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HomeMy WebLinkAbout2013-05-06 City Council Agenda PacketCITY OF PALO ALTO CITY COUNCIL Special Meeting Council Chambers May 6, 2013 5:30 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 May 6, 2013 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. * The agenda now includes time estimates for each section or item. These 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. Call to Order Closed Session 5:30-7:00 PM Public Comments: Members of the public may speak to the Closed Session item(s); three minutes per speaker. 1. CONFERENCE WITH CITY ATTORNEY Potential Litigation – One Matter Subject: Construction of the Mitchell Park Library and Community Center Authority: Government Code Section 54956.9 2. CONFERENCE WITH CITY ATTORNEY Potential Initiation of Litigation - One Case Subject: Class-Action Litigation Alleging Price-Fixing by Foreign Manufacturers of Lithium ion Batteries Authority: Government Code section 54956.9 Special Orders of the Day 7:00-7:30 PM 3. Public/Private Partnership Presentation by REACH 4. Proclamation Supporting May 2013 as Bike Month Including Bike to Work Day on May 9, 2013 5. Acknowledgement and Recognition of Development Center Improvements 2 May 6, 2013 MATERIALS RELATED TO AN ITEM ON THIS AGENDA SUBMITTED TO THE CITY COUNCIL AFTER DISTRIBUTION OF THE AGENDA PACKET ARE AVAILABLE FOR PUBLIC INSPECTION IN THE CITY CLERK’S OFFICE AT PALO ALTO CITY HALL, 250 HAMILTON AVE. DURING NORMAL BUSINESS HOURS. Agenda Changes, Additions and Deletions HEARINGS REQUIRED BY LAW: Applications and/or appellants may have up to ten minutes at the outset of the public discussion to make their remarks and put up to three minutes for concluding remarks after other members of the public have spoken. 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 7:30-7:40 PM Oral Communications 7:40-7:55 PM Members of the public may speak to any item not on the agenda; three minutes per speaker. Council reserves the right to limit the duration of Oral Communications period to 30 minutes. Minutes Approval 7:55-8:00 PM March 14, 2013 March 18, 2013 April 22, 2013 Consent Calendar 8:00-8:05 PM Items will be voted on in one motion unless removed from the calendar by two Council Members. 6. Record of Land Use Action Approving a Conditional Use Permit for Beer and Wine Service at Freebirds World Burrito Located at 2305 El Camino Real 7. Appeal of and Recommendation to Uphold Director’s Architectural Review Approval of the Co-location by AT&T Mobility LLC of One Pole- Mounted Wireless Communication Antenna and Associated Equipment Boxes on the Existing Utility Pole Within the City’s Public Utility Easement on 3704 Carlson Circle. 8. Approval of a One-Year Extension of the Sierra Infosys Contract (C10135998) for Annual SAP Support in the amount of $250,000.00 per year for the Support and Maintenance of SAP Industry-Specific Solution for Utilities (IS-U), SAP Enterprise Central Component (ECC 6.0), Customer Relationship Management System (CRM), Business Intelligence System (BI) and Utilities Customer Electronic Services (UCES) 3 May 6, 2013 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. 9. Adoption of a Resolution Confirming that the City Manager is Authorized to Report Greenhouse Gases Generated in Municipal and Utility Operations to Federal and State Agencies and to Participate in Cap and Trade Programs 10. Request for Authorization to Increase the Existing Blanket Purchase Order with Cooper Power Systems, Inc. by $225,000 for Fiscal Year 2013 and to Approve a $225,000 Blanket Purchase Order with Cooper Power Systems, Inc., for Fiscal Year 2014 for the Purchase of Padmount Switches 11. Recommendation to Purchase Eighteen (18), 5-Year Extended Warranties for New Electrocardiogram (EKG) Monitors for a Not-to- Exceed Total of $93,000 12. Approval of a Contract with Advanced Design Consultants, Inc. in the Total Amount of $234,869 for Design of Mechanical, Electrical and Fire Life Safety Upgrades for the Lucie Stern Community Center Complex (CIP PF-09000) 13. Second Reading: Adoption of an Ordinance Amending the Zoning Map to Add the Ground Floor (GF) Combining District (regulated under PAMC Section 18.30(C)) to Properties on the 600 block of Emerson Street Zoned CD-C-P (Commercial-Downtown Community with Pedestrian Combining District) and Street Fronting Ground Floor Spaces Zoned CD-S-P (Commercial- Downtown Service with Pedestrian Combining District), as Listed on the Ordinance’s Exhibits 1 and 2 (Passed: April 8, 2013, 6-3 Klein, Price, S 14. Adoption of an Ordinance Amending Palo Alto Municipal Code Section 5.35 to Expand Plastic Bag Ban to Retail and Food Establishments, Require Retailers to Charge Fee for Paper Bag Use and Provision of Phased Implementation (Passed: April 15, 2013, 8-0, Berman not participating) Action Items Include: Reports of Committees/Commissions, Ordinances and Resolutions, Public Hearings, Reports of Officials, Unfinished Business and Council Matters. 8:05-9:35 PM 15. Review of Guiding Principles for Stanford University Medical Center Fund Allocations and Allocation of $2Million to Project Safety Net 4 May 6, 2013 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. 9:35-9:40 PM 16. Public Hearing: Hear Objections to the Levy of Proposed Assessments on the Palo Alto Downtown Business Improvement District and Adoption of a Resolution Confirming the Report of the Advisory Board and Levying Assessment for Fiscal Year 2014 on the Downtown Palo Alto Business Improvement District 9:40-10:00 PM 17. Public Hearing: Adoption of a Resolution Approving the Proposed Fiscal Year 2014 Community Development Block Grant Funding Allocations and the Draft 2014 Action Plan 10:00-10:15 PM 18. Adoption of a Resolution Authorizing the Issuance and Sale of General Obligation Bonds Series 2013A For Measure N Projects in the Principal Amount of $20,695,000, Authorizing and Directing the Execution of a Paying Agent Agreement, and Certain Other Related Documents, and Authorizing Official Actions Related Thereto 10:15-10:30 PM 19. Request Council Adopt the Resolution Amending the 2013 Management and Professional Compensation Plan Council Member Questions, Comments and Announcements 10-:30-10:45 PM Members of the public may not speak to the item(s) Adjournment AMERICANS WITH DISABILITY ACT (ADA) Persons with disabilities who require auxiliary aids or services in using City facilities, services or programs or who would like information on the City’s compliance with the Americans with Disabilities Act (ADA) of 1990, may contact (650) 329-2550 (Voice) 24 hours in advance. PUBLIC COMMENT Members of the Public are entitled to directly address the City Council/Committee concerning any item that is described in the notice of this meeting, before or during consideration of that item. If you wish to address the Council/Committee on any issue that is on this agenda, please complete a speaker request card located on the table at the entrance to the Council Chambers, and deliver it to the City Clerk prior to discussion of the item. You are not required to give your name on the speaker card in order to speak to the Council/Committee, but it is very helpful. 5 May 6, 2013 MATERIALS RELATED TO AN ITEM ON THIS AGENDA SUBMITTED TO THE CITY COUNCIL AFTER DISTRIBUTION OF THE AGENDA PACKET ARE AVAILABLE FOR PUBLIC INSPECTION IN THE CITY CLERK’S OFFICE AT PALO ALTO CITY HALL, 250 HAMILTON AVE. DURING NORMAL BUSINESS HOURS. Additional Information Standing Committee Meetings Infrastructure Committee Meeting Finance Committee Meeting Regional Housing Mandate Committee Meeting Finance Committee Meeting Schedule of Meetings Schedule of Meetings Tentative Agenda Tentative Agenda Informational Report Fiscal Year 2014 Proposed Operating and Capital Budgets Utilities Resource Management Operating Policies and Plans Presentation of Insurance Services Office Report on Palo Alto Building Division Rating Notice of Vacancies Public Letters to Council SET 1 SET 2 SET 3 SET 4 SET 5 SET 6 City of Palo Alto (ID # 3636) City Council Staff Report Report Type: Special Orders of the Day Meeting Date: 5/6/2013 City of Palo Alto Page 1 Summary Title: Public/Private Partnership Presentation - REACH Title: Public/Private Partnership Presentation by REACH From: City Manager Lead Department: Community Services REACH Summary “It’s like having your own private earthquake.” REACH Program student Earthquake is an apt metaphor for a stroke: typically striking without warning, the consequences are usually devastating, if not fatal. Loss of physical, mental and communication abilities are common. And when the insurance runs out and the therapies stop, the survivor is still damaged. The REACH Program exists to provide a bridge back to the survivors’ communities, and to their lives. REACH is an acronym: Rehabilitation; Education; Acceptance; Community; Hope. REACH has served the Bay Area community of stroke survivors since 1989, with more than 2,200 graduates. From 1989 until 2010, REACH was part of Foothill College; it transitioned to Foothill’s Community Education offering until Spring 2012. Due to the continuing financial challenges in the Cal State system, we have spun off the REACH Program as a stand-alone 501- (c)-(3) nonprofit. REACH operates as an educational rather than a medical operation. Our staff of licensed professional speech, occupational and physical therapists work with the students in group classes. The students attend 1, 2 or 3 classes each day, two days a week. As the students slowly begin to regain their strength, the instructors provide the guidance and their fellow survivors provide encouragement. City of Palo Alto Page 2 The focus on communication skills, adaptive learning skills and mobility and fitness allows each student to reach his or her own emotional, social and physical potential, and attain their highest levels of independence. REACH enables these individuals to accept their limitations, and develop a positive attitude toward themselves, their families and their community. It is a place of small miracles. This video provides a look into the REACH Program - http://vimeo.com/13786426 Based on the past two years of operations, REACH is a break-even proposition. The fees paid by the students cover the payroll and other incidental costs. The P Building on city-owned land at Cubberley Community Center is provided on a no-cost basis through the end of 2014, courtesy of Foothill College. After that, REACH must either secure a lease from the city, or find a new home. Attachments:  Attachment A - REACH Brochure (PPTX) CITY OF PALO ALTO PROCLAMATION BIKE MONTH MAY 2013 WHEREAS, the City of Palo Alto joins cities and counties throughout the country and the League of American Bicyclists in celebrating May as National Bike Month; and WHEREAS, the San Francisco Bay Area’s 19th annual Bike to Work Day will be held on May 9, 2013, with the participation of transportation, public health and advocacy organizations including the Metropolitan Transportation Commission, the Bay Area Air Quality Management District, the Valley Transportation Authority, the Bay Area Bicycle Coalition, and the Silicon Valley Bicycle Coalition; and WHEREAS, the City of Palo Alto has been designated as a Gold Level Bicycle Friendly Community since 2003 and continues its commitment to innovative bicycle facility design and implementation through the 2012 Bicycle and Pedestrian Transportation Plan; and WHEREAS, Palo Alto’s Safe Routes to School partnership with the Palo Alto Unified School District and the Palo Alto Council of PTAs has coordinated programs of safety engineering, education, enforcement and education and dramatically increased the percentage of students cycling to school; and WHEREAS, Palo Alto recognizes cycling as a highly beneficial transportation mode that promotes healthy living and a vibrant local economy, alleviates traffic and parking congestion, improves the quality of our air and reduces the production of greenhouse gases; and WHEREAS, National Bike Month and Bike to Work Day are effective at encouraging more commuters and more residents to try leaving their cars at home and biking to more places more often; NOW THEREFORE, I, H. Gregory Scharff, Mayor of the City of Palo Alto, along with my colleagues on the City Council, do hereby proclaim the month of May 2013 as Bike Month and recognize May 9, 2013 as Bike to Work Day in Palo Alto. Presented: May 6, 2013 ________________________ H. Gregory Scharff Mayor City of Palo Alto (ID # 3690) City Council Staff Report Report Type: Consent Calendar Meeting Date: 5/6/2013 City of Palo Alto Page 1 Summary Title: Freebirds Conditional Use Permit Title: Record of Land Use Action Approving a Conditional Use Permit for Beer and Wine Service at Freebirds World Burrito Located at 2305 El Camino Real From: City Manager Lead Department: Planning and Community Environment Recommendation Staff recommends a Council MOTION to approve the attached Record of Land Use Action (ROLUA, Attachment A) to approve the Conditional Use Permit (CUP) recommended by staff and the Planning and Transportation Commission (P&TC). A public hearing, requested following the Director of Planning and Community Environment’s tentative approval, has been held on this matter. The CUP is for the service of beer and wine at the Freebirds World Burrito restaurant, located at 2305 El Camino Real. Executive Summary The Municipal Code specifies a two-step Council review process for contested CUPs. If three Council members vote to take the item off the consent calendar, a hearing is to be scheduled for full Council discussion of the CUP request. On January 9, 2013, the Planning Director issued a tentative approval a CUP to serve beer and wine at Freebirds World Burrito restaurant. A nearby business owner, Dr. Hadler, requested that the P&TC consider the CUP in a public hearing. On April 10, 2013, the P&TC conducted a hearing, but Dr. Adler did not attend. The P&TC confirmed the Director’s Findings for Approval, and adjusted the approval conditions, as part of its recommendation for City Council approval. There were no public speakers attending the P&TC public hearing. Staff and the P&TC support the service of beer (and wine) in conjunction with meals at this location, in the manner proposed, with the expectation that such service will not result in negative impacts. City of Palo Alto Page 2 Background Site Information The project site is located at 2305 El Camino Real, at the corner of El Camino and Cambridge Avenue, as shown on the location map (Attachment B). The site’s land use, eating and drinking services, was established many years ago. The ‘Kentucky Fried Chicken’ restaurant opened in 1967, followed by ‘Wahoo’s Fish Taco’ restaurant in 2006. The ‘Freebirds World Burrito’ restaurant leased the site in 2012. Adjacent uses to the southeast along El Camino Real are the Cheese Steak Shop, a restaurant, and Palo Alto Pathology (office). Behind the building to the northeast is a public alleyway, known as New Mayfield Lane, and a two level City parking garage is located across the alley. Across Cambridge Avenue to the west is the First Republic Bank. Across El Camino Real to the southwest are two restaurants (Panda Express and Jack in the Box). Project Description Freebirds World Burrito is a Mexican food restaurant where one-on-one service is provided to each customer. Customers create their own taco, burrito, salad, or burrito bowl creation, choosing from over 40 fresh ingredients. The ambiance is a casual dining environment with décor and music reminiscent of a late 1960’s roadhouse. The applicant’s project description is attached (Attachment C). The requested CUP is for the service of beer and wine. Service of hard liquor is not proposed, and there is no bar in the restaurant. The restaurant is open from 10:30am to 10:00pm; therefore no late night activity would occur at the location. The tentative approval of the CUP did not allow the service of alcohol outside of the building. Restaurant Conditional Use Permits Restaurants only require a CUP approval if alcohol is served, or if the business plans to operate between the hours of 10 pm and 6 am and the establishment is within 50 feet of residentially zoned property. The service of beer and wine within restaurants is very typical. It is rare that such a facility results in negative impacts to adjacent properties. Establishments are more likely to have negative issues when providing full alcohol service in a “bar” type environment. This is why alcohol is only permitted in eating establishments by CUP approval. History The Director of Planning and Community Environment tentatively approved the CUP on January 9, 2013, in a letter (Attachment D). On January 18, 2013, Dr. Hadler, the owner of an adjacent business named Palo Alto Pathology, submitted an objection to the approval. Prior to this CUP application, there were two incidents involving Dr. Hadler and the Freebirds restaurant. The City of Palo Alto Page 3 first incident was the use of Dr. Hadler’s parking space by one of the contractors working on the interior build out of the Freebirds restaurant tenant space. The second incident was the placement of trash from the Freebirds restaurant in Dr. Hadler’s trash bins. Freebirds management addressed these two issues as soon as they were made aware of them. Dr. Hadler submitted several letters prior to the P&TC meeting and requested information from the City. Dr. Hadler’s original correspondence is attached to this report (Attachment E), as are the staff responses (Attachments F, G and H). Dr. Handler’s correspondence following the P&TC meeting is also attached (Attachment K). Commission Review and Recommendation On April 10, 2013, the P&TC unanimously supported staff’s findings and recommended approval of the CUP allowing the service of beer and wine, as reflected in the RLUA (Attachment A) and P&TC meeting minutes (Attachment I). Condition of approval number five was amended to allow the restaurant to stay open until 10:00 pm, at the applicant’s request. This was modified from an end time of 9:30 pm, which the applicant had originally requested. Condition number seven, related to keeping the area around the building clear of litter associated with the restaurant, was also amended to include the adjacent sidewalk in the area to be kept clean. The hearing requester, Dr. Hadler, did not attend the P&TC public hearing and there were no public speakers. The P&TC staff report (Attachment J) contains additional background, including a summary of concerns of the hearing requester. Discussion Review Process and Council Purview The Council’s review of CUPs is governed by PAMC Section 18.76.010. An applicant is entitled to a CUP if the following findings can be made: (1) The use shall not be detrimental or injurious to property/improvements in the vicinity and not be detrimental to the public health, safety, general welfare or convenience and (2) the use shall be located and conducted in a manner in accord with the Comprehensive Plan and purposes of the Zoning Code. The Municipal Code specifies a two-step Council review process for contested CUP’s. If three Council members vote to take the item off the consent calendar, a hearing is to be scheduled for full Council discussion of the CUP request. On January 9, 2013, the Planning Director issued a tentative approval of a CUP to serve beer and wine at Freebirds World Burrito restaurant. A nearby business owner, Dr. Hadler, requested P&TC consider the CUP in a public hearing. On April 10, 2013, the P&TC conducted a hearing, but Dr. Hadler did not attend. The P&TC unanimously confirmed the Director’s tentative decision that the proposed use would not have a negative impact on the surrounding neighborhood and recommended approval of the CUP to the Council. In addition, the P&TC City of Palo Alto Page 4 recommended modifying some of the approval conditions, at the applicant’s request. There were no public speakers attending the P&TC public hearing. Staff and the P&TC support the service of beer (and wine) in conjunction with meals at this location, in the manner proposed, with the expectation that such service will not result in negative impacts. The CUP regulations allow the City to re-evaluate the permit if issues do arise during the operations of the business. Timeline Application submitted: 11/06/13 Application tentatively approved by the Director: 01/09/13 Request for hearing received: 01/18/13 Planning and Transportation Commission hearing: 04/10/13 City Council consent calendar date: 05/06/13 Environmental Review This application is categorically exempt under the California Environmental Quality Act (CEQA) per CEQA Gudelines Section 15301. Courtesy Copies Dan Torres Pepper Lane-Pender, LLC Alexander Eagle Kenneth Hadler Attachments:  : Attachment A: Record of Land Use Action (DOCX)  : Attachment B: Site Location Map (PDF)  : Attachment C: Applicant Project description Letter (PDF)  : Attachment D: Tentative Conditional Use Permit Approval Letter (PDF)  : Attachment E: Letter from Dr.Hadler March 21, 2013 (PDF)  : Attachment F: Response to Dr. Hadler's March 27, 2013 (PDF)  : Attachment G: Police Response to Dr. Hadler's PRR (PDF) City of Palo Alto Page 5  : Attachment H: Approved Alcohol CUPs 2008-2012 (PDF)  : Attachment I: P&TC Minutes of April 10, 2013. (DOC)  : Attachment J: P&TC Staff Report of April 10, 2013. (PDF)  : Attachment K: Hadler Letters post PTC (PDF) 1 DRAFT APPROVAL NO. 2013-1 RECORD OF THE COUNCIL OF THE CITY OF PALO ALTO LAND USE APPROVAL FOR 2305 EL CAMINO REAL: FILE 12PLN-00454, CONDITIONAL USE PERMIT FOR THE SERVICE OF ALCOHOL (BEER AND WINE). (Dan Torres (Freebirds World Burrito), APPLICANT) The City Council of the City of Palo Alto (“City Council”) finds, determines, and declares as follows: SECTION 1. Background. A. On January 09, 2013, the Director of Planning and Community Environment issued a tentative approval of Conditional Use Permit (CUP) application 12PLN-00454 for the on sale service of alcohol (beer and wine) at 2305 El Camino Real, Freebirds World Burrito (“The Project”). B. On January 18, 2013, Staff received a request for hearing from Mr. Hadler, an adjacent business owner. C. On April 10, 2013, the Planning and Transportation Commission reviewed the Applicant’s request for approval of a CUP to allow the on-site sale service of alcohol (beer and wine) at 2305 El Camino Real, Freebirds World Burrito, and recommended approval of the CUP to the City Council. SECTION 2. Environmental Review. The Project is exempt from the provisions of the California Environmental Quality Act (CEQA) per CEQA Guidelines Section 15301. The Freebirds World Burrito restaurant is an existing permitted use within an existing building. SECTION 3. Conditional Use Permit Findings. In accordance with Palo Alto Municipal Code Section 18.76.010, the City Council makes the following findings: 1. The proposed use, at the proposed location, will not be detrimental or injurious to property or improvements in the vicinity, and will not be detrimental to the public health, safety, general welfare, or convenience. The proposed restaurant use is permitted in the Community Commercial zoning district [CC2]. The alcohol service would be accessory to the restaurant use and there are no sensitive uses in close proximity that could be impacted by the beer and wine service. Beer and wine sales are projected to constitute less than 10% of the restaurant’s business. With the addition of alcohol service, the restaurant would remain compatible and contribute to the active commercial district. The restaurant is located within an existing building, the service of alcohol would be accessory to the primary restaurant use, and it would be conducted in a manner that would not be injurious to property or improvements in the vicinity or detrimental to the public health, Attachment A 2 safety, and general welfare, or convenience. The Applicant intends to achieve this by maintaining responsible serving practices and preventing youth access to alcohol. 2. The proposed use will be located and conducted in a manner in accordance with the Palo Alto Comprehensive Plan and the purposes of the Zoning Ordinance. The proposed restaurant and on-site sale service of alcohol are compatible with the site’s land use designation of Regional/Community Commercial and with its CC2 zoning designation. The restaurant and associated uses will serve to enliven the mix of businesses on the block and contribute to the area’s economic vitality. SECTION 4. Conditions of Approval 1. The use shall be conducted in substantial conformance with the CUP project plans received on November 6, 2012 and related documents on file with the City of Palo Alto Planning Division, except as modified by these conditions of approval. 2. This approval letter, including the Conditions of Approval, shall be printed on the plans submitted for building permit review, as applicable. 3. The service of alcohol must be associated with a bona fide public eating establishment or provided in conjunction with the service of food in compliance with the Palo Alto Municipal Code (PAMC). 4. The approved use permit does not allow live entertainment or amplified music. This condition does not preclude the ability to play background music through speakers. 5. Alcohol service shall be permitted daily between the hours of 10:30 am and 10:00 pm only. 6. This CUP allows alcoholic beverage service within the indoor area of the building only. No service of alcohol is permitted outside of the building. The formal approval of the State of California Department of Alcohol Beverage Control is also required. 7. The operator shall keep the subject property and the adjacent sidewalk free of litter associated with the business operation. 8. This use shall comply with all applicable City ordinances, including those set forth in PAMC, Titles 9 (Public Peace, Morals and Safety) and 15 (Fire Prevention/Uniform Fire Code), and Titles 4 (Alcoholic Beverage Business Regulations) and 19 (Public Safety) of the State of California Code of Regulations (aka California Administrative Code). 3 9. The consumption of alcoholic beverages under this use permit shall be deemed an agreement on the part of the Applicant and his heirs, successors, and assigns to comply with all terms and conditions of this Conditional Use Permit. 10. Any intensification of use shall require an amendment to the conditional use permit and any other entitlements as specified in the Palo Alto Municipal Code. 11. Noise levels emanating from the business shall not exceed the maximum level established in the PAMC Chapter 9.10 12. Revocation or Modification of Approvals: The director may issue a notice of noncompliance for any failure to comply with any condition of this Conditional Use Permit approval, or when a use conducted pursuant to a conditional use permit is being conducted in a manner detrimental to the public health, safety and welfare. 13. All trash, compost, and recycling receptacles must remain within the trash room at all times, except as necessary to facilitate trash collection. SECTION 5. Term of Approval In the event actual service of alcohol is not commenced within one year of the effective date of the City Council’s approval of the CUP, the CUP approval shall expire and be of no further force or effect, pursuant to PAMC Section 18.82.080 and Ordinance 5061. SECTION 6. Standard Conditions A. Except as expressly specified herein, the site plan, floor plans, building elevations and any additional information or representations, submitted by the Applicant during the Staff review and public hearing process leading to the approval of this entitlement, whether oral or written, which indicated the proposed structure or manner of operation, are deemed conditions of approval. B. The approved use and/or construction are subject to, and shall comply with, all applicable City ordinances and laws and regulations of other governmental agencies. C. California Government Code Section 66020 provides that a project applicant who desires to protest the fees, dedications, reservations, or other exactions imposed on a development project must initiate the protest at the time the development project is approved or conditionally approved or within ninety (90) days after the date that fees, dedications, reservations or exactions are imposed on the Project. Additionally, procedural requirements for protesting these development fees, dedications, reservations and exactions are set forth in Government Code Section 66020. IF YOU FAIL TO INITIATE A PROTEST WITHIN THE 90-DAY PERIOD OR FOLLOW THE PROTEST PROCEDURES DESCRIBED IN GOVERNMENT CODE SECTION 66020, YOU WILL BE BARRED FROM CHALLENGING THE VALIDITY OR REASONABLENESS OF THE FEES, DEDICATIONS, RESERVATIONS, AND EXACTIONS. 4 D. This matter is subject to the California Code of Civil Procedures (CCP) Section 1094.5; the time by which judicial review must be sought is governed by CCP Section 1094.6. E. To the extent permitted by law, the Applicant shall indemnify and hold harmless the City, its City Council, its officers, employees and agents (the “indemnified parties”) from and against any claim, action, or proceeding brought by a third party against the indemnified parties and the applicant to attack, set aside or void, any permit or approval authorized hereby for the Project, including (without limitation) reimbursing the City for its actual attorneys’ fees and costs incurred in defense of the litigation. The City may, in its sole discretion, elect to defend any such action with attorneys of its own choice. PASSED: AYES: NOES: ABSENT: ABSTENTIONS: ATTEST: APPROVED: _________________________ ____________________________ City Clerk Director of Planning and Community Environment APPROVED AS TO FORM: ___________________________ Senior Asst. City Attorney PLANS AND DRAWINGS REFERENCED: 1. Those plans, prepared by Dan Torres titled “Freebirds”, consisting of four (4) pages, dated May 5, 2012, and received November 6, 2012. 137- 01- 148 137- 01- 149 137- 01- 108 137- 01- 102 124- 3 1 - 0 8 1 124- 33- 020 137- 01- 095 137- 01- 074 124- 33- 019 124- 33- 016 124- 32- 071 124- 33- 022 137- 01- 105 137- 01- 094 137- 01- 093 137- 01- 145 137- 01- 087 124- 32- 019 137- 01- 142 124- 33- 018 124- 32- 043 124- 32- 022 124- 32- 021 124- 32- 035 124- 32- 042 124- 32- 072 Lot C - 5 Park i n g L o t Ban k o f the W e s t Cali f o r n i a S t a t i o n Cou n t r y S u n COL L E G E A V E N U E YA L E S T R E E T CAM B R I D G E A V E N U E CAL I F O R N I A A V E N U E WI L L I A M S S T R E E T EL C A M I N O R E A L EL C A M I N O R E A L EL C A M I N O R E A L NEW M A Y F I E L D L A N E NEW M A Y F I E L D L A N E E L C A M I N O R E A L EL C A M I N O R E A L CAL I F O R N I A A V E N U E CAL I F O R N I A A V E N U E PE R A L L A N E MI M O S A L A N E SE D R O L A N E CAM B R I D G E A V E N U E COL L E G E A V E N U E JAC A R A N D A L A N E E L C A M I N O R E A L This map is a product of the City of Palo Alto GIS This document is a graphic representation only of best available sources. 0'123' 2305 El Camino Real Freebirds World Burrito CITY O F PALO A L TO IN C O R P O R AT E D C ALIFOR NI A P a l o A l t oT h e C i t y o f A P RIL 16 1894 The City of Palo Alto assumes no responsibility for any errors. ©1989 to 2013 City of Palo Alto rreich, 2013-03-21 17:47:36 (\\cc-maps\gis$\gis\admin\Personal\Planning.mdb) 1 Planning and Transportation Commission 1 Draft Verbatim Minutes 2 April 10, 2013 3 4 EXCERPT 5 6 7 2305 El Camino Real: Request by Dan Torres on behalf of Pepper Lane-Pender, LLC for a 8 Conditional Use Permit (CUP) to allow the service of alcohol (Beer only) at Freebirds World 9 Burrito. Zone District, Service Commercial (CC(2)). [12PLN-00454] 10 11 Chair Martinez: Ok, we’re going to move to the next item on our agenda and that’s the 12 application for a Conditional Use Permit (CUP) for 2305 El Camino Real. Let’s begin with a, 13 oh, first this is a quasi-judicial item. City Attorney do you have any words of wisdom on that for 14 us? 15 16 Cara Silver, Sr. Assistant City Attorney: Yes, your protocols require that if you’ve had any ex-17 parte communications with applicants or with the applicant or neighbors or residents that you 18 disclose those on the record. 19 20 Chair Martinez: Ok, thank you. Commissioners, anyone? Commissioner Keller you had a taco 21 lately or anything? Ok, you’re fine? Ok. Let’s begin with a staff report. 22 23 Russ Reich, Senior Planner: Thank you. Good evening Chair Martinez and Commissioners. The 24 application before you this evening is for a Conditional Use Permit request to allow the sale of 25 beer at the existing Freebirds restaurant. On January 9th of this year the application was 26 tentatively approved by the Planning Director based on the findings and conditions provided in 27 the tentative approval letter, which is provided as Attachment D of your staff report. On January 28 18th of this year an adjacent neighbor requested a hearing on the matter. Since no hearing took 29 place in advance of the tentative decision the code makes provision to request a public hearing. 30 The item first appears before the Planning and Transportation Commission (PTC) who then 31 forwards a recommendation to the City Council. After the Commission’s review the item will 32 appear on the Council’s consent calendar and will be heard by the City Council if three members 33 vote to take it off their consent calendar. 34 35 Restaurants only require CUP if they serve alcoholic beverages. Freebirds has proposed to serve 36 beer only at their restaurant to accompany their food selections. Alcohol would only be served 37 in combination with a full meal. The restaurant does not have a bar and would not be open past 38 9:30 in the evening. Alcohol sales are a very minor component of their business. Staff has 39 recommended approval of the CUP request as it believes that the offering of beer in conjunction 40 with food items on the menu would not result in negative impacts to adjacent properties. The 41 service of alcohol at restaurants in Palo Alto is a common occurrence that exists typically 42 without incident. 43 44 Staff has had no comment from the public on this matter outside of those provided by the 45 neighbor that requested the hearing, Mr. Hadler. The only stated concern that Mr. Hadler has 46 provided to staff thus far is that he believes that the service of alcohol at the restaurant would 47 lead to increased incidents of graffiti on the building. Staff does not share this concern as there 48 has been no correlation between those activities in the past. The project applicant is here to 49 Attachment I 2 make a brief presentation and staff and the applicant are here to answer any questions that you 1 may have. Thanks. 2 3 Chair Martinez: Thank you. We shall open the public hearing and if the applicant cares to speak 4 you shall have 10 minutes. Please state your name and address. 5 6 Alex Eagle, General Counsel, Tavistock Restaurants: My name is Alex Eagle and our address is 7 6475 Christie Avenue, Suite 300 in Emeryville, 94608. I’m general counsel for Tavistock 8 Restaurants. We own Freebirds and I wanted to start by thanking staff for the work they did on 9 our application so far, I think it’s probably been more than expected; and also for the 10 thoughtfulness about the order of the agenda tonight. I’d also like to reiterate an apology that our 11 President made to our neighbor, Dr. Hadler. When we were under construction our general 12 contractor, it’s believed that either our general contractor or subcontractor parked in his parking 13 space and that is not acceptable conduct to us and as a result we established a good neighbor 14 policy with our general contractor and made it clear to him that we would not continue to do 15 business with him if we continued to receive other similar complaints from neighbors. 16 17 If I can give you just a brief introduction to our concept, Freebirds World Burrito, it’s a fast 18 casual restaurant. So it fits into about 2,500 to 3,000 square feet. There’s no table service so the 19 quality of the food is similar to what you’d receive in a table service environment, but the 20 intention is you can get through the restaurant quicker and of course the price point is lower as 21 well. We acquired this concept in 2007 with less than 20 restaurants and we now have over 100. 22 And we started opening restaurants in California in 2011 and we now currently have 25 23 restaurants open in California. Since we’ve been open we have had an emphasis on culinary 24 aspect of the business. So we make a lot more things fresh in house with fresh ingredients than 25 our competitors. So for example, all of our competitors use frozen corn for their corn salsa and 26 we use fresh corn that’s grilled in house every day. 27 28 We also have a charitable aspect to our business called World Works. So the staff at every 29 restaurant is encouraged to adopt a local charity and to volunteer. And the charities that have 30 been chosen by our location in Palo Alto are the Palo Alto Humane Society and Loaves and 31 Fishes. And I think we’ve had some pretty good success particularly with the staff’s 32 participation with the Humane Society. We also try to make an emotional connection with the 33 guest so the restaurant is designed to be stimulating. We play music; we have sort of a graphic, 34 colorful presentation. 35 36 And as far as alcohol is concerned it’s really not an important part of what we do. We consider it 37 more of a veto vote that the concern is not that it’s a profitable part of what we’re doing, but that 38 if there’s four people that want to go out to dinner and one of them wants to have a beer with 39 their meal that they may choose not to come to our restaurant if we don’t offer beer and wine. 40 So it constitutes a very small fraction of our sales and since we’ve been opening restaurants in 41 California we’ve had no violations. I also wanted to point out that we’ve owned California Cafe 42 here in Palo Alto for a long time, since early 2000 timeframe. 43 44 Regarding the conditions of approval I did want to just request a few clarifications or 45 amendments. We are seeking approval for beer and wine. So we only sell beer in our 46 restaurants right now, but we would like to reserve the option to also offer wine. And then 47 specifically with regard to the condition of approval Section 4, Condition 4, there is regarding 48 amplified music and I just wanted to clarify that we do play music in our restaurants. So I don’t 49 3 know if we would be, if that would be problematic, but we would like to play music in the 1 restaurant. And then regarding Section 4, Condition 5, the restaurant is only open till 9:30 2 currently, but we’d appreciate your consideration of a modification to 10:00. So that concludes 3 my comments. I would request your support of our condition of approval for alcohol and I 4 appreciate your time. 5 6 Chair Martinez: Thank you. Before you leave Commissioners any questions of the applicant? 7 Ok. Yes, Commissioner King? 8 9 Commissioner King: Yes. There’s comments in here about potential for outdoor amplified 10 music. Is that, do you have facilities for playing music out in front of your restaurant? 11 12 Mr. Eagle: I don’t know. I do know that we have outdoor seating, so I would assume that that’s 13 possible. Typically we would have both indoor and outdoor music if we’re offering outdoor 14 seating. 15 16 Commissioner King: May I ask staff then on that? I’m curious because I know La Bodeguita 17 Del Medio on California Avenue somehow they play music continually outdoors. And so what 18 is the, what are the regulations around that? 19 20 Mr. Reich: Well we do have a noise ordinance that limits noise levels at the property line. I’m 21 not aware of any zoning that actually discusses music being played outdoors. The condition of 22 approval that’s in the staff report is talking about amplified music. Staff’s understanding of 23 amplified music and the use of this condition on all the other Conditional Use Permits that we’ve 24 issued is really specific to like live bands and DJ type music. It is not to limit a restaurant from 25 playing background music through speakers either inside or out. 26 27 Commissioner King: Thank you. 28 29 Chair Martinez: Just for the record you do have outdoor music because I walk by. I can see the 30 speakers and hear the music, so. Commissioners, Commissioner Alcheck? 31 32 Commissioner Alcheck: Does that clarification satisfy your inquiry? 33 34 Mr. Eagle: That’s great. 35 36 Commissioner Alcheck: So are you ok with Number 4 now? 37 38 Mr. Eagle: If it’s limited to live music then that is great. Thank you for the clarification. 39 40 Commissioner Alcheck: Great. 41 42 Mr. Reich: It’s live or like DJ music. 43 44 Chair Martinez: Commissioner Keller. 45 46 Commissioner Keller: Yes. In terms of the beer and wine I assume that people would be 47 consuming beer within the outdoor seating, but not be able to take it out of the outdoor seating? 48 Or they are not allowed in the outdoor seating to consume wine? Consume beer or wine. 49 4 1 2 Mr. Reich: They would not be allowed to serve alcohol outside. ABC requires barriers to 3 separate the public access from the area where alcohol is being served and there’s no room at this 4 location. So the CUP would limit the alcohol service to the interior of the building. 5 6 Commissioner Keller: And in terms of the wine that you’re planning to serve, are you planning 7 to serve glasses of wine or allow people to buy bottles of wine? 8 9 Mr. Eagle: We have no current intention to sell wine at all, but we have an upscale division that I 10 made brief reference to with California Cafe and many other upscale dining restaurants that we 11 own throughout the country. And we have a private label wine and so my concern is really only 12 that eventually we might get to the point of considering the idea of having a wine offering in the 13 restaurant, but it’s not something that is currently proposed. Beer in fact makes up less than one 14 percent of our sales. So it is truly incidental component to our business. But the application is 15 for beer and wine and so I wanted to be clear that we would like to have approval for both. 16 17 Commissioner Keller: Would you have any objection to a prohibition against being serving a 18 whole bottle of wine to a customer as opposed to individual glasses? Because the issue of a 19 bottle of wine is that people would not drink it all and then would take the rest of it off site and 20 that might be more of an issue for offsite consumption. 21 22 Mr. Eagle: I would not oppose that. 23 24 Commissioner Keller: How does staff feel about that limitation? 25 26 Mr. Reich: I don’t have any issue if it’s consistent with State law. 27 28 Commissioner Keller: Ok, because people can take bottles of wine offsite when you go to a more 29 upscale restaurant, but I’m more concerned about this for a restaurant of this level. And you 30 mentioned that you wanted until 10:00. Is that on Fridays and Saturdays or every night? 31 32 Mr. Eagle: It’s every night and right now we’re, we just opened and we are also going through a 33 process of really refining our operations team at the location. Some of our locations are open till 34 10:00 seven days a week and so I just, this one is only open till 9:30 now, but if there’s an 35 opportunity to move that until 10:00 it would be appreciated. 36 37 Commissioner Keller: And does staff have any comment about extending it until 10:00 possibly 38 every day? 39 40 Aaron Aknin, Assistant Director: That would be fine. Those are still typical business hours for a 41 restaurant. 42 43 Commissioner Keller: Ok. Thank you. 44 45 Chair Martinez: Commissioner Panelli. 46 47 Commissioner Panelli: Yeah, just a quick question. If we compare the terms of this CUP to the 48 terms of some of the other CUPs that have been issued I think you, in the staff report there’s a 49 5 list of over the last couple years all of them. Is there anything particularly extraordinary about 1 this one or out of the ordinary about this one compared to those? 2 3 Mr. Reich: There’s nothing really special about this application. It is a little unique in that it 4 does specify that alcohol service can’t occur outside. It’s pretty common to request alcohol 5 service at some kind of outdoor patio, but this facility just doesn’t have the resources to do that. 6 7 Commissioner Panelli: Yeah I meant not in terms of it being more restrictive, but maybe it be 8 more liberal than any of the other CUPs that have been approved in recent history. 9 10 Mr. Reich: It’s certainly not more liberal. I mean the hours, 9:30 or 10:00 are pretty limiting. A 11 lot of CUPs go much later than that and it has many of the same restrictions on live 12 entertainment and music and so I don’t think it’s more liberal than most. It’s actually more 13 restrictive than most. 14 15 Commissioner Panelli: Thank you. 16 17 Chair Martinez: Thank you. Vice-Chair? Nothing? Commissioner Alcheck. 18 19 MOTION 20 21 Commissioner Alcheck: Ok, I’d like to make a Motion that we recommend that the City Council 22 approve this CUP with the amendment to the conditions of approval that we’ve discussed here, 23 namely that wine can be served as well and that the hours are adjusted to 10:00 p.m. After 24 careful review of this, am I going to have a chance to speak to this? 25 26 Chair Martinez: Yes you will. Is there a second? 27 28 SECOND 29 30 Commissioner King: Second. 31 32 Chair Martinez: Ok, Motion by Commissioner Alcheck and seconded by Commissioner King. 33 You may speak to your Motion at this time. 34 35 Commissioner Alcheck: I’m going to keep this short and sweet because I think this is a no 36 brainer. After careful review of the staff report and the concerns of the neighboring business 37 owner I think that the CUP as amended should be recommended for approval. 38 39 Chair Martinez: Commissioner King? 40 41 Commissioner King: Is for staff, so just regarding the hours, which under the original CUP do 42 specify 9:30 p.m. Is that typical that each CUP will have hours associated with it and that it’s 43 specific to that restaurant or place of service? 44 45 Mr. Reich: That is true. The reason this one said 9:30 was because that was actually what they 46 requested in their application submittal. So it’s usually looked at in combination with what they 47 request versus what seems reasonable based on the location. 48 49 6 Commissioner King: Thank you. And then for the Senior Assistant Attorney, do we have an 1 issue with our Motion that we’re changing the CUP? Are we fine? That we’re changing the 2 terms as were presented to us? 3 4 Ms. Silver: We were just trying to track the amendments to the conditions of approval and there 5 was one comment about adding wine that I didn’t follow. I thought that this did include the 6 service of wine. 7 8 Commissioner Alcheck: Yeah. I think it did too, but for the sake of clarification I just made it 9 obvious. That’s not an amendment. 10 11 Ms. Silver: Ok, thank you. Everything else that was suggested is fine. 12 13 Chair Martinez: Although the applicant accepted the suggestion about the bottles of wine I just 14 feel that’s kind of like overreaching for the City to tell them. If that’s going to be their policy let 15 it be informal. I can see a situation where somebody buys a bottle of wine and wants to take this 16 much home and it just doesn’t seem to be like friendly business practice to tell them they can’t. I 17 think since it’s your intention to sell wine by the glass I don’t think it’s going to be a big issue. 18 I’d rather not muddy up this issue by putting conditions on how you run your business. So I 19 wouldn’t support that if it’s made as a Friendly Amendment, but Commissioner Keller. 20 21 Commissioner Keller: Yes. I notice that Condition 7 says the operator shall keep the subject 22 property free of litter associated with the business operation. Is there any condition that also says 23 that the subjects shall keep the sidewalk adjacent to the subject property free of litter because I’m 24 not saying, I know of other properties that have people wind up with insufficient place to throw 25 their trash and what happens is that the City winds up with City garbage cans and things like that 26 that has to deal with the excess trash. For example, there’s a frozen yogurt place on University 27 Avenue that has that problem. So I’m wondering if that, is that something that’s commonly done 28 or not commonly done? 29 30 Mr. Reich: It’s actually not a bad idea to, because the building actually goes to the property line 31 and so there wouldn’t be an instance where litter is on the property unless it’s in the building. So 32 being that there is seating outside it wouldn’t be a bad idea to require that they keep the sidewalk 33 free of litter that is associated with the building or the property. 34 35 Commissioner Keller: And if we made that Amendment would that be acceptable to the 36 applicant? 37 38 Mr. Eagle: Yes. 39 40 FRIENDLY AMENDMENT 41 42 Commissioner Keller: And can I offer that as a Friendly Amendment to the maker and seconder? 43 44 Commissioner Alcheck: I’m not clear how this works. 45 46 Commissioner Keller: I’m saying that the applicant would be required not only to keep the 47 subject property clean, but essentially keep the sidewalks adjacent to the property clear of litter 48 from materials from that facility. 49 7 1 Commissioner Alcheck: Ok, just to respond for clarity’s sake. If in fact people were throwing 2 burrito wrappers on the ground in front of this storefront would complying with your 3 Amendment include the applicant collecting those burrito wrappers and tossing them into a 4 garbage that belongs to the City? Because I think what you’re asking is that you don’t want 5 garbage from this facility ending up in a City’s garbage can like the garbage from a yogurt shop 6 on University ending up in a City garbage bin. 7 8 Commissioner Keller: Well my main problem is that there’s insufficient garbage facilities for 9 people to do the opposite. I don’t have problems with people walking on University Avenue and 10 dealing with the yogurt and throwing it where they need to, but the issue is that that particular 11 site doesn’t have enough garbage and so I’m not as much concerned with this, I’m not sure if 12 there’s a garbage can there. But basically they need to keep that free and provide sufficient 13 garbage facilities so people on their site, so people can actually throw things away on their site. 14 But I’m not going to make all of that a condition. I just think keep it free of (interrupted) 15 16 Commissioner Alcheck: I will accept this Friendly Amendment because I don’t, I’d be 17 astonished if you allowed people to litter in front of your storefront. So I will accept that 18 Friendly Amendment. 19 20 Chair Martinez: Good. Commissioner King, you’re the seconder. Do you accept it? 21 22 Commissioner King: I accept. 23 24 Chair Martinez: Ok. We’re in business. Question by Vice-Chair Michael. 25 26 Vice-Chair Michael: So I’m supporting of the Motion and just wanted to clarify the only place 27 where I see that there’s any reference to the type of alcohol being served is in the second 28 paragraph of Section 3, paragraph 1, 3rd line where it says, “beer sales.” And would that be a 29 place where you’d say, “beer or wine sales” just so it’s inclusive of the possibility of selling 30 wine. 31 32 Ms. Silver: We would go by the Conditional Use Permit itself not the staff report. 33 34 Vice-Chair Michael: Well (interrupted) 35 36 Mr. Reich: So if you’d look at the record of land use action the staff, it specifies beer and wine 37 throughout. The only reason the staff report talks about beer is because the applicant had said 38 they intend to serve beer only. 39 40 Vice-Chair Michael: Ok. In the Section 4 conditions of approval where it references the 41 prohibition on live entertainment or amplified music, would that be something you’d clarify with 42 an additional phrase such that provided that recorded background music is allowed? I mean just 43 (interrupted) 44 45 Mr. Reich: We could do that. That’s fine. 46 47 Vice-Chair Michael: Ok, and then the only reference to time is in Section, next Section 5, which 48 is 9:30 would change to 10:00. 49 8 1 Chair Martinez: So were you offering a Friendly (interrupted) 2 3 Vice-Chair Michael: Well I’m just trying to clarify exactly what’s going, how this is going to be 4 taken up to the Council. 5 6 Ms. Silver: Yes, that’s correct. We’ve made amendments to conditions of approval Number 4, 5, 7 and 7 as you indicated. So 7 would include the keeping the sidewalk free of litter as well. Yes. 8 9 Vice-Chair Michael: Ok. Perfect. 10 11 VOTE 12 13 Chair Martinez: Ok. Are we ready to vote? Those in favor of the Motion say aye (Aye). Motion 14 passes unanimously with Commissioner Tanaka absent. Thank you very much. Good luck. 15 16 Ok, should we move on or give you a minute to set up? It’s up to you. Ok, we’re going to take 17 like two minutes. 18 19 MOTION PASSED (6-0-1, Commissioner Tanaka absent) 20 21 Commission Action: Item moved to agenda item placement 2, Commission action – approved 22 staff recommendation, Motion by Commissioner Alcheck, second by Commissioner Keller (6-0-23 1, Commissioner Tanaka absent) 24 25 City of Palo Alto (ID # 3661) Planning & Transportation Commission Staff Report Report Type: Meeting Date: 4/10/2013 City of Palo Alto Page 1 Summary Title: 2305 El Camino Freebirds Title: 2305 El Camino Real: Request for Conditional Use Permit for the service of alcohol (beer) at an established eating and drinking place (Freebirds world Burrito). From: Russ Reich, Senior Planner Lead Department: Planning and Community Environment Recommendation Staff recommends that the Planning and Transportation Commission (PTC) recommend that City Council approve the Conditional Use Permit (CUP) for beer service at the Freebirds World Burrito restaurant located at 2305 El Camino Real; the Director of Planning and Community Environment (Director) had tentatively approved this CUP and a request for hearing was received from the owner of a nearby office business. A draft Record of Land Use Action is attached (Attachment A). Background Site Information The project site is located at 2305 El Camino Real, at the corner of El Camino and Cambridge Avenue, as shown on the location map (Attachment B). Adjacent uses to the southeast along El Camino Real are the Cheese Steak Shop, a restaurant, and Palo Alto Pathology (office). Behind the building to the northeast is a public alleyway, known as New Mayfield Lane, and a two level City parking garage is located across the alley. Across Cambridge Avenue to the west is the First Republic Bank. Across El Camino Real to the south west are the Panda Express and Jack in the Box restaurants. The site has been a restaurant for many years, starting out as a Kentucky Fried Chicken restaurant in 1967 and then a Wahoo’s Fish Taco restaurant in 2006. In 2012 the space was leased by the current tenant, Freebirds World Burrito. Project Description Freebirds World Burrito is a unique Mexican food restaurant where one-on-one service is City of Palo Alto Page 2 provided to each customer. Customers create their own taco, burrito, salad, or burrito bowl creation, choosing from over 40 fresh ingredients. The ambiance is a casual dining environment with décor and music reminiscent of a late 1960’s roadhouse. The applicant’s project description is attached (Attachment C). The requested CUP is for the service of beer and wine; however, the restaurant proposes to only serve beer in combination with the meals. Wine and hard liquor are not proposed to be provided, and there is no bar in the restaurant. The restaurant is open from 10:30am to 9:30pm; therefore no late night activity would occur at the location. The tentative approval of the CUP did not allow the service of alcohol outside of the building. Restaurant Conditional Use Permits Restaurants only require a CUP if alcohol is served, or if the business plans to operate between the hours of 10 pm and 6 am and the establishment is within 50 feet of residentially zoned property. The service of beer and wine within restaurants is very typical. It is rare that such a facility results in negative impacts to adjacent properties. Establishments are more likely to have negative issues, when providing full alcohol service in a “bar” type environment. This is why alcohol is only permitted in eating establishments by CUP approval. History The CUP was tentatively approved by the Director on January 9, 2013 as reflected in the attached letter (Attachment D). On January 18, 2013, Dr. Hadler, the owner of an adjacent business named Palo Alto Pathology, submitted an objection to the approval. Prior to this CUP application, there were two incidents involving Dr. Hadler and the Freebirds restaurant. The first incident was the use of Dr. Hadler’s parking space by one of the contractors working on the interior build out of the Freebirds restaurant tenant space. The second incident was the placement of trash from the Freebirds restaurant in Dr. Hadler’s trash bins. Freebirds management addressed these two issues as soon as they were made aware of them. Dr. Hadler has submittal several letters and has requested information from the City. Dr. Hadler’s most recent letter is attached to this report (Attachment E), and responses provided to this most recent request are Attachments F, G and H. Summary of Key Issues Hearing Request v. Appeal The public hearing of the requested CUP is technically not an “appeal” of the Director’s tentative decision, so the hearing requester is not an appellant. Rather, the decision on the application no longer rests with the Director but with the City Council. The PTC is requested to City of Palo Alto Page 3 consider the Conditional Use Permit, findings and conditions for approval and make a recommendation to the City Council. The CUP process allows for a public hearing upon written request, to be held with the Planning and Transportation Commission, followed by Council consent calendar review and decision based upon the Commission and staff recommendations. If three Council members vote to take the item off the consent calendar, a hearing can scheduled for full Council discussion of the CUP request. The CUP regulations allow the City to re-evaluate the permit if issues do arise during the operations of the business. Staff believes the Findings stated in the attached CUP approval letter are valid, and supports the service of beer (and wine) in conjunction with meals at this location, in the manner proposed, with the expectation that such service will not result in negative impacts. Concerns of Neighboring Business Owner Staff has attempted to ascertain the exact nature of the hearing requester’s concern. In Dr. Hadler’s initial email to the City, he notes his objection to the approval because City staff had not responded to his phone or email messages and other reasons. The project planner responsible for the application was out of the office due to illness and was unable to respond to these in a timely manner. Staff is not aware of any attempt by Dr. Hadler to contact anyone else at the City regarding this matter during that time. After receiving Dr. Hadler’s email and letter, staff telephoned him in an attempt to understand what his reasoning was for objecting to the application. This was done in an attempt to possibly address those concerns. During the few phone conversations staff has been able to have with Dr. Hadler, he discussed specific issues such as graffiti on the building, increased traffic, past power failures, and the conversion of space within an adjacent building to office uses. It was still unclear how these other issues specifically relate to the service of beer at the adjacent restaurant. In one phone conversation, Dr. Hadler explained that he believed the service of alcohol would lead to increased incidents of graffiti on the building. Staff does not find there to be a correlation between the service of beer at a restaurant and increased graffiti. Dr. Hadler also indicated concern that if the Police are unable to prevent graffiti on the building now, they would be less likely to be able to address any negative impacts associated with beer service. Per Dr. Hadler’s request, communication has taken place via written letter through traditional mail rather than over the phone or via email. Staff has responded to his letters via fax and US postal service, and is now preparing a response to Dr. Hadler’s most recent letter (Attachment E). Staff has received no written communication from Dr. Hadler, as of the date of the drafting of this staff report, directly explaining the nature of his concern regarding this beer service CUP. Timeline Application submitted: 11/6/13 Application tentatively approved by the Director: 1/9/13 Request for hearing received: 1/18/13 Planning and Transportation Commission hearing: 4/10/13 City of Palo Alto Page 4 City Council consent calendar tentative date: 5/6/13 Environmental Review This application is categorically exempt under the California Environmental Quality Act (CEQA) per CEQA Gudelines Section 15301. Courtesy Copies Dan Torres Pepper Lane-Pender, LLC Alexander Eagle Kenneth Hadler Attachments:  Attachment A: 2305 El Camino Real Freebirds ROLUA (PDF)  Attachment B : Site Location Map (PDF)  Attachment C : Applicant's Project Description Letter (PDF)  Attachment D : Tentative Conditional Use Permit Approval Letter (PDF)  Attachment E: Letter from Dr. Hadler March 21, 2013 (PDF)  Attachment F: Response to Dr. Hadler March 27, 2013 (PDF)  Attachment G: Police Response to Dr. Hadler's PRR (PDF)  Attachment H: Approved Alcohol CUPs 2008-2012 (PDF) 1 DRAFT  APPROVAL NO. 2013‐____  RECORD OF THE COUNCIL OF THE CITY OF PALO ALTO LAND USE  APPROVAL FOR 2305 EL CAMINO REAL: FILE 12PLN‐00454,  CONDITIONAL USE PERMIT FOR THE SERVICE OF ALCOHOL (BEER AND  WINE). (Dan Torres (Freebirds World Burrito), APPLICANT)      The City Council of the City of Palo Alto (“City Council”) finds, determines, and  declares as follows:    SECTION 1.  Background.    A. On January 09, 2013, the Director of Planning and Community Environment  issued a tentative approval of Conditional Use Permit (CUP) application 12PLN‐00454 for the on  sale service of alcohol (beer and wine) at 2305 El Camino Real, Freebirds World Burrito (“The  Project”).    B. On January 18, 2013, Staff received a request for hearing from Mr. Hadler,  an adjacent business owner.     C. On April 10, 2013, the Planning and Transportation Commission reviewed  the Applicant’s request for approval of a CUP to allow the on‐site sale service of alcohol (beer  and wine) at 2305 El Camino Real, Freebirds World Burrito, and recommended approval of the  CUP to the City Council.        SECTION 2. Environmental Review.   The Project is exempt from the provisions of  the California Environmental Quality Act (CEQA) per CEQA Guidelines Section 15301.  The  Freebirds World Burrito restaurant is an existing permitted use within an existing building.    2         SECTION 3. Conditional Use Permit Findings. In accordance with Palo Alto  Municipal Code Section 18.76.010, the City Council makes the following findings:  1. The proposed use, at the proposed location, will not be detrimental or injurious to  property or improvements in the vicinity, and will not be detrimental to the public health,  safety, general welfare, or convenience.  The proposed restaurant use is permitted in the Community Commercial zoning district [CC2].   The alcohol service would be accessory to the restaurant use and there are no sensitive uses in  close proximity that could be impacted by the beer and wine service.  Beer sales are projected  to constitute less than 10% of the restaurant’s business.  With the addition of alcohol service,  the restaurant would remain compatible and contribute to the active commercial district. The  restaurant is located within an existing building, the service of alcohol would be accessory to  the primary restaurant use, and it would be conducted in a manner that would not be injurious  to property or improvements in the vicinity or detrimental to the public health, safety, and  general welfare, or convenience.  The Applicant intends to achieve this by maintaining  responsible serving practices and preventing youth access to alcohol.    2. The proposed use will be located and conducted in a manner in accordance with the  Palo Alto Comprehensive Plan and the purposes of the Zoning Ordinance.  The proposed restaurant and on‐site sale service of alcohol are compatible with the site’s land  use designation of Regional/Community Commercial and with its CC2 zoning designation. The  restaurant and associated uses will serve to enliven the mix of businesses on the block and  contribute to the area’s economic vitality.          3  SECTION 4. Conditions of Approval.    1. The use shall be conducted in substantial conformance with the CUP project plans  received on November 6, 2012 and related documents on file with the City of Palo Alto Planning  Division, except as modified by these conditions of approval.    2. This approval letter, including the Conditions of Approval, shall be printed on the  plans submitted for building permit review, as applicable.    3. The service of alcohol must be associated with a bona fide public eating  establishment or provided in conjunction with the service of food in compliance with the Palo  Alto Municipal Code (PAMC).    4. The approved use permit does not allow live entertainment or amplified music.   5. Alcohol service shall be permitted daily between the hours of 10:30 am and 9:30 pm  only.  6. This CUP allows alcoholic beverage service within the indoor area of the building  only.  No service of alcohol is permitted outside of the building.  The formal approval of the  State of California Department of Alcohol Beverage Control is also required.     7. The operator shall keep the subject property free of litter associated with the  business operation.  8. This use shall comply with all applicable City ordinances, including those set forth in  PAMC, Titles 9 (Public Peace, Morals and Safety) and 15 (Fire Prevention/Uniform Fire Code),  and Titles 4 (Alcoholic Beverage Business Regulations) and 19 (Public Safety) of the State of  California Code of Regulations (aka California Administrative Code).    4 9. The consumption of alcoholic beverages under this use permit shall be deemed an  agreement on the part of the Applicant and his heirs, successors, and assigns to comply with all  terms and conditions of this Conditional Use Permit.  10. Any intensification of use shall require an amendment to the conditional use permit  and any other entitlements as specified in the Palo Alto Municipal Code.    11. Noise levels emanating from the business shall not exceed the maximum level  established in the PAMC Chapter 9.10  12. Revocation or Modification of Approvals: The director may issue a notice of  noncompliance for any failure to comply with any condition of this Conditional Use Permit  approval, or when a use conducted pursuant to a conditional use permit is being conducted in a  manner detrimental to the public health, safety and welfare.  13. All trash, compost, and recycling receptacles must remain within the trash room at  all times, except as necessary to facilitate trash collection.       SECTION 5. Term of Approval.  In the event actual service of alcohol is not  commenced within one year of the effective date of the City Council’s approval of the CUP, the  CUP approval shall expire and be of no further force or effect, pursuant to PAMC Section  18.82.080 and Ordinance 5061.      SECTION 6. Standard Conditions  A.  Except as expressly specified herein, the site plan, floor plans, building elevations  and any additional information or representations, submitted by the Applicant during the Staff  review and public hearing process leading to the approval of this entitlement, whether oral or  written, which indicated the proposed structure or manner of operation, are deemed  conditions of approval.     5 B. The approved use and/or construction are subject to, and shall comply with, all  applicable City ordinances and laws and regulations of other governmental agencies.     C. California Government Code Section 66020 provides that a project applicant who  desires to protest the fees, dedications, reservations, or other exactions imposed on a  development project must initiate the protest at the time the development project is approved  or conditionally approved or within ninety (90) days after the date that fees, dedications,  reservations or exactions are imposed on the Project.  Additionally, procedural requirements  for protesting these development fees, dedications, reservations and exactions are set forth in  Government Code Section 66020. IF YOU FAIL TO INITIATE A PROTEST WITHIN THE 90‐DAY  PERIOD OR FOLLOW THE PROTEST PROCEDURES DESCRIBED IN GOVERNMENT CODE SECTION  66020, YOU WILL BE BARRED FROM CHALLENGING THE VALIDITY OR REASONABLENESS OF THE  FEES, DEDICATIONS, RESERVATIONS, AND EXACTIONS.    D.  This matter is subject to the California Code of Civil Procedures (CCP) Section  1094.5; the time by which judicial review must be sought is governed by CCP Section 1094.6.     E.  To the extent permitted by law, the Applicant shall indemnify and hold harmless  the City, its City Council, its officers, employees and agents (the “indemnified parties”) from and  against any claim, action, or proceeding brought by a third party against the indemnified parties  and the applicant to attack, set aside or void, any permit or approval authorized hereby for the  Project, including (without limitation) reimbursing the City for its actual attorneys’ fees and  costs incurred in defense of the litigation.  The City may, in its sole discretion, elect to defend  any such action with attorneys of its own choice.        6 PASSED:  AYES:  NOES:  ABSENT:  ABSTENTIONS:  ATTEST:      APPROVED:  _________________________                 ____________________________  City Clerk      Director of Planning and          Community Environment    APPROVED AS TO FORM:    ___________________________  Senior Asst. City Attorney      PLANS AND DRAWINGS REFERENCED:  1. Those plans, prepared by Dan Torres titled “Freebirds”, consisting of four (4) pages, dated  May 5, 2012, and received November 6, 2012.    137- 01- 148 137- 01- 149 137- 01- 108 137- 01- 102 124- 3 1 - 0 8 1 124- 33- 020 137- 01- 095 137- 01- 074 124- 33- 019 124- 33- 016 124- 32- 071 124- 33- 022 137- 01- 105 137- 01- 094 137- 01- 093 137- 01- 145 137- 01- 087 124- 32- 019 137- 01- 142 124- 33- 018 124- 32- 043 124- 32- 022 124- 32- 021 124- 32- 035 124- 32- 042 124- 32- 072 Lot C - 5 Park i n g L o t Ban k o f the W e s t Cali f o r n i a S t a t i o n Cou n t r y S u n COL L E G E A V E N U E YA L E S T R E E T CAM B R I D G E A V E N U E CAL I F O R N I A A V E N U E WI L L I A M S S T R E E T EL C A M I N O R E A L EL C A M I N O R E A L EL C A M I N O R E A L NEW M A Y F I E L D L A N E NEW M A Y F I E L D L A N E E L C A M I N O R E A L EL C A M I N O R E A L CAL I F O R N I A A V E N U E CAL I F O R N I A A V E N U E PE R A L L A N E MI M O S A L A N E SE D R O L A N E CAM B R I D G E A V E N U E COL L E G E A V E N U E JAC A R A N D A L A N E E L C A M I N O R E A L This map is a product of the City of Palo Alto GIS This document is a graphic representation only of best available sources. 0'123' 2305 El Camino Real Freebirds World Burrito CITY O F PALO A L TO IN C O R P O R AT E D C ALIFOR NI A P a l o A l t oT h e C i t y o f A P RIL 16 1894 The City of Palo Alto assumes no responsibility for any errors. ©1989 to 2013 City of Palo Alto rreich, 2013-03-21 17:47:36 (\\cc-maps\gis$\gis\admin\Personal\Planning.mdb) City of Palo Alto (ID # 3745) City Council Staff Report Report Type: Consent Calendar Meeting Date: 5/6/2013 City of Palo Alto Page 1 Summary Title: AT&T DAS Appeal - 3704 Carlson Circle Title: Appeal of and Recommendation to Uphold Director’s Architectural Review Approval of the Co-location by AT&T Mobility LLC of One Pole- Mounted Wireless Communication Antenna and Associated Equipment Boxes on the Existing Utility Pole Within the City’s Public Utility Easement on 3704 Carlson Circle. From: City Manager Lead Department: Planning and Community Environment Recommendation Staff recommends that Council approve the Record of Land Use Action (Attachment A), upholding the Director of Planning and Community Environment’s decision to approve the Architectural Review application for the AT&T Distributed Antenna System (DAS) installation within a public utility easement on 3704 Carlson Circle (part of the Phase 3 AT&T DAS project), based upon the findings and conditions of approval described in the Record of Land Use Action. Executive Summary On January 28, 2013, Council approved AT&T’s application for Architectural Review of the Phase 3 DAS project to allow 20 wireless communication facilities (WCFs) collocated on utility poles within City rights-of-way and jointly owned by the City and Pacific Bell Telephone Company dba AT&T of California (City Manager’s Report (CMR) #3435, attachment G). The installations included one antenna placed on a pole extension at the top of each pole, and equipment cabinets placed lower down on the pole (between 10 feet and 20 feet above grade). At that time, one site was excluded (“3706 Carlson Circle”) from the approval to allow additional time for staff, AT&T and the residents to fully understand the issues and explore feasible alternatives for site placement. Staff recommended the exclusion as the project entailed relocation of the pole to the street right-of-way in a neighborhood with no poles at the street (all are located in easements in the side or rear yards). Residents in the neighborhood objected to this aesthetic intrusion at the street, and staff concurred that a further review was warranted. City of Palo Alto Page 2 On March 6, 2013, staff hosted a meeting with AT&T and the appellants of the “3706 Carlson Circle” (the correct address is 3704 Carlson Circle) installation. Several alternatives were explored, but most were discounted as being inaccessible to AT&T or not optimal for the network. Staff suggested placing the equipment on the existing pole in the utility easement rather than moving it to the street, which would be minimally visible, while restricting the noise to the more stringent “residential” standard of the code. One other site on Redwood Circle (also in a side yard easement), however, was considered “technically feasible.” Staff and AT&T explored the placement of the DAS equipment at this location and made the determination that it was not a better location than the proposed Carlson Circle location. On March 28, 2013, the Director’s decision to approve the Carlson Circle placement on the existing pole was issued and the appeal of that decision was filed on April 11, 2013. Staff notes that the owners of the property on which the pole stands did not file the appeal, but they do concur with the appeal and signed the petition. The appellants of this decision had also appealed the original Phase 3 Architectural Review approval. The reasons cited in the recent appeal were concerns regarding the close proximity of the equipment to the existing homes; noise; and that the adjacent neighbors spend the majority of their time at home. Topics such as health, aesthetics, noise, and property value impacts were raised in the Phase 1 through Phase 4 appeals that Council reviewed and approved in 2012 and 2013. Background There are four phases of AT&T’s citywide DAS project, for a total of 75 installations. These four phases are a part of AT&T’s build-out to provide adequate coverage and/or additional capacity for wireless communications. AT&T is subject to a license agreement that allows AT&T to collocate the DAS antennas and equipment on the City’s portion of the utility poles. The Council approved the standard license agreement on July 25, 2011 (CMR #1756). In January 2012, the Council, on appeal, reviewed the Phase 1 DAS project for 20 installations and upheld the Director’s decision to approve the project sites (CMR #2393). At that time, the issues raised by the appellants focused on the need for a wireless master plan for the entire city, and concerns for aesthetic impacts, potential health risks, noise, impacts on property value, type of technology proposed, and the safety and reliability of the actual installations. These issues were discussed in the associated CMR and can be viewed online for additional details. The Council approved all of the applications. On November 5, 2012, the Phase 2 DAS project approval was forwarded to Council for consideration of an appeal filed by resident Tony Kramer, who cited concerns about the City of Palo Alto Page 3 project’s compliance with the City’s Noise Ordinance. The City Council did not remove it from the Consent Calendar and voted to uphold the Director’s decision to approve the 15 project sites (CMR #3239). On January 28, 2013, Phases 3 and 4 were forwarded to Council on appeal. The City Council did not remove these projects from the Consent Calendar and voted to uphold the Director’s decision to approve them (CMR #3435 & #3436). For Phase 3, the approval excluded the “3706 Carlson Circle” installation so staff could work with AT&T and the appellants to study potential alternative placements for the DAS equipment. On March 6, 2013, the Planning Director met with the appellants and AT&T staff to discuss the project and placement. At that meeting, a feasible (technologically) alternative site was identified at 3716 Redwood Circle. This location had similar conditions as Carlson Circle, with the existing utility pole located within a public utility easement (PUE) along the side yard and set back deeper into the property. On March 28, 2013, the Director’s decision to approve the DAS equipment on the existing utility pole located within a PUE on 3704 Carlson Circle was issued. This decision was based upon the fact that the alternative location at 3716 Redwood Circle was not a better solution, aesthetically or otherwise. Within the prescribed timeframe to appeal the decision, an appeal was filed by the same appellants that appealed the earlier Phase 3 decision. Review Process The standard procedure for the review of an appealed Architectural Review application is for placement on the Council Consent Calendar within 30 days of the filing of an appeal. Section 18.76.020(b)(3)(D) of the Zoning Code specifies that wireless communication facilities are considered “minor projects” to be reviewed by staff. Section 18.77.070(b)(5) of the Zoning Code specifically requires consideration by the Council on appeal of a staff approval of such a facility, rather than hearing before the Architectural Review Board (ARB). Council may decide to pull the item off Consent only if at least three Councilmembers concur, and then the project is scheduled for a future public hearing date (PAMC 18.77.070(f)). The Council meeting on June 3, 2013 has been targeted for this public hearing, if Council votes to conduct a hearing. Project Description The proposed project includes the installation of an 8’-6” pole extension above the existing 33’- 6” tall utility pole and equipment cabinets approximately 10 feet above grade. The equipment proposed on the pole face is the same for all the poles and is comprised of (1) a power disconnect box located nine feet above grade; (2) a remote prism cabinet (52.4”H x 12.15”W x City of Palo Alto Page 4 Figure 1: Proposed Location 10.125”D) located approximately 11’-0” above grade; (3) a back-up battery cabinet (27”H x 22”W x 18”D) located approximately 15’-11” above grade; (4) an optical network interface box (13”H x 13”W x 3.75”D) located approximately 19’ above grade; and (5) related wiring. At the top of the pole extension, one antenna radome (24”H x 16” Base Diameter) would be placed in- line with the pole. The proposed location has an existing private tree that would provide screening for the equipment boxes, as shown in Figure 1. Discussion The approval decision for this installation was appealed by Roger Petersen (3719 Carlson Circle) and John Hamburger (3700 Carlson Circle). The appellants indicate they represent 22 concerned neighbors, as evidenced in a signed petition included as Attachment C. The appeal submitted by Mr. Petersen in January 2013 included the same signed petition submitted in April 2013. This DAS installation was one of the two proposed pole relocations in Phase 3 that would move the existing utility pole approximately 22 feet away from the current location, which is approximately four feet away from the garage at 3704 Carlson Circle, out toward the street. The concern Mr. Petersen cited in his original appeal is that relocation of the utility pole out onto the street would be unattractive, since there currently are no utility poles located along Carlson Circle. The City’s direction to AT&T has been to avoid location of antennas and equipment on poles in PUEs, given their proximity to homes and potential visual and noise concerns. This street, however, does not have existing utility poles on the street and the residents identified some alternatives (including in PUEs) that staff and AT&T evaluated. In the effort to come up with a compromise, the recent approval of the Carlson Circle installation did not require the utility pole to be relocated to the sidewalk, and in so doing, the existing street character would be maintained. An existing tree also provides screening of the equipment from the two adjacent homes. City of Palo Alto Page 5 The newly submitted appeal from Messrs. Petersen and Hamburger raise the following three points:  “The 3706 Carlson Circle location is less than 6 feet from each of (the) two homes on our circle. This couldn’t be what the Architectural Review Board has in mind.”  “The equipment would tower over the patio and family room of a well-respected, longtime Palo Alto couple who spend the majority of their time at home.”  “The Carlson location is a quiet cul-de-sac with no through traffic, and minimal ambient noise.” Health Impacts and Property Value The Federal Telecommunications Act (TCA) of 1996 limits the City’s authority in the review of wireless telecommunications projects. The City may only focus on the aesthetic and zoning code aspects of a project and, by law, may not consider potential health issues and any perceived related consequences (e.g. drop in property value). Under federal law, a local agency’s wireless facility siting decisions may not have the effect of prohibiting the provision of wireless service or unreasonably discriminating among wireless service providers. Further, a utility is required to provide any telecommunications carrier with nondiscriminatory access to its utility poles. Under federal law, the City may not regulate the placement, construction or modification of wireless communications facilities on the basis of the environmental effects of radio frequency (RF) emissions, so long as the facilities comply with the Federal Communications Commission (FCC) regulations concerning such emissions. Staff additionally has seen no information that indicates an identifiable loss of property value from such installations. Noise This project is required to meet the residential noise standards, as outlined in PAMC Section 9.10.030, and cannot exceed six dB above the local ambient (40 dBA minimum) at the property plane. This standard differs from other project approvals, since it is located in a PUE on private property, rather than in the public right-of-way. To further address and monitor the noise concern, staff has included the following Conditions of Approval:  The applicant shall submit a sound analysis of an operating installation within two months of the project installation/operation. The analysis shall clearly delineate how the installation complies with the previously listed condition regarding noise. Applicant may be required to submit these reports periodically for the life of the project, as determined by the Director of Planning. Aesthetics City of Palo Alto Page 6 The Carlson Circle installation follows the same design concepts that were reviewed by the ARB and approved by the City Council in January 2012. A fairly large tree is located between the two homes and should provide significant screening for the equipment. The pole and equipment is not adjacent to primary living or bedroom areas of the homes, but is adjacent to a carport and a patio. Staff believes that relocation to the Redwood Circle site would have at least similar aesthetic impacts and would not be preferable to the approved location. In addition, the location is just as likely to encounter similar levels of neighborhood opposition. Policy Implications The proposed project is consistent with the Comprehensive Plan and staff believes there are no other substantive policy implications. The project is supported by the following Comprehensive Plan Policies: (B-13) Support the development of technologically-advanced communications infrastructure and other improvements that will facilitate the growth of emerging telecommunications industries; and (B-14) Work with electronic information network providers to maximize potential benefits for Palo Alto businesses, schools, residences, and other potential users. Resource Impacts The costs of project review by all staff and consultants is recovered by Architectural Review application fees paid by AT&T. Pursuant to the City’s standard license agreement, AT&T will pay the City $270 per year per installation. Environmental Review The project is categorically exempt from the provisions of the California Environmental Quality Act (CEQA) per section 15303 of the CEQA Guidelines. Attachments:  : Attachment A: Record of Land Use Action (DOC)  : Attachment B: Location Map (PDF)  : Attachment C: Petersen Appeals (PDF)  : Attachment D: Comment Letters (PDF)  : Attachment E: Architectural Review Approval Letter, March 28, 2013 (PDF)  : Attachment F: Applicant's Submittal Information (PDF)  : Attachment G: City Council Report #3435 Appeal of AT&T DAS Phase 3 without Attachments (PDF)  : Attachment H: Project Plans (Councilmembers and Libraries only) (PDF) 1 DRAFT ACTION NO. 2013-05 RECORD OF THE COUNCIL OF THE CITY OF PALO ALTO LAND USE ACTION FOR AT&T DAS PROJECT LOCATED AT 3704 CARLSON CIRCLE (PART OF PHASE 3): ARCHITECTURAL REVIEW 12PLN-00127 (AT&T, APPLICANT) On May 6, 2013, the Council upheld the Director of Planning and Community Environment’s March 28, 2013 decision to approve the Architectural Review of the co-location by AT&T of (Distributed Antenna System, a.k.a. DAS) wireless communications equipment on an existing utility pole on 3704 Carlson Circle making the following findings, determination and declarations: SECTION 1. Background. The City Council of the City of Palo Alto (“City Council”) finds, determines, and declares as follows: A. On January 28, 2013, the City Council approved AT&T’s Architectural Review application for the co-location of wireless communications equipment (Distributed Antenna System) on 19 utility poles located within City rights-of-ways near the following locations excluding the installation at 3704 Carlson Circle requiring the pole relocation to the back of sidewalk. Staff would continue to work with AT&T and the appellants to determine the most appropriate placement of the DAS equipment. The action is contained in the CMR #3435. B. On March 28, 2013, following staff review, the Director of Planning and Community Environment (Director) approved the DAS equipment location on the existing utility pole (relocation not required) located within the public utility easement on 3704 Carlson Circle, amending the Architectural Review (AR) application for Phase 3. Notices of the Director’s decision were mailed notifying neighbors of the decision. The action is contained in the CMR #3745. D. Within the prescribed timeframe, one appeal of the Director’s decision was filed by Palo Alto residents Petersen and Hamburger. SECTION 2. Environmental Review. This project is exempt from the provisions of the California Environmental Quality Act per Section 15303 of the CEQA Guidelines. SECTION 3. Architectural Review Findings. 1. The design is consistent and compatible with applicable elements of the Palo Alto Comprehensive Plan. This finding can be made in the affirmative in that the project, as conditioned, incorporates a more streamlined design that conforms with policies that encourage quality development that is compatible with Attachment A 2 surrounding development and public spaces. The project is also supported by the following Comprehensive Plan Policies: (B-13) Support the development of technologically-advanced communications infrastructure and other improvements that will facilitate the growth of emerging telecommunications industries; (B-14) Work with electronic information network providers to maximize potential benefits for Palo Alto businesses, schools, residences, and other potential users. 2. The design is compatible with the immediate environment of the site. This finding can be made in the affirmative in that the proposed design, as conditioned, blends with the existing utility poles that are located within various residential neighborhoods within the City. 3. The design is appropriate to the function of the project. This finding can be made in the affirmative in that the design of the equipment is not excessive for the intended utility use and has been improved with the required conditions of approval to streamline the design with the back-up battery cabinet placed above the prism and elimination of one antenna. 4. In areas considered by the board as having a unified design character or historical character, the design is compatible with such character. This finding is not applicable to this project. 5. The design promotes harmonious transitions in scale and character in areas between different designated land uses. This finding is not applicable to this project. 6. The design is compatible with approved improvements both on and off the site. This finding can be made in the affirmative in that the project, as conditioned, is compatible with the existing utility poles. 7. The planning and siting of the various functions and buildings on the site create an internal sense of order and provide a desirable environment for occupants, visitors and the general community. This finding is not applicable to this project. 8. The amount and arrangement of open space are appropriate to the design and the function of the structures. This finding is not applicable to this project. 9. Sufficient ancillary functions are provided to support the main functions of the project and the same are compatible with the project’s design concept. This finding is not applicable to this project. 3 10. Access to the property and circulation thereon are safe and convenient for pedestrians, cyclists and vehicles. This finding can be made in the affirmative in that the circulation under and around the utility pole is not impacted. 11. Natural features are appropriately preserved and integrated with the project. This finding is not applicable to this project. 12. The materials, textures, colors and details of construction and plant material are appropriate expression to the design and function. This finding can be made in the affirmative, see Findings 2, 3, and 4 above. 13. The landscape design concept for the site, as shown by the relationship of plant masses, open space, scale, plant forms and foliage textures and colors create a desirable and functional environment. This finding can be made in the affirmative in that the Phase 3 DAS project, as conditioned, will be required to plant some additional street trees at some locations. The placement and selection of the street trees will be reviewed and approved by Public Works and Utilities to assure the plantings will be consistent with City standards. 14. Plant material is suitable and adaptable to the site, capable of being properly maintained on the site, and is of a variety which would tend to be drought-resistant to reduce consumption of water in its installation and maintenance. This finding can be made in the affirmative, see Finding 13. All City street trees are regularly maintained and will use only the required amount of water needed for establishment and maintenance. 15. The project exhibits green building and sustainable design that is energy efficient, water conserving, durable and nontoxic, with high-quality spaces and high recycled content materials. This finding is not applicable to this project. The scope of the project is small and there is limited opportunity to incorporate green building design into the sign installations. 16. The design is consistent and compatible with the purpose of architectural review as set forth in subsection 18.76.020(a). This finding can be made in the affirmative in that the project design, as conditioned, promotes visual environments that are integrated into the aesthetics of the immediate environment of an industrial utility facility. 4 SECTION 4. Architectural Review Approval Granted. Architectural Review Approval is hereby granted for the Project by the City Council pursuant to Chapter 18.77 of the Palo Alto Municipal Code. SECTION 5. Plan Approval. The plans submitted for Building Permit shall be in substantial conformance with those plans prepared by AT&T titled Palo Alto ODAS – 3706 Carlson Circle, consisting of 3 pages, and received April 29, 2013, except as modified to incorporate the conditions of approval in Section 6. A copy of these plans is on file in the Department of Planning and Community Development. SECTION 6. Conditions of Approval. Planning Division 1. The project shall be in substantial conformance with the approved plans and related documents received April 29, 2013, except as modified to incorporate these conditions of approval. 2. All conditions of approval shall be printed on the cover sheet of the plan set submitted to obtain any permit through the Building Inspection Division. 3. All conditions of approval associated with the AT&T Phase 3 approval (RLUA 2013-03)are applicable to this project, except as modified to incorporate these conditions of approval 4. Any modifications/additions to the approved plans shall be approved by Planning prior to construction and installation. 5. The project approval shall be valid for a period of one year from the original date of approval. In the event a building permit(s), if applicable, is not secured for the project within the time limit specified above, the approval shall expire and be of no further force or effect. 6. For all pole installations, the backup battery cabinet shall be placed above the prism box. 7. For the life of the project, the size of the battery cabinet shall be reduced as technology improves so as to maintain the smallest battery cabinet needed. 8. The antenna, cabinet boxes, and pole extension shall be painted either “Rock Brown” or “Sand Brown”, with a matte finish, to match the existing color and finish of the utility 5 pole, and all other equipment (i.e. wiring and related hardware) shall be painted with a matte finish to blend in with the background material/color of the pole. 9. The project shall be reviewed by the Utilities Department to determine if the pole is feasible for the placement of the proposed equipment and antennas. If the Utilities department does not support the placement of the equipment on the pole, the applicant shall submit a new Architectural Review application to the Planning Division for review of proposed alternative pole selection. 10. For sites that require new street tree installations, the applicant shall coordinate with the Public Works Tree Division, Utilities Department, and Transportation Division to gain approval for the placement and selection of tree type. If the City departments do not support the placement of a city tree for screening purposes for the identified locations, then that site is no longer approved for the equipment installation and the applicant shall be required to submit a new Architectural Review application to the Planning Division for review of proposed alternative pole selection. 11. The applicant, in coordination with City departments, shall (1) analyze all proposed sites to determine whether new street trees can be added in the immediate vicinity for screening purposes and (2) add additional trees where feasible. 12. The preferred selection for new street trees shall be evergreen trees, as deemed appropriate by Public Works and the Utilities department. 13. Unless the City agrees to a modification of this condition, the requirements to install new street trees shall be 100% the responsibility of the applicant and shall be completed prior to the installation of pole equipment. 14. Pole 12/Node P2N13A (3704 Carlson Circle) installation shall be installed on the existing utility pole located within the public utility easement. This installation shall have the equipment boxes facing toward the street; and shall not exceed the residential noise standards as specified in PAMC 9.10.030 of 6dB above the ambient noise level, measured at the property line. 15. For installations in the City right-of-way, the Applicant shall endeavor to minimize the noise at the property line boundary with adjacent residential property, and shall attempt to keep such noise below 6dB above the ambient level 6 most of the time, when fans are running at their normal setting. If such a standard is not reasonably achievable for a site, then the Applicant voluntarily agrees to use commercially reasonable efforts to ensure that the noise level does not exceed 6 dB above the ambient noise level at the nearest location of a residential structure. Under no circumstances shall the noise exceed the noise standard in Municipal Code 9.10.050 (i.e., +15dB over ambient at 25 feet). 16. The applicant shall submit a sound analysis of an operating installation within two months of the project installation/operation. The analysis shall clearly delineate how the installation complies with the previously listed condition regarding noise. Applicant may be required to submit these reports periodically for the life of the project, as determined by the Director of Planning. 17. The applicant shall perform a radio frequency (RF) analysis for each of the twenty installations to document the RF emissions for the installed and operating equipment. This analysis shall be submitted to the City within two months of the project installation/operation. Applicant may be required to submit these reports periodically for the life of the project, as determined by the Director of Planning. 18. If for any reason the project requires modification from the approved plans in any way, the applicant shall contact Planning staff for a determination on whether the change requires a new application for Architectural Review and Historic Review, if applicable, to be submitted. 19. All cost recoverable charges related to this Planning entitlement process, per the cost recovery agreement, shall be paid in full and in a timely manner; these include charges for two consultants hired for peer review of this project. Non-payment may result in the withholding of other city required permits and or approvals required for the project to move forward to the construction phase. Fire Department 20. The applicant shall submit a completed copy the document entitled “Optional Checklist for Local Government to Determine Whether a Facility is Categorically Excluded.” If the applicant is required to submit an Environmental Assessment (EA) to the FCC, please indicate if it has been submitted and the date submitted. Electric Utility 7 21. Electric Utility shall not perform any operations and/or engineering until a Master License Agreement is signed between AT&T and the City of Palo Alto. AT&T shall not attach any equipment on the City's portion of any utility pole until the Master License Agreement is signed by both parties. The Master License Agreement will determine the procedures, policies, fees and responsibilities for DAS work on joint utility poles. SECTION 7. Indemnity. To the extent permitted by law, the Applicant shall indemnify and hold harmless the City, its City Council, its officers, employees and agents (the “indemnified parties”)from and against any claim, action, or proceeding brought by a third party against the indemnified parties and the applicant to attack, set aside or void, any permit or approval authorized hereby for the Project, including (without limitation) reimbursing the City its actual attorneys fees and costs incurred in defense of the litigation. The City may, in its sole discretion, elect to defend any such action with attorneys of its own choice. SECTION 8. Term of Approval. Architectural Review Approval. The approval shall be valid for one year from the original date of approval, pursuant to Palo Alto Municipal Code Section 18.77.090. PASSED: AYES: NOES: ABSENT: ABSTENTIONS: ATTEST: APPROVED: _________________________ ____________________________ City Clerk Director of Planning and Community Environment APPROVED AS TO FORM: ___________________________ Senior Asst. City Attorney 8 PLANS AND DRAWINGS REFERENCED: Those plans prepared by AT&T titled Palo Alto ODAS – 3706 Carlson Circle, consisting of 3 pages, and received April 29, 2013. Phase 3 - Palo Alto oDAS kj kj kj kj kj kj kj kj kj kj kj kj kj kj kj kj kj kj kj kj N25A N38A P2N7A P2N6A P2N52AP2N51A P2N36A P2N34B P2N33A P2N32A P2N31A P2N28A P2N27A P2N24A P2N21A P2N20AP2N15B P2N13A P2N11A P2N10B AL M A MID DLEFIEL D E L C A M I N O R E A L PAGE MILL EMBARCADERO C H A R LE S T O N O R E G O N FOOTHILL C H U R C HILL J U NIP E R O S E R R A S A N D HIL L PALMARBORETUM RENGSTORFF G A L V E Z EL CAMINO REAL £¤101 Legend kj N25A, 1772 Hamilton Ave kj N38A, 109 Lois Ln kj P2N10B, 3524 Waverly St kj P2N11A, 747 Loma Verde Ave kj P2N13A, 3706 Carlson Cir kj P2N15B, 3284 Cowper St kj P2N20A, 3412 Ross Rd/3374 Ross Rd kj P2N21A, 3132 David Ave kj P2N24A, 3415 Greer Rd kj P2N27A, 3757 Corina Way kj P2N28A, 3915 Louis Rd kj P2N31A, 631 E Meadow Dr kj P2N32A, 3901 Middlefield Rd kj P2N33A, 3539 Louis Rd kj P2N34B, 412 Ferne Ave kj P2N36A, 3945 Nelson Dr kj P2N51A, 2385 Waverly St kj P2N52A, 3094 Greer Rd kj P2N6A, 390 El Dorado kj P2N7A, 452 Loma Verde Ave ³ AT&T Proprietary (Internal Use Only)Not for use or disclosure outside the AT&T companies except under written agreement.Telco proprietary data is not to be disclosed to siloed employees. From: Thomas A. Vician <tvician@sbcglobal.net> Sent: Saturday, April 13, 2013 2:52 PM To: Campbell, Clare Cc: 'Ashwinee Khaladkar on Nextdoor' Subject: AT&T DAS on Carlson Circle Clare, I am strongly opposed to placing the AT&T DAS on the pole between 3716 and 3718 Redwood Circle. I strongly support placing the DAS on the proposed site on Carlson Circle. I support the original location on the basis that the AT&T engineers chose it as the most appropriate location for sending a strong wireless signal to the geographic area relevant to the placement of their other DAS installations. I am prepared to address the City Council on Monday night if the issue is being decided then. Please, inform me of the next step in this process. Best wishes, Thomas A. Vician, Ph.D. 3718 Redwood Circle From: Bhushan Khaladkar [mailto:bhushan@gmail.com] Sent: Wednesday, April 17, 2013 10:43 PM To: Ashwinee Khaladkar Cc: Campbell, Clare Subject: Re: AT&T DAS location Dear Ms. Campbell, My name is Bhushan Khaladkar, resident of 3716 Redwood Circle. I wanted to submit my comments about the location of the AT&T DAS antenna. 1. The characteristics of Redwood Circle are identical to Carlson circle, so changing would not have any additional benefits. 2. We already receive good AT&T coverage at our location so there will no benefit by putting the Antenna at the Redwood circle location. 3. We already have 2 electric utility poles on our property which are a huge eye sore, adding another pole will significantly impact our property appeal and will put disproportionate burden of the poles on our property. 4. We are also greatly concerned about the noise and EMF signals and its impact on children, especially given that we have small children. Given these considerations, we are strongly against putting the AT&T DAS antenna at the Redwood circle location and hopefully would consider more appropriate locations like Charleston which would be more useful to the community. Thanking you, Bhushan Khaladkar, 3716 Redwood Circle, Palo Alto. MACKENZIE & ALBRITTON LLP 220 SANSOME STREET, 14TH FLOOR SAN FRANCISCO, CALIFORNIA 94104 TELEPHONE 415 / 288-4000 FACSIMILE 415 / 288-4010 April 30, 2013 VIA ELECTRONIC MAIL Mayor Gregory Scharff Vice Mayor Nancy Shepherd Council Members Patrick Burt, Marc Berman, Karen Holman, Larry Klein, Gail Price, Greg Schmid and Liz Kniss City Council City of Palo Alto 250 Hamilton Avenue Palo Alto, California 94301 Re: AT&T’s Response to Appeals of AT&T DAS Project Phase III, 3706 Carlson Circle City Council Consent Calendar May 6, 2013 Dear Mayor Scharff, Vice Mayor Shepherd and Council Members: We write to you on behalf of our client AT&T Mobility (“AT&T”) to urge that you uphold the well-reasoned decision of the Planning Division to approve the AT&T distributed antenna system (“DAS”) node at 3706 Carlson Circle (the “Approval”). The Approval represents the last node of 75 AT&T DAS nodes approved in Palo Alto in four phases over the last two years. The appeal of Roger Petersen and John Hamburger (the “Appellants”) seeks to re-open unsupported aesthetic concerns regarding design and site placement that have been thoroughly reviewed by both AT&T and the City. The appeal simply raises no new concerns that justify removing the Approval from the Council’s May 6, 2013, consent calendar. The Approval represents years of exhaustive analysis by Planning Division staff, Utilities Department staff, the City arborist, the City’s outside consultants, the Architectural Review Board (the “ARB”) and the Council of both the design and the site locations of the AT&T DAS project. Notwithstanding this careful analysis, staff withdrew the 3706 Carlson Circle facility from its December 18, 2012 Phase III approval to allow further review of Appellants’ aesthetic concerns. After months of reevaluation that included meeting with Appellants and a review of numerous alternatives, staff re-issued the Approval on March 28, 2013 which places the facility on the existing utility pole at 3706 Carlson Circle. In sum, Staff’s findings in support of the Approval are well-reasoned, Palo Alto City Council April 30, 2013 Page 2 of 3 supported by substantial evidence and represent years of analysis and re-analysis. In addition, both state and federal law compel the City to affirm the Approval. I. The Thoughtful Design and Careful Placement of AT&T DAS Node Facilities on Existing Utility Poles Create No Aesthetic Impacts. Since early 2010, AT&T has worked with the City of Palo Alto to design and locate its DAS nodes to minimize aesthetic impacts on the Palo Alto community while providing needed wireless service. Based upon ARB review, the aesthetic profile of AT&T’s DAS nodes has been nearly eliminated by streamlining antennas to a single pole-top attachment, raising battery boxes above a narrow radio cabinet, and rotating all equipment toward the street and away from residential views. The benefits of this streamlined design and site placement are well-demonstrated in the approved node at 3706 Carlson Circle that is now being appealed. As shown in the attached photosimulation, the approved node only minimally increases the profile of the existing utility pole. Closely following rigorous location guidelines established by the ARB, AT&T conducted an Alternative Aesthetics Fielding Analysis evaluating and initial five existing utility poles to identify the Carlson Circle location. This included consideration of block placement to identify locations away from street corners in order to minimize public views and in-between property lines to avoid impacts on individual views, as well as identifying poles where existing foliage would best camouflage DAS equipment. AT&T’s aesthetic review was re-analyzed and adjusted by Planning Division staff and again over the last month through meetings with AT&T, Appellants and Planning Division staff. This extensive review has confirmed that the final pole location represents the least aesthetic impacts to individuals and the community to be served. In sum, the design and pole selection guidelines have been thoroughly reviewed by the Planning Division staff, the ARB and the Council. Further, the 3706 Carlson Circle node has been twice reviewed and compared to identified alternatives by the City’s Director of Planning and Community Environment following consultation with Appellants and does not require further public hearings or review. II. The Appeal Does Not Warrant Further Council Review. In their appeal, Appellants argue that AT&T has failed to fully evaluate alternatives to the 3706 Carlson Circle node and that inadequate time has been devoted to reviewing alternatives. In reality, and as confirmed by Appellants in their appeal, AT&T and Planning Division staff have devoted over a year to evaluating alternatives to the Carlson Circle node, and in particular have identified and evaluated those nodes that Appellants claim need further evaluation. Over the last month, AT&T has worked with City staff, including meeting with the Appellants, to re-review and reevaluate at least seven alternatives, including those identified by Appellants. The result of this reevaluation, which included all alternatives identified by Appellants, is the Approval which appears on Palo Alto City Council April 30, 2013 Page 3 of 3 the May 6, 2013 consent calendar. Under the Approval, the existing utility pole at 3706 Carlson Circle will be used, which addresses the concern regarding the aesthetic impact of relocating the utility pole to the street. Appellants’ claims that alternatives have not been thoroughly evaluated or that adequate time has not been devoted to evaluating alternatives are simply unfounded.1 III. Federal Law Compels Council Affirmation of the Approval. AT&T has worked diligently with the City of Palo Alto over the last three years to identify the least intrusive means to provide wireless service to an identified significant gap in coverage. This effort has resulted in the approval of 75 AT&T DAS nodes including this final component of all four phases of the DAS network. Failure to affirm the Approval would run afoul of limitations under the Telecommunications Act which preempt any local decision that would effectively prohibit the provision of personal wireless services or that would unreasonably delay approvals for such service.2 For these reasons, federal law compels Council affirmation of the Approval on May 6, 2013. Conclusion The Approval that appears on the May 6, 2013, Council consent calendar represents the culmination of years of design and aesthetic review, including a second look by Planning Division staff earlier this year. That process has resulted in the ideal facility design and locations to best serve the Palo Alto community with the least impacts upon residents. The City Council should not permit the narrow, unfounded concerns of a few individuals to further delay this well-designed project, which represents the extensive efforts of both the City and AT&T. We encourage you to affirm the Approval as part of the Council’s consent calendar without further hearing. Very truly yours, Paul B. Albritton cc: Curtis Williams Cara Silver, Esq. Attachment 1 Appellants’ claims of the adverse impacts of the node on their homes is also in error. As demonstrated by submittals provided by AT&T, the existing utility pole where the DAS node is to be located is over 25 feet from exterior walls of adjacent homes. 2 See 47 U.S.C. §332 et seq. MACKENZIE & ALBRITTON LLP 220 SANSOME STREET, 14TH FLOOR SAN FRANCISCO, CALIFORNIA 94104 TELEPHONE 415 / 288-4000 FACSIMILE 415 / 288-4010 January 23, 2013 VIA ELECTRONIC MAIL Mayor Gregory Scharff Vice Mayor Nancy Shepherd Council Members Patrick Burt, Marc Berman, Karen Holman, Larry Klein, Gail Price, Greg Schmid and Liz Kniss City Council City of Palo Alto 250 Hamilton Avenue Palo Alto, California 94301 Re: AT&T’s Response to Appeals of AT&T DAS Project Phase III, 12PLN-00127 Architectural Review Phase IV, 12PLN-00258 Architectural Review City Council Consent Calendar January 28, 2013 Dear Mayor Scharff, Vice Mayor Shepherd and Council Members: We write to you on behalf of our client AT&T Mobility (“AT&T”) to urge that you adopt the findings and decision of the Planning Division to approve AT&T’s distributed antenna system (“DAS”) Phase III and Phase IV (the “Approvals”). Staff’s findings in support of the Approvals are well-reasoned, supported by substantial evidence and represent years of exhaustive review by Planning Division staff, Utilities Department staff, the City arborist, the City’s outside consultants, the Architectural Review Board (the “ARB”) and the Council. In addition, both state and federal law compel the City to affirm the Approvals. There is no reason to remove the Approvals from the Council’s January 28, 2013, consent calendar. As described below, all but one of the appeals are filed by residents whose homes are next to existing poles. These appeals simply seek to re-open unsupported aesthetic, noise, health or property value concerns, while the remaining appeal challenges the City’s implementation of its noise regulations with arguments that were rejected by the Council in its approval of Phase II of the AT&T DAS project. The concerns raised in all of the appeals have been thoroughly reviewed and previously addressed by the ARB and the Council and are not worthy of further review, as follows. Palo Alto City Council January 23, 2013 Page 2 of 2 I. The Thoughtful Design and Careful Placement of AT&T DAS Node Facilities on Existing Utility Poles Create No Aesthetic Impacts. Since early 2010, AT&T has worked with the City of Palo Alto to arrive at an aesthetically acceptable design and pole site selection process that will minimize aesthetic impacts on the Palo Alto community while providing needed wireless service. Based upon ARB review, the aesthetic profile of AT&T’s DAS nodes has been nearly eliminated by streamlining antennas to a single pole-top attachment, raising battery boxes above a narrow radio cabinet, and rotating all equipment toward the street and away from residential views. Closely following rigorous location guidelines established by the ARB, AT&T conducted a rigorous Alternative Aesthetics Fielding Analysis evaluating 150 existing utility poles to identify the 38 approved pole locations in Phase III and Phase IV, which represents the fewest poles feasible to provide necessary wireless coverage. Block placement was evaluated to identify locations away from street corners in order to minimize public views and in-between property lines to avoid impacts on individual views. Poles were also selected to maximize the benefit of existing foliage to camouflage DAS equipment. AT&T’s aesthetic review was re-analyzed and adjusted by Planning Division staff and again by the City’s independent consultant to arrive at final pole locations with the least aesthetic impacts to individuals and the community to be served. In sum, the design, pole selection guidelines and final pole selection have been thoroughly reviewed by the Planning Division staff, its independent consultants, the ARB and the Council and do not require further public hearings for review. II. Presently Operating DAS Nodes Confirm Compliance with Noise Ordinance. Notwithstanding repetitious appeals, there is simply no question that the AT&T DAS project complies with Palo Alto Municipal Code §9.10 (the “Noise Ordinance”). Just two months ago, in November 2012, the Council, following the recommendation of Planning Division staff and the City Attorney, completely rejected a similar appeal based upon a tortured interpretation of the Noise Ordinance. As part of its obligations under the Phase I approval, and submittal requirements for its Phase II approval, AT&T has provided the City with a post-installation noise analysis by independent consultants Hammett & Edison, Inc., Consulting Engineers. This report, which was included in the Council’s approval of Phase II of the AT&T DAS project, measured the sound from an operating AT&T DAS facility in Palo Alto and confirmed that AT&T’s Palo Alto DAS design fully complies with the Noise Ordinance. Based upon this information and the prior decisions of the Council, further appeals raising noise concerns are simply frivolous and do not warrant any further hearings. III. Health Concerns and, by Extension, Property Value Concerns Are Unfounded, Preempted by Federal Law and May Not Be the Basis of Further Hearings. The Telecommunications Act of 1996 bars local jurisdictions from denying an application for a wireless telecommunications facility based on the environmental effects of Palo Alto City Council January 23, 2013 Page 3 of 3 radio frequency emissions1 where, as here, AT&T has demonstrated full compliance with Federal Communications Commission (“FCC”) emissions guidelines. The statements submitted by Hammett & Edison, Inc., Consulting Engineers, confirm that all of the AT&T DAS facilities will operate well within, and indeed far below, applicable public exposure limits allowed under FCC guidelines. The federal preemption of radio frequency emissions issues applies whether local decisions are directly based on emissions or indirectly based on a proxy such as property values. Thus, “concern over the decrease in property values may not be considered as substantial evidence if the fear of property value depreciation is based on concern over the health effects caused by RF emissions.” AT&T Wireless Services of California LLC v. City of Carlsbad, 308 F.Supp.2d 1148, 1159 (S.D. Cal. 2003). IV. Federal and State Law Compel Council Affirmation of the Approvals. AT&T has worked diligently with the City of Palo Alto over the last three years to identify the least intrusive means to provide wireless service to an identified significant gap in coverage. This effort has resulted in the Approvals that appear on the January 28, 2013 Council consent calendar. Failure to affirm the Approvals on that date would run afoul of limitations under the Telecommunications Act which preempt any local decision that would effectively prohibit the provision of personal wireless services or that would unreasonably delay approvals for such service.2 Similarly, the Council may not act in a manner that would deny AT&T the right to place its facilities in the public rights-of-way under the statewide franchise granted to AT&T under California Public Utilities Code.3 For these reasons, both state and federal law compel Council affirmation of the Approvals on January 28, 2013. Conclusion The Phase III and Phase IV AT&T DAS Approvals that appear on the January 28, 2013 Council consent calendar represent years of design and aesthetic review to arrive at the ideal facility design and locations to best serve the Palo Alto community with the least impacts upon residents. The City Council should not permit the narrow, unfounded concerns of a few individuals to further delay this well-designed project, which represents the extensive efforts of both the City and AT&T. We encourage you to affirm the Approvals as part of the Council’s consent calendar without further hearing. Very truly yours, Paul B. Albritton cc: Curtis Williams Cara Silver, Esq. 1 47 U.S.C. §332(c)(7)(B)(iv). 2 See 47 U.S.C. §332 et seq. 3 See California Public Utilities Code §7901 et seq. New Cingular Wireless PCS, LLC Application for Development Review Permit Outside Distributed Antenna System (DAS) City of Palo Alto March 23, 2012 3 Project Description AT&T is interested in deploying an outside “distributed antenna system” (DAS) to bolster voice and data capacity in areas of the City of Palo Alto. DAS is comprised of a network of small, low power antennas, usually placed on poles, which are connected to common radio equipment within a limited geographic area. This system would fill coverage and capacity gaps within areas of the City that are experiencing high density demand for mobile wireless services. The DAS proposed by AT&T would support the development of technologically advanced communications infrastructure that will facilitate the growth of emerging wireless telecommunications industries in the City of Palo Alto. In addition, residents as well as public safety are increasingly reliant on mobile devices. Data suggests as much as 70% of all mobile calls are made inside buildings and 50% of all calls to 911 are made on mobile devices.1 The Police Department reminds residents to know where their phones are to help report crimes. Also, in the event of disasters, first responders and affected residents rely on their cell phones. The DAS system thus will help improve service coverage and reliability and thus help enhance public safety efforts within the City. AT&T’s DAS technology is capable of serving multiple carriers with very minimal equipment installation. It is AT&T’s intent that its DAS will not only meet the existing demand but also provide the infrastructure for deployment of future 4G demands. 1 National Emergency Numbers Association - “It is estimated that of the 240+ million calls that were made to 9-1-1 in 2006, at least 100 million of them were made by wireless telephone users—that’s 50 percent. This is a huge increase from nearly 4.3 million wireless 9-1-1 calls just 10 years ago, and it is anticipated that the number will continue to rise, both due to cellular and IP-based WiFi and WiMAX forms of wireless service.” 4 Scope of Work This application is for a Development Review Permit and is being proposed for the construction of the 20 of approximately 80 DAS nodes on existing utility poles within the City of Palo Alto. The initial and 2nd group applications of 35 nodes has already been submitted to the City. This 3rd group of nodes will provide wireless service in the area of southeastern Palo Alto west of Oregon Expressway and east of El Camino. The exact locations of the 20 proposed nodes are depicted on exhibit of this application. The remaining node locations will be applied for on separate applications to address the remaining coverage needs within the City of Palo Alto. Under Section 1.1307(b)(1) of the Federal Communication Commission’s rules; the proposed low powered wireless facilities are “categorically excluded” as they are fully compliant with FCC requirements for limiting human exposure to radio frequency (RF) energy and are identified as unlikely to cause exposure in excess of the FCC’s guidelines. Please see the attached Federal Communications Commission – Local and State Government Advisory Committee Checklist. The facility also will comply with California Public Utility Commission General Orders - 95 and 170. AT&T intends to utilize its existing infrastructure within the City to minimize the impact of deploying DAS on residents of the City of Palo Alto. The DAS system will primarily use existing underground fiber to connect the DAS nodes to the DAS radio equipment hub which is located inside the local AT&T central switching office. 5 AT&T Mobility will purchase local fiber transport from AT&T California. If AT&T California does not have fiber to any node location, it will be necessary to place new fiber and in a few instances new conduit. In these instances, new conduit will be necessary only from the nearest manhole or pole to the node; generally, this should be between 50 to 250 feet. If fiber or power is not already located in the manhole, it generally can be pulled through existing conduit without the need for additional trenching or new conduit. In an effort to minimize trenching, power and fiber can share the same trench where feasible. All of the DAS nodes will be located within the public ROW on existing utility poles or within existing Public Utility Easement (PUE). Replacement of a utilities pole will be necessary if the pole is found to be noncompliant with General Orders - 95 and 170. For utility poles that must be replaced, it will remain at the existing height unless a change is requested by AT&T California or Palo Alto Utilities. On August 4th, 2011 AT&T attended a preliminary study session for this DAS project with the Palo Alto Architectural Review Board. As a result each node locations were reviewed and aesthetics guidelines from the ARB panel were adhered to where possible. The battery cabinets were moved higher on the pole to avert it from line of sight. And where applicable, nodes were moved to avoid being in front of second story windows. Also, nodes locations were reassessed to account for maximum screening with the available foliage. The DAS nodes consist of a remote prism antenna (which is 24 inches tall with a 16-inch diameter) that is mounted on top of the existing/replacement poles. The antenna is mounted at the top of a 6 feet tall fiber glass extension that is mounted to the top of the pole. In total, the extension will be 8 feet above the top of the utility pole in order to maintain GO95 separation. This is shown on page. 6 For a utility pole mounted cabinet design, a 10 inches high by 5.5 inches wide by 5 inches deep quick disconnect, a 11 inches high by 4 inches wide by and 3/8 inches deep ground bus bar mounted 9 feet above the ground line. Above that sits a Tyco remote cabinet that is 52.4 inches tall by 12.2 inches deep by 11.2 inches wide. And above that is the Alpha battery cabinet that is 27 inches high by 22 inches wide by 18 inches deep. Lastly, above that is a demark box that is 13 inches tall by 13 inches wide by 3.75 inches deep. This is shown on page 30. All the attached equipment is configured such that it blends into the width of the pole. Equipment is tan/beige, and designed to blend in with equipment usually found in the streetscape. Two of the cabinets produce measureable acoustical results. Both have theoretical maximum acoustical performance of 46dB, without isolating ambient noise from the environment, at a distance of 20 feet, which is a rough approximation of the typical distance from a user on the ground. AT&T Mobility expects the actual acoustical performance of the cabinet to be quieter than these theoretical maximums. Description of Construction The antenna structure installation may involve the removal and replacement of the utility poles. A new foundation will be excavated (size dependent on soil conditions), and conduits containing coaxial cables (from the Remote cabinet), and power. Trenching will typically extend to a depth of 36 inches below grade. The following is a description of the work involved in the installation of the Myers cabinet and ground mounted remote. The typical sequence for construction of these nodes will be as follows: 7 · Remote & Myers cabinet excavation and trenching -- An excavation will be made via backhoe to accommodate the proposed concrete slab for the equipment/meter cabinet with trenching from the cabinet location to the pole(s) and/or power connection point, as necessary. An additional trunk will haul and hold supplies. Excavated material will be exported from the site using a dump truck. Backhoe and dump truck will be manned and idling throughout the excavation process and then turned off; generator on truck will run during construction. · Utility pole replacement -- The existing foundation will be removed and replaced with new foundation adequate for new pole installation. · Electrical Installation -- Once conduit and cabinet are in place, cables will be installed to connect the new cabinet to the serving manhole. The power panel will be set by an electrical contractor. SCE will then be called to set the power meter. · Testing -- Final testing of cabinet equipment and antennas will be performed after electrical power is provided to the site. · Duration and Estimated Personnel -- Typical duration for active construction of each node will be 10 days with 2 trucks and 1-3 workers, with traffic control and Department of Transportation approvals required for lane closures associated with trenching, excavation of pad and caisson foundations, and setting of the pole. 8 NORTH PALO ALTO Polygon2 Existing Coverage In-Building Service In-Transit Service Outdoor Service Legend Existing Site City Boundary 9 NORTH PALO ALTO Polygon2 Proposed (Top) Coverage In-Building Service In-Transit Service Outdoor Service Legend Existing Site City Boundary 10 Palo Alto Phase 3 Nodes kj kj kj kj kj kj kj kj kj kj kj kj kj kj kj kj kj kj kj kj N34B37.41379-122.10791 N38A37.44575-122.136509 N7A37.426463-122.126148 N6A37.428466-122.132264 N51A37.431927-122.13638 N36A37.41718-122.111271 N31A37.42379-122.115742 N28A37.42315-122.106521 N21A37.433803-122.11966 N25A37.449747-122.132666 N52A37.437177-122.117219 N33A37.430394-122.111908 N32A37.420137-122.109488 N27A37.427621-122.107027 N24A37.432914-122.111599 N20A37.429212-122.116544 N15B37.425283-122.122644 N13A37.418163-122.117285 N11A37.429938-122.121374 N10B37.421091-122.120513 L O U I S U S H W Y 1 0 1 MI D D L E F I E L D B R Y A N T A L M A C O W P E R G R E E R W A V E R L E Y R O S S SEALE B A Y S H O R E S O U T H W E B S T E R LOMA VE R D E P A R K COLORADO FA B I A N NE W E L L R A M O N A ELYBARR O N C L A R A LEGHOR N GARCIA CALIFO R N I A LOWE L L B Y R O N MARION TENNY S O N AMES LOS R O B L E S AMARI L L O HI G H MELVIL L E DR I V E W A Y OLIVE E M E R S O N OREGO N N E L S O N GE N G MATAD E R O LA PA R A HARKER ILIMA MA R I N E 2N D GRAN T GARLAN D MOREN O WI L K I E WYANDO T T E SUTTE R CO R I N A HANS E N COLER I D G E IRIS BIRC H BICYCL E JOSI N A WALKWAY WILTO N CHIMA L U S PAUL G R O V E EDLEE HOPKINS KINGS L E Y PARKINSON LAMB E R T CASEY O R M E FU L T O N MAYB E L L AMP H I T H E A T R E FLOR A L E S EL C A M I N O WA L N U T CURT N E R VISTA EL CAR M E L O TA S S O E D G E W O O D TALISM A N FERN A N D O G U I N D A PARKS I D E R A M P BRUCE ELSIN O R E CERE Z A GEOR G I A MARG A R I T A SAL A D O CREEKSIDE SU T H E R L A N D IN D I A N CAROL I N A C H A R L E S T O N S A N T A A N A BRYSON W H I T S E L L L A N D I N G S TERMIN A L SANTA R I T A CO M M E R C I A L E M B A R C A D E R O TENNE S S E E MILIT A R Y T R A N S P O R T THAI N CELIA PEPP E R TULI P CHEST N U T VENTU R A WASHIN G T O N SYCAMOR E LAKE ACACI A BLAIR FIELDIN G W R I G H T TA N L A N D STONE CA R M E L GREEN W I C H MOR T O N SIE R R A SHAU N A MACL A N E MAURE E N E M E R S O N COLORADO OREGO N R A M O N A U S H W Y 1 0 1 HI G H P A R K RAMP DRIVE W A Y T A S S O MOREN O R A M O N A P A R K CHARLE S T O N MATAD E R O R A M P DR I V E W A Y PA R K B A Y S H O R E BY R O N E M E R S O N CALIFO R N I A Legend PA_Phase_3Nodes Name, Address kj N10B, 3524 Waverly St kj N11A, 747 Loma Verde Ave kj N13A, 3706 Carlson Cir kj N15B, 3314 Cowper St kj N20A, 3412 Ross Rd kj N21A, 3132 David Ave kj N24A, 3415 Greer Rd kj N25A, 620 Rhodes Dr kj N27A, 3757 Corina Way kj N28A, 3915 Louis Rd kj N31A, 651 E Meadow Dr kj N32A, 3901 Middlefield Rd kj N33A, 3539 Louis Rd kj N34B, 372 Ferne Ave kj N36A, 3945 Nelson Dr kj N38A, 109 Lois Ln kj N51A, 2410 Waverly St kj N52A, 3094 Greer Rd kj N6A, Side of 2801 South Ct kj N7A, 452 Loma Verde Ave ³ AT&T Proprietary (Internal Use Only)Not for use or disclosure outside the AT&T companies except under written agreement.Telco proprietary data is not to be disclosed to siloed employees.11 Palo Alto DAS all forecasted Nodes 0 0.4 0.8 1.2 1.6 20.2 Miles PALO ALTO 280 280 101 101 82 114 109 82 M I D D L E F I E L D R D A L M A S T SAND H I L L R D ORE G O N E X P Y EMBARCADERO RD COU N T Y R O U T E G 3 UNIV E R S I T Y A V E W B A Y S H O R E R D J U N I P E R O S E R R A B L V D FO O T H I L L E X P Y SAN A N T O N I O A V E SAN T A C R U Z A V E FA B I A N W A Y G A R C I A A V E PU L G A S A V E CHA R L E S T O N R D AMPHIT H E A T R E P K W Y E B A Y S H O R E R D W M I D D L E F I E L D R D N S H O R E L I N E B L V D ARA S T R A D E R O R D OLD M I D D L E F I E L D W A Y E CHAR L E S T O N R D W CH A R L E S T O N R D BA Y S H O R E P K W Y A L M A S T ORE G O N E X P Y F O O T H I L L E X P Y COU N T Y R O U T E G 3 CHA R L E S T O N R D Legend Polygon 1 Polygon 2 City Bounds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                                                                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Occupational Exposure Public Exposure PCS CellFM Po w e r De n s i t y (m W / c m 2) The U.S. Congress required (1996 Telecom Act) the Federal Communications Commission (“FCC”) to adopt a nationwide human exposure standard to ensure that its licensees do not, cumulatively, have a significant impact on the environment. The FCC adopted the limits from Report No. 86, “Biological Effects and Exposure Criteria for Radiofrequency Electromagnetic Fields,” published in 1986 by the Congressionally chartered National Council on Radiation Protection and Measurements (“NCRP”). Separate limits apply for occupational and public exposure conditions, with the latter limits generally five times more restrictive. The more recent standard, developed by the Institute of Electrical and Electronics Engineers and approved as American National Standard ANSI/IEEE C95.1-2006, “Safety Levels with Respect to Human Exposure to Radio Frequency Electromagnetic Fields, 3 kHz to 300 GHz,” includes similar limits. These limits apply for continuous exposures from all sources and are intended to provide a prudent margin of safety for all persons, regardless of age, gender, size, or health. As shown in the table and chart below, separate limits apply for occupational and public exposure conditions, with the latter limits (in italics and/or dashed) up to five times more restrictive: Frequency Electromagnetic Fields (f is frequency of emission in MHz) Applicable Range (MHz) Electric Field Strength (V/m) Magnetic Field Strength (A/m) Equivalent Far-Field Power Density (mW/cm2) 0.3 – 1.34 614 614 1.63 1.63 100 100 1.34 – 3.0 614 823.8/ f 1.63 2.19/ f 100 180/ f2 3.0 – 30 1842/ f 823.8/ f 4.89/ f 2.19/ f 900/ f2 180/ f2 30 – 300 61.4 27.5 0.163 0.0729 1.0 0.2 300 – 1,500 3.54 f 1.59 f f /106 f /238 f/300 f/1500 1,500 – 100,000 137 61.4 0.364 0.163 5.0 1.0 Higher levels are allowed for short periods of time, such that total exposure levels averaged over six or thirty minutes, for occupational or public settings, respectively, do not exceed the limits, and higher levels also are allowed for exposures to small areas, such that the spatially averaged levels do not exceed the limits. However, neither of these allowances is incorporated in the conservative calculation formulas in the FCC Office of Engineering and Technology Bulletin No. 65 (August 1997) for projecting field levels. Hammett & Edison has built those formulas into a proprietary program that calculates, at each location on an arbitrary rectangular grid, the total expected power density from any number of individual radio sources. The program allows for the description of buildings and uneven terrain, if required to obtain more accurate projections. 17 RFR.CALC™ Calculation Methodology Assessment by Calculation of Compliance with FCC Exposure Guidelines Methodology Figure 2 The U.S. Congress required (1996 Telecom Act) the Federal Communications Commission (“FCC”) to adopt a nationwide human exposure standard to ensure that its licensees do not, cumulatively, have a significant impact on the environment. The maximum permissible exposure limits adopted by the FCC (see Figure 1) apply for continuous exposures from all sources and are intended to provide a prudent margin of safety for all persons, regardless of age, gender, size, or health. Higher levels are allowed for short periods of time, such that total exposure levels averaged over six or thirty minutes, for occupational or public settings, respectively, do not exceed the limits. Near Field. Prediction methods have been developed for the near field zone of panel (directional) and whip (omnidirectional) antennas, typical at wireless telecommunications base stations, as well as dish (aperture) antennas, typically used for microwave links. The antenna patterns are not fully formed in the near field at these antennas, and the FCC Office of Engineering and Technology Bulletin No. 65 (August 1997) gives suitable formulas for calculating power density within such zones. For a panel or whip antenna, power density S = 180 BW 0.1 Pnet D2 h , in mW/cm2, and for an aperture antenna, maximum power density Smax = 0.1  16    Pnet   h2 , in mW/cm2, where BW = half-power beamwidth of the antenna, in degrees, and Pnet = net power input to the antenna, in watts, D= distance from antenna, in meters, h= aperture height of the antenna, in meters, and = aperture efficiency (unitless, typically 0.5-0.8). The factor of 0.1 in the numerators converts to the desired units of power density. Far Field. OET-65 gives this formula for calculating power density in the far field of an individual RF source: power density S = 2.56 1.64 100 RFF2 ERP 4 D2 , in mW/cm2, where ERP = total ERP (all polarizations), in kilowatts, RFF = relative field factor at the direction to the actual point of calculation, and D= distance from the center of radiation to the point of calculation, in meters. The factor of 2.56 accounts for the increase in power density due to ground reflection, assuming a reflection coefficient of 1.6 (1.6 x 1.6 = 2.56). The factor of 1.64 is the gain of a half-wave dipole relative to an isotropic radiator. The factor of 100 in the numerator converts to the desired units of power density. This formula has been built into a proprietary program that calculates, at each location on an arbitrary rectangular grid, the total expected power density from any number of individual radiation sources. The program also allows for the description of uneven terrain in the vicinity, to obtain more accurate projections. 18 Alternative Aesthetics Fielding Analysis 3/20/12 Seq Design Status Node Number Latitude Longitude Pole _Ht PA_ Pole _no Locations Fielding Notes 1 in-design P2N10B 37.421091 -122.120513 38' 6" 3954 3524 Waverly St on E Meadow Dr Feasible - Deciduous tree against pole to rt (NE). No street tree opportunity. alternate P2N10B 37.421339 -122.120306 3453 3524 Waverly St W corner of Waverly and E Meadow Dr on E Meadow Feasible - Corner pole. Trees behind. No street trees or opporunity for. Equipment streetside on E Meadow? alternate P2N10B 37.421250 -122.120140 2311 Rear of 3546 South Ct on E Meadow Dr - South Corner of Waverly and E Meadow Feasible - Corner pole. No tree screening, except for tree behind (S) pole. Middle School across Waverly St. alternate not feasible P2N10B 37.420980 -122.120384 223? Side of 3535 South Ct. on E Meadow Dr Not feasible - No room on pole. Pole number obscured. Can't read last digit. alternate P2N10B 37.420852 -122.120743 3955 Side of 3527 South Ct on E Meadow Feasible - Evergreen tree to rt (NE) and deciduous to left (SW). Cable box on pole at 17.j Equipment could be located under cable box. 2 in-design P2N11A 37.429938 -122.121374 43' 6" 3289 747 Loma Verde Ave Feasible - Decid tree to left (W) on property line. 2nd story window, but distant, offset and screened. Room for street tree to right (E). alternate not feasible P2N11A 37.429793 -122.121713 3288 737 Loma Verde Ave Not feasible - Decid tree to rt (W) and Euc behind. Euc would block 130 AZM. alternate P2N11A 37.429766 -122.121515 3290 734 Loma Verde Ave Feasible if replaced. Power step down pole. No AT&T. Not tall enough. Evergreen trees to rt and left. alternate P2N11A 37.430177 -122.121133 3291 761 Loma Verde Ave Feasible - Euc for screening to rear. Possible to add street tree to right. 2nd story windows behind eucalyptus tree. 3 in-design P2N13A 37.418163 -122.117285 33' 6" 2255 3706 Carlson Cir Feasible - PUE not ROW. Deciduous yard tree to 5' from top. Pole within 6' of garage. No 2nd story. alternate P2N13A 37.418982 -122.117042 n/a 3716 Redwood Cir Feasible - Evergreen shrubs 10' up pole. No 2nd story. Pole number covered by foliage. 3 spans north of primary. PUE. alternate not feasible P2N13A Not AvailableNot Available n/a 3704 Calson Cir Not feasible - Rear yard no access. N of primary 1 span. alternate not feasible P2N13A Not AvailableNot Available n/a 3709 Carlson Cir Not feasible - Rear yard no access. S of primary 1 span. End pole. alternate not feasible P2N13A Not AvailableNot Available n/a 3719 Redwood Cir Not feasible - Rear yard no access. N of primary 2 spans. 4 in-design P2N15B 37.425283 -122.122644 39' 6" 3993 3314 Cowper St Feasible - No 2nd story window. Magnolia tree to far left (SE). Decid tree to far right (NW). No trees immediately adjacent and no room for street trees. alternate P2N15B 37°25'31.68"N122° 7'22.76"W 3992 3304 Cowper St Feasible - Large pine to rear. Magnolia tree to left (SE). Place equipment to left. 2nd story window to rt. alternate P2N15B 37°25'32.70"N122° 7'24.25"W 3991 3284 Cowper St Feasible - Large decid tree to right of and around pole. Across street from school. Equipment streetside. alternate P2N15B 37°25'29.69"N122° 7'19.58"W 3994 3352 Cowper St. Not feasible unless replaced. End pole. Too short. Guy pole only. No tree screening. 5 in-design P2N20A 37.429212 -122.116544 43' 3368 3412 Ross Rd - border of YMCA property and 3374 Ross Rd Feasible - Large cypress behind pole. No 2nd story window alternate P2N20A 37.428626 -122.115709 3371 3412 Ross Rd - YMCA Feasible - surrounded by deciduous trees. No 2nd story window. Equipment streetside. 2 spans SE of primary. alternate P2N20A 37.428848 -122.116042 3370 3412 Ross Rd - YMCA Feasible - surrounded by deciduous trees. No 2nd story window. Equipment streetside. 1 span SE of primary alternate P2N20A 37.429433 -122.117015 3367 3370 Ross Rd Feasible - No 2nd story window. Topped redwood behind pole to screen. Equipment streetside. 1 span NW of primary. 6 in-design P2N21A 37.433803 -122.119660 37' 6" 3268 3132 David Ave Feasible - No 2nd story window. Good evergreen and decid screening behind pole. Mature decid tree to right (NW). No room for new street trees. alternate not feasible P2N21A Not AvailableNot Available n/a 3135 David Ct.Not Feasible - 1 span to the NE. Rear yard, no access. alternate not feasible P2N21A Not AvailableNot Available n/a n/a All other poles within 2 spans are rear yard. alternate P2N21A 37.433971 -122.120905 3258 3055 Stelling Dr Feasible if not too far for RF - Alternate pole located approx 250' W of primary. No 2nd story. Decid tree to rt (SW). Possible new street tree to left (NE). Page 1 of 3 19 Alternative Aesthetics Fielding Analysis 3/20/12 Seq Design Status Node Number Latitude Longitude Pole _Ht PA_ Pole _no Locations Fielding Notes 7 in-design P2N24A 37.432914 -122.111599 38' 6" 2917 3415 Greer Rd Feasible - No 2nd story window. Birch tree behind. Equipment on rt (S) to avoid streetlight on separate pole in front of utility pole. No room for new street tree. alternate not feasible P2N24A Not AvailableNot Available n/a n/a No other feasible candidates. All poles rear yard 8 in-design P1N25A 37.449747 -122.132666 38' 4490 Side of 620 Rhodes Dr (borders 1772 Hamilton Ave) Feasible - Screen from SW by evergreen trees. Equipment on E side of pole. No 2nd story window. Set back from street in PUE. alternate Not feasible P1N25A Not AvailableNot Available n/a Back of 1765 Hamilton Ave Not feasible - Pole in yard. No access. alternate Not feasible P1N25A Not AvailableNot Available n/a Back of 660 Rhodes Dr Not feasible - Pole in yard. No access. alternate Not feasible P1N25A Not AvailableNot Available n/a Back of 580 Rhodes Dr Not feasible - Pole in yard. No access. 9 in-design P2N27A 37.427621 -122.107027 36' 6" 3660 3757 Corina Way Feasible - No 2nd story. Mature decid tree to right (SW). No tree and no room for new tree on left. alternate not feasible P2N27A Not AvailableNot Available n/a n/a No other feasible candidates. All poles rear yard 10 in-design P2N28A 37.423150 -122.106521 37' 3571 3915 Louis Rd Feasible - No 2nd story. Mature decid tree to left (N). alternate P2N28A 37.424167 -122.106458 3672 3891 Louis Rd Feasible - No 2nd story. Mature decid tree to left (N) Transformer. Equipment streetside. Adjacent to Adobe Creek. alternate not feasible P2N28A Not AvailableNot Available n/a n/a No other feasible candidates. All poles rear yard 11 in-design P2N31A 37.423790 -122.115742 3620 651 E Meadow Dr Feasible - No 2nd story windows. Equipment streetside. No screening. No room for street tree. alternate P2N31A 37.424176 -122.114924 37' 6" 3623 691 E Meadow Dr at Middlefield Rd Feasible - Corner pole.Guy pole only. Evergreen olive tree screening from behind. Decid tree to rt (NW). alternate P2N31A 37.424085 -122.114782 3622 3600 Middlefield Rd Feasible - Corner pole. PA Fire Dept. No 2nd story. Equipment facing E Meadow Dr. Note there is a flagpole cell tower at the Fire station. alternate P2N31A 37.423846 -122.115236 3618 Side of 3600 Middlefield Rd (on E Meadow) Feasible - No 2nd story. Bet church and Fire Station. No screening. No opportunity for street tree. Equipment on N side. alternate not feasible P2N31A 37.423980 -122.115377 36??681 E Meadow Dr Not feasible - Pole full. Pole number obscured. alternate not feasible P2N31A 37.424111 -122.115140 3261 691 E Meadow Dr Feasible only if tree is pruned and pole replaced with taller pole. Pole is approx. 30' high. No 2nd story, not corner. Support pole and drop. 12 in-design P2N32A 37.420137 -122.109488 43' 6" 2167 3901 Middlefield Rd on E Charleston Rd Feasible - Large oaks on both sides. 2nd story only across E Charleston. End pole. None further W. alternate P2N32A 37.420236 -122.109198 2166 3901 Middlefield Rd on E Charleston Rd (further NE) Feasible - Large oak on east side and street tree to west. 2nd story window across E Charleston. alternate P2N32A 37.420365 -122.108862 2165 706 E Charleston Feasible - Tree (deciduous) on west side only. No 2nd story window. 13 in-design P2N33A 37.430394 -122.111908 23' 6978 3539 Louis Rd Feasible - At Eichler Swim Club. Support pole only. 23' AGL. Will need replacement. Only fully accessible pole candidate. Adjacent to creek. alternate P2N33A 37.430645 -122.111546 2975 3539 Louis Rd Feasible - Pole located inside Eichler Swim and Tennis Club. There is gate access to utility easement. Feasible if ATT can get access to that gate as a utility. Redwood alternate not feasible P2N33A Not AvailableNot Available n/a n/a No other feasible candidates. All poles rear yard 14 in-design P2N34B 37.413790 -122.107910 38' 1980 372 Ferne Ave Feasible - No 2nd story. Evergreen shrub to 10' up pole. Equipment facing driveway (SW). PUE not ROW. alternate not feasible P2N34B 37.414412 -122.107422 1998 412 Ferne Ave Not feasible - Tree behind that interferes with 170 AZM. alternate not feasible P2N34B Not AvailableNot Available n/a n/a No other feasible candidates. All poles rear yard Page 2 of 3 20 Alternative Aesthetics Fielding Analysis 3/20/12 Seq Design Status Node Number Latitude Longitude Pole _Ht PA_ Pole _no Locations Fielding Notes 15 in-design P2N36A 37.417180 -122.111271 38' 1951 3945 Nelson Dr rear of 4000 Middlefield Rd Feasible - Evergreen screening behind (E) and left (N). On border or Cubberly Community Center. No 2nd story window. alternate not feasible P2N36A Not AvailableNot Available n/a Rear of 3962 Nelson Dr First pole W of primary Not feasible - Rear yard no access. alternate not feasible P2N36A Not AvailableNot Available n/a Rear of 3960 Nelson Dr 2nd pole W of primary Not feasible - Rear yard no access. alternate not feasible P2N36A Not AvailableNot Available n/a Rear of 3945 Nelson Dr First pole E of primary Not feasible - Rear yard no access. alternate not feasible P2N36A Not AvailableNot Available n/a Rear of 3929 Nelson Dr 2nd pole E of primary Not feasible - Rear yard no access. 16 in-design P1N38A 37.445750 -122.136509 39' 5048 109 Lois Ln near Walnut Dr Feasible - Setback 10' from sidewalk in front yard. No 2nd story. No tree screening but could plant one at street. Equipment will be within 10' of 2 houses. PUE. alternate Not feasible P1N38A Not AvailableNot Available n/a Back of 109 Lois Ln near Walnut Dr (first pole to NW of primary) alternate Not feasible P1N38A Not AvailableNot Available n/a Back of 108 Lois Ln (first pole to SE of primary) alternate Not feasible P1N38A Not AvailableNot Available 5029 108 Walter Hayes Ln (2nd pole to SE of primary) alternate Not feasible P1N38A Not AvailableNot Available 5058 Side of 1547 Walnut (on Stanley) (2nd pole to NW) 17 in-design P2N51A 37.431927 -122.136380 33' 2575 2410 Waverly St. Feasible - 2nd story window. End pole. Last pole to SE. Large evergreen mature tree to SE. No street tree opportunity. alternate not feasible P2N51A 37.432257 -122.136955 4863 2398 Waverly St Not feasible - No space available without interfering with climbing. 30' from corner. Street tree behind. alternate P2N51A 37.432539 -122.137175 4862 2385 Waverly St Feasible - 2nd story window approx 80' back. Decid trees to rt (SE) and behind. Comm, no power. alternate P2N51A 37.432440 -122.137248 4861 2380 Waverly St Feasible - 2nd story window behind on house next door. Small decid tree to rt (NW). Larger decid street trees 20' each side of the pole. 18 in-design P2N52A 37.437177 -122.117219 38' 6" 2355 3094 Greer Rd on Maddux Dr Feasible - No 2nd story. Redwood behind. Decid trees to rt and left. Equipment streetside. alternate P2N52A 37.437595 -122.117177 2379 3095 Greer Rd Feasible - No 2nd story window. In side yard, adjacent to garage, not house. Matadero Creek to left. No screening. Tree could be added in yard? alternate not feasible P2N52A Not AvailableNot Available n/a n/a No other feasible candidates. All poles rear yard 19 in-design P2N6A 37.428466 -122.132264 39' 6" 2669 Side of 2801 South Ct on El Dorado Feasible - Magnolia tree rt (NE) and decid tree to left (SW). No 2nd story window. Shrubs growing up pole to ht of 5'. alternate P2N6A 37.428179 -122.132552 2668 Side of 2800 South Ct on El Dorado Feasible - Deciduous tree to left (NE) and rt (SW). No 2nd story window. alternate P2N6A 37.428693 -122.132072 2670 Side of 2801 South Ct on El Dorado (NE of Primary) Not feasible - Surrounded by trees for screening, but tall redwood across street in 360 AZM. 20 in-design P2N7A 37.426463 -122.126148 42' 4002 452 Loma Verde Ave on Kipling St Feasible - No 2nd story. Equipment streetside. Birch to rt and behind. alternate P2N7A 37.426713 -122.126467 3972 Side of 3149 Waverly St (on Loma Verde) Feasible - No 2nd story. Shrubs to rear. No room for street tree to left(W). Mature dec street stree to ft (E). alternate P2N7A 37.426443 -122.126879 3970 Side of 3149 Waverly St (on Loma Verde) Feasible - Grace Lutheran Church. No 2nd story. Dec street trees to rt and left. Equipment streetside. alternate P2N7A 37.426347 -122.126785 3971 Side of 3157 Waverly St (on Loma Verde) Feasibility to be determined by RF. Decid street tree to left (E). Possible new tree to rt (W). No 2nd story. Height might be an issue as this is a short pole. Page 3 of 3 21 PRISM REMOTE INSTALLATION ******PROPRIETARY INFORMATION****** NOT FOR USE OR DISCLOSURE OUTSIDE OF ADC TELECOMMUNICATIONS OR THEIR CUSTOMERS 50 ' - 0 " 6' 6 " 43 ' - 6 " 21 ' - 1 0 " 12 ' - 4 " 12 ' - 4 " 2'-0" 1' - 0 " 4" U GUARD EXOTHERMIC (CAD) WELD TO GROUND ROD 10'-0" 9' - 0 " 20 ' - 8 7 / 8 " QUAD BAND/ QUAD BAND BATTERY CABINET- ALPHA MMOE 24 ' - 1 / 8 " 24 ' - 1 1 7 / 8 " DUAL BAND X-POL TRI-SECTOR ANTENNA 52 ' - 3 " CABLE GAUGE BETWEEN UTILITY POLE GROUND BAR AND GROUND ROD #2 AWG SOLID PLACED IN LIQUID TIGHT NON METALIC CONDUIT COAXIAL CABLE WILL BE ½” FOR ALL RUNS >/= 1'-0" 5" x 5 " F I B E R G L A S S E X T E N S I O N 6' - 0 " 6" 22                                                                      23 !"#"$%&'()(*+$,$-.&/&012$3(0*.('4*12$!5*1556$7+0*18$ -6)&$!)*&9$:6)(;&.5(6$ !"#$%! !!&'()!*!+,!*! 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STANLEY SALEK, P.E. ROBERT P. SMITH, JR. RAJAT MATHUR, P.E. KENT A. SWISHER ANDREA L. BRIGHT ___________ ROBERT L. HAMMETT, P.E. 1920-2002 EDWARD EDISON, P.E. 1920-2009 BY E-MAIL JD3235@ATT.COM July 27, 2012 John di Bene, Esq. AT&T Mobility 4430 Rosewood Drive Pleasanton, California 94588 Dear John: As you requested, we have visited the AT&T Mobility oDAS node recently installed at 255 North California Avenue in Palo Alto, California, in order to assess the noise levels from that installation and to evaluate those actual levels against both the city's noise limit and the projected levels. On the morning of June 6, 2012, using one of our Quest Technologies Type 2200 Sound Level Meters (Serial No. SBF110001, under current calibration by the manufacturer), we observed a minimum* noise level of 44.5 dBA at a distance of 25 feet from the pole. That is the distance specified for compliance with the city's municipal code Section 9.10.050, which limits an increase in noise to 15 dBA, measured at 25 feet, for facilities not located on private property. The ambient reading at that location with the AT&T node shut off was 42.1 dBA, so the actual increase was 2.4 dBA, well below the 15 dBA allowed by the code. Removing† the 42.1 dBA ambient level from the 44.5 dBA level with the AT&T equipment turned on indicates that the equipment by itself produced noise at 25 feet of approximately 40.8 dBA. This compares well with the manufacturer's data, given in our report dated November 1, 2011, which averaged 40.9 dBA to the front and sides. Therefore, we conclude from these measurements that noise from the AT&T Mobility oDAS nodes has been accurately represented by the manufacturer and that, indeed, the noise increase easily meets the Palo Alto limits. Please let us know if any questions arise on these measurements or this analysis. Sincerely yours, William F. Hammett * Intended to represent the noise from continuous, fixed sources, separate from the varying levels due to intermittent sources including traffic, wind, voices, and planes. † Using appropriate mathematical conversions. City of Palo Alto (ID # 3435) City Council Staff Report Report Type: Consent Calendar Meeting Date: 1/28/2013 City of Palo Alto Page 1 Summary Title: Appeal of AT&T DAS Phase 3 Title: Appeal of Director’s Architectural Review Approval of the Co-location by AT&T Mobility LLC of Pole-Mounted Wireless Communications Equipment and Associated Equipment Boxes on 20 Existing Utility Poles Within City Rights-of-Ways Near the Following Locations: 747 Loma Verde Ave; 3284 Cowper; 3412 Ross/ 3374 Ross Rd; 3132 David Ave; 3415 Greer Rd; 3539 Louis Rd; 2385 Waverley; 3094 Greer Road on Maddux; 390 El Dorado Ave; 452 Loma Verde; 3524 Waverly on E. Meadow; 3706 Carlson Circle; 3757 Corina Wy; 3915 Louis Rd; 631 E. Meadow; 3901 Middlefield Rd; 412 Ferne; 3945 Nelson Ave.; 1772 Hamilton Ave.; 109 Lois Lane - AT&T DAS Phase 3 Project From: City Manager Lead Department: Planning and Community Environment Recommendation Staff recommends that Council: 1) uphold the Director of Planning and Community Environment’s decision to approve the Architectural Review application for the Phase 3 project based upon the findings and conditions of approval described in the Record of Land Use Action (Attachment A), excluding the proposed installation adjacent to 3706 Carlson Circle; and 2) direct staff to work with AT&T and residents to evaluate alternative locations/options for the 3706 Carlson Circle installation. Executive Summary AT&T’s application is for Architectural Review of 20 wireless communication facilities (WCFs) collocated on utility poles within City rights-of-way and jointly owned by the City and Pacific Bell Telephone Company dba AT&T of California, known as the Palo Alto Outdoor DAS (Distributed Antenna System) project Phase 3. The 20 installations propose one antenna placed on a pole extension at the top of each pole, and equipment cabinets placed lower down on the pole (between 10 feet and 20 feet above grade). The pole locations were reviewed regarding City of Palo Alto Page 2 their aesthetic impacts and consistency with the Phase 1 design approval by Council on January 23, 2012, and on December 18, 2012 the staff level Architectural Review approval was issued for the project. Staff received five appeals of this decision from residents who cited concerns regarding impacts to property values, aesthetics, noise, health, AT&T’s procedures for site selection, and the City’s review process. These are topics similar to those that have been raised in the Phase 1 and Phase 2 appeals that Council reviewed and approved in 2012. Staff believes the Director’s decision is appropriate for all of the sites, with the exception of the 3706 Carlson Circle site, which involves relocation of the utility pole from a public utility easement (PUE) to the street frontage. Staff recommends that this request be referred back to staff and AT&T to work with the residents to evaluate alternative sites. A subsequent decision on that particular site would then be issued and would again be appealable to Council. Background On March 29, 2012, AT&T submitted an application for Architectural Review for the Phase 3 DAS installations at 20 locations. The project was determined to be a collocation project and, according to Palo Alto Municipal Code (PAMC) Section 18.42.110, requires approval of an Architectural Review application, followed by the issuance of encroachment permits. The use itself is considered a permitted use, such that no Conditional Use Permit (CUP) is needed. In January 2012, the Council, on appeal, reviewed the Phase 1 DAS project for 20 installations and upheld the Director’s decision to approve the project sites (CMR #2393). At that time the issues that were raised by the appellants focused on the need for a wireless master plan for the entire city, and concerns for aesthetic impacts, potential health risks, noise, impacts on property value, type of technology proposed, and the safety and reliability of the actual installations. These issues were discussed in the associated CMR and can be viewed online for additional details. The Council approved all of the applications. On November 5, 2012, the Phase 2 DAS project approval was forwarded to Council on appeal to consider (on the Consent Calendar) at their meeting. An appeal was filed by Mr. Tony Kramer, a resident, citing concerns about the project’s compliance with the City’s Noise Ordinance. The City Council did not remove it from the Consent Calendar and voted to uphold the Director’s decision to approve the 15 project sites (CMR #3239). There are a total of four phases in AT&T’s citywide DAS project, including a total of 75 installations. The Phase 3 and 4 projects were both approved on December 18, 2012. Phase 1 is nearing completion of construction and Phase 2 installations are nearing construction. These four phases are a part of AT&T’s build-out to provide adequate coverage and/or additional capacity for wireless communications. AT&T is subject to a license agreement that allows AT&T to collocate the DAS antennas and equipment on the City’s portion of the utility poles. The Council approved the standard license agreement on July 25, 2011 (CMR #1756). City of Palo Alto Page 3 Following the Council’s decision on the Phase 1 application, subsequent Architectural Review (AR) applications for DAS installations, following the same prototype design as the approved design, were to be reviewed at staff level and be subject to public notice and Council appeal, but ARB public hearings were not required, according to the Zoning Code. Neighbor notification is provided and public comments are reviewed by staff for each location. Actions by the Director of Community Environment on the applications are posted on the City’s website and courtesy notices of the actions are mailed to neighbors within 300 feet of each pole. The Director’s decisions on staff level AR applications are also noted on the next available ARB meeting agenda. Review Process The standard procedure for the review of an appealed Architectural Review application is for placement on the Council Consent Calendar within 30 days of the filing of an appeal. Section 18.76.020(b)(3)(D) of the Zoning Code specifies that wireless communication facilities are considered “minor projects” to be reviewed by staff. Section 18.77.070(b)(5) of the Zoning Code specifically requires consideration by the Council on appeal of a staff approval of such a facility, rather than hearing before the ARB. Council may decide to pull the item off Consent only if at least three Councilmembers concur, and then the project is scheduled for a future public hearing date (PAMC 18.77.070(f)). The Council meeting on March 4, 2013 has been targeted for this public hearing, if Council determines to set a hearing. Project Description The approved design for the DAS installations is shown in the attached plans (Attachment G). The existing utility poles range in height from 28 to 52 feet and the pole top extension, on average, is about 8.25 feet. The equipment proposed on the pole face is the same for all the poles and is comprised of (1) a power disconnect box located nine feet above grade; (2) a remote prism cabinet (52.4”H x 12.15”W x 10.125”D) located approximately 10’-5” above grade; (3) a back-up battery cabinet (27”H x 22”W x 18”D) located approximately 15’-9” above grade; (4) an optical network interface box (13”H x 13”W x 3.75”D) located approximately 19’ above grade; and (5) related wiring. At the top of the pole extension, one antenna radome (24”H x 16” Base Diameter) would be placed in-line with the pole. The Phase 3 DAS project includes two sites where the existing poles, which are within a PUE and located close (3-5 feet) to the existing residential buildings, are proposed to be relocated out to the sidewalk right-of-way. With this pole relocation, the DAS installation would be consistent with the other sites throughout the city. Discussion City of Palo Alto Page 4 There were five appeals filed for this project and these are included as Attachment C. With the exception of one (Kramer), the appellants all requested that another location for the DAS equipment be considered, other than the sites indicated in their appeal request. 1. The first appeal, submitted by Dorianne and Roy Moss, was directed at the proposed installation near 747 Loma Verde. This installation is over 150 feet away from the Moss’ rear property line, and is separated by a street and one single-family property. The concerns that were raised in the appeal were the potential impacts to property value and AT&T’s lack of consideration (in determining the equipment location) of the project’s impacts to their second-story master bedroom window view. 2. The second appeal was filed by Scott and Elaine Keller and focused on the installation adjacent to their home at 3945 Nelson Drive. This installation is at least 35 feet away from the rear of the house. The Kellers raised concerns about the project’s noise impacts and the design aesthetics. 3. The third appeal, submitted by Bala Ganesh and Albert Ovadia, was specific to the DAS installation on the pole adjacent to 631 E. Meadow Drive. The installation is approximately 18 feet away from Mr. Ganesh’s garage and 25 feet away from Mr. Ovadia’s home. The appeal stated their concern was about the potential health impacts from the installation and the possible reduction in property value due to aesthetics. 4. The fourth appeal, submitted by Tony Kramer, was directed at the entire project. Mr. Kramer stated that he is appealing the decision because “AT&T has not met all the conditions of the Planning Department’s Notice of Incomplete”, dated April 27, 2012, and therefore should not be approved. This is in regards to the City requiring AT&T to submit an updated noise study for the DAS equipment. There is no DAS installation proposed adjacent to Mr. Kramer’s home. 5. The fifth appeal, submitted by Roger Petersen, was specific to the installation near 3706 Carlson Circle. This DAS installation is one of the two proposed pole relocations in Phase 3 and would move the existing utility pole approximately 22 feet away from the current location (that is approximately four feet away from the garage at 3704 Carlson Circle) out toward the street. This site also has a condition of approval that requires the installation of a new street tree for future screening. The concern that Mr. Petersen cites in his appeal is that the relocation of the utility pole out onto the street would be unattractive, since there currently are no utility poles located along Carlson Circle. City of Palo Alto Page 5 Staff Responses to Appeal Issues Property Value and Health Impacts The Federal Telecommunications Act (TCA) of 1996 limits the City’s authority in the review of wireless telecommunications projects. The City may only focus on the aesthetic and zoning code aspects of a project and, by law, may not consider potential health issues and any perceived related consequences (e.g. drop in property value). Under federal law, a local agency’s wireless facility siting decisions may not have the effect of prohibiting the provision of wireless service or unreasonably discriminating among wireless service providers. Further, a utility is required to provide any telecommunications carrier with nondiscriminatory access to its utility poles. Under federal law, the City may not regulate the placement, construction or modification of wireless communications facilities on the basis of the environmental effects of radio frequency (RF) emissions, so long as the facilities comply with the Federal Communications Commission (FCC) regulations concerning such emissions. Staff additionally has seen no information that indicates an identifiable loss of property value from such installations. Noise As outlined in PAMC Section 9.10.050, the public property noise limit specifies that no person shall produce on public property a noise level more than 15 dB above the local ambient at a distance of 25 feet or more from the source. The definition of local ambient means the lowest sound level repeating itself during a six-minute period as measured with a precision sound level meter; the code specifies that the minimum sound level shall be 40 dBA when determining noise levels outside (not inside a structure), and therefore, noise production in excess of 55 dBA at a distance of 25 feet away from the source would violate the noise ordinance. The noise requirements for residential properties, as set forth in PAMC 9.10.030, is that noise levels cannot exceed six dB above the local ambient (40 dBA minimum) at the property plane. According to AT&T, the two pieces of equipment that would produce sound are the back-up battery cabinet and the prism remote. All other elements proposed (antenna and wiring) do not produce noise. On June 6, 2012, Hammett & Edison Inc. performed a noise analysis at a powered installation in front of 255 N. California Avenue. The results of this study state that the noise level produced by the equipment, including the ambient noise, is approximately 44.5 dBA at a distance of 25 feet away from the pole. Based on this data, the conclusion is that the equipment is compliant with the Noise Ordinance. The details of the noise analysis are outlined in Attachment D. Staff does believe that, as indicated in the noise measurements at 255 N. California Avenue, lower noise levels (nearer the residential standard) can be readily achieved and that every City of Palo Alto Page 6 effort should be made to attain the lowest level reasonable. To further address the noise concern, therefore, staff has included the following two Conditions of Approval:  For installations in the City right-of-way, the Applicant shall endeavor to minimize the noise at the property line boundary with adjacent residential property, and shall attempt to keep such noise below 6dB above the ambient level most of the time, when fans are running at their normal setting. If such a standard is not reasonably achievable for a site, then the Applicant voluntarily agrees to use commercially reasonable efforts to ensure that the noise level does not exceed 6 dB above the ambient noise level at the nearest location of a residential structure. Under no circumstances shall the noise exceed the noise standard in Municipal Code 9.10.050 (i.e., +15dB over ambient at 25 feet).  The applicant shall submit a sound analysis of an operating installation within two months of the project installation/operation. The analysis shall clearly delineate how the installation complies with the previously listed condition regarding noise. Applicant may be required to submit these reports periodically for the life of the project, as determined by the Director of Planning. AT&T has agreed to the above conditions and has stated that it will make all feasible attempts to minimize the noise production from their installations. AT&T has completed several DAS installations, including 255 North California, 464 Churchill, 1720 Webster, 370 Lowell, and 1345 Webster. Council members may wish to visit one or more of these sites to assess the noise impacts from a layperson’s standpoint. Staff has visited the sites and believes that the noise is minimal adjacent to the pole and barely audible from 25 feet away. Aesthetics The Phase 3 installations follow the same design concepts that were reviewed by the ARB and approved by the City Council in January 2012. Carlson Circle Relocation to Street Right-of-Way Several residents in the vicinity of the 3706 Carlson Circle site have objected to the relocation of the pole from a public utility easement (PUE) to the street right-of-way. The City’s direction to AT&T has been to avoid location of antennas and equipment on poles in PUEs, given their proximity to homes and potential visual and noise concerns. This street, however, does not have existing utility poles on the street and the residents have identified some alternatives (including in PUEs) that might be viable. Staff recommends that the Council direct staff and AT&T to work with the residents to evaluate the alternative sites and re-issue an approval letter. AT&T concurs with the staff recommendation. The subsequent action would be appealable to Council if any neighbor objected. The Record of Land Use Action (Attachment A) has been prepared excluding this site from the Council approval at this time (condition #25). City of Palo Alto Page 7 Other Objections Staff also notes that some property owners objected (Attachment F) to the location and installations of four other sites near their properties, but those residents did not formally appeal the decision. Nevertheless, the entire Phase 3 project is one application, so the Council may act on those or any other proposal in the package. Staff believes that the objections fall into similar categories related to health impacts or visual concerns, as addressed above. Conclusion Staff believes that all of the site requests, other than 3706 Carlson Circle, are consistent with City criteria and federal and state law for such installations, and the Director’s decisions should be upheld. The approvals are reflected in the Record of Land Use Action. Citywide Wireless Communications Facilities Study In association with the Phase 1 DAS project, many residents requested the City to consider the development of a city-wide master plan for wireless facilities. On May 16, 2011, Council sponsored a study session to review issues related to wireless communications facilities (cell towers and antennas). Consultants to the City and staff presented an overview of the need for and technology related to such facilities, health issues, and relevant federal, state, and Palo Alto regulations. The Council asked that staff continue the dialogue with the community to provide better understanding for the public and the wireless industry. Council directed staff on July 2, 2012 to issue a request for proposal for a consultant/vendor to prepare a citywide wireless communications facilities plan. The RFP was released on October 2, 2012. Staff has interviewed four firms for the study and is finalizing its selection. A contract is expected to be awarded in February. Alternatives to Staff Recommendation The Council may also consider the following alternatives rather than approval as proposed: A. Council may remove the project from Consent to schedule and conduct a Public Hearing for one or more of the specific DAS locations; OR B. Council may remove the project from Consent to schedule and conduct a Public Hearing for all of the proposed DAS locations. Staff has targeted March 4, 2013 as a potential hearing date, given the wireless communications “shot-clock” processing requirements. (AT&T has stipulated to a shot-clock extension to accommodate the Council’s hearing schedule, if necessary.) City of Palo Alto Page 8 Policy Implications The proposed project is consistent with the Comprehensive Plan and staff believes there are no other substantive policy implications. The project is supported by the following Comprehensive Plan Policies: (B-13) Support the development of technologically-advanced communications infrastructure and other improvements that will facilitate the growth of emerging telecommunications industries; and (B-14) Work with electronic information network providers to maximize potential benefits for Palo Alto businesses, schools, residences, and other potential users. Resource Impacts The costs of project review by all staff and consultants is recovered by Architectural Review application fees paid by AT&T. Pursuant to the City’s standard license agreement, AT&T will pay the City $270 per year per installation, or a total of $4,050 per year for the 15 sites. Environmental Review The project is categorically exempt from the provisions of the California Environmental Quality Act (CEQA) per section 15303 of the CEQA Guidelines. Attachments:  Attachment A: Record of Land Use Action (DOC)  Attachment B: Location Map (PDF)  Attachment C: Appeals (PDF)  Attachment D: Hammett and Edison Noise Memo, July 27, 2012 (PDF)  Attachment E: Applicant's Submittal Information (PDF)  Attachment F: Public Comments (PDF)  Attachment G: Project Plans (Councilmembers and Libraries only) (TXT) PLACEHOLDER City of Palo Alto (ID # 3566) City Council Staff Report Report Type: Consent Calendar Meeting Date: 5/6/2013 City of Palo Alto Page 1 Summary Title: Approval of a One-Year Extension of the Sierra Infosys Contract for Annual SAP Support Title: Approval of a One-Year Extension of the Sierra Infosys Contract (C10135998) for Annual SAP Support in the amount of $250,000.00 per year for the Support and Maintenance of SAP Industry-Specific Solution for Utilities (IS-U), SAP Enterprise Central Component (ECC 6.0), Customer Relationship Management System (CRM), Business Intelligence System (BI) and Utilities Customer Electronic Services (UCES) From: City Manager Lead Department: IT Department RECOMMENDATION Staff recommends that the Council: 1. Approve, and authorize the City Manager or his designee to execute, the attached one year usage-based professional services contract (Attachment A) with Sierra Infosys Inc. in the amount not to exceed $250,000 per year for the support and maintenance of various SAP modules. The contract will be for fiscal year 2014. 2. Approve, and authorize the City Manager or his designee to execute, a one year usage- based professional services contract extension with Sierra Infosys Inc. in the amount not to exceed $250,000 per year for the support and maintenance of various SAP modules. The extension will be for fiscal year 2015. The total not-to-exceed value of the agreement and renewal is $500,000. MOTION City of Palo Alto Page 2 I move to accept staff’s recommendation to approve and authorize the City Manager or his designee to execute the attached one year usage-based professional services contract (Attachment A) for fiscal year 2014, with an optional second-year extension for fiscal year 2015, with Sierra Infosys Inc. for the support and maintenance of various SAP modules, in the amount not to exceed $250,000 per year, with a total not-to-exceed value of $500,000. BACKGROUND The City’s history with SAP began in 2002 when the City selected SAP as its preferred vendor for an Enterprise Resource Planning system with the purpose of integrating various business processes within the City and to pave the path for the City to moving toward the direction of electronic government. The SAP system has been running in the City since 2003, supporting Accounting, Finance, Purchasing, Project Management, Plant Maintenance, Budgeting, Payroll, Human Resource Management, and Service Order management. In 2009, the City completed a major upgrade to the SAP ERP system and replaced the former utility billing system (Banner) with the implementation of the SAP IS-U module, Customer Relationship Management, Utilities Customer Electronic Services (also known as My Utilities Account customer portal) and Business Intelligence systems. By supporting the critical business processes in Finance, Procurement, HR, and Utilities’ meter- read to billing, payment and collection SAP has become an integral part of City’s business continuity. Examples of the operational scope of SAP include:  Manages and maintains a City budget of over half billion dollars  Issues 11,000 A/P checks, processes 2,200 purchases documents, and issues 36,000 payroll checks each year  Generates 370,000 utilities invoices and collects approx. $220M for 30,500 utilities accounts  Currently, 12,100 active customers registered to use “My Utilities Account” for e-bills and online payments  Provides concise business information to support 38,000 incoming calls into the Utilities Customer Service Center  Interfaces to City Business Partners such as Wells Fargo, Check Free, JP Morgan (procurement card services), Green Waste (refuse), and non-SAP City systems City of Palo Alto Page 3 City staff provides internal SAP resources and knowledge to support and maintain the following six SAP systems: Enterprise Planning system, SAP Industry-Specific Utilities system, Customer Relationship Management system, Utilities Customer Electronic Services system, Employee and Manger Self-Service system, and Business Intelligence systems. To supplement staff support of SAP, the City, on July 1, 2010, entered a three (3) year software consulting services contract with Sierra Infosys Inc. in the amount of $750,000 In July 2011, to cope with the resource shortage due to staff medical leave, the City amended the contract to include additional basis system support in the amount of $84,000. Sierra’s existing contract will expire on June 30, 2013. DISCUSSION SAP is a highly configurable system with processes integrated via inter-linked configuration rules in the various modules. SAP requires a high degree of specialized expertise to provide effective ongoing maintenance and support. Sierra augments City staff resources in order to adequately provide coverage across the depth and breadth of SAP. For the past two and a half years, the City has leveraged Sierra’s expertise to support numerous technical and functional areas. Sierra’s annual performance evaluations have been satisfactory. Examples of Sierra’s support include the following:  Perform functional configuration for the various business modules  Provide assistance with functional troubleshooting specific complex business operational issues  Provide assistance with technical troubleshooting in our various SAP environments  Provide assistance with authorization and security administration  Perform Oracle data base patch/release upgrade  Perform Support package upgrade to the latest version including all database tasks  Perform and document SAP portal system monitoring tasks The IT Department and SAP Steering Committee will conduct an assessment of our current SAP environment, business processes, support resources needs, and develop a strategic plan for the Enterprise Resource Planning systems. The assessment is one of the proposed FY 2014 capital City of Palo Alto Page 4 improvement projects. Until the full assessment report and Enterprise Resource Planning strategic plan is ready, staff recommends extending the service contract with Sierra Infosys to maintain current support levels. RESOURCE IMPACT With the new on-going Information Technology funding structure, funds for this project will come from the Technology Internal Service Fund. Funds for this contract and extension are available in the current 2013 and proposed 2014 budgets. The proposed contract amount of $250,000 per year does not present an increase over current funding levels for the Sierra contract. POLICY IMPLICATIONS Approval of these contracts is consistent with current City policies. ENVIRONMENTAL REVIEW This is not a project under the California Environmental Quality Act (CEQA). Attachments:  C10135998 W-Sierra Infosys Amend No 2 (PDF)  FY14 Sierra Contract CMR (MinuteTraq vesion1) (DOC)  CMR291-10 (PDF) 1 Revision July 25, 2012 AMENDMENT NO. 1 TO CONTRACT NO. C10135998 BETWEEN THE CITY OF PALO ALTO AND SIERRA INFOSYS, INC. This Amendment No. 2 to Contract No. C10135998 (“Contract”) is entered into April , 2013, by and between the CITY OF PALO ALTO, a California chartered municipal corporation (“CITY”), and SIERRA INFOSYS, INC., a Texas corporation, authorized to do business in California, located at 6001 Savoy Drive, Suite # 210, Houston, TX 77030, Telephone: (713) 747-9693 (“CONSULTANT”). R E C I T A L S: A. The Contract was entered into between the parties for the maintenance and support of SAP Applications; and B. The parties wish to amend the Contract to extend for one year and make other changes described herein; NOW, THEREFORE, in consideration of the covenants, terms, conditions, and provisions of this Amendment, the parties agree: SECTION 1. Section 2 is hereby amended to read as follows: “SECTION 2. TERM. The term of this Agreement shall be from the date of its full execution through June 30, 2014 with the option to extend the Agreement for a one-year extension, unless terminated earlier pursuant to Section 19 of this Agreement. SECTION 2. 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 Dollars ($1,000,000.00), over the four-year term of the Agreement, with annual payments not to exceed $250,000.00 per year. In the event the parties exercise the option to extend the contract for a one-year extension, 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 Two Hundred Fifty Thousand Dollars ($1,250,000.00), over the term of the Agreement with annual payments not to exceed $250,000.00 per year. In the event Additional Services are authorized, the total compensation for services and reimbursable expenses shall not exceed One Million Dollars ($1,000,000.00) or shall not exceed One Million Two Hundred Fifty Thousand Dollars ($1,250,000.00) in the event the parties exercise the option to extend the contract for a one-year extension. 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. 2 Revision July 25, 2012 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 3. 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” SECTION 4. 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 No. 2 on the date first above written. CITY OF PALO ALTO ____________________________ City Manager APPROVED AS TO FORM: _____________________________ Senior Asst. City Attorney SIERRA INFOSYS, INC. By:___________________________ Name:_________________________ Title:________________________ Attachments: EXHIBIT "C": COMPENSATION Professional Services Rev June 2, 2010 Year 1 to Year 3 07/12/2010 to 07/12/2013 The CITY agrees to compensate the CONSULTANT for professional services performed in accordance with the terms and conditions of this Agreement on a Time and Materials basis, 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 $750,000.00 ($250,000.00 per year). CONSULTANT agrees to complete all Services, including reimbursable expenses, within this amount. In the event CITY authorizes any Additional Services, the maximum compensation shall not exceed $750,000.00 ($250,000.00 per year). 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 $250.00, 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 CONSULTANT prior to commencement of the services. Payment for additional services is subject to all requirements and restrictions in this Agreement. Professional Services Rev June 2, 2010 Year Four 07/12/2013 to 06/30/2014 EXHIBIT “C” COMPENSATION The CITY agrees to compensate the CONSULTANT for professional services performed in accordance with the terms and conditions of this Agreement on a Time and Materials basis, 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 $1,000,000.00 ($250,000.00 per year). CONSULTANT agrees to complete all Services, including reimbursable expenses, within this amount. In the event CITY authorizes any Additional Services, the maximum compensation shall not exceed $1,000,000.00 ($250,000.00 per year). 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 $250.00, 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 CONSULTANT prior to commencement of the services. Payment for additional services is subject to all requirements and restrictions in this Agreement. Professional Services Rev June 2, 2010 Year Five [One (1) Year-Extension] 07/12/2014 to 06/30/2015 EXHIBIT “C” COMPENSATION The CITY agrees to compensate the CONSULTANT for professional services performed in accordance with the terms and conditions of this Agreement on a Time and Materials basis, 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 $1,250,000.00 ($250,000.00 per year). CONSULTANT agrees to complete all Services, including reimbursable expenses, within this amount. In the event CITY authorizes any Additional Services, the maximum compensation shall not exceed $1,250,000.00 ($250,000.00 per year). 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 $250.00, 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 CONSULTANT prior to commencement of the services. Payment for additional services is subject to all requirements and restrictions in this Agreement. CMR: 3566:13291:10 Page 1 of 5 TO: HONORABLE CITY COUNCIL FROM: CITY MANAGER DEPARTMENT: INFORMATION TECHNOLOGY DATE: MAY 9APRIL XX, 2013 CMR: 3566XXX:13 REPORT TYPE: ACTION SUBJECT: Approval of a One Year Software Consulting Services extension of contract (C10135998) with the an opOptional sSecond yYear extension with Sierra Infosys Inc. in the Amount of $2150,000 per year for the Support and Maintenance of SAP Industry- Specific Solution for Utilities (IS-U), SAP Enterprise Central Component (ECC 6.0), Customer Relationship Management System (CRM), Business Intelligence System (BI) and Utilities Customer Electronic Services (UCES). RECOMMENDATION Staff recommends that the Council: 1. Approve and authorize the City Manager or his designee to execute the attached one year usage-based professional services agreement contract (Attachment A) with Sierra Infosys Inc. in the amount not to exceed $2150,000 per year for the support and maintenance of various SAP modules. The contract will be for fiscal years 2014. and 2015. The total not-to-exceed value of this agreement is $300,000. This is a reduction of the current contract value of $250,000 per year. 2. Approve and authorize the City Manager or his designee to execute a one year usage- based professional services contract extension with Sierra Infosys Inc. in the amount not to exceed $250,000 per year for the support and maintenance of various SAP modules. The extension will be for fiscal year 2015.Authorize the City Manager or his designee to execute the renewal agreement at the rate of $150,000 per year for a maximum of two years. The total not-to-exceed value of the agreement and renewal this agreement is $300,000 $500,000. MOTION I move to accept staff’s recommendation to approve and authorize the City Manager or his designee to execute the attached one year usage-based professional services contract (Attachment A) for fiscal year 2014, with an optional second year extension for fiscal year 2015, with Sierra Infosys Inc. for the support and maintenance of various SAP modules, in the amount not to exceed $250,000 per year, with a total not-to-exceed value of $500,000. [David R – can you please recommend a motion?] Formatted: Font: (Asian) Japanese Formatted: Font color: Auto CMR: 3566:13291:10 Page 2 of 5 BACKGROUND The City’s history with SAP began in 2002 when the City selected SAP as its preferred vendor for an Enterprise Resource Planning system with the purpose of integrating various business processes within the City and to pave the path for the City to moving toward the direction of electronic Government. In fiscal year 2003, the implementation of the above SAP core modules were completed and the SAP system has been running in the City since 2003, supporting Accounting, Finance, Purchasing, Project Management, Plant Maintenance, Budgeting, Payroll, Human Resource Management, and Service Order management. In 2009, tThe City completed a major upgrade to the SAP ERP system in 2009 and , which also replaced the former utility billing system (Banner) with the implementation of the SAP IS-U module, Customer Relationship Management, Utilities Customer Electronic Services (also known as My Utilities Account customer portal) and Business Intelligence systems. By supporting the critical business processes in Finance, Procurement, HR, and Utilities’ meter-read to billing, payment and collection SAP has become thean integral part of City’s business continuity. SAP is the system of record for the City and represents the cornerstone of the business continuity by supporting critical business processes in Finance, Financial, Procurement, HR processes, and Utilities’ meter-read to billing, payment and collection processes. Some Eexamples of the values generated by services that SAP provides include:  Manages and maintains a City budget of over half billion dollars  Issues 11,000 A/P checks, processes 2,200 purchases documents, and issues 36,000 payroll checks each year  Generates 370,000 utilities invoices and collects approx. $220M for 30,500 utilities accounts  Currently, 12,100 active customers registered to use “My Utilities Account” for e- bills and online payments  Provides concise business information to support 38,000 incoming calls into the Utilities Customer Service Center  Interfaces to City Business Partners such as Wells Fargo, Check Free, JP Morgan (procurement card services), Green Waste (refuse), Hartford, and ICMA as well as to non-SAP City systems To complement internal SAP support resource and knowledge in providing support and maintainancemaintenance services to the following six systems: Enterprise Planning system, SAP Industry-Specific Utilities system, Customer Relationship Management system, Utilities Customer Electronic Services system, Employee and Manger Self-Service system, and Business Intelligence systems, onOn July 1, 2010 the City we entered into a CMR: 3566:13291:10 Page 3 of 5 three (3) year software consulting services contract with Sierra Infosys Inc. in the amount of $750,000 for the Support and Maintenance of SAP Industry-Specific Solution for Utilities (IS-U) , SAP Enterprise Central Component (ECC 6.0), Customer Relationship Management System (CRM), Business Intelligence System (BI) and Utilities Customer Electronic Services (UCES). In July 2011, to cope with the resouecresource shortage due to staff medical leave, the Ccity amended the contract to include additional basis system support in the amount of added funds in the amount of $84,000 to account for a staff member on medical leave in order to minimize business impacts. Sierra’s existing The current contract will expire is due to expire on June 30, 2013. DISCUSSION SAP is a highly configurable system with processes integrated via inter-linked configuration rules in the various modules. SAP requires a high degree of specialized expertise to provide effective ongoing maintenance and support. Sierra augments city staff in order to adequately provide coverage across the depth and breadth of SAP. For the past two and a one half years, through a collaborative working relationship the City has leveraged Sierra’s Sierra’s expertise to support numerous technical and functional areas. Sierra’s annual performance evaluations have been satisfactory. has yielded Satisfactory result. current support contract with Sierra Infosys Inc. has been leveraged to provide adequate support. Sierra has been providing support in both technical and functional areas of the system to supplement the City internal resources and has established a collaborative working relationship. These areas of HighlighsExamples of Sierra’s support include the following:  Perform functional configuration for the various business modules  Provide assistance with functional troubleshooting specific complex business operational issues  Provide assistance with technical troubleshooting in our various SAP environments  Provide assistance with authorization and security administration  Perform Oracle data base patch/release upgrade  Perform Support package upgrade to the latest version including all database tasks  Perform and document SAP portal system monitoring tasks Moving forward, tTThe IT Department and SAP Steering Committee will have proposed to cconduct an assessment onof identified a requirement to assess our current SAP environment, business processes, support resources needs, and to develop a strategic plan for the ERP (Enterprise Resource Planning systems) strategy; T the assessment is one of the proposed FY 2014 capital improvement projects. is will tentatively occur during FY 2014. Upon completion of the ERP assessment, management will be better able to forecast CMR: 3566:13291:10 Page 4 of 5 system resource requirements. This will also enable staff to define a more precise scope of work for future professional services contracts. Until the full assessment report and Enterprise Resource Planning steategicstrategic plan is ready, In the meanwhile, staff recommends extending the service contract with Sierra Infosys to maintain current support levels. RESOURCE IMPACT As a result of With the new the on-going Information Technology funding structure, funds for this project will come from have been included in the Technology Internal Service Fund. Fund (ISF) 20131-20142 budget. Funds for this contract and extension are available in the current 2013 and proposed 2014 budgets. POLICY IMPLICATIONS Approval of these contracts is consistent with current City policies. ENVIRONMENTAL REVIEW This is not a project under the California Environmental Quality Act (CEQA). CMR: 3566:13291:10 Page 5 of 5 PREPARED BY: JENNIFER LEU, Manager, Information Technology REVIEWED BY: DAVID RAMBERG Assistant Director, Administrative Services TOMM MARSHALL Assistant Director, Utilities Engineering TOM AUZENNE Assistant Director, Utilities Customer Support Services DEPARTMENT HEAD: _____________________________________ Jonathan Reichental, CIO CITY MANAGER APPROVAL: _________________________________ JAMES KEENE, City Manager ATTACHMENTS Attachment A: Contract TO: HONORABLE CITY COUNCIL FROM: CITY MANAGER DATE: JULY 12, 2010 REPORT TYPE: ACTION City of Palo Alto City Manager's Report DEPARTMENT: ADMINISTRATIVE SERVICES CMR: 291:10 SUBJECT: Approval of Three Year Software Consulting Services Contract with Sierra Infosys Inc. in the Amount of $750,000 for the Support and Maintenance of SAP Industry-Specific Solution for Utilities, SAP Financials, Customer Relatiouship Management System, Business Intelligence System and Utilities Customer Electronic Services RECOMMENDATION Staff recommends that the Council: 1. Approve and authorize the City Manager or his designee to execute the attached usage- based professional services agreement (Attachment A) with Sierra Infosys Inc. in the amount not to exceed $250,000 per year for the support and maintenance of various SAP modules. The contract will be for fiscal years 2011, 2012 and 2013. The total not-to- excced value of this agreement is $750,000. 2. Authorize the City Manager or his designee to execute the renewal 'agreement at the rate of $250,000 per year for years two and three for software consulting services. BACKGROUND The City recently completed a major upgrade to the SAP system, which integrated the former utility billing system. The upgrade project totaled $8.8 million, spanned more than two-years, required a three-month Council-approved extension, nine-months of Council-approved extended post implementation support, with consulting services provided by Axon ConSUlting. This proposed contract moves past the SAP upgrade project and into normal system support as described below. The City's history with SAP began in 2002 when the City selected SAP as its preferred vendor for an Enterprise Resource Planning system with the purpose of integrating various business processes within the City and to pave the path for the City to moving toward the direction of electronic Government. In fiscal year 2003, the implenlentation of the above SAP core modules were completed and the SAP system has been running in the City since, supporting Accounting, CMR:291:IO Page I of 5 Purchasing, Project Management, Plant Maintenanee, Budgeting, Payroll, Human Resource Management, and Service Order management. On July 23, 2007, the Council approved contract changes with SAP for the SAP upgrade (from release 4.6 C to ECC6.0) and implementation of SAP's industry-specific solution for utilities (IS-U) to replace the aging Utilities Department's Customer Information System (CIS). The SAP upgrade was completed in fiscal year 2008 and the implementation of the SAP IS-U, Customer Relationship Management, and Business Inte\ligenee systems were subsequently completed in fiscal year 2009. These systems replaced the old Utilities Customer Information System known as Banner. Annual support for the Banner system was in the $200,000 per year rangc. Similar to many major project implementations the SAP IS-U projcet, since go-live in May 2009, has gone through a period of post go-live support, issue resolution, and change management. To ensure smooth transition from project post go-live support to normal support and maintenance, the Axon consultants who did the original project were retained to assist staff to carry out the project post go-live support from September 2009 to June 2010. The systems now are stabilized and the City's SAP team is transitioning to normal support and maintenance where system stability, system tuning and continuous improvements are the key objectives. DISCUSSION With the implementation of the SAP IS-U project, SAP has become the cornerstone of the City'S business continuity, supporting Financial, Procurement, HR processes, and Utilities' meter-read to billing, payment and collection processes. This centralization relocated the Utilities customer information and support system from Banner to SAP. As the system became integrated with the utilities modules, the breadth and depth of SAP knowledge and skill requirements for effective SAP support and maintenance also has increased in these areas. Compared to the prior stand alonc Banner system, SAP is a highly configurable system with processes integrated via inter- linked configuration rules in the various modules. Configuration change requires thorough knowledgc of multiple related modules and wbile these skills have been developing since the system go-live on May 2009, the City's current resource for configuration and trouble-shooting for the mission critical areas of the Utilities modules are insufficient. After analyzing the past 12 months of SAP support and maintenance requests and considering the scope and complexity and limited in-house resource capacity and capability; the SAP Project Management Office (PMO) recommended that leveraging an extemal vendor to supplement the City internal resources would be the best solution for the next three years. The support and maintenance consulting cost will be similar to that under the former Banner system. The SAP modules for Finance, HR, and Procurcment, in place since 2003 will also be supported under this contract at approximately 20% of the contract. CMR:291:IO Page 2 of 5 F 11 fh d o owmg IS a summary 0 t even or se cctton process. Proposal Description/Number NamelNumber of Proposal here , Proposed Length of Contract ~months . __ .- Total Days to Rcspond to Proposal i Pre-proposal Meeting Date 4/1912010 Number of Attendees at Pre-proposal 21 Meeting Number of Proposals Received: 9 Company Name ' Location (city, Selected for oral !ltate) interview? ' . 1. Alijon Consulting Walnut Creek,CA No . 2. EA Consulting Folsom, CA Yes 3. HCL-Axon Jersey City, NJ Yes 4. HPC America San Ramon, Ca No 5. CSC El Segnado, CA No 6. Sage Group Hazlet, NJ Yes 7. Sierra Infosys Houston TX Yes i 8. Terra Information Group, Inc. Naperville, IL No 9. The Basis Group! Inc. Hales Corners, WI Yes Range of Proposal Am,ounts Submitted $137,915 to $lM An evaluation committee consisting of six staff from Administrative Services and Utilities Departtnents reviewed the proposals. From the nine RFPs submitted, the evaluation committee selected five firms that met the first level of ranking to participate in an oral interview on Jnae 1, 2010. Firms were not invited to interview if their proposals were inadequate or out of scope. The committee carefully rated and ranked each frrm's qualifications and submittal in response to the criteria identified in the RFP. Criteria used for the, evaluation is as follow: Criteria Weight 1. Quality and completeness of proposal 5% 2. Qualification and experience of proposed project manager and key staff 20% 3. Similar experience and expertise in the type of work required 25% 4. Demonstrated understanding of the scope of services required, timeframe, 20% Scheduling ability, ability to provide back-up or follow-up services, if needed 5. Financial stability of Firm, current and looking forward 10% 6. Thc proposed fee schedule relative to the services to be provided 20% Sierra Infosys, Inc was selected unanimously by all RFP evaluation committee members as the first choice with the reasons summarized as: I. The work model proposed by Sierra best complements City's existing 1'1 level support capabilitics; with Sierra providing 2nd level support on as-needed basis. Under this model City staff is contacted first for all SAP issues that come to the Helpdesk. The 2nd level of support is only used if City staff needs assistance with a particular issue. This CMR:291:10 Page 3 of 5 ! , model enables the City to access Sierra's support resource pool to resolve unforeseen critical system problems swiftly and provides the City with sufficient flexibility to schedule plamled maintenance work effectively. Sierra's perfonnance will be measured according to the service level agreement. 2. Sierra's proven implementation and support maintenance experience and expertise in similar environments, such as City of San Diego, State of Kentucky, Clark County, Nevada, and Broward County School District. Reference check results collected £i'om these organizations are consistent and positive. 3. What differentiates Sierra Infosys from the other vendors responding to the Palo Alto RFP is their strategic focus on providing Support and Maintenance services to mid-size organization such as City of Palo Alto and their commitment to retain ample in-house knowledge of SAP for prompt problem diagnosis and resolution of client problems. Over the years, Sierra also has established a deep relationship with SAP Global Support. Sierra has been selected by as a partner for the SAP GSS-Global Network of Subject Matter Experts, providing quick resource deployment to SAP clients, when needed. The City Of Palo Alto SAP Steering Committee comprised of the directors of the Administrative Services, Public Works and Utilities Departments are in agreement with the selection of Sien'a Infosys, Inc for the work outlined in the City's Request for Proposal. RESOURCE IMPACT As a result of the on-going Information Teehnology funding structure, funds for this project have been included in the Technology Internal Scrvice Fund (ISF) 2011-2012 budget. POLICY IMPLICATIONS Approval of these contracts is consistent with current City policies. ENVIRONMENTAL REVIEW This is not a project under the California Environmental Quality Act (CEQA). CMR:191:l0 Page 4 of 5 PREPARED BY: REVIEWED BY: DEPARTMENT HEAD: DEPARTMENT HEAD: CITY MANAGER APPROVAL: ATTACHMENTS Attachment A: Contract CMR:291:10 JENNIFER LEU, Manager, Information Technology DA VIO RAMBERG Assistant Director, Administrative Services TOMM MARSHALL Assistant Director, Utilities Engineering TOM AUZENNE Assistant Director, Utllities Customer Support Services LALO PEREZ, Director of Admini$trative Services ryJAMES KEENE City Manager \ . PageSof 5 ATTACHMENT A CITY. OF J?ALO ALTO CONTRACT NO. CI0135998 AGREEMENT BETWEEN THE CITY 01' PALO ~LTO AND SIERRA INFOSYS INC. FOR PROI'ESSIONAL SERVICES PROVISION SAP APPLICATION MAINTENANCE SUPPORT This Agreement is entered into on this 13TH day of July, 2010, ("Agreement") by and between the CITY OF PALO ALTO, a California chartered municipal corporation ("CITY"), and SIERRA INFOSYS INC., a Texas Corporation authorized to do business in California, located at 6001 Savoy Drive, Suite #210, Houston, TX, 77030 (PH) 713-747-9693 ("CONSULTANT"). RECITALS The following recitals are a substantive portion of this Agreement. A. CITY intends to maintain SAP Applications ("Project") and desires to engage a consultant to provide Maintenance Support Consultant Services 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 CONSULT ANT 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, 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 all Services shall be to the reasonable satisfaction of CITY. D Optional On-Call Provision (This provision only applies if checked and only applies to on-call agreements.) Services will be authorized by the CITY, as needed, with a Task Order assigned and approved by the CIYY's Project Manager. Each Task Order shall be in substantially the same form as Exhibit A-I. Each Task Order shall designate a City Project Manager and shall contain a specific scope of work, a specific schedule of performance and a specific compensation amount. The total price of all Task Orders issued under this Agreement shall not exceed the amount of Compensation set forth in Section 4 of this Agreement. CONSULTANT shall only be compensated for work performed under an authorized Task Order and the CITY may elect, but is not required, to authorize work up to the maximum compensation amount set forth in Section 4. ProfessiDrud Services Rev. June 2, 2010 SECTION 2. TERM. The term ofthis Agreement shall be from the date ofits full execution through July 12, 2013, unless terminated earlier pursuant to Section 19 of this Agreement. OR The term of this Agreement shall be from the date of its full execution through completion of the services in accordance with the Schedule of Performance attached as Exhibit "B" unless terminated earlier pnrsuant 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 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 Seven Hundred Fifty Thousand Dollars, over the three year term of the Agreement ($750,000.00), with annual payments not to exceed $250,000.00 per year .. In the event Additional Services are authorized, the total compensation for services and reimbursable expenses shall not exceed Seven Hundred Fifty Thousand Dollars ($750,000.00). The applicable rates and schedule of payment are set out in Exhibit "C-I", entitled "HOURLY RATE SCHEDULE," which is attached to and made a part ofthis 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-l "). 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. CONSULT ANT 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 2 Professional Services Rev, June2,2010 S:\ASDIPURCHISOLICITA TJONSICURRENT BUYER·CM FOLDERS\KATHYlContra elslCI 0 135998·Sicrra inf",ys, InelOmtract CI0135998J doc 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 pennitted, have and shall maintain during the term of this Agreement all Iieenses, 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 itselfinformed 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. CONSULTANT shall correct, at no cost to CITY, any and all errors, omissions, or ambiguities in the Services rendered to CITY, provided CITY gives appropriate notice to CONS UL T ANT. 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 the Project. This obligation shall survive termination of the Agreement. SECTION 9. COST ESTIMATES. If this Agreement pertains is the design of a publie works prejeot, C()'NSULTf~IT shall Sllblllcit estimates of pro19allle eonstruction BOSts at eaeh phase of deSigfl sa19mittal. l[the totsl estimated eonstruetion eost at any sabmittal elteeeds ten pareent (1 0%) of.the CITY's statee. eonstruetion lme.get; CONSULTA"IT shall mal(e reeemmendations to the CITY for aligning the PROJECT e.esign with the badge!, ineorporate CITY approyed reeommentiations, and revise the design to meet the Pre;ieet 1gedge!, at HO additional eost to CITY. Section Not Applicable. SECTION 10. INDEPENDENT CONTRACTOR. It is understood and agreed that in performing the Services under this Agreement CONSULT ANT, 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 of the CITY. SECTION 11. ASSIGNMENT. The parties agree that the expertise and experience of CONSULTANT are material considerations for this Agreement. CONSULTANT shall not assign or transfer any interest in this Agreement nor the perfonnance 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 mauager will be void. 3 Professional Services Rev. June 2, 2010 S:IASDIPURCHlSOLlCIT A TlONSICURRENT BUYER.cM FOWERSIKA THYlContr. elslCI 0\35998-Sierr. infosys, lnc\O:mtract ClO135998Ldoc SECTION 12. SUBCONTRACTING. !8IOption A: No Subcontractor: CONSULTANT shall not subcontract any portion of the work to be performed under this Agreement without the prior written authorization of the eity manager or designee. DOption B: Subcontracts Authorized: Notwithstanding Section 11 above, CITY agrees that subconsultants may be used to complete the Serviees. The subconsultauts authorized by CITY to perform work on this Project are: 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 subconsultaut. CONSULTANT shall change or add subconsultauts only with the prior approval of the city manager or his designee. SECTION 13. PROJECr MANAGEMENT. CONSULT ANT will assign Robert Nyman as the Account Executive to have supervisory responsibility for the performance, progress, and execution of the Services and Fazle Navqi as the Project Manager/Support S e rv ic e s Manager to represent CONSULTANT during the day-to-day work on the Project. If cireumstances cause the substitution of the Account Executive, Project Manager/Support Services Manager, or any other key personnel for any reason, the appointment of a substitute Account Executive 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 fmds 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. The City's project manager is Jennifer Leu, Administrative Services Department, Information Technology Services Division, 250 Hamilton Avenue, Palo Alto, CA 94303, Telephone: 650-853- 8 I S9. 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 CITY projcct manager from time to time. SECTION 14. OWNERSHIP OF MATERIALS. Upon delivery, all work product, including without Ihnitation, all writings, drawings, plans, reports, specifications, calculations, documents, other materials and copyright interests developed under this Agreement shall be and remain the exclusive property of CITY without restriction or limitation upon their use. CONSULTANT agrces 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 CONSULT ANT 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. 4 Professional Services Rev, JUfle2.2010 SlASDIPURCHISOLlG1TATlONSlCURRENT BUYER.cM FOWERSIKATHYlC<>ntra cts1ClO135998-Siem infosys, InclContrac\ CI01359981.doc 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, CONSULT ANT's records pertaining to matters covered by this Agreement. CONSULTANT 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. OIOption A applies to the following design professionals pursuant to Civil Code Section 2782.8: architects; landscape architects; registered professional engineers and licensed professional land surveyors.] 16, I, To the fullest extent pennitted by law, CONSULTANT shall protect, indemnifY, defend and hold harmless 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") that arise out of, pertain to, or relate to the negligence, recklessness, or willful misconduct of the CONSULTANT, its officers, employees, agents or contractors under this Agreement, regardless of whether or not it is caused in part by an Indemnified Party, ~IOption B applies to any eonsultant who does not qualify as a design professional as defined in Civil Code Section 2782.8.) 16.1. To the fullest extent permitted by law, CONSULT ANT shall protect. indemnifY. defend and hold harmless 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, SECTION 18. INSURANCE. 18.1 , CONSULTANT, at its sole cost and expense, shall obtain and maintain, in full 5 Professional Services Rev, June 2, 2010 S:IASDIPURCffiSOUCIT ATIONSICURRENT BUYER·CM FOillERS\KATHy\Contra clS\CI0135998·Sierra inf!l5)'S, [nc\Contract CI0135998[doc force and effect during the term of this Agrecment, the insurance coverage described in Exhibit "D". CONSU'LT ANT 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, CONSULTANT shall be responsible for ensuring that current certi.ficates evidencing the insurance are provided to CITY's Purchasing Manager during the entire term of this 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 anlOunt 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 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 ortermil1ation by CITY, CONSULTANT will be paid for the Services rendered or materials delivered to CITY in accordance with the scope of services on or before the effective date (Le., 10 days after giving notice) of suspension or tenninatiol1; provided, 6 Profussional Services Rev. Ju.e 2, 2010 S,\ASD\PURCHISOLlClT ATIONSI(.'URRENT BUYER ·CM FOLDERSIKATHYlContra ctslClO 135998·Sierra infosys. InelContract ClOI359981.doe 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 CONSULT ANT's services which are of direct and immediate benefit to CITY as such determination may be made by the City Manager acting in the reasonable exercise ofhislher discretion. The following Seetions 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, address sarue as above for City Clerk To CONSULTANT: Attention of the 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 havc any financial intcrest under this Agreement is an officer or employee of CITY; this provision will be interpreted in accordance with the applicable provisions of the Palo Alto Municipal Code and the Government Code of the State of California. 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 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. CONSULTANT acknowledges that it has read and understands the 7 Professional Services Re,dune 2, 2010 S:IASDIPURCHlSOLICITATlONSICURRENT BUYER-eM FOLDERSIKATHYlContr. etsICI0I35998-Sierra infosys, InclConlnlet C101359981.doc 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. SECTJON23. ENVIRONMENTALLY PREFERRED PURCHASING AND ZERO WASTE REOUIREMENTS. CONSULTANT shall comply with the CITY's Environmentally Preferred Purchasing policies which are available at the CITY's Purchasing Division, Administrative Services 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 of30% 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 of this 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 anytime within a fiscal year in the event that funds are only appropriated for a portion of the fiscal year and funds for this Agreement 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 25. MISCELLANEOUS PROVISIONS. 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 8 Professionat Services Rev. June 2, 2010 S:\ASD\PURCH\SOLICITATIONS\CURRENT BUYER-CM FOiDERSIKATHYlConlra c(,\CIOI35998.sicrra infosys,lnc\Conlracl CI0J359981.doc California. 25.3. The prevailing party in any action brought to enforce the provisions of this Agreement may recover its reasonable costs and attorneys' 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. 1bis 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 rernain 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 ofthis Agreement. 25.8 If, pursuant to this contract with CONSULTANT, CITY shares with CONSULT ANT personal information as defined in California Civil Code section 1798.81.5( d) about a California resident ("Personal Information"), CONSULTANT shall maintain rcasonable 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 CffY's express written consent. 25.9 All unchecked boxes do not apply to this agreement. 25.1 0 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. 9 Professional Services Rev. June 2, 2010 S:IASDIPURCHISOLICITATIONSICURRENT BUYER.cM FOLDERSIKA THYlContr. elsie I 0135998-Siert. inrosys, InclContract CW1359981.doc 06-25-10; 11: 18 16503292302 # 2/ 2 IN WITNESS WHEREOF, the parties bereto have by their duly authorized representatives executed this Agreement 011 the date first above written. ern 01<' PALO ALTO City Manager (Required ~;;;;ili.;:~~ts over $85,000) Purchasing Manager (Required on contrllCts over $25,000) Contracts Administrator (Required on contracts under $25,000) APPROVED AS TO FORM: Senior ABst. CilJ' AUorney (Required on Contracts over $25,000) Attachments: EXHIBIT "A": EXHIBIT "B": EXHIBIT "C": 1!XH1BlT "C· I "; EXHIBIT "D": EXHIBIT "E" SCOPE OF SERVICES SCHEDULE OF PERFORMANCE COMPENSATION SCHEDULE OF RATES INSURANCE REQUIREMENTS TRANSITION PLAN Profeasiunul Smlce!i Rcv,Junc2,2:010 10 \\C<:.ltlTlu\.humdlASDlPURCIl\SOLICITATIONSICUllllENT BUYell-CM POWEIlBIKA THYIC.m,. cts\ClOI3S998·Si<l". illiOsy>, l"oIC'nfrOet CIO 1359981.<100 I. BACKGROUND. EXHIBIT A SCOPE OF SERVICES The CITY OF PALO ALTO (hereinafter "City") hereby requested proposals for SAP Support Consultant Services. The CITY sought application support services for its SAP ECC 6.0 - Enterprise Resourcc Planning Central Component System, ISUlCCS-Industry Solution Utilities Customer Care and Service System, CRM Customer Relationship Management IC Web, UCES - Utilities Customers eServices U CES Systems and Business Intelligence (BI) System. The most recent ECC 6.0 was upgraded in July 2008, ISUlCCS was implemented in May 2009, and BI was implemented in October 2009. II. OVERVIEW Sierra InfoSys (hereinafter "CONSULTANT') is to provide 2nd level of SAP Support and Maintenance Consulting Services to supplement CITY in house resource when one or more of the following scenarios occur: • A quick solution is needed to fix system malfunction in areas such as payroll, utility bill print, where system malfunction will disrupt normal business operation of multiple departments or the entire organization. • A quick solution is needed when customer facing systems such as UCES -Utility Customer Electronic Services is down. • Additional resource is needed to deliver system solution to meet legal compliance date, such as Assombly Bill 920 -California Surplus Act of2009 or tax law changes. • Industry best practice knowledge and experience is needed when City is evaluating, designing, and implementing new business process and system fnnctions. • At SAP PMO's discretion to perform special tasks such as new technOlogy evaluation, feasibility study and/or reviewing system configuration setup. Consultants are expected to have in-depth SAP knowledge and experience to perform tasks inelude but not limited to system configuration custoinization, master data design and setup, process design, custom table design, system analysis, and integration, focusing on the following modules. 2 Professional Services Rev, June 2, 2010 S:IASDIPURCH\SOLICITA TlONSlCURRENT BUYER-CM FOWERSIKA THy\Cootra elslCl 0 13599S.sierra infooys, InclCofllract ClO135998Ldoc Ill. SCOPE SAP System SAP Modules Est Hours % (per year) IS-UtCCS DM-Device Management Support and Maintenance 200 12% I BM-Billing Management Support and Maintenance 200 12% FICA-Contract Account Finance Support and Maintenance 133 8% UT·CRMllcWeb -Customer Relationship Management 200 12% -Support and Maintenance BI -Business Intelligence Support and Maintenance 133 8% UCES -Utility Customer Electronic Services 133 8% Core ERP ERP-Core SAP modules Support and Maintenance 333 20% SAP Basis SAP BASIS consulting 333 20% Total 1667 IV. WORK MODEL Contract engagement with CONSULTANT primarily is based on Labor Hour for each Approved Task Order. Hourly rate is fixed according to rate schedule. Total labor hours and cost is not to exceed $250,000 annually. Each task order with CONSULTANT, except urgent system fix, will be reviewed and approved by SAP PMO, providing supporting material such as task scope; objectives, cost estimate, resource planning, and schedule are available. CONSULTANT's Account Executive will collaborate with CITY project manager and PMO to align objects, schedule, resource, and cost closely. V. DELIVERABLES For each task order assigned, Consultant must follow CITY's system design and development standards, to conduct the following tasks and produce deliverables: Conduct problem investigation, root cause analysis, problem resolution, and knowledge transfer on as-needed basis Prepare functional specification, technieal specification, testing plan, and training material Document configuration changes and process changes Others: Solution comparaison, gap analysis, etc VI. AREAS OF FOCUS Areas of Business Operation where support and maintenance consulting is imperative to sustain business continuity, to hnprove efficiency and fine tune process, 3 Professional Services Rev, June 2, 20 to S:IASDIPURCHISOLlClTATlONSlCURRENT BUYER-CM FOLDERSIKATHYlContra ctsICI013599S.sierra infos)'$, Inc\Contract Cl 0 135998Ldoc • DM-Device Management Support and Maintenance o Device and installation o Meter reading optimization and fine tuning, including meter reading unit and scheduling, implausible reading results setting and estimate read activation • BM-Billing Management Support and Maintenance o Creating Consolidated Rate structure for Retail Settlement, Distributor and Retailer consolidated Billing for Deregulated transactions o Configuration of Billing Schema, Rate Category, Rates and Operands for Industrial o Preparing specification for Print workbench requirement for custom specific application form, to display unbundled billing with Power, Water and Sewer contracts and Rate information. • FICA-Contract account Support and Maintenance o Configuring New Dunning Procedures and Dunning Levels with Dunning Activities o Creating functional specifications for Reset Clearing, Payments, Dunning, Security Deposits, Automatic Clearing, and Clearing rules • UT-CRM/IcWeb -Customer Relationship Management -Support and Maintenance o Base Customization like Product master, Business Partners, Organizational Mgmt, Lead MgmtXxx o Configuring IC Web client like Business Roles, Profile setup, Interaction records, Partner determination, broadcast messaging, Transaction launcher, Authorization Setup, o Creating Users for Web UI and integration between ECC and CRM. • BI -Business Intelligence Support and Maintenance o Redesigning BI Landscape to improve loading and Query performance o Creating custom reports and workbooks using BEx Analyzer • UCES -Support and Maintenance o Sustaining UCBS Utility Customer E-Service • ERP-Core Support and Maintenance Consulting o Plarming production support activities for ERP Core activities o Identify change management opportunities and implement organizational solutions involving functional department efficiency improvement and workload balancing • SAP Basis Consulting o SAP Solution Management evaluation and implementation o SAP Enterprise portal architecture 4 Professional Services Rev. June 2,2010 S:IASDlPURCHISOLlCIT ATlONs\CURRENT BUYER-CM FOLDERS\l<ATHY\Coll". elSIC 10 135998-Sierra iIlCosy" InclContract CI0135998I.doc EXHIBIT "B" SCHEDULE OF PERFORMANCE CONSULTANT shall provide 2nd level of SAP Support and Maintenance Consulting_Services for configuration changes, master data setup, process design, system analysis, and integration for the SAP modules listed in Exhibit A-Scope of Services. Detailed tasks will be assigned and approved by SAP PMO on as-needed basis not to exceed allocated hours per module. Specific schedules for each Task as assigned will be developed on a Task by Task basis. CONSULTANT shall perform the Services so as to complete each Task within the number of hours/days/weeks as specified in Table A-I below and agreed to by CONSULTANT and City's Functional Lead and SAP Basis Lead. PriOrity Definition Response Provide Target Resolution Time Escalation Path Time Solution After Time Notification rg y y y i • Core business process cannot be carried out. Escalation path: tbd Critical • Security violation. I • Multiple users or departments are directly affected. I 4 hours • Incident has serious impact on critical tasks and no workaround is available • Customer affected. as _ group of users are directly affected. • Compliance time line is affected day I 1 day 3 days 3 days nesource estimation, City's approval, prioritization and scheduling S,IASD\PURCH\SOUClTATIONS\CURRENT BUYER·eM FOLDERSIKATHY\Contra ClS\CI0I35998·Sicrra infosys, Inc\Conlract C10135998Ldoc Resolution> 2 day Escalation path: tbd l'l1:>ressiooal Services Rev. June 2, 2010 [ , Low I L • Small number of users are affected. • Isolated incident. • Degraded performance and/or is difficult to use, • User requests general information, servioe or consultation, • Cosmetic enhancements • Report enhancements 5 days 5 days 2 2·3 weeks Requires resouroe estimation, City's approval, prioritization and scheduling I 4-6 weeks' I Requires resource 'II ... =' ~timatiOn, City's approval, prioritization and scheduling ._-L ___ . . . . . Professional Services Rev. June 2, 2010 S:IASDIPURCH\SOUCITATIONSICURRENT BUYER-CM FOLDERS\KATHYIContra cts\CI0135998-Sierr. infos;., Inc\Contract Cl 013S9981.doc EXHIBIT "C" COMPENSATION The CITY agrees to compensate the CONSULTANT for professional services performed in accordance with the terms and conditions ofthis Agreement on a Time and Materials basis, based on the hourly rate schedule attached as Exhibit C-I. The compensation to be paid to CONSULTANT under this Agreement for all services described in Exhibit "A" ("Services") and reimbursable expenses shall not exceed $750,000.00 ($250,000.00 per year). CONSULTANT agrees to complete all Services, including reimbursable expenses, within this amount. In the event CITY authorizes any Additional Services, the maximum compensation shall not exceed $750,000.00 ($250,000.00 per year). 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 arc reimbursable at actual cost. All requests for payment of expenses shall be accompanied by appropriate backup information. Any expense anticipated to be more than $250.00, shall be approvad 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-l. 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. Professional Services 18 Rev June 2,2010 S:IASDIPURC!l\SOLlCITATIONSICURRENT BUYER-CM FOLDERSIKA THYlContra ctsICI0135998-Sierra infosys, InclContrac! ClOI35998l.doc [SCOPE ! i i IIS:U/CCS I i1 ~--' ____ M I 2 , 3 , I--4 , r-5 1---'" 6 i COREERP ! ! i '" EXHIBIT "C-l" HOURLY RATE SCHEDULE I LABOR CATEGORIES (e.g. Sr. Consultant, ' Lead, Consultant, Clerical, etc.) i ONSITE CONSULTING SAP ISU DM Support and Maintenance Sr. Consultant -----------,-, ____ M. SAP ISU BM-BILLING Support and Maintenance Sr. Consultant SAP ISU FICA Support and Maintcmmee ' Sr. Consultant ' SAP CRM & ICWEB Support and Maintenance Sr. Consultant SAP BI Support and Maintenance Sr. Consultant SAP UCES Support and Maintenance Sr. Consultant ERP-CORE Support and Maintenance FUNCTIONAL' SAP ESSIMSS, FI, HR, SD, MM, PM, WM, PS, CO,BCS,FA ___ M. CONSULTANTS ERP-CORE Support and Maintenance TECHNICAL ABAP, ALV, Workftow, Report, Painter, JAVA, JSP, HTML, Web Service, XML, , RFC,JCO BSP Architecture and Development CONSULTANTS .... ..--- HOURLY EXTENDED RATE 135 125 135 125 125 135 HOURLY RATE (HOURLY RATE 160 ! ... -----_ .... , 150 , ""-~ .... 160 , 125 125 ..... ~ ... 160 "'-" , Professional Services 19 Rev June 2, 2010 i i i I I I i S:IASDIPURCHlSOLICITATIONSlCURRENT BUYER·CM FOLDERS\KA THY\Contra elSIC! 0135998..s1erra inCosys, In.IContract CI01359981.doe '---.. ··1 7 I ERP-CORE Support and Maintenance 100 SAP Basis Is 1 BASIS CONSULTING ! I Sr. Con~uItant 100_ :~ I i ~--~ .. ! I Assumptions: Hourly Rates and implementation eosts cbange for any otber extra consulting services. 100 100 Professional Services 20 Rev June 2, 2010 S:\ASDIPURCH\sOLICITATIONSICURRENT BUYER-CM FOLDERS\KA llIY1Conlra elS\cI 0135998-Sierr. infosys, Ine\Contract CIOI3S998I.doc .- ._. ,---..... EXHIBIT "D" INSURANCE REQUIREMENTS CONTRACTORS TO THE CITY OF PALO ALTO (crry), AT THEIR SOLE EXPENSE, SHALL FOR THE TERM OFTHECONTRACr OBT Am AND MAJNT Am INSlJRANCE IN THE AMOUNTS FOR THE COVERAGE SPECIFIED BELOW, AFFOIlDED BY COMPANIES WITH AM BEST'S KEY llATING OF A-:VU, Oil HJGHEIl, LICENSED Oil AUTHORIZED TO TllANSACT INSUIlANCE BUSINESS IN THE STATE OF CALIFORNIA. AWARD IS CONTINGENT ON COMPLIANCE WITH CITY.'S INSURANCE REQUIREMENTS, AS SPECIFIED BELOW: I-.1INlMUM J.IMITS REQUIRED TYPE OF COVERAGE REQUIREMENT i EACH YES YE:S YES YES YES I. WORKER'S COMPENSATION EMPLOYER'S LIABHJTY GENERAL IlABILlTY. INCLUDING PERSONAL INJURY. BROAD FORM PROPERTY DAMAGE BLANKET CONTRACTUAL, AND FIRE LEGAL LIABILITY AUTOMOBIlE LIABILITY, INCLUDING ALL OWNED, HIRED, NON-OWNED PROFESSIONAL LIABILITY, INCLUDING, ERRORS AND OMISSIONS, MALPRACrICE (WHEN APPLICABLE), AND NEGLIGENT PERFOR;'l!ANCE STATUTORY STATUTORY BODlL Y INJURY PROPERTY DAMAGE BODILY INIURY &.PROPERTY DAMAGE COMBINED. BODILY INJURY EACH PERSON EACH OCCURRENCE PROPERTY DAMAGE BODlL Y INJURY AND PROPERTY DAMAGE. COMBINED ALL DAMAGES OCCURRENCE $1,000,000 $1,000,000 $1,000,000 $1000000 : , , $1,000,000 $1,000,000 $1,000.000 $1,000,000 AGGREGATE .... _,;;0;;-$1,000,000 $1,000,000 $1,000,000 . .... ~ .... """ $1000 000 : $1:000;000 : $1,000,000 $1.000,000 $1,000,000 1 ____ -'$"-1"'00"-'0"-'0""00'-___ --1 THE CITY OF PALO ALTO IS TO BE NAMED AS AN ADDmONAL INSUIlED: CONTRACTOR, AT ITS SOlI! !:-'OST AND EXPENSE, SHAH, OBTAIN AND MAlNTAm, IN FULL FORCE AND EFFECT THROUGHOUT THE ENTIRE TERM OF ANYRF,SULTANT AGREEMENT, THE INSURANCE COVERAGE HEREIN DP.s!:-'RIBED, INSURING NOT ONLY CONTRACTOR AND ITS SUBCONSlJLTANTS, IF ANY, BUT ALSO, WITH THE EXCEPTION OF WORKERS' COMPENSATION, EMPLOYER'S LIABILITY AND PROFESSIONAL INSlJRANCE. NAMING [ AS ADDITIONAL INSUIlEDS CITY, ITS COUNCIL MEMBERS, OFFICERS, AGENTS, AND EMPLOYEES. ' INSURANCE COVERAGE MUST INCLUDE: A. A PROVISION FOR A \\fRIHEN THIRTY DAY ADVANCE NOnCE TO CITY OF CHANGE IN COVERAGE OR OF COVERAGE CANCELLATION; AND E. A CONTRACTUAL LIABILITY ENDORSEMENT PROVIDING INSURANCE COVERAGE FOR CON1RACTOR'S AGREEMENT TO INDEMNIFY CI1Y. 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 APFORDED TO "ADDITIONAL INSUREDS" A, PRIMM Y COVERAGE WITH RESPECT TO CLAIMS ARISING OUT OF THE OPERAnONS OF THE NAMED INSURED, INSURANCE AS AFFORDED BY THIS POLICY IS PRIMARY AND IS NOT ADDITIONAL TO OR CONTRIBUTING WITIl ANY OTHER INSURANCE CARRIED BY OR FOR THE BENEFIT OF THE ADDITIONAL INSUREDS, E, CROSS LIABILITY Professional Services 21 Rev June 2, 2010 S:IASDIPURCH\SOLICITATIONSICURRENT BUYER.cM FOIDERSIKATHYlContra etsICI0I35998·Sierra inrosys, In,\Contrac' CI0I35998I.doe TIlE NAMING OF MORE THAN ONE PERSON, FIRM, OR CORFORA TlON AS INSUREDS UNDER THE POLICY SHALL NOT, FOR THAT REASON ALONE, EXTINGUISH ANY RIGHTS OF THE INSURED AGAINST ANOTIlER, BUT THIS ENDORSEMENT, AND THE NAMING OF MULTIPLE INSUREDS, SHALL NOT INCREASE TIlE TOTAL LIABILITY OF TIlE COMPANY UNDER THIS POLICY, C. NOTICE OF CANCELLATION 1. IF THE POLICY IS CANCELED BEFORE ITS EXPIRATION DATE FORANY REASON OTHER THAN THE NON·PAYMENT OF PREMlUM, THE ISSUING COMl'ANY SHALL PROVIDE CITY AT LEAST A HURTY (30) DAY WRlTTEN NOTICE BEFORE THE EFFECTIVE DATE OF CAl'lCELLA TlON. 2. IF THE POLICY IS CANCELED BEFORE ITS EXPIRATION DATE FOR TIlE NON·PAYMENT OFPREMlUM, TIlE ISSUING COMPANY SHALL PROVIDE CITY AT LEAST A TEN (10) DAY WRllTEN NOTICE BEFORE THE EFFECTIVE DATE OF CANCELLATION. NOTICES SHALL BE MAILED TO: PURCHASING AND CONTRACT ADMINISTRATION CITY OF PALO ALTO P.O. BOX 10250 PALOALTO,CA 94303 Professional Services 22 Rev June 2. 2010 S :IASDlPURCHISOLlCrrATIONSICURRENT BUYER-CM FOLDERSIKA THY\Contra e!SICI 0 11599li-Sicrra infusys, lnclContract C101359981.doc I ~~h X Cha1nanl 6001 Savoy Dr suite Houston ~X 77016 i..-A~~ QWmO It(lt03 ~ SCHE:OUlEO AUf OS __ H1RID oWrou 501 C1T~ OF Pl\LOlWI'O p.O. BOX 10250 p~ ALTO, CA 94303 ®2010 -Sierra Infosys Inc $ 1.000.000 SHaUll;) ANV Of THl! A80VE QE.SCRi8EO f>OVClfS BE CAACELlEQ BEfO. HE I TM!! EXPiAATION DATE TH£A~ NOTICE WIll e'" ACCORDmCI'1 wn~ THE POLIe'( PRoVIsIONS ... OELMREO 1M Professional Services 2 3 Rev June 2, 20 I 0 S;\ASD\PURCH\SOLICITATIONS\CURRENT BUYER ·eM FOLDERSIKA THy\Contru elslC! 0 lJ5998·Sierr. infos~,. In.ICon!rao! ClOI35998I.doc EXHIBITE TRANSITION PLAN . am enance Planning Setup Transfer . D I' ervlce e Ive > TMOOW'" ~",m'.OO"~KOOW.dg, ~t~port -.... , Establish scope • Setup connectivity and time!ines for remote access • Identify • Identify and deploy stakeholders & connectivity and ~ process owners access • Identify • Authorltation :r Organization • Sierra System • Define service levels • Support process ;== ~ • Transition plan • SAP account • Support Org • Authorization ;: • Support flow • Network Access • Sierra system = QQB'I QQB'I SAP PMO members SAP PMO members 0 SAP Basis :r ;:: lli!lrqi Engagement Manager Sierra Support Service Manager Engagement Manager Support consultant s ~ • Understand Business process, Configuration, Master data "' Customization • Understand and review change management process • On site training ticketing system • Blue prlnl • Scheduled jobs • Operation manuals • Customization specification • Interfaces .~ CUPA SAP PMO SAP Core Team AXON -as needed ~ d Engagement Manager Suooort Con,ullar • Reporting req • Tas~ Order planning , Prioritization • Perfonnance management • Scheduling • Cost conlrol • Performance • Slatus Report QQB'I SAPPMO SAP Core Team ~ Engagement Manager Support Service Manager Professional Services 2 4 Rev June2,:WIQ S:IASDIPURCH\SOLlClT A TIONSICURRENT BUYER-CM FOLDERSIKA THY\Conka c!sIClO 13599&-Sicrra Infosl"', Ine\Contract CI0!359981.doc City of Palo Alto (ID # 3714) City Council Staff Report Report Type: Consent Calendar Meeting Date: 5/6/2013 City of Palo Alto Page 1 Summary Title: City Manager Authorization to Report Greenhouse Gases Title: Adoption of a Resolution Confirming that the City Manager is Authorized to Report Greenhouse Gases Generated in Municipal and Utility Operations to Federal and State Agencies and to Participate in Cap and Trade Programs From: City Manager Lead Department: Utilities Recommendation Staff recommends that Council approve the attached resolution confirming that the City Manager is authorized as required by state and federal regulations to report greenhouse gases generated in municipal and utility operations to Federal and State agencies and to participate in cap-and-trade programs. Executive Summary The City of Palo Alto currently reports greenhouse gas (GHG) emissions from various municipal and utility operations to the Federal Environmental Protection Agency (EPA) and the California Air Resources Board (CARB), and also participates in the CARB’s GHG cap-and-trade program. Both agencies require that staff members reporting such data or participating in the cap and trade program be explicitly authorized to report the data. The City Manager and Utility Director are authorized by the Municipal Code to generate reports to Federal and State agencies, but since the relevant code section does not specifically mention the EPA and CARB regulations, this resolution will ensure that there is no question of staff’s authorization to perform the duties required under these regulations. Background The EPA and CARB both require the City to report GHG emissions from the activities of its natural gas utility, electric utility, and landfill. The CARB uses the natural gas and electric utility reports to establish the City’s compliance requirement under the GHG cap-and-trade program. The City’s electric utility is allocated GHG emission allowances, which it is required to sell in the CARB auctions. Staff expects the CARB to establish the parameters for the City’s gas utility to participate in the cap-and-trade program by 2015. City of Palo Alto Page 2 Discussion The Palo Alto Municipal Code (PAMC) Section 2.08.200(a)(4) states that one of the duties of the Director of Utilities is “to generate appropriate reports as may be required by county, state and federal agencies or by law.” Staff members reporting GHG emissions to the EPA or the CARB are required to certify the following:  That they were selected to do such reporting by an agreement binding on the agency; and  That they are authorized to perform such reporting duties, and that their actions in that capacity will be binding on the agency. By approving this resolution, the Council will confirm that the City Charter and the PAMC serves as that binding agreement and will confirm the authorization to perform the required duties. Staff members auctioning allowances under CARB’s cap-and-trade program are required to make similar representations, and the attached resolution will confirm that they have the required authorization to do so if the City Manager delegates that authority to them. The resolution confirms the City Manager’s authority to make other reports or engage in other cap and trade activities under any future regulations. Staff is not aware of any such programs currently under development, but in the event one is developed, the City Manager will have proper authorization to report or act under those programs. Resource Impact Adoption of the resolution does not impact Utilities operating expenses. Policy Implications Adoption of the resolution does not change City policy. It ensures that the City can conduct business activities required by State and Federal law. Environmental Review Adoption of the proposed resolution does not constitute a project for the purposes of the California Environmental Quality Act. Attachments:  Attachment A: Resolution Authorizing the City Manager to Report Greenhouse Gases to State and Federal Agencies and to Participate in Cap and Trade Programs (PDF) *NOT YET APPROVED* 130418 dm 015009 Resolution____ Resolution of the Council of the City of Palo Alto Confirming that the City Manager is Authorized to Report Greenhouse Gases Generated in Municipal and Utility Operations to Federal and State Agencies and to Participate in Cap and Trade Programs R E C I T A L S A. The City of Palo Alto’s municipal and utility operations generate greenhouse gases in varying amounts. Some of these operations, such as the electric utility, gas utility, and landfill, are currently subject to Federal regulations mandating reporting of greenhouse gases, State regulations mandating such reporting, State regulations requiring participation in the State’s cap and trade program, or some combination of these regulations. Other regulations may apply to these operations or other municipal or utility operations in the future. B. Some of these regulations require that the staff member completing the greenhouse gas reports or taking actions under the cap and trade program certify that he or she has the necessary authority to make such reports and that the City will be bound by his or her representations and actions with respect to this program. The Council of the City of Palo Alto does resolve as follows: SECTION 1. The Council confirms that the City Manager or his or her designee is authorized under the City Charter and Palo Alto Municipal Code to perform on behalf of the City of Palo Alto all duties and responsibilities required by Title 40, Part 98 of the Code of Federal Regulations (Mandatory Greenhouse Gas Reporting), Title 17, Article 5, Sections 95800 through 96022 (California Cap on Greenhouse Gas Emissions and Market-based Compliance Mechanisms), and Sections 95100 through 95158 (Regulation for the Mandatory Reporting of Greenhouse Gases) of the California Code of Regulations, or any other regulation related to the reporting of greenhouse gases or the tracking and disposition of allowances, offsets, or other instruments as part of programs related to the tracking or reduction of greenhouse gases. // // // // // // *NOT YET APPROVED* 130418 dm 015009 2 SECTION 2. The Council finds that the adoption of this resolution does not constitute a project under the California Environmental Quality Act and no environmental assessment is required. INTRODUCED AND PASSED: AYES: NOES: ABSENTIONS: ABSENT: ATTEST: APPROVED: _____________________________ _____________________________ City Clerk Mayor APPROVED AS TO FORM: _____________________________ City Manager _____________________________ Senior Deputy Asst. City Attorney _____________________________ ____________________________ Director of Utilities Director of Administrative Services City of Palo Alto (ID # 3678) City Council Staff Report Report Type: Consent Calendar Meeting Date: 5/6/2013 City of Palo Alto Page 1 Summary Title: Amendment to Blanket Contract – Cooper Power Systems Title: Request for Authorization to Increase the Existing Blanket Purchase Order with Cooper Power Systems, Inc. by $225,000 for Fiscal Year 2013 and to Approve a $225,000 Blanket Purchase Order with Cooper Power Systems, Inc., for Fiscal Year 2014 for the Purchase of Padmount Switches From: City Manager Lead Department: Utilities Recommendation: Staff recommends that the City Council approve and authorize the City Manager or his designee to increase the amount of the blanket purchase order with Cooper Power Systems, Inc. (“Cooper”) by an additional $225,000 for the purchase of padmount switches for fiscal year 2013. Staff also recommends that the Council approve and authorize a blanket purchase order amount of $225,000 for fiscal year 2014. Executive Summary Cooper is a manufacturer of electrical equipment used for construction of utility electric systems. In 2011 a three year blanket purchase order was signed for the provision of padmount switches to the City of Palo Alto. Purchase order limits are established each fiscal year. Council authorization to increase the amount of the blanket purchase order for fiscal year 2013 and 2014 will allow staff to purchase the equipment necessary to facilitate the construction of the electric system. Background The City has a three year (2012-2014) blanket purchase order with Cooper for supplying pad mount electric switches for Customer Service and System Improvement Projects. A purchase limit is set each fiscal year based on historical expenditures and future projections. For fiscal year 2013 the purchase limit is $225,000. Staff requests council approval to increase the City of Palo Alto Page 2 blanket purchase order amount by $225,000, for a total of $450,000, for the remainder of fiscal year 2013. Discussion Historically Utilities procures six to seven switches in a year for its projects and this has consistently met anticipated construction activities. However, in recent months several projects have been undertaken which have increased the requirement for the number of switches. This includes the new VMware campus which required the installation of six switches; primary electric distribution line reconfiguration for substation upgrades; system rebuild projects; and spare units to replenish emergency stock. The additional $225,000 purchase order amount for fiscal year 2013 will allow staff to purchase the necessary padmount switches for Utilities projects other than the VMare campus. Staff anticipates, based on planned underground system projects, padmount switch requirements in fiscal year 2014 will be back to historic levels. Resource Impact Funding for the projects that require equipment to be purchased under the requested authorization is available in the FY 2013 budget. This report is only requesting approval of the blanket purchase order limit increase. Policy Implications No policy implications. Environmental Review Council authorization to increase the amount of the blanket purchase order with Cooper does not meet the definition of a project pursuant to Public Resources Code Section 21065, thus no environmental review is required. City of Palo Alto (ID # 3699) City Council Staff Report Report Type: Consent Calendar Meeting Date: 5/6/2013 City of Palo Alto Page 1 Summary Title: Life Pack 15 Monitor Warranties Title: Recommendation to Purchase Eighteen (18), 5-Year Extended Warranties for New Electrocardiogram (EKG) Monitors for a Not-to-Exceed Total of $93,000 From: City Manager Lead Department: Fire Recommendation Staff recommends that Council approve an agreement and authorize the City Manager to purchase eighteen (18), five-year extended warranties for the new Electrocardiogram (EKG) monitors, through Physio Control, Inc. for the amount not to exceed a total of $93,000. Executive Summary The Fire Department recently purchased 18 Life Pack 15 EKG monitors for just under $500,000. All monitors come with a standard one-year warranty. This CMR is for approval of an extended warranty for each monitor at a cost of $5,165 each, and a total of $93,000 for all monitors. This includes on-site annual calibrations and repairs, loaner monitors if needed for major repairs, software upgrades, remote troubleshooting, etc. This is a sole source from Physio Control, the manufacturers of the Life Pack 15. The five-year service agreement is attached. Background Due to the complicated hardware and clinical significance of the monitors used in the field for patient assessment, data transmissions and reporting, the need for extended warranties is justified. The older model monitors were sold to a reseller and the funds from the sale will help offset the costs for the extended warranties. The total reimbursement from the sale of the older monitors is $77,850, leaving the City with an additional $15,150 to meet the service contract. Currently, the additional funds are in the ALS/EKG Monitor Replacement CIP #FD- 12000. Once the money is received from the reseller, funds will be transferred to the existing CIP fund for this purchase. City of Palo Alto Page 2 Discussion EKG monitors are a critical piece of equipment used by paramedics every day in Palo Alto. This life-saving and operationally necessary equipment allows paramedics to deliver the highest levels of advanced life support to the community. The measurable outcomes have increased paramedic efficiency, enhanced diagnosis and treatment capabilities, and saving patients’ lives in cardiac situations. In December 2012, Council approved the purchase of 18 Life Pack 15 EKG monitors in an amount not to exceed $540,000 that included a standard one-year warranty. Extended warranties were not available at the time of purchase because the City was utilizing discount pricing received by another emergency medical services provider and not purchasing directly from the vendor. The extended warranty includes on-site annual calibrations and repairs, identical loaner EKGs if needed for major repairs, software upgrades and remote troubleshooting. EKG monitors have a serviceable life expectancy of five to ten years. Due to the life-saving mission of the equipment, complicated hardware and clinical significance of the monitors used for patient assessment, data transmissions and reporting, extended warranties are a prudent investment. To offset the cost, the older Phillips EKG monitors that were replaced were declared surplus and sold to Foremost Equipment. Resource Impact The five-year warranty costs of $93,000 will be partially offset by the receipt of $77,850 from the sale of older monitors. The remaining funding of $15,150 will be derived from an existing project: the ALS/EKG monitor Replacement CIP #FD-12000. Attachments: Attachment A: Extended Warranty Contract LP15 (PDF) TECHNICAL SERVICE SUPPORT AGREEMENT End User #Bill To #PALO ALTO FIRE711 SIERRASTANFORD, CA 94305 PALO ALTO FD250 HAMILTON AVE6TH FLOORPALO ALTO, CA 94301 00011303 00011302 Contract Number: The designated Covered Equipment and/or Software is listed on Schedule A. This Technical Service Agreementis subject to the Terms and Conditions on the reverse side of this document and any Schedule B, if attached.If any Data Management Support and Upgrade Service is included on Schedule A then this Technical ServiceSupport Agreement is also subject to Physio-Control's Data Management Support and UpgradeService Terms and Conditions, rev 7/99-1. This Technical Service Support Agreement begins on Price of coverage specified on Schedule A is $92,970.00 per term, payable in a One Time installment. Special Terms Accepted: Physio-Control, Inc. By: Title: Date: Customer: By: Print: Title: Date: Purchase Order Number: Territory Rep:WENN67Mark Plummer800-442-1142 x2556800-772-3340Phone:FAX: Customer Contact:Kimberley Roderick650-329-2220650-322-3607Phone:FAX: 1/3/2013 and expires on 1/2/2018. NONE Reference Number:N67-1632 NewPrinted: 3/14/2013 Page 1 of 5 PHYSIO-CONTROL, INC. TECHNICAL SERVICE SUPPORT AGREEMENT TERMS AND CONDITIONS Customer's signature or purchase order referencing this Technical Service Support Agreement are required prior to Physio-Control's acceptance of this Agreement. This Agreement covers only the equipment listed on Schedule A ("Covered Equipment"). These terms constitute the complete agreement between the parties and they shall govern over any other documents. These terms may not be revised in any manner without the prior written consent of Physio-Control. SERVICES. The services provided under this Agreement are set forth on Schedule A. Physio-Control strives to return service calls within two (2) hours, and strives to resolve service issues within twenty-four (24) hours. Following service, Physio-Control will provide Customer with a written report of actions taken or recommended and identification of any materials replaced or recommended for replacement. The following services are available: "Repair Only Service" means repairs, Battery Replacement Service, parts and labor necessary to restore Covered Equipment to original specifications, subject to Exclusions. "Inspection Only Service" means inspections of Covered Equipment to verify proper device calibration, mechanical operations and output measurements, electrical safety check in accordance with National Fire Protection Association (NFPA) guidelines and labor, subject to Exclusions. "Repair and Inspect Service" means repairs, Battery Replacement Service, parts and labor necessary to restore Covered Equipment to original specifications, and inspections to verify proper device calibration, mechanical operations and output measurements, electrical safety check in accordance with NFPA guidelines and Updates (as set forth below), subject to Exclusions. "Battery Replacement Service" means replacement of batteries on a one-for-one, like-for-like basis, up to the number of batteries and/or devices listed in Schedule A. Only batteries manufactured or distributed by Physio-Control are eligible for replacement. Battery replacement is available upon Customer notification to Physio-Control of the occurrence of: (i)Battery failure as determined by Customer's performance testing and evaluation in accordance with the applicable Operating Instructions; or (ii)The end of the useful life of the battery as set forth in the applicable Operating Instructions At the discretion of Physio-Control, battery replacement shall be effected by shipment to Customer and replacement by Customer, or by on-site delivery and replacement by a Physio-Control Service Technician. Upon Customer's receipt of a replacement battery, the battery being replaced shall become the property of Physio-Control, and Customer must return the battery being replaced to Physio-Control for proper disposal. In the event that Physio-Control does not receive the battery, Customer will be charged at the then-current rate for the replacement battery. "On-Site Service" means that a Physio-Control factory-trained technician will provide service at Customer's location. Services will be performed between 8:00am and 5:00pm local time, Monday through Friday, excluding holidays. Customer is to ensure Covered Equipment is available for service at scheduled times. Some service may not be completed On-Site. Physio-Control will cover travel and/or round-trip freight for Covered Equipment that must be sent to our designated service facility for repair. "24-hour On-Site Service" means that a Physio-Control factory-trained technician will provide service at Customer's location at any time, except on the holidays listed above. Customer is to ensure Covered Equipment is available for service at scheduled times. Some service may not be completed On-Site. Physio-Control will cover travel and/or round-trip freight for Covered Equipment that must be sent to our designated service facility for repair. "Ship-In Service" means that service will be performed at Physio-Control's designated service facility. Physio-Control will cover round-trip freight for Covered Equipment that is sent to our designated service facility for repair. If Covered Equipment is not available as scheduled or Customer requests services or goods not covered by this Agreement or outside of designated service frequency or hours, Physio-Control will charge Customer at Physio-Control's standard labor rates less 10% (including overtime, if appropriate) and applicable travel costs. Parts required for such repairs will be made available at 15% off the then-current list price. EXCLUSIONS. Unless otherwise specified, this Agreement does not include: ·supply or repair of accessories or disposables ·repair of damage caused by misuse, abuse, abnormal operating conditions, use of batteries or other products not distributed by Physio-Control, operator errors, or acts of God ·case changes ·repair or replacement of items not originally distributed or installed by Physio-Control ·Upgrades and installation of Upgrades ·battery maintenance, performance testing, evaluation, removal and recycling Reference Number:N67-1632 NewPrinted: 3/14/2013 Page 2 of 5 LOANERS. If Covered Equipment must be removed from service to complete repairs, Physio-Control will provide Customer with a loaner device, if one is available, until the Covered Equipment is returned. Customer assumes complete responsibility for the loaner and shall return the loaner at Customer's expense to Physio-Control in the same condition as received, upon the earlier of the return of the removed Covered Equipment or Physio-Control's request. UPDATES. "Update" means a change to a device to enhance its current features, stability, or software. If Repair and Inspect Service is designated for Covered Equipment on Schedule A, Physio-Control will install Updates at no additional cost, provided such Updates are installed at the time of regularly scheduled service. If parts must be replaced to accommodate installation of new software, such parts may be purchased at a rate of 30% less than the then-current list price. Updates installed on Covered Equipment designated as Repair Only Service, Inspect Only Service, or at a time other than regularly scheduled Repair and Inspect Service will be billed on a separate invoice at the then-current list price less 20%. UPGRADES. "Upgrade" means a major, standalone version of software or the addition of features or capabilities to a device. Upgrades must be purchased separately, and are not provided under this Agreement. Upgrades are available at a rate of 17% less than the then-current list price. PRICING. Pricing is set forth on the front page of this Agreement. Prices do not include taxes. Sales, service or use taxes will be invoiced in addition to the price of the goods and services covered by this Agreement unless Physio-Control receives a copy of a valid exemption certificate. If the number or configuration of Covered Equipment changes during the Term, pricing shall be pro-rated accordingly. For Inspection Only Service and Repair and Inspect Service, no pricing deduction will be made for removal of Covered Equipment if an inspection has already been performed during the Term. Discounts will not be combined with other special terms, discounts, and/or promotions. PAYMENT. Payment is due within thirty (30) days of invoice date. WARRANTY. Physio-Control warrants services performed under this Agreement and replacement parts provided in performing such services against defects in material and workmanship for ninety (90) days from the date a service was performed or a part was provided. Customer's sole remedy shall be reservicing the affected unit and/or replacement of any part determined to be defective, without additional charge, provided Customer notifies Physio-Control of any allegedly defective condition within ten (10) calendar days of its discovery by Customer. Physio-Control makes no other warranties, express or implied, including, without limitation, NO WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, AND IN NO EVENT SHALL PHYSIO-CONTROL BE LIABLE FOR INCIDENTAL, CONSEQUENTIAL, SPECIAL, OR OTHER DAMAGES. TERM. The initial Term is set forth on the front page of this Agreement. This Agreement shall automatically renew unless terminated by either party with written notice thirty (30) days prior to the expiration of the then-current term. Prices are subject to change upon renewal. TERMINATION. Either party may terminate this Agreement for material breach by the other party by providing thirty (30) days' written notice to the other party, and provided such breach is not cured within the notice period. In addition, either party may terminate this Agreement at any time upon sixty (60) days' prior written notice to the other party. In the event of such early termination, Customer shall be responsible for the portion of the designated price which corresponds to the portion of the Term prior to the effective date of termination and the cost of any services rendered during the Term. DELAYS. Physio-Control will not be liable for any loss or damage of any kind due to its failure to perform or delays in its performance resulting from any cause beyond its reasonable control, including, but not limited to, acts of God, labor disputes, labor shortages, the requirements of any governmental authority, war, civil unrest, delays in manufacture, obtaining any required license or permit, and Physio-Control's inability to obtain goods from its usual sources. Any such delay shall not be considered a breach of Physio-Control's obligations and the performance dates shall be extended for the length of such delay. DEVICE INSPECTION BEFORE ACCEPTANCE. All devices that are not under Physio-Control Limited Warranty or a current Technical Service Support Agreement must be inspected and repaired (if necessary) to meet original specifications at then-current list prices prior to being covered under a Technical Service Support Agreement. MISCELLANEOUS. (a)Customer agrees to not employ or offer employment to anyone performing services on Physio-Control's behalf during the Term of this Agreement or for one (1) year following its expiration without Physio-Control's prior written consent; (b) this Agreement, and any related obligation of other party, may not be assigned in whole or in part without the prior written consent of the other party; (c) this Agreement shall be governed by the laws of the State in which the service is provided; (d) all costs and expenses incurred by the prevailing party related to the enforcement of its rights under this Agreement, including reasonable attorney's fees, shall be reimbursed by the other party. Reference Number:N67-1632 NewPrinted: 3/14/2013 Page 3 of 5 Contract Number:Servicing Rep:District:Phone:FAX: Mark Plummer, WENN67WEST800-442-1142 x2556800-772-3340 TECHNICAL SERVICE SUPPORT AGREEMENTPHYSIO-CONTROL, INC. SCHEDULE A Equipment Location:PALO ALTO FIRE, 00011303711 SIERRASTANFORD, CA 94305 Model Part Number Serial Number Line Date Date POS LP15 On Site Repair and 1 Insp per Year:M-F/8-5Scope Of Service Effective ExpirationRef. Inspections Total LIFEPAK® 15 V15-2-001565 40990458 1 1/3/2013 1/2/2018 5LIFEPAK® 15 V15-2-001565 40990491 2 1/3/2013 1/2/2018 5LIFEPAK® 15 V15-2-001565 40990634 3 1/3/2013 1/2/2018 5LIFEPAK® 15 V15-2-001565 40991280 4 1/3/2013 1/2/2018 5LIFEPAK® 15 V15-2-001565 40991302 5 1/3/2013 1/2/2018 5LIFEPAK® 15 V15-2-001565 40991333 6 1/3/2013 1/2/2018 5LIFEPAK® 15 V15-2-001565 40991375 7 1/3/2013 1/2/2018 5LIFEPAK® 15 V15-2-001565 40991447 8 1/3/2013 1/2/2018 5LIFEPAK® 15 V15-2-001565 40991451 9 1/3/2013 1/2/2018 5LIFEPAK® 15 V15-2-001565 40991453 10 1/3/2013 1/2/2018 5LIFEPAK® 15 V15-2-001565 40991462 11 1/3/2013 1/2/2018 5LIFEPAK® 15 V15-2-001565 40991582 12 1/3/2013 1/2/2018 5LIFEPAK® 15 V15-2-001565 40991642 13 1/3/2013 1/2/2018 5LIFEPAK® 15 V15-2-001565 40991643 14 1/3/2013 1/2/2018 5LIFEPAK® 15 V15-2-001565 40995176 15 1/3/2013 1/2/2018 5LIFEPAK® 15 V15-2-001565 40982459 16 1/3/2013 1/2/2018 5LIFEPAK® 15 V15-2-001565 40983001 17 1/3/2013 1/2/2018 5LIFEPAK® 15 V15-2-001565 40983187 18 1/3/2013 1/2/2018 5 ** Denotes an inventory line that has changed since the last contract revision or addendum. Reference Number:N67-1632 NewPrinted: 3/14/2013 Page 4 of 5 TECHNICAL SERVICE SUPPORT AGREEMENTPHYSIO-CONTROL, INC. SCHEDULE B LIFEPAK® 15 Monitor/Defibrillator Repair Service includes: • Standard detachable hard paddle repairs. • Replacement or repair of Physio-Control battery charging systems on a one-for-one basis with the total number of LP15Defibrillator/Monitors listed in Schedule A, and as determined necessary by Physio-Control. • Power Adapter repair/replacement. • Battery Coverage • Replacement of three (3) LIFEPAK Li-ion Batteries every two (2) years, or upon battery failure . Reference Number:N67-1632 NewPrinted: 3/14/2013 Page 5 of 5 City of Palo Alto (ID # 3720) City Council Staff Report Report Type: Consent Calendar Meeting Date: 5/6/2013 City of Palo Alto Page 1 Summary Title: Lucie Stern Mech/Elec Upgrade Design Contract Title: Approval of a Contract with Advanced Design Consultants, Inc. in the Total Amount of $234,869 for Design of Mechanical, Electrical and Fire Life Safety Upgrades for the Lucie Stern Community Center Complex (CIP PF- 09000) From: City Manager Lead Department: Public Works RecommendationStaff recommends that Council: Approve,and authorize the City Manager or his designee to execute,the attached contract with Advance Design Consultants, Inc. (Attachment A) in the amount of $234,869 for the design of Lucie Stern Buildings Mechanical/Electrical Upgrades (Capital Improvement Program Project PF-09000), including $213,517 for basic services and $21,352 for additional services. BackgroundThe Lucie Stern buildings were originally constructed in 1936. The buildings havebeen through successive remodeling but there are specific deficiencies that were pointed out in a 2008 Facilities Assessment Report developed by Kitchell Co., Inc. In particular, certain electrical and mechanical components servicing the buildings have reached the end of their useful life expectancy. Additionally, the City of Palo Alto Fire Department requested an upgrade to the existing fire/life safety system at the Children’s Theatre because the fire access lane in the rear of the theater was narrowed when the Children’s Library was expanded. DiscussionWhile staff was developing a detailed scope of work for the Lucie Stern Children’s Theatre project, staff recognized the similar and related work at the other two buildings at the Lucie Stern complex (the Lucie Stern Community Center and the Lucie Stern Community Theater) and is proposing to include them in the scope of a comprehensive revised project for the renovation of the Lucie Stern Buildings Mechanical/Electrical Upgrades for Council consideration. The adopted FY2013 Capital Improvement Program (CIP) budget included existing and additional appropriations,totaling $340,000,for design of the Children’s Theatre mechanical and electrical systems (CIP Project PF-09000), and $100,000 City of Palo Alto Page 2 for design of the Community Center mechanical system (PF-13001). Prior year budgets allocated $250,000 for design and construction of the fire/life safety upgrades for the Children’s Theatre (PF-07003).The adopted-in-concept budget for FY2014 includes $170,000 for design of the Community Theater electrical system replacement (PF-15002). The subject contract will encumber the available design funds from PF-09000, but provide design services for all four projects. In the proposed FY2014 Capital Improvement Budget, the four projects will be moved and consolidated in a new CIP Lucie Stern Buildings Mechanical/Electrical Upgrades (PE-14015) for efficiency and project administrative purposes. Based upon the 2008 needs assessment described above, staff issued a Request for Proposals (RFP) seeking an engineering firm to design modifications to the identified building systems in order to extend the buildings’useful life by an additional thirty years. The scope of work outlined in the RFP included a study phase, conceptual design phase, construction document phase, and a bid and construction phase for the following elements: Task 1: Lucie Stern Children’s Theatre·Fire/Life Safety Upgrade·Balcony Stair Design·Mechanical and Electrical Services Upgrades Task 2: Lucie Stern Community Theater·Electrical Services Upgrades Task 3: Lucie Stern Community Center·Mechanical Services Upgrades The RFP for the project was sent to prospective consultants and posted on the City’s web site on Jan 10, 2013. The following table summarizes the results of the RFP solicitation: City of Palo Alto Page 3 Summary of Solicitation Process Proposal Description/Number Design Services for Lucie Stern Mechanical/Electrical Upgrades Proposed Length of Project 180 Calendar Days Number of Request for Proposals Mailed 21 Total Working Days to Respond to Proposal 18 Working Days Number of Proposals Received 8 Company Name Location (City, State) Selected for Oral Interview? 1.Tmad, Taylor, & Gaines San Francisco, CA Yes 2.Carey & Co., Inc.San Francisco, CA No 3.Bartos Architecture San Mateo, CA No 4.Gordon Prill, Inc.Mountain View, CA No 5.Advance Design Consultants, Inc.San Jose, CA Yes 6.EDesignC, Inc.San Francisco, CA No 7.Axiom Engineers San Jose, CA No 8.Flack + Kurtz San Francisco, CA No Range of Proposal Amounts Submitted $213,517 -$467,525 An evaluation committee,consisting of representatives from the Public Works Engineering Services and Public Services Divisions,reviewed the proposals. The committee carefully reviewed each firm's qualifications and submittal in response to the criteria identified in the RFP. The committee reviewed each firm's qualifications relative to its experience in mechanical, electrical, and fire/life safety design. Consideration was also given to the quality of the proposers’ project approach, performance on past historical and theater projects, qualifications of the specific staff to be assigned to the project, and understanding of the project goals. Two firms were invited to participate in oral interviews on April 3, 2013. Advance Design Consultants, Inc.(ADC)was selected because of the depth and quality of their design experience;particularly with respect to the exceptional qualifications of their proposed project design team and the strength of their proposed project design approach. City of Palo Alto Page 4 TimelineThe design of the components for the three buildings will be completed within 180 calendar days following issuance of the Notice to Proceed. Subsequently, construction of the improvements is expected to take place during Winter 2013 / Spring 2014. If feasible, construction of selected project elements may be fast-tracked to allow for the work to take place during any Children’s Theatre breaks. Staging of the work will be planned in close coordination with the users of the facilities. Resource ImpactFunding for the design of the proposed Lucie Stern renovations is available in the Children’s Theatre Improvement project (CIP PF-09000).Funds for the construction phase are included in the new Lucie Stern Buildings Mechanical/Electrical Upgrades (CIP PE-14015). Remaining funding from Children’s Theatre Fire/Live Safety Upgrades project (CIP PF-07003), the Children’s Theatre Improvement project (CIP PF-09000), the Lucie Stern Mechanical System Upgrade project (CIP PF-13001), and the Lucie Stern Theater Electrical Systems Replacement project (CIP PF-15002)will be returned to the Infrastructure Reserve Fund and those projects closed upon Council’s approval of the proposed FY 2014-2018 Capital Improvement Program budget Environmental ReviewThis project is categorically exempt from the provisions of the California Environmental Quality Act (CEQA) under Section 15301 of the CEQA Guidelines as repair, maintenance or minor alteration of an existing facility and no further environmental review is necessary. Attachments: ·A -ADC Contract for Professional Services (PDF) CITY OF PALO ALTO CONTRACT NO. C13148737 AGREEMENT BETWEEN THE CITY OF PALO ALTO AND ADVANCED DESIGN CONSULTANTS, INC. FOR PROFESSIONAL SERVICES This Agreement is entered into on this day of May, 2013, ("Agreement") by and between the CITY OF PALO ALTO, a California chartered municipal corporation ("CITY"), and ADVANCE DESIGN CONSULTANTS, INC, a California corporation, located at 998 Park Ave, San Jose, CA 95126 ("CONSULTANT"). RECITALS The following recitals are a substantive portion of this Agreement. A. CITY intends to implement the Lucie Stem Buildings Mechanical/Electrical Upgrades Project ("Project") and desires to engage a consultant to provide professional design services for upgrades in connection with the Project in connection with the Project ("Services"). B. CONSUL TANT 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 all Services shall be to the reasonable satisfaction of CITY. o Optional On-Call Provision (This provision only applies if checked and only applies to on-call agreements.) Services will be authorized by the City, as needed, with a Task Order assigned and approved by the City's Project Manager. Each Task Order shall be in substantially the same form as Exhibit A-I. Each Task Order shall designate a City Project Manager and shall contain a specific scope of work, a specific schedule of performance and a specific compensation amount. The total price of all Task Orders issued under this Agreement shall not exceed the amount of Compensation set forth in Section 4 of this Agreement. CONSULTANT shall only be compensated for work performed under an authorized Task Order and the City may elect, but is not required, to authorize work up to the maximum compensation amount set forth in Section 4. Professional Services Rev. Nov. 1,2011 SECTION 2. TERM. The term of this Agreement shall be from the date of its full execution through completion of the services in accordance with the Schedule of Performance attached as Exhibit "B" unless terminated earlier pursuant to Section 19 of this Agreement. SECTION 3. SCHEDULE OF PERFORMANCE. Time is ofthe 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 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 two hundred, thirteen thousand,five hundred, seventeen dollars ($213,517.00). In the event Additional Services are authorized, the total compensation for services and reimbursable expenses shall not exceed twenty- one thousand, three hundred, fifty two dollars ($21,352.00). 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". I 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. CONSUL TANT 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. 2 Professional Services Rev. Nov. 1,2011 S:IASDIPURCHISOLICITATIONSICURRENT BUYER-CM FOLDERSIPW -JOHN MIContractsIFY20 13 ContractslC13148737 _ ADCC LS Mech-ElecIC13148737_Lucie Stern MechElec Upgrades Constract.doc 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. CONSUL TANT 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. CONSULTANT shall correct, at no cost to CITY, any and all errors, omissions, or ambiguities in the work product submitted to CITY, provided CITY gives notice to CONSULTANT. If CONSUL TANT 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 of the Agreement. SECTION 9. COST ESTIMATES. If this Agreement pertains to the design of a public works project, CONSULTANT shall submit estimates of probable construction costs at each phase of design submittal. Ifthe 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 of the CITY. SECTION 11. ASSIGNMENT. The parties agree that the expertise and experience of CONSUL TANT are material considerations for this Agreement. CONSULTANT 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. Subcontracts Authorized: Notwithstanding Section 11 above, CITY agrees that subconsultants may be used to complete the Services. The subconsultants authorized by CITY to perform work on this Project are: 1) Walshon Fire Protection, Inc. 1015 Terminal Way, San Carlos, CA 94070 2) BCA Structural Engineering, Inc. 3 Professional Services Rev. Nov. 1,2011 1300 Industrial Rd, San Carlos, CA 94070 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 sub consultant. CONSULTANT shall change or add subconsultants only with the prior approval of the city manager or his designee. SECTION 13. PROJECT MANAGEMENT. CONSULTANT will assignLorenzoRios as the Project Manager to have supervisory responsibility for the performance, progress, and execution of the Services and Lorenzo Rios Jr. as the project Coordinator 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 ofthe Project or a threat to the safety of persons or property. The City's project manager is Matt Raschke, Public Works Department, Engineering Services Division, City of Palo Alto, CA 94303, Telephone:650-496-5937. 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 shall 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. 16.1. To the fullest extent permitted by law, CONSULTANT shall protect, indemnify, defend and hold harmless CITY, its Council members, officers, employees and agents (each an "Indemnified Party") from and against any and all demands, claims, or liability of any Professional Services Rev. Nov. 1,2011 4 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") that arise out of, pertain to, or relate to the negligence, recklessness, or willful misconduct of the 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 CONSUL TANT' 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 vio lation 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 ofthe same or of any other term, covenant, condition, provision, ordinance or law. SECTION 18. INSURANCE. 18.1. CONSUL TANT, 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 subjectto 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 of this 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 5 Professional Services Rev. Nov. 1,2011 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. CONSUL TANT may terminate this Agreement or suspend its performance of the Services by giving thirty (30) days prior written notice thereofto 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 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, CONSULT ANT will be paid for the Services rendered or materials delivered to CITY in accordance with the scope of services on or before the effective date (i.e., 10 days after giving notice) of suspension or termination; provided, however, ifthis 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 benefit to CITY as such determination may be made by the City Manager acting in the reasonable exercise ofhislher 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 of the project director 6 Professional Services Rev. Nov. 1,2011 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. CONSUL TANT further covenants that, in the performance ofthis 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 of the Palo Alto Municipal Code and the Government Code of the State of California. 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 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. 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 of30% 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 of this policy is on file at the Purchasing Office. 7 Professional Services Rev. Nov. 1,2011 • 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 ofthe 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 of the fi-scal year and funds for this Agreement 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 25. MISCELLANEOUS PROVISIONS. 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 party in any action brought to enforce the provisions of this Agreement may recover its reasonable costs and attorneys' 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 ofthe 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 information as defined in California Civil Code section 1798.81.5( d) about a California resident ("Personal Information"), CONSULTANT shall maintain reasonable and 8 Professional Services Rev. Nov. 1,2011 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. 1/ 1/ 1/ 1/ 1/ 1/ 1/ 1/ 1/ 1/ 25.9 All unchecked boxes do not apply to this agreement. 9 Professional Services Rev. Nov. 1,2011 25.1 0 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. 25.11 This Agreement may be signed in multiple counterparts, which shall, when executed by all the parties, constitute a single binding agreement IN WITNESS WHEREOF, the parties hereto have by their duly authorized representatives executed this Agreement on the date first above written. D DE~IG1L-UL TANTS, INC, CITY OF PALO ALTO By: City Manager APPROVED AS TO FORM: Senior Asst. City Attorney Title: 1?RkS I 0 ~ N 1 Attachments: EXHIBIT "A": EXHIBIT "A-I" EXHIBIT "B": EXHIBIT "C": EXHIBIT "C-l": EXHIBIT "D": SCOPE OF WORK ON CALL TASK ORDER (Optional) SCHEDULE OF PERFORMANCE COMPENSATION SCHEDULE OF RATES INSURANCE REQUIREMENTS !O Professional Services Rev.Nov.!,20!! EXHIBIT" A" SCOPE OF SERVICES Chapter 4 Work Plan or Proposal Introduction: The Lucie Stern Buildings Mechanical/Electrical Upgrades project will encompass three (3) separate buildings; Palo Alto Children's Theater, Lucie Stern Community Theater and Lucie Stern Community Center. The buildings where constructed in 1936 and are located at 1305 Middlefield Road, Palo Alto. The professional services will be divided into three (3) separate work packages as outlined in the scope of work provide with the RFP. Each professional service work package will incorporate a Study Phase, Conceptual Design, Construction Drawings and Bidding/Construction phase. Advance Design Consultants, Inc. (ADC) will provide architectural/engineering consulting services for the evaluation, analysis, recommendation and design for mechanical, electrical and fire / life safety upgrades and improvements, along with any associated structural upgrades for the City of Palo Alto Children's Theatre. ADC will provide engineering consulting services for the evaluation, analysis, recommendation and design for the electrical only upgrades for the Lucie Stern Community Theater. ADC will provide engineering consulting services for the evaluation, analysis, recommendation and design for the mechanical only upgrades, along with any associated electrical/structural support for the new equipment for the Lucie Stern Community Center. Professional Services Approach: I. Phase 1: Study Phase The three (3) buildings; Palo Alto Children's Theater, Lucie Stern Community Theater and Lucie Stern Community Center will remain occupied throughout the entire design process and completion of construction. The study phase of the project will be presented to the City of Palo Alto with a Basis of Design report and As-Built drawings for each building project work package. This phase will include the following: 11 Professional Services Rev. Nov. 1,2011 a. A detailed scope of work as described by the City of Palo Alto and refined based on development of the basis of design. b. Review all available plans and documentation provided by the City of Palo Alto for the project work package area. Develop As-Built drawings ofthe building and systems to be evaluated. c. Survey the various departments and interview end-users that will be utilizing the areas of refurbishment to affectively address their desired needs and concerns. This will include strategies and alternatives that will provide maximum benefit to end user and optimize the functionality and usefulness of the work spaces d. Analyze the existing system(s) to be evaluated and identify existing deficiencies, condition, useful life expectancy, existing equipment life cycle, code compliance, aesthetics, capacity and energy efficiency. e. Consult the City of Palo Alto Project Manager and City of Palo Alto Energy Consultant as needed to develop the survey strategy, identify the existing conditions and needs, and develop recommended modifications to meet critical needs. f. Make recommendations to demolish, modify, refurbish, replace and update existing system as needed based on analysis. The recommendations will meet 2010 California Building & Energy Codes, City of Palo Alto Codes and Regulation, Current NFPA Codes and any other applicable codes and/or regulations. They will take into account the feasibility, economics, downtime and disruption to occupants. g. Provide alternative design concepts and strategies for each system to be evaluated so the City of Palo Alto can determine which option is best for the facility's needs. II. Phase 2: Conceptual Design This phase will entail the preparation of preliminary design drawings with estimated construction costs for the City of Palo Alto's at 30% for review and comment. This phase will include the following: a. Su bmission of 30% conceptual design drawings and demolition drawings for the City of Palo Alto's review and approval. This submission will be Issue for Review 30% (IFR30%). This submission will include the drawings and specifications as stated in the project deliverables section ofthis chapter. b. Provide life cycle analysis of new major pieces of equipment and proposed energy efficient equipment. It is proposed that the City of Palo Alto is replaCing/retrofitting outdated equipment such that the building systems receive an extended life expectancy 12 Professional Services Rev. Nov. 1,2011 of 30 or more years. The analysis is proposed to be included into a revision of the basis of design which will be re-submitted in Phase 2. c. Provide a preliminary engineer's cost estimate of the construction contract cost for the City of Palo Alto's review. The estimate is proposed to be included into a revision of the basis of design which will be re-submitted in Phase 2. d. Provide a proposed methodology for completing the renovations during time periods of least impact to the functions of the departments proposed; along with refining the full scope of work ofthe project. The analysis is proposed to be included into a revision of the basis of design which will be re-submitted in Phase 2. e. Attend meeting after 30% submission with the City of Palo Alto project manager and associated personal to review the documents submitted and receive comments. III. Phase 3: Construction Documents This phase will include the preparation of detailed construction documents, including detailed drawings and specifications, which will be submitted to the City of Palo Alto at 60% and 90% for review and comment. This submission will include the drawings and specifications as stated in the project deliverables section of this chapter. This phase will include the following: a. Prepare construction documents all components defined in Phase 2 Conceptual Design. Detailed plans and specifications will be presented to the City of Palo Alto at 60% and 90% for review and comment. These submissions will be Issue for Review 60% (IFR60%) and Issue for Review 90% (IFR90%) b. Provide a final engineer's cost estimate of the construction contract cost for the City of Palo Alto's review at the 90% submission. c. Attend meeting after 60% and 90% submission with the City of Palo Alto project manager and associated personal to review the documents submitted and receive comments. d. Prepare construction documents to be Issue for Permit (IFP) following 90% submission revisions. Assist the City of Palo Alto in obtaining all building permits, and other applicable permits required for the implementation of the work. e. Prepare final construction documents to be Issue for Construction (IFe) following the City's approval of the IFP documents. This submission will include the drawings and specifications in AutoCAD and MS Word format as stated in the deliverables section of 13 Professional Services Rev. Nov. 1,2011 this chapter. The drawings and specifications will be non-proprietary so multiple vendors can bid on the installation. f. Prepare a proposed detailed construction schedule including, but not limited to, equipment lead times for major equipment purchases, tenant relocations, temporary equipment and staging, etc., using Microsoft Project. It is proposed that the schedule will be submitted with IFP package for review and finalized for IFC package submittal. g. Provide "as-built" final record drawings based on "as-built" information provided by the general contractor and field verification. Record drawings will be provided in AutoCAD format on a CD, as well as one set of reproducible drawings. IV. Phase 4: Bid and Construction This phase will require ADC to provide assistance to the City of Palo Alto's staff (e.g. pre bid meeting with prospective bidders, issuance of addenda, respond to requests for information or clarification, etc.) and will assist the city with evaluation of the bids. Following the award of the construction contract to a general contractor, ADC will engage in negotiations with the city to develop an appropriate scope of work for the construction phase services to be provided as needed. The RFP indicates that the construction phase services will be added to the Consultant's contract at the City's discretion via a contract amendment. 14 Professional Services Rev. Nov. 1,2011 Detailed Scope of Work: I. Package 1: Palo Alto Children's Theater (17,619 SF) a. Task 1.1: Fire Life / Safety Upgrade The scope will entail the evaluation, analysis, recommendation and design for the Fire Alarm / Life Safety System and Fire Protection Sprinkler System. The Fire Alarm / Life Safety system consists of panels, detectors, alarms, horns, strobe lights, pull stations, batteries, exist signage and emergency lights. The fire alarm system will tie into the existing Honeywell system. The Fire Protection Sprinkler system consists of wet sprinkler coverage for the building. The sprinkler system will be developed with locations of fire sprinkler heads, proper fire sprinkler coverage, flow calculations, pipe sizing and verification of water service and pressure into the system. The Fire Alarm / Life Safety Engineering design will be provided by ADC's electrical engineering division and the Fire Protection Sprinkler design will be provided Walschon Fire Protection Systems which will be reviewed by ADC's mechanical engineering division. The scope will include the systems serving, but not limited to, the following areas within the theater listed below: • Children's Theatre Lobby • Storage closet in lobby • Men's RR in lobby • Theatre Box Office next to lobby • Control booth in lobby (for auditorium) • Main auditorium (audience sitting area) and Orchestra pit • Auditorium attic area i.e. space above ceiling • Hallway next to the audience • Electric Equipment room next to the stage • Attic next to the Elec. Equip. Room • Catwalk for operating elevated stage light • Catwalk above Orchestra pit • Kitchen next to media center • Under the stairs/ladder access to the second floor catwalk in the Magic Castle • Entire Boy Scouts area. 15 Professional Services Rev. Nov. 1,2011 The acoustics and historical aspects of the Children's Theatre including the auditorium will be carefully considered while providing architectural/engineering design for the new Fire Alarm / Life Safety System and Fire Protection Sprinkler System. Concealment of the sprinklers and acoustical considerations will be taken into account during the conceptual design phase to ensure the City of Palo Alto is content with the final product. The following subtasks will be provided within this task to meet the proposed schedule attached and the professional services project approach. i. Subtask 1.1.1: Existing Document Review Review all available plans and documentation provided by the City of Palo Alto for the project work package area. Analysis and findings will be presented in the study phase of the work package. ii. Subtask 1.1.2: Field Investigation Perform extensive field investigation of the entire project work package site and all existing conditions that may affect the scope of work. As-Built drawings will be developed and provide as part ofthe basis of design. iii. Subtask 1.1.3: Basis of Design (BOD) Develop a Basis of Design for Package 1 which will include the Fire Life / Safety Upgrade's evaluation, analysis, recommendations, etc. as described in Phase 1 of professional services approach. The Basis of Design will include all three (3) major tasks listed for Package 1. iv. Subtask 1.1.4: 30% Conceptual Design Development (IFR30%) Prepare and submit 30% conceptual design drawings, preliminary engineer's construction cost estimate and update basis of design as listed in Phase 2 ofthe of professional services approach. This submission will include all three (3) major tasks listed for Package 1. v. Subtask 1.1.5: 60% Construction Documents (IFR60%) 16 Professional Services Rev. Nov. 1,2011 Prepare and submit 60% construction drawings, specifications and engineer's construction cost estimate. This submission will include all three (3) major tasks listed for Package 1. vi. Subtask 1.1.6: 90% Construction Documents (IFR90%) Prepare and submit 90% construction drawings, specifications and engineer's construction cost estimate. This submission will include all three (3) major tasks listed for Package 1. vii. Subtask 1.1.7: Issue for Permit (IFP) Prepare and submit Issue for Permit drawings and calculations. Assist City of Palo Alto in obtaining permits as needed. Prepare and Submit tentative construction schedule using Microsoft Project. This submission will include all three (3) major tasks listed for Package 1. viii. Subtask 1.1.8: Issue for Construction (IFe) Prepare and submit Issue for Construction drawings and specifications for the City of Palo Alto's use. This submission will include all three (3) major tasks listed for Package 1. ix. Subtask 1.1.9: Bid and Construction Support Provide assistance to the City of Palo Alto's staff and assist the city with evaluation of the bids. x. Subtask 1.1.10: liAs-Builts" Upon completion ofthe construction provide liAs-Built" drawing based on the general contractor red lines and field investigations. This submission will include all three (3) major tasks listed for Package 1. b. Task 1.2: Balcony Stair Design The scope will entail the evaluation, analysis, recommendation and design to replace the existing balcony stair system which currently provides staff access to the catwalk in the liMagic Castle" stage area. The current system install is in very poor condition and does not meet current building code requirements. During the evaluation and design of the staircase system ADC will take into account then requirements of the City of Palo Alto Fire and Building Departments, the 2010 California Building Code, Title-24 Compliance and Accessibility/ADA requirements as applicable. The design of new stairs will consider 17 Professional Services Rev. Nov. 1,2011 the installation of perforated metal to allow fire sprinkler water to pass from above and determine if the new fire sprinklers will be needed underneath the proposed staircase. The following subtasks will be provided within this task to meet the proposed schedule attached and the professional services project approach. i. Subtask 1.2.1: Existing Document Review Review all available plans and documentation provided by the City of Palo Alto for the project work package area. Analysis and findings will be presented in the study phase of the project work package. ii. Subtask 1.2.2: Field Investigation Perform extensive field investigation of the entire project work package site and all existing conditions that may affect the scope of work. As-Built drawings will be developed and provide as part of the basis of design. iii. Subtask 1.2.3: Basis of Design (BOD) Develop a Basis of Design for Package 1 which will include the Balcony Staircase Upgrade's evaluation, analysis, recommendations, etc. as described in Phase 1 of professional services approach. The Basis of Design will include all three (3) major tasks listed for Package 1. iv. Subtask 1.2.4: 30% Conceptual Design Development (IFR30%) Prepare and submit 30% conceptual design drawings, preliminary engineer's construction cost estimate and update basis of design as listed in Phase 2 of the of professional services approach. This submission will include all three (3) major tasks listed for Package 1. v. Subtask 1.2.5: 60% Construction Documents (IFR60%) Prepare and submit 60% construction drawings, specifications and engineer's construction cost estimate. This submission will include all three (3) major tasks listed for Package 1. vi. Subtask 1.2.6: 90% Construction Documents (IFR90%) Prepare and submit 90% construction drawings, specifications and engineer's construction cost estimate. This submission will include all three (3) major tasks listed for Package 1. vii. Subtask 1.2.7: Issue for Permit (IFP) 18 Professional Services Rev. Nov. 1,2011 Prepare and submit Issue for Permit drawings and calculations. Assist City of Palo Alto in obtaining permits as needed. Prepare and Submit tentative construction schedule using Microsoft Project. This submission will include all three (3) major tasks listed for Package 1. viii. Subtask 1.2.8: Issue for Construction (IFe) Prepare and submit Issue for Construction drawings and specifications for the City of Palo Alto's use. This submission will include all three (3) major tasks listed for Package 1. ix. Subtask 1.2.9: Bid and Construction Support Provide assistance to the City of Palo Alto's staff and assist the city with evaluation of the bids. x. Subtask 1.2.10: "As-Builts" Upon completion ofthe construction provide "As~Built" drawing based on the general contractor redlines and field investigations. This submission will include all three (3) major tasks listed for Package 1. c. Task 1.1.3: Mechanical and Electrical Services Upgrades The scope will entail the evaluation, analysis, recommendation and design to replace the Children's Theater mechanical and electrical services. The existing mechanical system consists of various types of Heating, Ventilation and Air Condition systems. The building is served by chiller, air handlers and some scattered heat pumps located on the roof and/or space. The building is also served from the basement which houses some custom air handlers. In addition, the building is also served by several smaller units which appear to be installed recently. All the mechanical equipment serving the building will be evaluated and the replacement/retrofit of the existing systems will provided as needed. HVAC building cooling/heating load calculations will need to be conducted to survey if the existing system capacity is adequately sized and to determine requirements for installation of HVAC equipment with the proper capacity. Based on the HVAC systems to be replaced and/or retrofitted the electrical load may also change. The electrical system currently serving the building will need to be carefully surveyed to determine if the major electrical equipment and sub-electrical panels will need to be 19 Professional Services Rev. Nov. 1,2011 replaced. Based on building demand power load calculations and proposed HVAC power consumption the electrical system will be replace and/or retrofitted to meet the new demand of the building. All the electrical systems including, but not limited to, the Main Switchgear, Panels, Sub-Panels, HVAC Disconnects, etc. will be carefully evaluated for life expectancy, available capacity and future capacity. The electrical system upgrade scope will also include all electrical power feeds as needed for the proposed HVAC system{s) to be replaced and/or retrofitted. The electrical system upgrade scope will also include all redistribution/increase in receptacles to areas as needed. The following subtasks will be provided within this task to meet the proposed schedule attached and the professional services project approach. i. Subtask 1.3.1: Existing Document Review Review all available plans and documentation provided by the City of Palo Alto for the project work package area. Analysis and findings will be presented in the study phase of the project work package. ii. Subtask 1.3.2: Field Investigation Perform extensive field investigation of the entire project work package site and all existing conditions that may affect the scope of work. As-Built drawings will be developed and provide as part of the basis of design. iii. Subtask 1.3.3: Basis of Design (BOD) Develop a Basis of Design for Package 1 which will include the Mechanical and Electrical System Upgrade's evaluation, analysis, recommendations, etc. as described in Phase 1 of professional services approach. The Basis of Design will include all three (3) major tasks listed for Package 1. iv. Subtask 1.3.4: 30% Conceptual Design Development (lFR30%) Prepare and submit 30% conceptual design drawings, preliminary engineer's construction cost estimate and update basis of design as listed in Phase 20fthe of professional services approach. This submission will include all three (3) major tasks listed for Package 1. v. Subtask 1.3.5: 60% Construction Documents (IFR60%) Prepare and submit 60% construction drawings, specifications and engineer's construction cost estimate. This submission will include all three (3) major tasks listed for Package 1. 20 Professional Services Rev. Nov. 1,2011 vi. Subtask 1.3.6: 90% Construction Documents (IFR90%) Prepare and submit 90% construction drawings, specifications and engineer's construction cost estimate. This submission will include all three (3) major tasks listed for Package 1. vii. Subtask 1.3.7: Issue for Permit (IFP) Prepare and submit Issue for Permit drawings and calculations. Assist City of Palo Alto in obtaining permits as needed. Prepare and Submit tentative construction schedule using Microsoft Project. This submission will include all three (3) major tasks listed for Package 1. viii. Subtask 1.3.8: Issue for Construction (lFC) Prepare and submit Issue for Construction drawings and specifications for the City of Palo Alto's use. This submission will include all three (3) major tasks listed for Package 1. ix. Subtask 1.3.9: Bid and Construction Support Provide assistance to the City of Palo Alto's staff and assist the city with evaluation of the bids. x. Subtask 1.3.10: IIAs-Builts" Upon completion ofthe construction provide IIAs-Built" drawing based on the general contractor red lines and field investigations. This submission will include all three (3) major tasks listed for Package 1. II. Package 2: Lucie Stern Community Theater (33,716 SF) a. Task 2.1: Electrical Services Upgrades The scope will entail the evaluation, analysis, recommendation and design to replace the Lucie Stern Community Theater electrical services including the Scene Shop (1,800 SF). The electrical system currently serving the building will need to be carefully surveyed to determine if the major electrical equipment and sub-electrical panels will need to be replaced. Based on building demand power load calculations and existing HVAC power consumption the electrical system will be replace and/or retrofitted to meet the current demand ofthe building. All the electrical systems including, but not limited to, the Main Switchgear, Panels, Sub-Panels, HVAC Disconnects, etc. will be carefully evaluated for life 21 Professional Services Rev. Nov. 1,2011 expectancy, available capacity and future capacity. It is expected that the existing main switch gear and distribution will need to be replaced. The electrical system upgrade scope will also include all redistribution/increase in receptacles to areas as needed. The following subtasks will be provided within this task to meet the proposed schedule attached and the professional services project approach. i. Subtask 2.1.1: Existing Document Review Review all available plans and documentation provided by the City of Palo Alto for the project work package area. Analysis and findings will be presented in the study phase of the project work package. ii. Subtask 2.1.2: Field Investigation Perform extensive field investigation of the entire project work package site and all existing conditions that may affect the scope of work. As-Built drawings will be developed and provide as part of the basis of design. iii. Subtask 2.1.3: Basis of Design (BOD) Develop a Basis of Design for Package 2 which will include the Electrical System Upgrade's evaluation, analysis, recommendations, etc. as described in Phase 1 of professional services approach. iv. Subtask 2.1.4: 30% Conceptual Design Development (IFR30%) Prepare and submit 30% conceptual design drawings, preliminary engineer's construction cost estimate and update basis of design as listed in Phase 2 of the of professional services approach. v. Subtask 2.1.5: 60% Construction Documents (IFR60%) Prepare and submit 60% construction drawings, specifications and engineer's construction cost estimate. vi. Subtask 2.1.6: 90% Construction Documents (IFR90%) Prepare and submit 90% construction drawings, specifications and engineer's construction cost estimate. vii. Subtask 2.1.7: Issue for Permit (IFP) Prepare and submit Issue for Permit drawings and calculations. Prepare and Submit tentative construction schedule using Microsoft Project. Assist City of Palo Alto in obtaining permits as needed. 22 Professional Services Rev. Nov. 1,2011 viii. Subtask 2.1.8: Issue for Construction (IFe) Prepare and submit Issue for Construction drawings and specifications for the City of Palo Alto's use. ix. Subtask 2.1.9: Bid and Construction Support Provide assistance to the City of Palo Alto's staff and assist the city with evaluation of the bids. x. Subtask 2.1.10: "As-Builts" Upon completion ofthe construction provide "As-Built" drawing based on the general contractor red lines and field investigations. III. Package 3: Lucie Stern Community Center (10,230 SF) a. Task 1: Mechanical Services Upgrades The scope will entail the evaluation, analysis, recommendation and design to replace the Lucie Stern Community Center mechanical services. The existing mechanical system consists of various types of Heating, Ventilation and Air Condition systems. The building is served by heating only units located in the attic. The basement of the building is served by a custom air handler with rectangular duct distribution in open low ceiling area. All the mechanical equipment serving the building will be evaluated and the replacement/retrofit of the existing systems will provided as needed. HVAC building cooling/heating load calculations will need to be conducted to survey if the existing system capacity is adequately sized and to determine requirements for installation of HVAC equipment with the proper capacity. Areas with heating only will be modernized to receive HVAC with cooling if possible. All electrical power feeds as needed for the proposed HVAC system(s) to be replaced and/or retrofitted will be included in this scope. The following subtasks will be provided within this task to meet the proposed schedule attached and the professional services project approach. i. Subtask 3.1.1: Existing Document Review Review all available plans and documentation provided by the City of Palo Alto for the project work package area. Analysis and findings will be presented in the study phase of the project work package. 23 Professional Services Rev. Nov. 1,2011 ii. Subtask 3.1.2: Field Investigation Perform extensive field investigation of the entire project work package site and all existing conditions that may affect the scope of work. As-Built drawings will be developed and provide as part of the basis of design. iii. Subtask 3.1.3: Basis of Design (BOD) Develop a Basis of Design for Package 2 which will include the Mechanical System Upgrade's evaluation, analysis, recommendations, etc. as described in Phase 1 of professional services approach. iv. Subtask 3.1.4: 30% Conceptual Design Development (IFR30%) Prepare and submit 30% conceptual design drawings, preliminary engineer's construction cost estimate and update basis of design as listed in Phase 2 ofthe of professional services approach. v. Subtask 3.1.5: 60% Construction Documents (IFR60%) Prepare and submit 60% construction drawings, specifications and engineer's construction cost estimate. vi. Subtask 3.1.6: 90% Construction Documents (IFR90%) Prepare and submit 90% construction drawings, specifications and engineer's construction cost estimate. vii. Subtask 3.1.7: Issue for Permit (IFP) Prepare and submit Issue for Permit drawings and calculations. Prepare and Submit tentative construction schedule using Microsoft Project. Assist City of Palo Alto in obtaining permits as needed. viii. Subtask 3.1.8: Issue for Construction (lFC) Prepare and submit Issue for Construction drawings and specifications for the City of Palo Alto's use. ix. Subtask 3.1.9: Bid and Construction Support Provide assistance to the City of Palo Alto's staff and assist the city with evaluation of the bids. x. Subtask 3.1.10: "As-Builts" Upon completion of the construction provide "As-Built" drawing based on the general contractor red lines and field investigations. 24 Professional Services Rev. Nov. 1,2011 Deliverables: The professional services will be divided into three (3) separate work packages as outlined in the detailed scope of work provided above. Each professional service work package will incorporate a Study Phase, Conceptual Design, Construction Drawings and Bidding/Construction phase. Each phase will have deliverables which are described in the professional services approach and scope of work sections of this chapter. The three (3) packages will be; Package 1: Palo Alto Children's Theater, Package 2: Lucie Stern Community Center, and Package 3: Lucie Stern Community Theater. The following will be included for each Package listed: 1. Basis of Design (BOD) • Preparation and delivery offive (5) hard copies and one (1) electronic copy (MS Word and PDF) of the draft BOD report. 2. Issue for Review 30% (IFR30%) • Preparation and delivery offive (5) hard copies and one (1) electronic copy(MS Word and PDF) ofthe final BOD report. • Preparation and delivery of five (5) hard copy sets and one (1) electronic copy set (PDF) of IFR30% Conceptual Drawings 3. Issue for Review 60% {lFR60%) • Preparation and delivery of five (5) hard copy sets and one (1) electronic copy set (PDF) of IFR60% Design Drawings. • Preparation and delivery offive (5 hard copies and one (1) electronic copy (PDF) of IFR60% Technical Specifications. 4. Issue for Review 90% (IFR90%) • Preparation and delivery of five (5) hard copy sets and one (1) electronic copy set (PDF) of IFR90% Design Drawings. • Preparation and delivery of five (5) hard copies and one (1) electronic copy (PDF) of IFR90% Technical Specifications. 5. Issue for Permit (IFP) • Preparation and delivery of five (5) wet signed/stamped hard copy sets and one (1) electronic copy (PDF) of IFP Design Drawings. 25 Professional Services Rev. Nov. 1,2011 • Preparation and delivery ofthree (3) wet signed/stamped hard copy sets and one (1) electronic copy (PDF) of Structural Calculations as required per package. 6. Issue for Construction (IFP) • Preparation and delivery offive (5) hard copy sets and one (1) electronic copy (AutoCAD & PDF) of IFC Construction Drawings. • Preparation and delivery of five (5) hard copies and one (1) electronic copy (MS Word & PDF) of IFC Technical Specifications. • Preparation and delivery ofthree (3) wet signed/stamped hard copy sets and one (1) electronic copy (PDF) of Structural Calculations as required per package. 7. "As-Builts" Record Drawings • Preparation and delivery of one (1) hard copy (reproducible) and one (1) electronic copy (AutoCAD & PDF) of "As-Built" Record Drawings. Proposed Engineering Schedule (NTP + 180 days) : The Time of Competition of all services is proposed to be within one-hundred eighty (180) calendar days after issuance of the Notice to Proceed (NTP) as stated in section G of Attachment B of the provided RFP Number 148737. Further the City of Palo Alto may request that certain high-priority components be completed within sixty (60) days after issuance of NTP. It is proposed that Package I, Tasks 1.1, 1.2, and 1.3 be completed concurrently. It is proposed that Package 2, Task 2.1 and Package 3, Task 3.1 be completed concurrently. It is proposed that the City of Palo Alto will take 5 working days to review submission prior to review meeting and providing comments. It is proposed that the City of Palo Alto Building / Fire department review for Permit will take 10 working days before providing plan check comments and/or approval of drawings. Bidding and Construction Support is shown tentative (additional services) and upon receipt of NTP the schedule will finalized. 26 Professional Services Rev. Nov. 1,2011 27 Professional Services Rev. Nov. 1,2011 EXHIBIT "B" SCHEDULE OF PERFORMANCE CONSULTANT shall perfonn the Services so as to complete each milestone within the number of days/weeks specified below. The time to complete each milestone may be increased or decreased by mutual written agreement of the project managers for CONSULTANT and CITY so long as all work is completed within the tenn of the Agreement. CONSULTANT shall provide a detailed schedule of work consistent with the schedule below within 2 weeks of receipt of the notice to proceed. Milestones Completion No. of DayslWeek From NTP (Work Days) Package 1: Palo Alto Children's Theater MechanicaIlElectricallFire Life Safety Upgrades and Balcony Stair Design 1. Document Collection and Field Investigation Start 2. Submit BOD 13 Days 3. BOD Review Meeting (City Meeting) 5 Days 4. Submit IFR 30% 10 Days 5. IFR 30% Review Meeting (City Meeting) 5 Days 6. Submit IFR 60% 10 Days 7. IFR 60% Review Meeting (City Meeting) 5 Days 8. Submit IFR 90% 10 Days 9. IFR 90% Review Meeting (City Meeting) 5 Days 10. Submit IFP 5 Days 11. Submit IFC and Obtain Permit 17 Days Total 85 Days 12. Bidding Support Tentative Package 2 and 3: Lucie Stern Community Theater and Community Center Electrical Services Upgrades and Mechanical Service Upgrades 1. Document Collection and Field Investigation Start 2. Submit BOD 13 Days 3. BOD Review Meeting (City Meeting) 5 Days 4. Submit IFR 30% 5 Days 5. IFR 30% Review Meeting (City Meeting) 5 Days 6. Submit IFR 60% 5 Days 7. IFR 60% Review Meeting (City Meeting) 5 Days 8. Submit IFR 90% 5 Days 9. IFR 90% Review Meeting (City Meeting) 5 Days 10. Submit IFP 3 Days 11. Submit IFC and Obtain Permit 15 Days Total 66 Days 12. Biding Support Tentative 2 Date (6/3/13) (6/20/13) (6/27/13) (7/11/13) (7/18/13) (8/1/13) (8/8/13) (8/22/13) (8/29/13) (9/5/13) (9/30/13) (8/22/13) (9/10/13) (9/17/13) (9/24/13) (10/1/13) (10/8/13) (10/15/13) (10/22/13) (10/29/13) (11/1/13) (11/22/13) Professional Services Rev. Nov. 1,2011 (Version 1 -use for task based compensation) EXHIBIT "C" COMPENSATION The CITY agrees to compensate the CONSULTANT for professional services performed in accordance with the terms and conditions of this Agreement, and as set forth in the budget schedule below. Compensation shall be calculated based on the hourly rate schedule attached as exhibit C-l up to the not to exceed budget amount for each task set forth below. The compensation to be paid to CONSULTANT under this Agreement for all services described in Exhibit "A" ("Basic Services") and reimbursable expenses shall not exceed $213,517. CONSULTANT agrees to complete all Basic Services, including reimbursable expenses, within this amount. In the event CITY authorizes any Additional Services, the maximum compensation shall not exceed $21,352. 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. CONSULTANT shall perform the tasks and categories of work as outlined and budgeted below. The CITY's Project Manager may approve in writing the transfer of budget amounts between any of the tasks or categories listed below provided the total compensation for Basic Services, including reimbursable expenses, does not exceed $213,517 and the total compensation for Additional Services does not exceed $21,352. BUDGET SCHEDULE Task 1 (Children's Theater Study Phase) Task 2 (Children'S Theater Conceptual Design) Task 3 (Children'S Theater Construction Drawings) Task 4 (Children'S Theater Bid & Construction Phase) Task 5 (Children'S Theater Reimbursables) Task 6 (Community Theater Study Phase) Task 7 (Community Theater Conceptual Design) 14 NOT TO EXCEED AMOUNT $24,212 $20,451 $45,870 $6,330 $1,937 $13,259 $10,869 Professional Services Rev. Nov. 1,2011 Task 8 $21,775 (Community Theater Construction Drawings) Task 9 $6,144 (Community Theater Bid & Construction Phase) Task 10 $1,041 (Community Theater Reimbursables) Task 11 $16,340 (Community Center Study Phase) Task 12 $15,535 (Community Center Conceptual Design) Task 13 $23,287 (Community Center Construction Drawings) Task 14 $5,258 (Community Center Bid & Construction Phase) Task 15 $1,209 (Community Center Reimbursables) Sub-total Basic Services $209,330 Reimbursable Expenses $4,187 Total Basic Services and Reimbursable expenses $213,517 Additional Services (Not to Exceed) $21,352 Maximum Total Compensation $234,869 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: 15 Professional Services Rev. Nov. 1,2011 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 oftravel 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 $500 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 expense, for such services based on the rates set forth in Exhibit C-I. 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 16 Professional Services Rev. Nov. 1,2011 (Version 2 -hourly rate -not task based) 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-l. The compensation to be paid to CONSULTANT under this Agreement for all services described in Exhibit "A" ("Services") and reimbursable expenses shall not exceed $ CONSUL TANT agrees to complete all Services, including reimbursable expenses, within this amount. In the event CITY authorizes any Additional Services, the maximum compensation shall not exceed $ . 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 $ shall be approved in advance by the CITY's project manager. ADDITIONAL SERVICES The CONSUL T ANT shall provide additional services only by advanced, written authorization from the CITY. The CONSULTANT, atthe 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-I. 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. 16 Professional Services Rev. Nov. 1,2011 OrOPTIONAL] Work required because the following conditions are not satisfied or are exceeded shall be considered as Additional Services: 17 Professional Services Rev. Nov. 1,2011 Rates in Dollars per Hour: EXHIBIT "C-l" HOURLY RATE SCHEDULE EFFECTIVE JANUARY 1 THROUGH DECEMBER 31, 2013 Item Discipline Billing Rate 0001 Prindpal/Mgr $ 214.10 0002 Supervisor $ 149.75 0003 SpecWdter $128.51 0004 Cost Estimator $ 147.62 0005 Drafter $90.10 0006 Architect S 156.83 0007 Arch itect -Des igner $108.07 0008 Structural Engineer $154,46 0009 Structural Designer $ 108.07 0010 Civil Engineer $ 131,43 0011 Geotechnical Engineer $131.43 0012 Mechanical Engineer $131,43 0013 Mechanical Designer $102.23 0014 Electrical Engineer $131.43 TheSe hourly rates ,we bosed on personnel $alaries, overhead, mark-up, and profit. MISCELLANEOUS FEES The following services are billed at no mark-up: ~ Subcontracted services [including Consultants, Contractors, Legal, and materials). & Permit fees or filing fees advanced by us, & Trarrsportatfon, meals and lodging for overnight travel and incidental travel expenses. Commercial delivery services, including federal Express, Express Mail and Messenger SerVkes. u Excessive klllg distance telephone cails, telegrams, and other costs directly applicable to the project. Outside printing services. Additional project insurance. MILEAGE ........................................................... $ .55/mile or Current allowable rate established by the IRS i ! 99& Park Ave. Sail Jose, CA 95126 P: (408)297·1881 f: (408)294-3186 18 ADVANCE DESIGN CONSULTANTS, INC. ii,rt;"ii(:u7;;"t~!;:; t~fl~jjhO(ltij~'~~/f~~~ Yo~;i:'s~'i(~ca;s: Professional Services Rev Nov. 1,2011 Client#· 7 ADVANDESI ACORDTM CERTIFICATE OF LIABILITY INSURANCE I DATE (MM/DDIYYYY) 4/29/2013 PRODUCER THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION Dealey, Renton & Associates ONLY AND CONFERS NO RIGHTS UPON THE CERTIFICATE P. O. Box 12675 HOLDER. THIS CERTIFICATE DOES NOT AMEND, EXTEND OR ALTER THE COVERAGE AFFORDED BY THE POLICIES BELOW. Oakland, CA 94604-2675 510 465-3090 INSURERS AFFORDING COVERAGE NAIC# INSURED INSURER A: Travelers Property Casualty Co Advance Design Consultants Inc INSURER B: U.S. Specialty Insurance Com pan 998 Park Avenue INSURER C: San Jose, CA 95126 INSURER 0: INSURER E: COVERAGES THE POLICIES OF INSURANCE LISTED BELOW HAVE BEEN ISSUED TO THE INSURED NAMED ABOVE FOR THE POLICY PERIOD INDICATED. NOTWITHSTANDING ANY REQUIREMENT, TERM OR CONDITION OF ANY CONTRACT OR OTHER DOCUMENT WITH RESPECT TO WHICH THIS CERTIFICATE MAY BE ISSUED OR MAY PERTAIN, THE INSURANCE AFFORDED BY THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE TERMS, EXCLUSIONS AND CONDITIONS OF SUCH POLICIES. AGGREGATE LIMITS SHOWN MAY HAVE BEEN REDUCED BY PAID CLAIMS. INSR DO' LTR NSRC TYPE OF INSURANCE POLICY NUMBER P&''-4~~ri~)~8mlE Pg~fJ(t~~tWlN LIMITS A ~NERAL LIABILITY 6806693L45A 12/01/12 12/01/13 EACH OCCURRENCE $1000,000 eX-3MMERCIAL GENERAL LIABILITY General Liab. ~~~6lf;~JoE~~~J~~ence $1000000 r--CLAIMS MADE [Xl OCCUR Excludes Claims MED EXP (Anyone person) $10000 rX-BI/PD Arising out of PERSONAL & ADV INJURY $1000000 the Performance GENERAL AGGREGATE $2000000 r-- GEN'LAGGREGATE LIMIT APPLIES PER: of Professional PRODUCTS -COMP/OP AGG $2000000 !xl POLICY n ~~8T n LOC Services A ~TOMOBILE LIABILITY BA6694L168 12/01/12 12/01/13 COMBINED SINGLE LIMIT ANY AUTO (Ea accident) $1,000,000 - ALL OWNED AUTOS BODILY INJURY -$ SCHEDULED AUTOS (Per person) - .!... HIRED AUTOS BODILY INJURY $ .!... NON-OWNED AUTOS (Per accident) -PROPERTY DAMAGE $ (Per accident) ~AGE LIABILITY AUTO ONLY -EA ACCIDENT $ ANY AUTO OTHER THAN EAACC $ AUTO ONLY: AGG $ A ~ESS/UMBRELLA LIABILITY CUP7866Y787 12/01/12 12/01/13 EACH OCCURRENCE $4000000 X OCCUR D CLAIMS MADE AGGREGATE $4000000 $ ==i DEDUCTIBLE $ RETENTION $ $ A WORKERS COMPENSATION AND UB7088Y069 09/01/12 09/01/13 X I T~~YS[~Ws I IOJ~- EMPLOYERS' LIABILITY $1,000,000 ANY PROPRIETOR/PARTNER/EXECUTIVE E.L. EACH ACCIDENT OFFICER/MEMBER EXCLUDED? E.L. DISEASE -EA EMPLOYEE $1,000,000 If yes, describe under E.L. DISEASE -POLICY LIMIT $1,000,000 SPECIAL PROVISIONS below B OTHER Professional USS1223566 12/30/12 12/30/13 $2,000,000 per claim Liability $2,000,000 annl aggr. DESCRIPTION OF OPERATIONS / LOCATIONS / VEHICLES / EXCLUSIONS ADDED BY ENDORSEMENT / SPECIAL PROVISIONS All Operations of the Named Insured. The City of Palo Alto, its Council Members, Officers, Agents and Employees are additional insureds as respects to General & Automobile Liability per policy form wording. Such insurance is Primary & Non Contributory with Severability of Interest clause. CERTIFICATE HOLDER City of Palo Alto Purchasing and Contract Administration P.O. Box 10250 Palo Alto, CA 94303 ACORD 25 (2001/08) 1 of 1 #S596015/M491648 CANCELLATION 10 Days for Non-Paymen SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE CANCELLED BEFORE THE EXPIRATION DATE THEREOF, THE ISSUING INSURER WILL ENDEAVOR TO MAIL .....30..... DAYS WRITTEN NOTICE TO THE CERTIFICATE HOLDER NAMED TO THE LEFT, BUT FAILURE TO DO SO SHALL IMPOSE NO OBLIGATION OR LIABILITY OF ANY KIND UPON THE INSURER, ITS AGENTS OR REPRESENTATIVES. AUTHORIZED REPRESENTATIVE t.J2.iAV--.::} ~ CCB @ ACORD CORPORATION 1988 POLICY NUMBER: 6806693L45A COMMERICAL GENERAL LIABILITY ISSUE DATE: 12/01/12 THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY. ADDITIONAL INSURED (ARCHITECTS, ENGINEERS AND SURVEYORS) This endorsement modifies insurance provided under the following: COMMERCIAL GENERAL LIABILITY COVERAGE PART SCHEDULE NAME OF PERSON(S) OR ORGANIZATION(S): City of Palo Alto Purchasing and Contract Administration P.O. Box 10250 Palo Alto, CA 94303 PROJECT/LOCATION OF COVERED OPERATIONS: SCHEDULE NAME OF ADDITIONAL INSURED PERSONS OR ORGANIZATIONS CO NT: The City of Palo Alto, its Council Members, Officers, Agents and Employees PROVISIONS A. The following is added to WHO IS AN INSURED (Section II): The person or organization shown in the Sched- ule above is an additional insured on this Cover- age Part, but only with respect to liability for "bod- ily injury", "property damage" or "personal injury" caused, in whole or in part, by your acts or omis- sions or the acts or omissions of those acting on your behalf: a. In the performance of your ongoing opera- tions; b. In connection with premises owned by or rented to you; or c. In connection with "your work" and included within the "products-completed operations hazard". Such person or organization does not qualify as an additional insured for "bodily injury", "property damage" or "personal injury" for which that per- son or organization has assumed liability in a con- tract or agreement. The insurance provided to such additional insured is limited as follows: d. This insurance does not apply to the render- ing of or failure to render any "professional services". e. The limits of insurance afforded to the addi- tional insured shall be the limits which you agreed in that "contract or agreement requir- ing insurance" to provide for that additional insured, or the limits shown in the Declara- tions for this Coverage Part, whichever are less. This endorsement does not increase the limits of insurance stated in the LIMITS OF INSURANCE (Section III) for this Coverage Part. B. The following is added to Paragraph a. of 4. Other Insurance in COMMERCIAL GENERAL LIABILITY CONDITIONS (Section IV): However, if you specifically agree in a "contract or agreement requiring insurance" that, for the addi- tional insured shown in the Schedule, the insur- ance provided to that additional insured under this CG 03820907 © 2007 The Travelers Companies, Inc. Page 1 of 2 Includes the copyrighted material of Insurance Services Office, Inc., with its permission COMMERICAL GENERAL LIABILITY Coverage Part must apply on a primary basis, or a primary and non-contributory basis, this insur- ance is primary to other insurance that is avail- able to such additional insured which covers such additional insured as a named insured, and we will not share with the other insurance, provided that: (1) The "bodily injury" or "property damage" for which coverage is sought occurs; and (2) The "personal injury" for which coverage is sought arises out of an offense committed; after you have entered into that "contract or agreement requiring insurance" for such addi- tional insured. But this insurance still is excess over valid and collectible other insurance, whether primary, excess, contingent or on any other basis, that is available to the additional in- sured when the additional insured is also an addi- tional insured under any other insurance. C. The following is added to Paragraph 8. Transfer Of Rights Of Recovery Against Others To Us in COMMERCIAL GENERAL LIABILITY CON· DITIONS (Section IV): We waive any rights of recovery we may have against the additional insured shown in the Schedule above because of payments we make for "bodily injury", "property damage" or "personal injury" arising out of "your work" on or for the pro- ject, or at the location, shown in the Schedule above, performed by you, or on your behalf, un- der a "contract or agreement requiring insurance" with that additional insured. We waive these rights only where you have agreed to do so as part of the "contract or agreement requiring insur- ance" with that additional insured entered into by you before, and in effect when, the "bodily injury" or "property damage" occurs, or the "personal in- jury" offense is committed. D. The following definition is added to DEFINITIONS (Section V): "Contract or agreement requiring insurance" means that part of any contract or agreement un- der which you are required to include the person or organization shown in the Schedule as an ad- ditional insured on this Coverage Part, provided that the "bodily injury" and "property damage" oc- curs, and the "personal injury" is caused by an of- fense committed: a. After you have entered into that contract or agreement; b. While that part of the contract or agreement is in effect; and c. Before the end of the policy period. Page 2 of 2 © 2007 The Travelers Companies, Inc. CG 03820907 Includes the copyrighted material of Insurance Services Office, Inc .• with its permission POLICY NUMBER: BA6694L 168 COMMERCIAL AUTO CA 20 48 02 99 THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY. DESIGNATED INSURED This endorsement modifies insurance provided under the following: BUSINESS AUTO COVERAGE FORM GARAGE COVERAGE FORM MOTOR CARRIER COVERAGE FORM TRUCKERS COVERAGE FORM With respect to coverage provided by this endorsement, the provisions of the Coverage Form apply unless modified by this endorsement. This endorsement identifies person(s) or organization(s) who are "insureds" under the Who Is An Insured Provision of the Coverage Form. This endorsement does not alter coverage provided in the Coverage Form. This endorsement changes the policy effective on the inception date of the policy unless another date is indicated below. Endorsement effective 12/01/12 Named Insured Countersigned by ~ fA c. . ~ Advance Design Consultants Inc --r (Authorized Representative) SCHEDULE Name of Person(s) or Organization(s): SCHEDULE NAME OF ADDITIONAL INSURED PERSONS OR ORGANIZATIONS CONT: The City of Palo Alto, its Council Members, Officers, Agents and Employees (If no entry appears above, information required to complete this endorsement will be shown in the Declarations as applicable to the endorsement.) Each person or organization shown in the Schedule is an "insured" for Liability Coverage, but only to the extent that person or organization qualifies as an "insured" under the Who Is An Insured Provision contained in Section II of the Coverage Form. CA 20480299 Copyright, Insurance Services Office, Inc., 1998 Page 1 of 1 City of Palo Alto (ID # 3651) City Council Staff Report Report Type: Action Items Meeting Date: 5/6/2013 City of Palo Alto Page 1 Summary Title: Stanford Funds Review and Allocation Process Title: Review of Guiding Principles for Stanford University Medical Center Fund Allocations and Allocation of $2 Million to Project Safety Net From: City Manager Lead Department: Administrative Services Recommendation Staff recommends that the Council provide input on staff’s proposed process for allocating Stanford University Medical Center (SUMC) Development Agreement funds and formally approve an allocation of $2 million for Project Safety Net from the Community Health and Safety Program funds, which was previously discussed by the City Council. Motion To approve Staff’s recommendation to approve an allocation of $2 million for Project Safety Net from the Community Health and Safety Program funds. Executive Summary The SUMC Parties (Stanford Hospitals and Clinics, Lucile Packard Children’s Hospital, and Stanford University) have paid $32.5 million in public benefit fees to the City through January 2013 as required by the Development Agreement between SUMC and the City as part of the Stanford University Medical Center Facilities Renewal and Replacement Project. The City is set to receive an additional $11.7 million from Stanford in the 2016-2017 timeframe upon issuance of final occupancy permits. This final payment brings the total due the City to $44.3 million. The City has spent $664,000 for activities related to Project Safety Net and the 27 University Avenue project. Additionally, Council recently committed $4.3 million from the Infrastructure, Sustainable Neighborhoods & Communities, and Affordable Housing fund to fund a long-term loan to the Stevenson House rehabilitation project and a short-term loan to the Maybell-Clemo affordable senior housing site. This report outlines a proposed process and set of guidelines for allocating Stanford funds to appropriate projects consistent with the requirements of the City of Palo Alto Page 2 Development Agreement. The report also recommends that the City Council formally approve an allocation of $2 million to Project Safety Net as discussed below. Background On June 6, 2011, the City Council approved Comprehensive Plan amendments, zoning changes, a conditional use permit, annexation and design applications for the Stanford University Medical Center Facilities Renewal and Replacement Project (the “Projects”). The Projects include the construction of a new Stanford Hospital and clinics buildings, an expansion of the Lucile Packard Children’s Hospital, construction of new School of Medicine buildings, renovation of the existing Hoover Pavilion, construction of a new medical office building and parking garage at Hoover Pavilion, roadway improvements along Welch Road and Durand Way, and SUMC design guidelines. A Development Agreement vesting these approvals was entered into between the SUMC Parties and the City and was effective on June 6, 2011 and continued for thirty years from the effective date. On July 25, 2011 Council discussed the status of the funds (Report ID #1954) and high-level themes guiding the use of the funds. Staff committed to returning to Council with defined guidelines, which are discussed in this report. In addition, at the July 25 meeting Council discussed the intent to allocate $2 million to Project Safety Net from the $4 million in Community Health and Safety Program funds. While the $2 million allocation was discussed, it was not formally approved via a Council vote. Staff is, therefore, asking Council to formalize the allocation via this staff report. The Council minutes from the July 25, 2011 meeting are attached to this report (Attachment C). This report lays out Staff’s recommendation of a proposed process and set of guidelines for allocating these funds in the near term and in future years. While the Infrastructure Blue Ribbon Commission (IBRC) initiative has identified many specific projects that could be funded by the SUMC monies, to best leverage all available funds, it is important to examine these projects in a larger context. Staff is proposing a phased approach to allocating the SUMC funds that is tied to leveraging opportunities such as grant funding, capital improvement program budget discussions, and a possible revenue ballot measure. Staff is seeking Council input on this proposed process and guidelines so staff can tailor upcoming discussions at the key decision points mentioned above. Discussion City Staff responsible for the project areas that will receive funds have met to layout a proposal for a process and guidelines to allocate SUMC funds. This process hinges on upcoming decisions and discussions that could take place around possible transportation grant City of Palo Alto Page 3 opportunities in 2013 or beyond, the FY2014 (or beyond) capital improvement program budget, and projects for a possible bond or initiative in FY2014. Guiding Principles Council discussed all the SUMC funds during an update on July 25, 2011 (Report ID #1954). Council comments suggested the funds should not be used for budgetary deficits, but rather to establish permanent funds from which the community could benefit for years to come (Attachment C). Comments also pointed to the transformative nature of the funds to do something for the community in a major way. Further, comments suggested that only high- priority projects, after much vetting from the community, should be selected. Projects that were fiscally sustainable could also be a requirement. Staff, building on Council comments, added financial management concepts along with principles of endowment management to develop the following recommended policy guidelines for reviewing SUMC funding allocation proposals (for Council discussion). Guiding Principles for Use of SUMC Funds 1. SUMC funds are onetime funds and they should be used to invest in initiatives that will have lasting impact 2. Funding decisions should strike a balance between safeguarding the principal and leveraging the interest 3. Interest is accrued to the individual funds 4. Should the vote threshold to approve the use of the funds by Council be high? 5. Any decision to expend funds includes full status report, review of approved policy guidelines and an accounting of expenditure outlays 6. Proposed projects or programs that would leverage matching grant funding or other funding sources would be weighted highly 7. The funds should not be used for ongoing expenditures, should strive to be one-time in nature 8. Endowment fund management concepts to consider and help frame discussion: a. Capital preservation for future generations b. “The trustees of an endowment institution are the guardians of the future against the claims of the present. Their task is to preserve equity among generations.” James Tobin c. Capital appreciation as well as current income (i.e. rent from real property) d. Restricted versus unrestricted funds City of Palo Alto Page 4 e. The role of the endowment in supporting the organization’s mission? f. How much of the endowment’s return should be spent and how much should be reinvested? g. Balance this tension: the current needs of the City and community vs. the obligation to preserve the endowment for future generations h. What’s the life of the SUMC funds? (i.e. endowments are forever) i. Risks:  Gradual reduction of assets on small non impactful projects or outcomes  “Too many hands in the pot,” Dilution of impact  Lax oversight j. How can endowment value be preserved for the future? k. Policies that will guide it’s management, written down and reviewed periodically Staff proposes that the (Council) Finance Committee weigh the merits of any proposed funding allocations via these guidelines and concepts. Under this process, all funding allocation proposals would come through Finance Committee for review and recommendation to the full Council. Staff would provide a package for Finance Committee review that would include a review of the guidelines, status on any expenditures and a recommendation based on staff review and other input from possible staff or external review committees. Current Fund Status As of March 2013, the City has spent a portion of SUMC funds on specific projects: 27 University ($524,124), Project Safety Net ($139,389), and affordable housing ($4,300,000; long and short term housing loans). The table below summarizes the responsible departments, funding received and the remaining funding after taking into account committed funds and interest income earned. The table does not include proposed allocations from the SUMC funds in the FY2014 Proposed Budget for Project Safety Net ($260,000) and the Bicycle and Pedestrian Transportation Plan ($1.2 million). These proposed allocations are due to be reviewed by the Finance Committee on May 16 as part of the FY2014 budget hearings. For a detailed accounting of SUMC funds to date see Attachment A. City of Palo Alto Page 5 SUMC Funds Category Responsible Department Payments due from Stanford per Development Agreement Amount Received from Stanford Amount Spent or Loaned Available Funding as of 3/31/13 (includes interest earned) Committed/ Status Committed/Designated Project Operating Deficit ASD $2,417,000 $2,417,000 $0 $2,612,413 Committed through end of project to mitigate unexpected project impact costs Linkage from Downtown through PAITS to Quarry/ECR Intersection Planning $2,250,000 $2,250,000 $374,124 $2,035,937 Recommended for CIP funding in FY2015 Linkage along Quarry Road for Pedestrian/Bicycles/ Transit Planning $400,000 $400,000 $0 $432,340 Recommended for CIP funding in FY2015 Not Committed – Council Input Sought Community Health and Safety Programs Community Services $4,000,000 $4,000,000 $139,389 $4,180,151 Available, recommended in part for Project Safety Net Infrastructure, Sustainable Neighborhoods and Affordable Housing Public Works and Planning $23,200,000 $15,466,666 $4,470,220 (Council voted on 9/24/12 to use $150,000 for a portion of 27 University) $11,669,332 ($7,733,333 due upon occupancy, est. 2016) Available pending OBAG project selection, then to Infrastructure and Sustainability Committees for prioritization and recommendation to Council Sustainability Programs Public Works and Planning $12,000,000 $8,000,000 $8,381,809 ($4,000,000 due upon occupancy, est. 2016) Available pending OBAG project selection, then to Infrastructure and Sustainability Committees for prioritization and recommendation to Council Totals $44,267,000 $32,533,666 $4,983,733 $29,311,982 (includes $1.8m interest) City of Palo Alto Page 6 Two projects, Linkage from Downtown through Palo Alto Intermodal Transit Station to Quarry/El Camino Real Intersection and Linkage along Quarry Road for Pedestrians, Bicycles, and Transit, have well-defined project areas. The Quarry Road linkage is a project that is required to be completed by December 2016. The same deadline applies to the larger Downtown linkage funds. Staff will work with Stanford as needed to coordinate these projects. Two other funding areas, Infrastructure and Affordable Housing and Climate Change and Sustainability represent funding that could go to any number of projects without any Development Agreement conditions. As discussed below, staff recommends that the process for allocating these funds be staged. The fourth funding category is for Community Health and Safety Programs with an emphasis on Project Safety Net. Staff proposes formalizing the $2million allocation to Project Safety Net and that no new allocations be decided until Project Safety Net has completed their strategic planning process currently under way. This is discussed in more detail below. Finally, the Project Operating Deficit funds are set aside in the Development Agreement to mitigate unanticipated project impact expenses that emerge during the course of the project. Staff anticipates holding these funds until final project completion, at which time the funds could be used to backfill additional City operating expenses that arise when the projects come fully online. At this point, the funds are not considered available for other projects. Community Health and Safety Programs ($4.2 million available) DA requirement:  $4 million to be distributed to selected community health programs that benefit residents of the City, based on joint committee recommendations and Council acceptance  Council may decide to use the entire portion for the Project Safety Net Program  The SUMC parties and the City shall establish a joint committee to review proposals and make recommendations to the City Council on programs or projects other than Project Safety Net. (The decision is Council’s sole discretion.) Consistent with the Guiding Principles discussed above and Council’s earlier direction, staff proposes that $2 Million of the Stanford funds be allocated to Project Safety Net (PSN). PSN is a recognized leader in suicide prevention and youth well-being and the umbrella entity for this effort in Palo Alto. The SUMC funding would support prevention, intervention, and education programs and projects targeted at “At Risk Youth” in the community. Project Safety Net is currently going through a significant planning process as a community collaborative with a local City of Palo Alto Page 7 non-profit Compass Point to define a strategic path for meaningful social impact on Palo Alto’s youth wellbeing and suicide prevention goals over the next three years. This planning work will be complete by the end of the fiscal year and will be particularly informative as we consider how best to invest the remainder of the Community Health and Safety funds. The planning work will further define PSN’s core programmatic and strategic goals, building upon current efforts. The plan will also provide a recommended structure along with decision making processes for the collaborative that will support the programmatic and strategic goals. At this time staff recommends that Council make no decision as to the allocation of the remainder of the funds, but wait until staff returns with the results of PSN’s strategic planning process. Staff does believe that a process similar to the Human Services Resources Allocation Process would be appropriate in discussing and prioritizing fund allocations. The Development Agreement anticipates use of this $4 million within a 10 year period. At the right point in time, staff recommends establishment of the joint review committee to discuss the best investment opportunities for the other $2 million. Infrastructure, Sustainable Neighborhoods and Communities and Affordable Housing ($11.8 million available) DA requirement:  $23 million for use in connection with infrastructure, sustainable neighborhoods and communities and affordable housing  Final payment of $7 million due upon issuance of a hospital occupancy permit, which is expected in 2016. Council recently approved the City’s participation in the One Bay Area Grant Program (OBAG) to seek grant opportunities for transportation projects that would satisfy infrastructure needs and sustainability objectives (report ID #3551). The Stanford funds were identified as a potential source for the necessary matching grants. The total for matching grants is $25 million and the available funds in the two SUMC funds categories is $22.7 million. It is unlikely that the City will be approved for all 10 projects so the ultimate matching requirement is expected to be far less than $25 million. The grant approval process is expected to be completed in April, with the City learning which projects have been approved by May. Staff proposes to return after the grant awards are announced with a final funding strategy, including the possible use of SUMC funds, recognizing there are many other competing possibilities, now and in the future. City of Palo Alto Page 8 Staff recommends that Council consider that upcoming discussions about the potential use of SUMC funds and prioritization and allocation possibilities be held with the Infrastructure committee, as a prelude to Finance Committee review. Staff proposes to set aside an amount of approximately $1,500,000 to be ready for affordable housing opportunities. Climate Change and Sustainability ($8.2 million available) DA Requirement:  $12 million for use in projects and programs (including carbon credits) for a sustainable community, including programs identified in the City’s Climate Action Plan, and investments in renewable energy and energy conservation.  $8 million received to date; $4 million final payment to be received upon hospital occupancy permit Projects prosed for the OBAG program, such as Adobe Creek/Highway 101 Bicycle-Pedestrian Bridge, are consistent with the City’s sustainability goals. Staff expects to learn what projects have been approved for OBAG funding in May. In any case, staff proposes that the discussion of project prioritization and recommended allocation of the sustainability funds be referred to the City’s staff “Sustainability Board” for a more detailed analysis and report. Resource Impact In addition to the funds from the Development Agreement identified earlier, development impact fees of $5.4 million have been collected so far on the project. Staff recommends preserving the development impact fees until the end of the project to help address remaining mitigations at that time. Administrative Fees: The development agreement allows for the City to recover from the SUMC funds the reasonable costs associated with managing, accounting and reporting for the funds. While City staff has recently began contributing time to managing the funds it is not significant. At this time staff does not recommend charging an administrative fee to the funds. City of Palo Alto Page 9 Since the City has proposed using SUMC funds as matching grant funding and for loans, in the case of affordable housing, this funding will be returned to the City in the future. As these funds are returned to the SUMC categories they will become available for appropriate projects in future years. Policy Implications One of the policy implications is how to synchronize the process for prioritizing infrastructure and other potential projects with the availability of funding. Council will surely want to discuss alternatives. Staff has met with representatives of Stanford to discuss the proposed allocation of funds discussed in this report and the ongoing process for allocating those funds. Environmental Review No environmental review is required at this stage of the discussion process but, if funded, some of the proposed projects may be required to complete a CEQA Analysis prior to construction. Attachments:  Attachment A: SUMC Funds 2012 (XLSX)  Attachment B: SUMC Funds 2013 (XLSX)  Attachment C: Excerpt City Council minutes from 07-25-2011.pdf (PDF) City of Palo Alto 5/2/2013 Stanford Medical Center Development Agreement (Fund 260) FY 2012 Project Ped & Bike Link Ped & Bike Link Infrastructure &Climate Change Community Total FY 2012 FY 2012 Operating at El Camino Park At Quarry Rd Afford Housing & Sustainability Health & Safety Actuals Authorized Deficit cost centers 26000000 60260010 60260020 60260030 60260040 80260010 Revenues: Revenues From Stanford 2,417,000 2,250,000 400,000 7,733,333 4,000,000 4,000,000 20,800,333 20,800,333 Investment Earnings 1,340,172 1,340,172 459,984 Allocate to categories (1,340,172) (1,340,172) Allocated Investment Earnings 157,814 130,758 26,117 504,934 261,173 259,376 1,340,172 - Total Revenues 2,574,814 2,380,758 426,117 8,238,267 4,261,173 4,259,376 22,140,505 21,260,317 Expenditures: Temp Salaries/Benefits (1)20,224 20,224 45,000 Contract Services for 27 University (2)247,369 247,369 250,000 Contract Services 1,650 1,650 - Other expenses 5,644 5,644 20,000 Total Expenditures - 247,369 - - - 27,518 274,886 315,000 Net total 06/30/12 2,574,814 2,133,390 426,117 8,238,267 4,261,173 4,231,858 21,865,619 20,945,317 Future Revenues from Stanford: Estimated January 2012-Foundation 7,733,333 4,000,000 permit for 1st hospital project. Permit is still under review by OSHPD Estimated January 2018-1st hospital 7,733,333 4,000,000 occupancy permit (1) Position was budgeted for six months, the person did not start until April. (2) $66K Fergus Gerber Young Architects $50K Sandis Engineers $31K Sand Civic Engineers $85K Fukuji Planning $13K Metropolitan Planning $2K Michael Reardon City of Palo Alto 5/2/2013 Stanford Medical Center Development Agreement (Fund 260) FY 2013 Expansion Cost Intermodal Transit Quarry Road Infrastructure &Climate Change Community Total FY 2013 FY 2013 Mitigation Improvements Afford Housing & Sustainability Health & Safety Actuals Authorized cost centers 26000000 60260010 60260020 60260030 60260040 80260010 Beginning Balance 07/01/12 2,574,814 2,133,390 426,117 8,238,267 4,261,173 4,231,858 21,865,619 Revenues: Revenues From Stanford (1)- - - 7,733,333 4,000,000 - 11,733,333 Investment Earnings 459,843 459,843 - Allocate to categories (459,843) (459,843) Allocated Investment Earnings 37,599 29,302 6,222 167,952 120,636 60,163 421,876 - Total Revenues 37,599 29,302 6,222 7,901,285 4,120,636 60,163 12,155,209 - Expenditures: Temp Salaries/Benefits 70,704 70,704 118,000 Contract Services for 27 University 126,755 150,000 276,755 374,504 Contract Services 37,476 37,476 95,000 Other expenses 3,691 3,691 15,000 Transfer to HIL-Residential 1,000,000 1,000,000 1,000,000 Loan to HIL-Residential 2,600,000 Transfer to HIL-Commercial 720,220 720,220 720,220 Total Expenditures - 126,755 - 4,470,220 - 111,871 2,108,846 2,322,724 FY 2013 Revenues less Exp 37,599 (97,453) 6,222 3,431,065 4,120,636 (51,708) 10,046,363 (2,322,724) Net total 03/31/13 2,612,413 2,035,937 432,340 11,669,332 8,381,809 4,180,151 31,911,982 Future Revenues from Stanford: Estimated January 2018-1st hospital 7,733,333 4,000,000 occupancy permit 07/25/2011 108-408 Council Member Shepherd asked whether wireless antennae could be installed on traffic lights. Mr. Marshall stated that he did not believe that the City would allow installation on traffic lights due to safety concerns. Council Member Shepherd asked how wireless antennae differed from traffic cameras. Mr. Marshall stated that wireless antennae were fairly large and heavy, and could potentially interfere with the traffic signal. MOTION PASSED: 8-0 Schmid absent 17. Stanford University Medical Center Community Benefits Discussion and Appointment of City Representatives to Joint Committee for Community Health and Safety Programs. Council Member Klein advised that he would not participate in the Item, as his wife was a member of the faculty at Stanford University. Deputy City Manager, Steve Emslie, explained that the Staff Report provided a summary of the schedule of payments to the City resulting from approval of the Stanford University Medical Center (SUMC) Development Agreement in June 2011. He stated that the first payment was due at the time of initial permit, estimated for summer 2011. The last two payments were due when the hospital’s foundation permit was pulled in January 2012, and upon occupancy of the first hospital project some time in 2018. He noted that the payments were to be divided into three major categories of funds: the Sustainability Fund ($12,000,000), the Neighborhood Infrastructure Fund ($23,200,000), and the Community Health and Safety Fund ($4,000,000). He stated that approximately $20,000,000 of the Neighborhood Infrastructure Fund was uncommitted, and could be used at Council’s discretion for projects that supported neighborhood infrastructure and other infrastructure needs of the City. He remarked that Council had designated $2,000,000 from the Community Health and Safety Fund to go to Project Safety Net, and that Staff would return after Council’s August break with a Budget Amendment Ordinance and a job description for the creation of a Project Safety Net Coordinator position in the Community Services Department. He stated that Staff’s recommendation was for Council to utilize the Finance Committee in determining the allocation of the funds. He explained that the Finance Committee was well equipped to facilitate conversations within the context of the City’s budgetary priorities and Capital Improvement Projects. Mr. Keene stated that there was no particular urgency regarding the issue. He stated that considering the amount of money that would be needed for 07/25/2011 108-409 Project Safety Net, the $2,000,000 allocation was not an extraordinary sum. He explained that only a portion of the $2,000,000 would be allocated to the new Project Safety Net Coordinator staff position. He stated that one of the reasons that Staff had placed the Item on the Agenda was so that Council could receive an update on the status of the Project Safety Net Coordinator position. Council Member Price observed that although the Staff report stated that the Finance Committee had recommended the designation of $2,000,000 from the Community Health and Safety Fund toward Project Safety Net, the Policies and Services Committee P&S had also reviewed the Item and made a similar recommendation. She asked that Staff correct the information in the Staff Report to include the P&S Committee. She asked whether the purpose of the Joint Stanford/City Committee for Community Health and Safety Programs was to develop procedures for the utilization of the funds. Mr. Keene stated that Council Member Price was correct, and added that Council may want to use the Joint Committee as a model for the assessment of allocations across all of the Funds. He acknowledged that Council may not use the same appointment technique for each committee, but emphasized the need to establish an allocation process and criteria would be more critical as Council began to make decisions regarding some of the larger Funds. Council Member Price agreed that Council would need an organized approach to defining the policy priorities that would determine the allocation of funds. She stated that although the Staff recommendation was rather broad, it was important to present Council the opportunity to discuss those issues. She emphasized that there was a lot of money at stake, and that it would need to be handled in a careful and responsible manner. She stated that Project Safety Net was an extremely important project, and that she looked forward to discussing it further. Mr. Keene stated that Staff sought direction from Council regarding how to create a process for allocation of the Community Benefit funds. He explained that Staff was not yet ready to present specific alternatives, but that with some direction they could return to Council with a more refined proposal. Council Member Shepherd stated that the strategic planning and vision work that had already been done by the Project Safety Net group was extremely valuable. She asked whether Staff intended to spread out the $2,400,000 fiscal neutrality payment over a number of years. Mr. Keene stated that the plan for the money was to place it in a savings account and allow the interest to grow to a point which could guarantee fiscal neutrality. 07/25/2011 108-410 Council Member Shepherd asked whether Council Member Klein’s participation in determining allocation of funds which had already been received from Stanford would represent a conflict of interest. City Attorney, Molly Stump, stated that Council Member Klein should not participate in the Joint Committee for Community Health and Safety Programs. Council Member Shepherd stated that Council had been asked to offer direction to Staff regarding allocation of Community Benefit funds, and asked whether Council Member Klein would be allowed to participate at some point. Ms. Stump replied that Council Member Klein’s participation could be further discussed as the project continued, but that he should not participate at the present time. Council Member Shepherd stated that the funds received from Stanford University should not be used for general purposes, such as balancing the annual budget. MOTION: Council Member Shepherd moved, seconded by Vice Mayor Yeh to accept Staff recommendation to authorize the Mayor to appoint two Council Members to the Joint Stanford/City Committee for Community Health and Safety Programs and provide Staff direction regarding the recommended process for expending Community Benefit funds. Vice Mayor Yeh agreed with Council Member Shepherd that the money should not be used to compensate for budgetary deficits within a given fiscal year, but to establish permanent Funds from which the community could benefit for years to come. Council Member Scharff expressed support for the Motion. He stated that the money should be used in a transformative way to do something positive for the community of Palo Alto. He stated that Council should focus on only the highest impact projects, which would require a great deal of input from the community. He commented that Council should consult the Infrastructure Blue Ribbon Task Force for their input regarding projects that could be extremely transformative to the City’s infrastructure. The Council needed to use the money on long-term rather than short-term projects, and that the emphasis should be placed on fiscally sustainable projects. Council Member Burt expressed support for the Motion, but asked for clarification regarding the Joint Committee. He asked whether, once formed, the Joint Committee would be advisory to one of the standing committees or to Council. 07/25/2011 108-411 Mr. Keene replied that the Joint Committee would be advisory to Council. He stated that most likely, the Joint Committee would seek explicit policy direction from Council prior to making any commitments. Council Member Burt stated that it was important to avoid misunderstandings regarding the delegation of authority. He expressed concerns regarding the misconception by some that Project Safety Net Staff would determine how to spend the funds, and asked that any misunderstandings be addressed as soon as possible. He stated that in order to avoid a false sense of authority over final decision making, it was necessary to have open communication and to be very clear from the outset about where the authority would reside. He stated that two of the Funds were primarily policy oriented, and so should be sent to the P&S Committee. He stated that he would like to hear from the other Council Members regarding which committees should review the Fund allocations. Mr. Keene explained that Staff was still in the very initial stages of the plan, but that they had included Finance Committee review in order to connect the projects to the budget cycle. He assured Council that conversations regarding Project Safety Net programs had been focused on how to create endowment funding that would leverage other money to remain sustainable. He indicated that during Fall 2011, Council might want to move forward with development of some guiding values and principles regarding the use of the funds. Council Member Holman suggested that any advisory committee’s formed to consider the allocation of funds from either the Sustainability Fund or the Neighborhood Infrastructure Fund should include different Council Members than the Joint Committee for Community Health and Safety Programs. She stated that Mr. Keene had indicated that the Joint Committee would seek explicit policy directions from Council prior to making any commitments, and inquired as to what types of commitments the two Council Members would make. Mr. Keene stated that his comments were intended to convey that efforts should be made to avoid a situation in which the Joint Committee Members made commitments without explicit direction from Council. He stated that Staff had recommended the Joint Committee because it was specifically prescribed by the SUMC Development Agreement. He stated that he had assumed that Council would prefer not to delegate full authority to the two Council Members appointed to the Joint Committee, but rather to give them direction prior to making any commitments. Council Member Holman asked why two Council Members would be making commitments, and not the Council as a whole. 07/25/2011 108-412 Mr. Keene stated that Council should be making the final decisions, and that the two Joint Committee Members would need to receive direction from Council. Council Member Burt clarified that the Joint Committee for Community Health and Safety Programs was the only committee specifically referenced in the SUMC Development Agreement. Council Member Holman stated that the Joint Committee had been described as an advisory body, and that she had been unclear as to the intent of Mr. Keene’s comments. She stated that having received clarification, she would support the Motion. Mayor Espinosa stated that he would like to see Staff provide a timeline, a process, and a list of responsibilities for both the Joint Committee and for the other two Funds. He would like to see those materials presented for review not long after Council’s return from the August break so that everyone was clear early on about how the process would work. He stated that the issues presented a great deal of overlap, and should be reviewed by both the Finance and the P&S Committees. He asserted that prior committee review would allow Council to engage in a broader conversation, and agreed that community input would be very important moving forward. MOTION PASSED: 7-0 Klein not participating, Schmid absent 18. Resolution 9194 entitled “Resolution of the Council of the City of Palo Alto Amending Section 1401 of the Merit System Rules and Regulations to Incorporate a Side Letter with SEIU Local 521 to Extend the Term of the Memorandum of Agreement for One Additional Year, Through June 30, 2012, and Add a Provision for a Flexible Spending Arrangement.” City Manager, James Keene, stated that the proposal would extend the SEIU Local 521 Memorandum of Agreement (MOA) until June 30, 2012. If approved, Staff would begin negotiation at the end of the calendar year for the 2012 MOA. He commented that Staff would have placed the Item on the Consent Calendar, but that the 2010 Santa Clara County Civil Grand Jury Report had specifically recommended that all cities in the County place labor agreements on the Action Agenda to improve transparency. Acting Assistant Director Human Resources, Marcie Scott, stated that the MOA would apply to 582 full-time equivalent employees working in nearly every City Department. She explained that in late October 2009, the City and SEIU were at impasse and could not agree on a wage and benefit package. As a result, Council implemented significant changes to compensation and made structural changes to pension and medical benefits. She explained that the changes included increased employee pension City of Palo Alto (ID # 3760) City Council Staff Report Report Type: Action Items Meeting Date: 5/6/2013 City of Palo Alto Page 1 Summary Title: BID Re-Authorization Title: Public Hearing to Hear Objections to the Levy of Proposed Assessments on the Palo Alto Downtown Business Improvement District and Adoption of a Resolution Confirming the Report of the Advisory Board and Levying Assessment for Fiscal Year 2014 on the Downtown Palo Alto Business Improvement District From: City Manager Lead Department: City Manager Recommendation Staff recommends that the City Council: 1. Hold a public hearing on the levy of proposed assessments in Fiscal Year 2014 in connection with the Downtown Palo Alto Business Improvement District; and 2. Approve a resolution confirming the report of the Advisory board and levying an assessment for Fiscal Year 2014 on the Downtown Palo Alto Business Improvement District (Attachment 2). Background On April 15, 2013, the City Council  Adopted a resolution preliminarily approving the report filed by the Palo Alto Downtown Business Improvement District Advisory Board for the Fiscal Year 2014;  Adopted a resolution of intention to levy the annual assessment for 2013-2014; and City of Palo Alto Page 2  Set May 6, 2013 at 7:00pm, or soon thereafter, as the date and time for the public hearing on the levy of the proposed assessments. Discussion The City Council is required to annually hold a public hearing, approve the Advisory Board Annual report, and determine whether or not to levy the annual assessment for the Palo Alto Downtown business Improvement District (BID). The BID is required by State law to be authorized annually. As such, it is not possible under state BID law to implement capital projects that extend longer than one year. Traditionally, funds generated from Business Improvement Districts are used for marketing, promotions, maintenance, and beautification of business districts. The assessments levied on businesses in the BID are based on the size, type, and location of downtown businesses. Based on a cost-benefit analysis, retailers and restaurants pay a larger assessment because they receive more benefit from the activities undertaken in the business district. For example, a small-large retailer/ restaurant would pay $225 to $450, while a small-large professional business (architect, accountant, etc) pay in the $50 to $225 range. Professional businesses pay the least since they receive less benefit from the BID. Absent a majority protest at the public hearing, the Council may adopt a resolution approving the report for Fiscal Year 2014 as filed or as modified by the Council at the conclusion of the public hearing. The adoption of the resolution constitutes the levying of the BID assessments for Fiscal Year 2014. The staff report (April 15, 2013) is attached and describes the actions related to the BID, including the report of the Palo Alto Downtown Business and Professional Association (PADBPA) to the City Council (Attachment 1). Attached is the Council Resolution approving the BID for Fiscal Year 2014 including required exhibits (Attachment 2). Resource Impacts Adoption of the proposed BID budget does not directly impact City revenue. BID assessments are restricted to exclusive use by the BID. A healthy BID will typically encourage growth of the retail community and consequently result in additional sales tax revenue for the City. Minimal staff effort is expended annually to administer the collection of the BID. City of Palo Alto Page 3 Staff will continue to monitor adminitrative time devoted to the collection of BID assessments to assure that City costs do not exceed estimates for these services. The cost and collection of BID assessments past 60 days is absorbed by the BID. The Attorney’s Office will continue to provide legal oversight to the BID during the annual reathorization process. Administrative Services and/or Planning Department staff provide assistance in the collection of BID assessments. The Economic Development Manager will continue to provide oversight of the BID and will prepare the annual reauthorization. Environmental Review This action by the City Council does not meet the definition of a project under Section 21065 of the California Environmental Quality Act, and therefore no environmental assessment is necessary. Attachments:  : Attachment 1: Staff Report #3642 Including BID FY 14 Annual Report (PDF)  : Attachment 2 - RESO Confirming Rpt of BID For FY14 (PDF) City of Palo Alto (ID # 3642) City Council Staff Report Report Type: Consent Calendar Meeting Date: 4/15/2013 City of Palo Alto Page 1 Summary Title: BID Preliminary Re-Authorization Title: Preliminary Approval of the Report of the Advisory Board for Fiscal Year 2012 in Connection with the Palo Alto Downtown Business Improvement District and Adoption of Resolution Declaring its Intention to Levy an Assessment Against Businesses within the Downtown Palo Alto Business Improvement District for Fiscal Year 2014 and Setting a Time and Place for a Public Hearing on May 6, at 7:00 PM or Thereafter, in the City Council Chambers From: City Manager Lead Department: City Manager Recommendation Staff recommends the following motion: that City Council: (a) Preliminarily approve the Business Improvement District (BID) Advisory Board’s 2014 Budget Report for the BID (Attachment 1) and; (b) Adopt a Resolution of Intention to Levy Assessments in the Palo Alto Downtown Business Improvement District for Fiscal Year 2014, setting a date and time for the public hearing on the levy of the proposed assessments for May 6, 2013, at 7:00 PM, or thereafter, in the City Council Chambers (Attachment 3) Executive Summary This Council action includes a preliminary approval of the BID Board’s annual report, and sets a time and place for a public hearing for the staff presentation, and to determine any objections to the assessments. Since the BID inception in 2004, a number of activities consistent with State BID law have been accomplished by the Palo Alto Downtown Business and Professional Association (PADBPA), the entity with which the City contracts to provide services to the 800+ businesses assessed in the Downtown. These include addressing the three main City of Palo Alto Page 2 issues facing downtown businesses: cleanliness, safety, and attractiveness, as well as participation in zoning and other matters affecting downtown businesses. Assessments for BID businesses are based on the size, type and location of the business. Assessments range from $50 for individually owned professional businesses to $500 annually for financial institutions. The PADBPA has monthly open meetings governed by the Ralph M. Brown Act which any business or individual can attend. Background The Palo Alto Downtown Business Improvement District (BID) was established by the City Council in 2004 pursuant to the California Parking and Business Improvement Area Law to promote the economic revitalization and physical maintenance of the Palo Alto Downtown business district. The Council appointed the Board of Directors of the Palo Alto Downtown Business and Professional Association (PADBPA), a non-profit corporation, as the Advisory Board for the BID. The Board’s purpose is to advise the Council on the method and basis for levy of assessments in the BID and the expenditure of revenues derived from the assessments. Pursuant to BID law, the Advisory Board must annually submit to the Council a report that proposes a budget for the upcoming Fiscal Year for the BID. The report must: 1) propose any boundary changes in the BID; 2) list the improvements and activities to be provided in the Fiscal Year; 3) estimate the cost to provide the improvements and activities; 4) set forth the method and basis for levy of assessments; 5) identify surplus or deficit revenues carried over from the prior Fiscal Year; and 6) identify amounts of contributions from sources other than assessments. The Council must then: 1) review the report and preliminarily approve it as proposed or as changed by the Council; 2) adopt a resolution of intention to levy the assessments for the upcoming Fiscal Year; and 3) set a date and time for the public hearing on the levy of assessments in the BID. Absent a majority protest at the public hearing on May 6, 2013, at the conclusion of the public hearing, the Council may adopt a resolution confirming the report for Fiscal Year 2014 as filed or as modified by the Council. The adoption of the resolution constitutes the levying of the BID assessments for Fiscal Year 2014. Discussion The Advisory Board has prepared a report (Attachment 1) for the Council’s consideration which includes the proposed budget for the Palo Alto Downtown BID for Fiscal Year 2014. As required by BID law, the report has been filed with the City Clerk City of Palo Alto Page 3 and contains a list of the improvements, activities, and associated costs proposed in the BID for Fiscal Year 2014. The Advisory Board has recommended no change in the BID boundaries or the method and basis for levying assessments. A map of the BID is attached (Attachment 2). The proposed assessments in the BID for Fiscal Year 2014 are the same as the assessments in Fiscal Year 2013. No increases are proposed. The budget report for Fiscal Year 2014 was reviewed and approved by the Palo Alto Downtown Business and Professional Association board on April 1, 2013. Resource Impact Adoption of the proposed BID budget does not directly impact City revenue. BID assessments are restricted for use exclusively by the BID. It is anticipated that a healthy BID will encourage vitality in the retail community and consequently result in additional sales tax revenue for the City. Some staff effort is expended annually to administer the collection of the BID. Staff will continue to monitor staff administrative time devoted to the collection of BID assessments to assure that City costs do not exceed estimates for these services. The cost and collection of BID assessments past 60 days is borne by the BID. The Attorney's Office will continue to provide legal oversight to the BID during the annual reauthorization process. Administrative Services staff provides assistance in the collection of BID assessments. The Economic Development Manager will continue to provide oversight to the BID and will prepare the annual reauthorization. Environmental Review This action by the City Council does not meet the definition of a project under Section 21065 of the California Environmental Quality Act, and therefore no environmental assessment is necessary. Attachments:  BID Annual Report FY 2014 (DOCX)  RESO Declaring Intention to Levy BID FY14 (PDF) Palo Alto Downtown Business Improvement District 2013-14 Annual Report Prepared for: Palo Alto City Council Prepared by: Russ Cohen, Executive Director, Palo Alto Downtown Business and Professional Association Start here. Introduction This report from the Advisory Board of the Palo Alto Downtown Business & Professional Association (“PAd”) was prepared for City Council to review for the annual reauthorization of the Downtown Palo Alto Business Improvement District (“BID”) pursuant to Section 36533 of the Parking and Business Improvement Law of 1989 (Section 36500 and following of the California Streets and Highways code) (the “Law”). This report is for the proposed fiscal year for the BID commencing July 1, 2013 and ending June 30, 2014. (“Fiscal Year 2013-14”). As required by the Law, this report contains the following information: I. Any proposed changes in BID boundaries and benefit zones within the BID; II. The improvements and activities to be provided for Fiscal Year 2013-14; III. An estimate of the cost of providing the improvements and the activities for Fiscal Year 2013-14; IV. The method and basis of levying the assessment in sufficient detail to allow each business owner to estimate the amount of the assessment to be levied against his or her business for Fiscal Year 2013-14. V. The amount of any surplus or deficit revenues to be carried over from a previous fiscal year. VI. The amount of any contributions to be made from sources other than assessments levied pursuant to the Law. Submitted by Anne E. Senti-Willis, Chair, and Russell S. Cohen, Executive Director on behalf of the Advisory Board (“Advisory Board”) of the Palo Alto Downtown Business & Professional Association (“PAd”). The Advisory Board approved this report on April 1, 2013. Received on file in the Office of the City Clerk of the City of Palo Alto on April 10, 2013. Section I: BID boundaries and Benefit Zones There have been no changes in the BID boundaries or benefit zones within the BID and no changes are proposed. The current boundaries are depicted on the map below. The area of the BID is referred to as “Downtown.” ~~"lr-~~;;;-l"~P~':IO~A:':'O~D:O:':'O:'O:W::O--lr~~~~=l ~ Business Improvement ,,, "" ., District P a lo Alto ---- Who and what are downtown Palo Alto? The following charts illustrate the current makeup of Downtown Palo Alto by business category. Methodology: Ratio estimates based on one time data collection through quick probability samplings considered a “windshield survey.” Margin of error is 15%. Businesses in downtown Palo Alto 2013 Restaurants = 88 Retail = 72 High tech = 109 Real Estate = 30 Finance = 84 Medical = 79 Other= 230 Restaurants Independenty owned=75 Chain or franchise=13 Total=88 Retail Independently owned=51 Chain or franchise=21 Total = 72 Restaurant vs. Retail Retaurant = 88 Retail = 72 Total independent vs Chain ( both rest. & retail combined ) Independent = 126 Chain = 34 Summary of findings based on the above charts: These data illustrate reality rather than perception. Many perceive that there is a preponderance of restaurants vs. retail, but in reality the mix is quite balanced. Also true for the number of chains vs. the number of independently owned businesses—it’s clear that there is much more in the way of independently owned businesses than chain or franchised businesses—thus breaking the commonly held perception of Downtown being dominated by chains and restaurants. New vs Closed New = 58 Closed = 13 Section II: 2012-13 Year in Review and Planned Activites for Fiscal Year 2013-2014 “Keeping Downtown Palo Alto Safe, Spotless and Successful.” PROJECT STATUS EXPECTED COMPLETION Beautification and Safety Cogswell Park rehabilitation Worked with the City to initiate the rehabilitation project and provided input on design. Grand re- opening was December 12, 2012. Complete Dec-12 University Ave. Tunnel rehabilitation Worked with the City to initiate new paint, water proof sealing and cleaning along with some new signage to brighten and provide a more welcoming entrance to Downtown. Complete Dec-12 Cogswell Park wi-fi hot spot Contributed funds to pilot free wi-fi hot spot program at Cogswell Park; assisted TopCorner.org with fundraising. [insert completion date] No Amplified Music Ordinance for Lytton Plaza and Cogswell Park In response to PAd member complaints, worked with the City to draft language and provide outreach to Downtown community. Ordinance is now in effect. Complete Jan-13 Operation Flagpole: an initiative to decorate University Ave with flags for special occasions Holes being installed as part of the University Ave landscaping improvements. Pricing for flags and poles under way along with solicitation of service clubs to install and remove flags on holidays. May-13 University Avenue landscape and irrigation rehabilitation Working with the city of Palo Alto on outreach to business community to add awareness and address concerns on scheduled improvements. Began the first of 9 phases of 1-2 weeks each on Feb 7. Apr-13 Public Art: Aurora installation at King Plaza PAd has worked with the Pal Alto Arts Commission to move this installation to King Plaza. Fundraising, website and print material distribution underway involving, among others, the Black Rock Art Foundation. Spring 13 Monthly sidewalk cleaning Worked with the City to increase frequency and improve equipment used for sidewalk cleaning. Ongoing Seasonal lamp post banner design In development as a pilot program with the expectation of expanding the program to include a greater variety of banners and more frequent replacement. Additional funding will come from private public partnerships. Spring 13 Public Art: Downtown Mural Project Program under development with Palo Alto Public Arts Commission and Downtown property owners to bring murals to Downtown buildings and other locations. Ongoing Lytton Plaza umbrellas To make Lytton Plaza more welcoming, umbrellas have been proposed to be added to outdoor seating. Downtown Streets Team has agreed to set up and dismantle umbrellas on weekdays. Outreach is beginning for storage and potential funding. Spring 13 Downtown Ambassador Program PAd continues to explore sponsorship of “ambassadors” with the Downtown Streets Team, with individuals who would be able to provide information regarding Downtown and direction to visitors. Ongoing Downtown gateway feature Development of feature to mark entrances to Downtown being considered Ongoing Camera installation in garages Working with PA Chamber of Commerce BAPPF to support program to increase safety in parking garages through installation and monitoring of security cameras. Currently involved with sourcing vendors, obtaining prices and suggesting placement locations. Ongoing Sleeping in Vehicles subcommittee Served on the committee to develop a pilot program with the faith community to address this issue Ongoing No smoking ordinance for Lytton Plaza and Cogswell Park Suggested new ordinance to City staff as a result of PAd member complaints. PAd has drafted a letter in support of current Policy & Services Committee consideration and have encouraged further business community support. Apr-13 Administration Yearly audit Annual required financial statement audit and tax return completed by independent accounting firm. Complete Feb-13 Annual database update Annual census of new and departed businesses within Downtown complete and provided to the City for annual BID assessment invoicing. Complete Feb-13 Annual invoices Separate communications from PAd added to all City invoices, including separate welcome letter for new businesses. Ongoing Membership Communications and programming Palo Alto Downtown Business and Professional Association re- branding Re-branding began in fiscal year 2012-2013 to increase visibility to members within Downtown and to create a recognizable brand to Downtown visitors. Logo redesign and initial implementation were completed in October 2012. Complete Oct-12 “Made in Downtown Palo Alto” Rewards Card Launched in partnership with FiveStars, Inc. in late 2012. Currently, over [20] Downtown businesses are participating Ongoing Downtown Palo Alto Walking Maps Update of merchants and locations is complete; contents have been proofed. Publication should be complete in March 2013 March - 13 “Made in Downtown Palo Alto” Magazine Magazine devoted to Downtown businesses under development. Partial issue was released during the Palo Alto Institute Film Festival in October 2012, but full issue remains to be released. When complete, it will be available for free distribution at Downtown businesses. Ongoing Outdoor dining In conjunction with the City, PAd hosted a meeting on March 18 with Downtown restaurant owners to provide information regarding encroachment permit requirements for outdoor dining. Efforts to facilitate compliance with City ordinances will be ongoing. Summer 13 Media Coverage The past fiscal year has seen at least 15 articles, citations, listings or other references in media outlets. Ongoing Facebook presence Photos, posts and calendar items are all included in facebook content. The facebook presence also provides “friends” with updates on new and departing businesses as well as events and activities in the Downtown Ongoing Twitter Account launched Jan 13 Ongoing Events Holiday Tree Lighting 2012 tree lighting occurred on November 30. The Ongoing 2013 lighting is currently scheduled for December 6. World Music Day PAd is involved with this annual Father’s Day event through assistance with securing insurance for the event and providing outreach to the Downtown business community regarding street closures and ways to participate in the event. June 13 “The Downtown Crown” At the grand opening of each new Downtown business, PAd welcomes the business to the district by presenting a crown. Three new crowns were presented during the year ended June 30, 2012 and more will be presented in the coming year. Ongoing Breakfast Roundtable The 2012 breakfast roundtable was entitled, “Let the brainiacs of Silicon Valley improve your downtown business” and featured three local startups, Euclid Elements, FiveStars loyalty and Google interior mapping. The 2013 roundtable will focus on helping Downtown businesses grow. Complete and Ongoing Downtown Parking Committee PAd is actively involved in ensuring the Downtown parking assessment district is running effectively. It engaged in considerable outreach with Downtown neighbors regarding impacts including the development of a pilot RPP program. PAd continues to be involved with ongoing Downtown parking studies, working with City staff and working on outreach to Downtown business and property owners. Complete and Ongoing Concert Series sponsorship PAd is currently building relationships and seeking underwriters to resume outdoor concerts Downtown. Ongoing Event outreach PAd provides continuous member outreach regarding street closures, special events, construction impacts, transportation studies, traffic disruptions and more. Ongoing 1 Section III. Budget for 2013-14 The total funds available for activities for this fiscal year are estimated to be [$189,400]. The budget for providing the activities is set forth as follows: BID 2013/14 Budget INCOME Total Non-Assessment Sources Assessments $155,000 Allowance for Uncollectible Assessments ($34,000) Other Revenue $32,400 $32,400 12-13 Surplus Carryover $20,000 TOTAL INCOME $173,400 $32,400 EXPENSES Operating Expenses Staff Salaries Executive Director Salary & Benefits $66,000 Payroll taxes and expense $6,600 Office Supplies & Expenses $250 Internet/Website Maintenance $500 Telephone $900 Rent $3,120 Reauthorization Advertising $2,000 Audit-Tax Returns $5,700 Legal $1,000 $1,000 Insurance - Liability $1,800 Workman's Comp $1,000 Nominating $1,500 Contingencies $2,000 Subtotal -- Operating Expenses $92,370 $1,000 Programs, Marketing and Events Banners $24,000 $24,000 Breakfast Roundtables $5,700 $4,100 Events $3,500 $3,300 Member Outreach & Communication $250 Downtown Streets Team $5,000 District Improvement $42,580 Subtotal --Programs, Marketing & Events $81,030 $31,400 TOTAL EXPENSES $173,400 $32,400 2 Section IV: Method and Basis of Levying the Assessment Cost Benefit Analysis / Bid Assessments The method and basis of levying the assessment is provided in sufficient detail to allow each business owner to estimate the amount of the assessment to be levied against his or her business for Fiscal Year 2013-14 and is not changed from the FY 2012-13 assessment. There have been no changes made to the Cost-Benefit Analysis or to the BID Assessments since they were approved by City Council on February 2, 2004. The method of calculation used to determine the cost and benefit to each business located in the BID is described below. The BID assessments are based on three criteria: the type of business, the location of the business and the size of the business. It has been consistently demonstrated that the typical BID program places a higher priority on activities such as commercial marketing. As a result, the retail and restaurant establishments in the BID are assessed more than service and professional businesses in the district. While service-oriented businesses benefit from a BID less than retailers and restaurateurs, they benefit more than professional businesses such as medical, dental, architectural, consultant and legal offices with their minimal advertising and promotion needs. For these reasons, various business types are assessed according to the benefit that they receive from the BID, as follows:  Retail and Restaurant 100% of base amount  Service 75% of base amount  Professional 50% of base amount Exceptions to this rule include financial institutions that are traditionally charged a flat rate regardless of location or size and lodging businesses that are typically charged by total rooms. The location of a business also determines the degree of benefit that accrues to that business. Centrally located businesses tend to benefit more, as do businesses located on the ground floor. For this reason, A and B benefit zones have been identified for the BID. In Palo Alto, Zone A benefit businesses are assessed 100% of the base benefit assessment while Zone B businesses are assessed 75%. A third criterion is used in the BID to determine benefit. This criterion, the size of the business, takes into consideration the number of full time employees employed by the business. Please refer to Attachment 1 for a more complete understanding of the application of these three variables to establish BID benefit. Attachment 2 is the BID assessment for each business located within the BID boundaries. Applying the criteria identified in Attachment 1, a summary of the assessment that applies to each business by size, 3 type and location is outlined. In addition to the Cost-Benefit Analysis, the assessments include the following criteria:  An exemption for “single person professional businesses” that have 25% or fewer full time equivalent (“FTE”), including the business owner. This covers employees who work less than 10 hours a week (based on a 40 hour work week; an FTE equals approximately 2000 hours annually)  An assessment specifically for “single person businesses” that have 26% FTE to 1 FTE in the professional business category of the BID (An FTE equals approximately 2000 hours annually)  The tiering of other professional businesses by size based (according to benefit) on the “single person business” criteria This outline provides information by which a business can determine its annual assessment based on objective criteria. Except where otherwise defined, all terms shall have the meanings identified below: Definitions of Business Types in the Downtown Business Improvement District Retailers and Restaurants: Businesses that buy or resell goods such as clothing stores, shoe stores, office supplies as well as businesses that sell prepared food and drink. Service Businesses: Businesses that sell services such as beauty or barber shops, repair shops, most automotive businesses, dry cleaners, art and dance studios, printing firms, film processing companies, travel agencies, entertainment businesses such as theatres, etc. Hotel and Lodging: These include businesses that have as their main business the lodging of customers. This is restricted to residential businesses that provide lodging services to customers for less than 30 days. Professional Businesses: Businesses that require advanced and/or specialized licenses or academic degrees such as architects, engineers, attorneys, chiropractors, dentists, doctors, accountants, optometrists, realtors, insurance brokers, venture capital firms, consultants, advertising and marketing professionals and mortgage brokers and similar professions. Financial Institutions: Includes banking, savings and loan institutions and credit unions. Additional clarification on business definitions will be defined according to Section 18.04.030 (Definitions) of the Palo Alto Municipal Code. The Advisory Board recommends that the following businesses be exempt from the BID assessment:  New businesses established in the BID area following the annual assessment for the year in which they locate in the BID area  Non-profit organizations  Newspapers  “Single person professional businesses” that have 25% or less FTE, including the business owner 4 The Assessment calculated shall be paid to the City no later 30 days after receipt of the invoice with the amount of the annual assessment sent by the City. A second notice will be mailed as a reminder to businesses that have not remitted payment by that date. Late payment will be subject to a 10% late fee. Section V: Revenue Surplus or Deficit Based on the revenue balance on 12/31/12 of $72,046, the PAd expects a surplus carryover of $20,000. Expected expenses for the remainder of FY 12-13 are as follows: Current Revenue Balance $72,046 Expected expenses for remaining FYE6/30/2013 Staff Salaries $25,000 Elections & Annual Report $3,500 Office & Operating Expenses $10,746 Outside Audit $4,000 Reauthorization Advertising $2,500 Downtown Streets Team $5,000 Rent $1,300 Total Expected Expense $51,300 Expected Carryover $20,000 Section VI: Non-assessment Income It is estimated that $32,400.00 will be raised in fundraising, and sponsor support. Additionally, anticipate in kind contribution towards expenses for Fiscal Year 2013-14. Projected Income for Fiscal Year 2013-14 Roundtable Breakfasts (donation) $4,100 Legal (donation) $1,000 Banners $24,000 Events $3,300 Total $32,400 5 Section VI: PAd Board of Directors by Business Type Retailers and Restaurants Alice Duetsher, Shady Lane Gifts Georgie Gleim, Gleim the Jeweler Cornelia Pendelton, University Art Claudia Cornejo, Café Venetia Service Businesses Robert Peterson, Peterson Architects Financial Institutions Deborah Pappas, Boston Private Bank & Trust Company Gayle Almeida-Haige, Boston Private Bank and Trust Company Professional Organizations Anne E. Senti-Willis, Thoits, Love, Hershberger & McLean Brad Ehikian, Premier Properties Patty McGuigan, Cornish & Carey Commercial Non Profit Organizations Chris Richardson, Downtown Streets Team LIAISONS Palo Alto Chamber of Commerce David MacKenzie, President & CEO Downtown Streets Team Eileen Richardson, Executive Director City Of Palo Alto Liz Kniss, Palo Alto City Council Thomas Fehrenbach, Manager of Economic Development 1 Attachment 1 ATTACHMENT 1 A General Statement Regarding Cost-Benefit Analysis For BID Businesses Using The Traditional Three Criteria Formula Criteria 1) Type of Business: Statement Concerning Cost-Benefit Formula For BID Businesses Regarding Type Of Business: In a review of 200 California Business Improvement Districts, it is consistently demonstrated that the typical BID Program places a higher priority on Commercial Marketing Programs than on Civic Beautification and Commercial Recruitment Programs. With that trend in mind, retail and restaurant businesses, with their emphasis on, and need for, commercial marketing, are traditionally assessed more than less marketing-sensitive service-oriented or professional-oriented businesses. However, while service-oriented businesses benefit from a BID less than retailers and restaurateurs, they benefit more, (from commercial marketing programs), than professional businesses such as medical, dental and legal offices with their minimal advertising and promotion needs. Therefore, set forth below, is an example of how various business types might be considered regarding the computation of the annual benefit assessment. • Retail and Restaurant: 100% of base amount • Service: 75% of base amount • Professional: 50% of base amount Exceptions to this rule include financial institutions that are traditionally charged a flat rate regardless of location or size and lodging businesses that are typically charged by total rooms. Lodging businesses are assessed based on the total number of rooms because it is a more equitable manner of determining size. Many lodging businesses have many part time employees, but revenues are based on the room occupancies of the hotel, not the goods sold or serviced provided by employees. Criteria 2) Location of Business: Statement Concerning Cost-Benefit Formula For BID Businesses Regarding Location of Business: It has also been consistently demonstrated that the more centrally located businesses tend to benefit from BID activities and services to a greater degree than businesses located toward the periphery of the proposed BID boundaries. Events and activities tend to originate in the central core of the Downtown area and spread benefit to the outer areas with diminishing energy and impact, much like the ripple effect of a stone tossed into a body of calm water. Furthermore, ground floor businesses tend to benefit to a greater degree than businesses located in upper floors. Therefore, in some cases, a new BID's annual benefit assessment formula also takes these street level criteria into account. As mentioned above, special events, fairs, festivals and other activities tend to take place within, or along, the Main Street core rather than in the areas at the periphery of the Downtown core. Additionally, BID-sponsored seasonal decorations, public art projects, street banners and street furniture tend to be located within the immediate core area. 2 Attachment 1 Therefore, businesses located within the most central area of the proposed BID are considered to be within "Zone A" which should be considered the primary benefit zone. There is typically a "secondary zone" or "Zone B" within most proposed BID areas. This area receives less benefit than Zone A and should be assessed accordingly. An example of how different zones might be treated regarding the computation of the annual benefit assessment is as follows. • Zone A: 100% of base benefit assessment • Zone B: 75% of base benefit assessment In the case of Downtown Palo Alto, it is recommended that all Zone A upper floor businesses, as well as any other businesses located at the periphery of the proposed BID, be considered as Zone B businesses. Please refer to the map in Attachment I. Criteria 3) Size of Business: Statement Concerning Cost-Benefit Formula For BID Businesses Regarding Size of Business: In approximately 50% of newly established BIDs, a third assessment criterion is used. This criterion involves the size of each individual business that is based upon the businesses’ total number of full-time employees. Full-time employees are those working a total of 2,000 hours per year. Part-time employees are grouped into full-time job positions, i.e., two half-time employees total one full-time. Fractions are rounded down to the nearest whole number with no less than one person as a minimum for business. An example of how various business sizes might be treated regarding the computation of the annual benefit assessment is as follows: Retail/Restaurants Service Businesses Small 50% of base amount Under 6 FTE* Under 4 FTE Medium 75% of base amount 6 to under 11 FTE 4 to under 7 FTE Large 100% of base amount 11 or more FTE 7 or more FTE * FTE = full time employees Additionally, an exemption was established for “single person professional businesses” that have 25% or less FTE, including the business owner. This covers employees who work less 10 hours a week (based on a 40 hour work week) Since “single person businesses” that have 26% FTE to 1 FTE in the professional business category of the BID benefit the very least from the assessment, their assessments have been tiered by size based (according to benefit) on the new “single person business” criteria. ATTACHMENT 2 Downtown Palo Alto Business Improvement District Annual BID Assessments ZONE A ZONE B (75% of Zone A amount) Restaurants & Retailers Under 6 FTE (50% of base amount) $225 $170 6 to under 11 FTE (75% of base amount) $340 $260 11 or more FTE (100% of base amount) $450 $340 Service Businesses Under 4 FTE (50% of base amount) $170 $130 4 to under 7 FTE (75% of base amount) $260 $200 Over 7 FTE (100% of base amount) $340 $260 Professional Businesses 25% or fewer FTE, including owner (0% of base amount) Exempt Exempt 26% FTE to under 1 FTE (25% of base amount) $60 $50 2 to 4 FTE (50% of base amount) $110 $90 5 to 9 FTE (75% of base amount) $170 $130 10+ FTE (100% of base amount) $225 $170 Lodging Businesses Up to 20 rooms (50% of base amount) $2258 $170 21 to 40 rooms (75% of base amount) $340 $260 41+ rooms (100% of base amount) $450 $340 Financial Institutions $500 $500 Note 1: For retail, restaurant, service, and professional businesses, size will be determined by number of employees either full-time or equivalent (FTE) made up of multiples of part-time employees. A full FTE equals approximately 2000 hours annually. Lodging facilities will be charged by number of rooms available and financial institutions will be charged a flat fee. Note 2: Second floor (and higher) businesses located within Zone A will be assessed the same as similar street-level businesses located within Zone B. Note 3: Assessment amounts are rounded to the nearest ten dollars. The minimum assessment will be $50.00. Not Yet Approved      120319 jb 0131058    1     Resolution No. _____  Resolution of the Council of the City of Palo Alto Declaring Its Intention  to Levy an Assessment Against Businesses Within the Downtown Palo  Alto Business Improvement District for Fiscal Year 2014 and Setting a  Time and Place for May 6, 2013 at 7:00 PM or Thereafter, in the Council  Chambers       THE CITY COUNCIL OF THE CITY OF PALO ALTO DOES HEREBY FIND, DECLARE,  AND ORDER AS FOLLOWS:    SECTION 1.  The Parking and Business Improvement Area Law of 1989 (the  "Law"), California Streets and Highways Code Sections 36500 et seq., authorizes the City  Council to levy an assessment against businesses within a parking and business  improvement area which is in addition to any assessments, fees, charges, or taxes  imposed in the City.    SECTION 2.  Pursuant to the Law, the City Council adopted Ordinance No. 4819  establishing the Downtown Palo Alto Business Improvement District (the "District") in  the City of Palo Alto.    SECTION 3.  The City Council, by Resolution No. 8416, appointed the Board of  Directors of the Palo Alto Downtown Business & Professional Association, a California  nonprofit mutual benefit corporation, to serve as the Advisory Board for the District (the  "Advisory Board").    SECTION 4.  In accordance with Section 36533 of the law, the Advisory Board  prepared and filed with the City Clerk a report entitled "Downtown Palo Alto Business  Improvement District, Annual Report 2013‐2014" (the "Report”). The City Council  hereby preliminarily approves the report.    SECTION 5.  The boundaries of the District are within the City limits of the City of  Palo Alto (the "City") and encompass the greater downtown area of the City, generally  extending from El Camino Real to the East, Webster Street to the West, Lytton Avenue  to the North and Addison Avenue to the South (east of Emerson Street, the boundaries  extend only to Forest Avenue to the South). Reference is hereby made to the map of the  District attached hereto as Exhibit "A" and incorporated herein by reference for a  complete description of the boundaries of the District.    SECTION 6.  The City Council hereby declares its intention, in addition to any  assessments, fees, charges or taxes imposed by the City, to levy and collect an  assessment against businesses within the District for fiscal year 2014 (July 1, 2013 to  June 30, 2014). Such assessment is not proposed to increase from the assessment levied  Not Yet Approved      120319 jb 0131058    2 and collected for the prior fiscal year. The method and basis of levying the assessment is  set forth in Exhibit "B" attached hereto, and incorporated herein by reference.    SECTION 7.  The types of improvements to be funded by the levy of an  assessment against businesses within the District are the acquisition, construction,  installation or maintenance of any tangible property with an estimated useful life of five  years or more. The types of activities to be funded by the levy of an assessment against  businesses within the District are the promotion of public events which benefit  businesses in the area and which take place on or in public places within the District; the  furnishing of music in any public place in the District; and activities which benefit  businesses located and operating in the District.    SECTION 8.  New businesses established in the District after the beginning of  any fiscal year shall be exempt from the levy of the assessment for that fiscal year. In  addition, non‐profit organizations, newspapers and professional "single‐person  businesses," defined as those businesses which have 25% or less full time equivalent  employees, including the business owner, shall be exempt from the assessment.    SECTION 9.  The City Council hereby fixes the time and place for a public  hearing on the proposed levy of an assessment against businesses within the District for  fiscal year 2013 as follows:    TIME:   7:00 p.m. or soon thereafter    DATE:   Monday, May 6, 2013    PLACE:  City Council Chambers      250 Hamilton Avenue       Palo Alto, California 94301    At the public hearing, the testimony of all interested persons regarding the levy  of an assessment against businesses within the District for fiscal year 2014 shall be  heard. A protest may be made orally or in writing by any interested person.    Any protest pertaining to the regularity or sufficiency of the proceedings must be  in writing and shall clearly set forth the irregularity or defect to which the objection is  made.    Every written protest must be filed with the City Clerk at or before the time fixed  for the public hearing. The City Council may waive any irregularity in the form or content  of any written protest and at the public hearing may correct minor defects in the  proceedings. A written protest may be withdrawn in writing at any time before the  conclusion of the public hearing.    Not Yet Approved      120319 jb 0131058    3 Each written protest must contain a description of the business in which the  person subscribing the protest is interested sufficient to identify the business and, if a  person subscribing is not shown on the official records of the City as the owner of the  business, the protest shall contain or be accompanied by written evidence that the  person subscribing is the owner of the business. A written protest which does not  comply with the requirements set forth in this paragraph will not be counted in  determining a majority protest (as defined below).    If, at the conclusion of the public hearing, written protests are received from the  owners of businesses in the District which will pay 50 percent or more of the  assessments proposed to be levied and protests are not withdrawn so as to reduce the  protests to less than 50 percent (i.e., there is a majority protest), no further proceedings  to levy the proposed assessment, as contained in this resolution of intention, shall be  taken for a period of one year from the date of the finding of a majority protest by the  City Council.    If the majority protest is only against the furnishing of a specified type or types  of improvement or activity within the District, those types of improvements or activities  shall be eliminated.    SECTION 10.  For a full and detailed description of the improvements and  activities to be provided for fiscal year 2014, the boundaries of the District and the  proposed assessments to be levied against the businesses within the District for fiscal  year 2014, reference is hereby made to the Report of the Advisory Board. The Report is  on file with the City Clerk and open to public inspection.    SECTION 11.  The City Clerk is hereby authorized and directed to provide  notice of the public hearing in accordance with law.    //    //    //    //    //    //    //    //  Not Yet Approved      120319 jb 0131058    4 SECTION 12.  The Council finds that the adoption of this resolution does not  meet the definition of a project under Section 21065 of the California Environmental  Quality Act and, therefore, no environmental impact assessment is necessary.    INTRODUCED AND PASSED:    AYES:    NOES:    ABSENT:    ABSTENTIONS:    ATTEST:      __________________________    _____________________________  City Clerk      Mayor    APPROVED AS TO FORM:    APPROVED:    __________________________    _____________________________  Senior Assistant City Attorney   City Manager           _____________________________         Director of Administrative             Services           _____________________________         Director of Planning and            Community Environment  934 - 9 4 4 927 932 233 281 933 - 9 3 7 943 327 1001 94 2 469 475 74 4 459 832 801 A P T 1 - 5 427-453 920 912 362 370 900 838 846 471 459 835 - 8 5 5 460 81 5 840 836 834 845 400 803 928930 931 933 835 - 8 3 7 831 - 8 3 3 451453 802800 81 0 - 8 1 6 81 8 - 8 2 0 82 8 - 8 3 0 817 - 8 1 9 82 3 - 8 2 5 567-569 559563 536 526 100 1 101 1 - 540 483 904 912 468 918 926 537 965-971505-507 519-521 939-945 931-935 923-925 518-520 539541543 515-517 809 811 420 1001 1011 1010 376 370 980960 990 34 354 326 426 4 1000 448 944 471 483948952 959947925 915 933 935 425-443 451449 463-465 936-940 458 460 440 428 426 527-533 543 551 510520 558-560 903 825 837 581 575 940934 813-823 501-509 511-519 521-529 531-539 541-547 556 596 904 926 561-567 569 845 580 574 566 991- 997 136 610 116-122 150 535529525 542516140 102 116 124 163 145 566 556 167 528 643635 635 645- 685 660- 666 620 180 164 158156 624 628 632 636 640 644 617 621 151-165 171-195 203 642640 636 200 151 115 125 135 514 101 440 444 436432 427 425 117119 630616 208 228 220 240-248 575 530- 534 536 540 552 177 156 201 209 215 225 595 229231 611-623 180 508500 625-631 170 172-174 542 544 538- 542 552 548 546 541- 547 230-238 734 723 721 702- 730220-244 744 701 731 755757 771 200 160 728-732 762- 776740-746 250 275 270 255741 265 724 730 651 221-225 227 668 707 205 201 203 451449 209 219 221 233 235450 460 470 442 444 400 420 430 411 425 429 185 165 181 412 250 420 245 171-169 441- 445 435- 439 346344 333 335 342 344 431 460 450 235530 220 220B 222 240 514278 274 270 250 545 540 251485255 271 281 300 310 301 581 259-267 533535537 261 267 518-526 532- 536 520-526 530-536 271 281 252 270 240-248 202- 216 228226 234238 244 242 210- 216 228- 234 223- 229 209215 247-259 240 232230 311-317 251 344 326 340 337339 323 317 400 420 332 330 314 353 355 367 305 347 265272-278 418 319 321- 341 328 330 300- 310 431401 366 436 426#1-7 369 335 319 390 301 315 375 307- 311 325330 3321&23301-3 324 326316 318 373- 377 416- 424 361 338 340 560 345 321325 315 529 285 555 650636 6281-12 628A-E 385 365 375380 345 664 325650-654 661635300 690 675 555541-549533 535- 539 318-324 326 352 425 439-441 435429425 415-419 405403453 461 383460 502 510 526 520 540 499 467 459 439 425 555 400 436-452 456 379 370-374 376 380-382 384-396 550-552 364 360 431 440-444 423 499 475 421-423 431-433 432 428 460-476 450 635 446 430 400 745 720706 385744 734 724-730 720 712 704 360 351 315737 332 300 653 -681 683 685 512 501619 609605 518 482 486 496 610 630 455 400 651-687 543-545 532534 542544 550 552 554 556 558560562564 635-6 643-6 470 313 334 333 325326 342 303301 229 336 308 310 312 316 318 311 331 315 319 317 321 335 228220 356-360 347-367 351 357 369-379360 258- 296 350 210 204 302- 316 379310 320 328 332 340 437 412 311A-B 404 313 325 327 333 407 401385 411 452 378-390 360 - 1A - 1C360 - 2A - 2C360 - 3A - 3C360 - 4A - 4C360 - 5A - 5C360 - 6A 344-348 418420 482 328 456 321 325 330204 218 236 240 250- 252 477 475 467 457 453 249235225221 201 60 275 505-509 239- 243 209- 213 210- 214 513-519 460 474472228- 230 535 558 201 16 12 20 209 215 223 231 521 80 239-245 530-540 544-554 212- 216 218-222 333 335- 337 351 457451 465 463 489-499360 530 480 420 430 480 463 451443437411 405 419405401 441 480-498 347 351 355 359 525 430 473 332- 342 425415 400 570 568 556 550 543 327321315305 343 515 525 551 555 328 309-311 518-528 536-540 552-554 558-562 573 A-E 591-599 557-571 330-332 318-320 406-418 417 542 548568 524 550 500-528 578 564 550 546 540 530 531-535 541 505 525 537 555 565 571 530 619-6 520 440-446 579 567 523610 600 555 581 420-438 437 566 224 228A-F 244 579 575 565 559 251 355A-J 335329 604 576 566 345-347 243 245 25725920921922723502 505 610-616 727 678 676 674672 642 636-638 567 555 711 701705 725 525 759 730 718 734 738-740 760 746-750 701 721-7 600 827 835 899 850 530 609 759 751753 7 737-62611 601 600 1013 10041000 1006 1001 623 137 145 700 780 790 744 111700 753 100 825805 33 51 75 63 841 44 675 49 41 711 799 703 100 101 139654 625 160 1001 1005 1009 1010 1004 930 975 945929931 948 181 940 960 145900 955 999875 853 925 81 855 901-907 909 87 98 917 921 925 735 849 707 847 842828 820248 230-232 212 825 829 833 839 800 812 818 882 165831 801 815 809801 841 791153 718 774 761 795745 201 209 834 836 845 895 926 190 934 942 948 203 209 219 225 929200 240 904 910 926 270 935 904 909 909A 217 222 148 171 421 130 312 318 324 317 301 186 192 323 329 151 325 329 334 131 129 355301 235 258 212 163 115 291247 210 201 207 64 202 235 251 249 252 247 244 250 177220 261 251-257 205245 231225213 205 70 2 206 234240 183 251 270 241-247 215- 237 210- 216 219 235 62 202 245 54 52 50 203 215 221 313-317318 220- 224 238 542-550 531-539 532 759 223-239 905 911-917907 188 190 251- 293 202 206 208 210 212 216 220 1008 275 539 201 400 27 168 865857 302 324 340 795 848 918 903 903A 408 412 440 483A - F 435 751 735 745 532 210 727 733 335 328 330 345 214 350 800 806 441 441A 230302 306 308 312 316 301 303 305 307 309 325 251 807 821 829 801 818-824 420 424 430 832A 832 842A 842 852A 852 862A 862 872A 872 351A 351 355A 355 359A 359 363A 363 367A 367 425 911 943 951 918 936 940 944 271 253 241 301 319 919A 919 935 949 928 936 940-946 353 264 367 361 310 1005 1010 423425413 - 419 457-467 469-471 473-481 454 729A-D 733-743 734-740 724-732 936 824-828 920 949 943941 715 95 445 324 328 545 590 425 447 827 565 585 595 904 315 507 561 706 536 200 100 280-290 150 158 164 276 516 698 161 159 157777 132 127 180 528 120 247 372 524 548 550 538 152 345 336 515 658 227 27 29 539 115 135 321 558#200-202 558#C&D 965 140 350 808 915 461 435433 945 1012 421 727A-C 218 255 206 739 260 840 650 642 351 451 551 375 530 643 415 12 700 802 99 89 87 901 560564 568 572 576580584588592594 906 908 910 912 914 916 918920 922 924 548 423 668 901 305 -313 423 405 352354 611 320322 346 323 471 484 528 426 264 430 1001 508 756- 760 940 930 544546 515 7 745 7 549 211 213 151 160 257 433-457 482 330 349 401 539 440 691 755 67 312 202 651 443445 447 716 218 398 998 262 335 218 640-646506 327 469 303 401 403 254 401 91 40 101 819 301 725 595 705 541 QuarryRoad Homer Avenue Lane 8 West MedicalFoundation Way Lane 7 West Lane 7 East Encina Avenue ElCamino Real UrbanLane WellsA venue Forest Avenue High Street Emerson Street Ch a n n i n g A v e n u e Alma Street ElCamino Real Mitchell Lane EverettAvenue Lytton Avenue Lane 15 E High Street Alma Street Bryant Street Lane 6 E Lane 11 W Lane21 High Street Gilman Street Hamilton Avenue University Avenue Bryant Court Lane 30 Florence Street Kipling Street Tasso Street Cowper Street Everett Avenue Waverley Street Cowper Street Webster Street Everett Court Lytton Avenue Lane A West L L La Addison Avenue Forest Avenue Downing Lane Homer Avenue La Lane 39 Lane 56 Hamilton Avenue Webster Street Waverley Street Kipling Street Bryant Street Ramona Street Addison Avenue Scott Street Webster Street Cowper Street Addison Avenue Channing Avenue Ramona Street Paulsen Ln Lane 15 E Lane 20 W Lane 20 E University Avenue CalTrain ROW Emerson Street Waverley Street Kipling Street Bryant Street Ramona Street Palo Road ay PearLane Lane 12 W Lane 5 E Everett Avenue Homer Avenue Emerson Street ta l m D r iv e Alma Street Lytton Avenue This map is a product of the City of Palo Alto GIS This document is a graphic representation only of best available sources. Legend abc Zone A (Ground Floor) - Zone B (Upper Floors) abc Zone B 0' 500' Downtown Palo Alto Business Improvement District Area Map CITY O F PALO A L TO I N C O R P O R AT E D C ALIFOR N I A P a l o A l t o T h e C i t y o f A P R IL 16 1 894 The City of Palo Alto assumes no responsibility for any errors ©1989 to 2012 City of Palo Alto rrivera, 2012-04-30 16:57:54 CPA BID (\\cc-maps\gis$\gis\admin\Personal\rrivera.mdb) EXHIBIT A Retailers and Restaurants (100%) Service Businesses (75%) Professional Businesses (50%) Lodging Businesses (100%) Financial Institutions EXHIBITB Downtown Palo Alto Business Improvement District Annual BID Assessments ZONE A $225.00 (Under 6 FTE employees) (50%) $340.00 (6 to under 11 FTE employees) (75%) $450.00 (11+ FTE employees) (100%) $170.00 (Under 4 FTE employees) (50%) $260.00 (4 to under 7 FTE employees) (75%) $340.00 (7+ FTE employees) (100%) ZONED (75%) $170.00 $260.00 $340.00 $130.00 $200.00 $260.00 EXEMPT (25% or fewer FTE employees, including the business owner) " $ 60.00 (26% to under 1 FTE employees) (25%) $ 50.00 $110.00 (2 to 4 FTE employees) (50%) $ 90.00 $170.00 (5 to 9 FTE employees) (75%) $130.00 $225.00 (10+ FTE employees) (100%) $170.00 $225.00 (up to 20 rooms) (50%) $340.00 (21 to 40 rooms) (75%) $450.00 (41 + rooms) (100%) $500.00 $170.00 $260.00 $340.00 $500.00 N otel: For retail, restaurant, service, and professional businesses, size will be determined by number of employees either full-time or equivalent (FTE) made up of multiples of part-time employees. A full FTE equals approximately 2000 hours annually. Lodging facilities will be charged by number of rooms available and financial institutions will be charged a flat fee. Note 2: Second floor (and higher) businesses located within Zone A, will be assessed the same as similar street-level businesses located within Zone B. Note 3: Assessment amounts are rounded to the nearest ten dollars. The minimum assessment will be $50.00. Not Yet Approved    130422 jb 0131069 1 Resolution No. _______  Resolution of the Council of the City of Palo Alto Confirming the Report of  the Advisory Board and Levying an Assessment for Fiscal Year 2014 on  the Downtown Palo Alto Business Improvement District       THE CITY COUNCIL OF THE CITY OF PALO ALTO DOES HEREBY FIND, DECLARE,  AND ORDER AS FOLLOWS:    SECTION 1.  The Parking and Business Improvement Area Law of 1989,  California Streets and Highways Code Sections 36500 et seq. (the “Law”), authorizes the  City Council to levy an assessment against businesses within a parking and business  improvement area which is in addition to any assessments, fees, charges, or taxes  imposed in the City.    SECTION 2.  Pursuant to the Law, the City Council adopted Ordinance No. 4819  establishing the Downtown Palo Alto Business Improvement District (the "District") in  the City of Palo Alto.    SECTION 3.  The City Council, by Resolution No. 8416, appointed the Board of  Directors of the Palo Alto Downtown Business & Professional Association, a California  nonprofit mutual benefit corporation, to serve as the Advisory Board for the District (the  "Advisory Board").    SECTION 4.  In accordance with Section 36533 of the law, the Advisory Board  prepared and filed with the City Clerk a report entitled "Downtown Palo Alto Business  Improvement District, Annual Report 2013‐2014" (the "Report”), and, by previous  resolution, the City Council preliminarily approved such report as filed.     SECTION 5.  The boundaries of the District are within the City limits of the City of  Palo Alto (the "City") and encompass the greater downtown area of the City, generally  extending from El Camino Real to the West, Webster Street to the East, Lytton Avenue  to the North and Addison Avenue to the South (east of Emerson Street, the boundaries  extend only to Forest Avenue to the South). Reference is hereby made to the map of the  District attached hereto as Exhibit "A" and incorporated herein by reference for a  complete description of the boundaries of the District.    SECTION 6.  The City Council has adopted a Resolution of Intention, Resolution  No. 9329 declaring its intention to levy and collect an assessment for fiscal year 2014  against the businesses in the District.    SECTION 7.  Following notice duly given pursuant to law, the City Council has  held a full and fair public hearing regarding the levy and collection of an assessment  within the District for fiscal year 2014. All interested persons were afforded the  opportunity to hear and be heard regarding protests and objections to the levy and  Not Yet Approved    130422 jb 0131069 2 collection of the assessment for fiscal year 2014..  The City Council finds that there was  no majority protest within the meaning of the Law.  All protests and objections to the  levy and collection of the assessment and any and all protests and objections are hereby  overruled by the City Council.    SECTION 8.  Based on its review of the Report, a copy of which has been  presented to the City Council and has been filed with the City Clerk, and other reports  and information, the City Council hereby finds and determines that (i) the businesses in  the District will be benefited by the expenditure of funds raised by the assessment (ii)  the District includes all of the businesses so benefited; and (iii) the net amount of the  assessment levied within the district for the 2014 fiscal year in accordance with the  Report is apportioned by a formula and method which fairly distributes the net amount  in proportion to the estimated benefits to be received by each such business.    SECTION 9. The City Council hereby confirms the Report as originally filed by the  Advisory Board. New businesses established in the District after the beginning of any  fiscal year shall be exempt from the levy of the assessment for that fiscal year. In  addition, non‐profit organizations, newspapers and professional "single‐person  businesses," defined as those businesses which have 25% or less full time equivalent  employees, including the business owner, shall be exempt from the assessment.    SECTION 10. The Adoption of this resolution constitutes a levy of an assessment  for the fiscal year 2014 (commencing July 1, 2013, and ending June 30, 2014). The  assessment formula, including the method and basis of levying the assessment, is set  forth Exhibit “B” attached hereto and incorporated herein by reference. New businesses  established in the District after the beginning of any fiscal year shall be exempt from the  levy of the assessment for that fiscal year. In addition, non‐profit organizations,  newspapers and professional "single‐person businesses," defined as those businesses  which have 25% or less full time equivalent employees, including the business owner,  shall be exempt from the assessment.    SECTION 11.  The City Council hereby declares that the proposed uses of the  revenues derived from the assessments levied against the businesses in the District are  for the following facilities and activities: The types of improvements to be funded by the  levy of an assessment against businesses within the District are the acquisition,  construction, installation or maintenance of any tangible property with an estimated  useful life of five years or more. The types of activities to be funded by the levy of an  assessment against businesses within the District are the promotion of public events  which benefit businesses in the area and which take place on or in public places within  the District; the furnishings of music in any public place in the District; and activities  which benefit businesses locating and operating in the District.    //    //  Not Yet Approved    130422 jb 0131069 3 SECTION 12.  The Council finds that the adoption of this resolution does not  meet the definition of a project under Section 21065 of the California Environmental  Quality Act and, therefore, no environmental impact assessment is necessary.      INTRODUCED AND PASSED:    AYES:    NOES:    ABSENT:    ABSTENTIONS:    ATTEST:      __________________________    _____________________________  City Clerk      Mayor    APPROVED AS TO FORM:    APPROVED:    __________________________    _____________________________  Senior Assistant City Attorney   City Manager           _____________________________         Director of Administrative             Services 934 - 9 4 4 927 932 233 281 933 - 9 3 7 943 327 1001 94 2 469 475 74 4 459 832 801 A P T 1 - 5 427-453 920 912 362 370 900 838 846 471 459 835 - 8 5 5 460 81 5 840 836 834 845 400 803 928930 931 933 835 - 8 3 7 831 - 8 3 3 451453 802800 81 0 - 8 1 6 81 8 - 8 2 0 82 8 - 8 3 0 817 - 8 1 9 82 3 - 8 2 5 567-569 559563 536 526 100 1 101 1 - 540 483 904 912 468 918 926 537 965-971505-507 519-521 939-945 931-935 923-925 518-520 539541543 515-517 809 811 420 1001 1011 1010 376 370 980960 990 34 354 326 426 4 1000 448 944 471 483948952 959947925 915 933 935 425-443 451449 463-465 936-940 458 460 440 428426 527-533 543 551 510520 558-560 903 825 837 581 575 940934 813-823 501-509 511-519 521-529 531-539 541-547 556 596 904 926 561-567 569 845 580 574 566 991- 997 136 610 116-122 150 535529 525 542516140 102 116 124 163 145 566 556 167 528 643635 635 645- 685 660- 666 620 180 164 158156 624628 632 636 640 644 617 621 151-165 171-195 203 642640 636 200 151 115 125 135 514 101 440 444 436432 427 425 117119 630616 208 228220 240-248 575 530- 534 536 540 552 177 156 201 209215 225 595 229231 611-623 180 508500 625-631 170 172-174 542544 538- 542 552 548 546 541- 547 230-238 734 723 721 702- 730220-244 744 701 731 755757 771 200 160 728-732 762- 776740-746 250 275 270 255 741 265 724 730 651 221-225 227 668 707 205 201203 451449 209 219 221 233 235450 460 470 442 444 400 420 430 411 425 429 185 165 181 412 250 420 245 171-169 441- 445 435- 439 346344 333 335 342 344 431 460 450 235530 220 220 B 222 240 514278 274270 250 545 540 251485255 271 281 300 310 301 581 259-267 533535537 261 267 518-526 532- 536 520-526 530-536 271 281 252 270 240-248 202- 216 228226 234238 244 242 210- 216 228- 234 223- 229 209215 247-259 240 232230 311-317 251 344 326 340 337339 323317 400 420 332330 314 353 355 367 305 347 265272-278 418 319 321- 341 328 330 300- 310 431401 366 436 426 #1-7 369 335 319 390 301 315 375 307- 311 325330 332 1&2330 1-3 324 326316 318 373- 377 416- 424 361 338 340 560 345 321325 315 529 285 555 650636 628 1-12 628 A-E 385 365 375380 345 664 325650-654 661635300 690 675 555541-549533 535- 539 318-324 326 352 425 439-441 435429425 415-419 405403453 461 383460 502 510 526 520 540 499 467 459 439 425 555 400 436-452 456 379 370-374 376 380-382 384-396 550-552 364 360 431 440-444 423 499 475 421-423 431-433 432428 460-476 450 635 446 430 400 745 720706 385744 734 724-730 720 712 704 360 351 315737 332 300 653 -681 683 685 512 501619 609605 518 482486 496 610 630 455 400 651-687 543-545 532534 542544 550 552 554556 558560562564 635-6 643-6 470 313 334 333 325326 342 303301 229 336 308 310 312 316 318 311 331 315 319 317 321 335 228220 356-360 347-367 351357 369-379360 258- 296 350 210 204 302- 316 379310 320 328 332 340 437 412 311 A-B 404 313 325 327 333 407 401385 411 452 378-390 360 - 1A - 1C360 - 2A - 2C360 - 3A - 3C360 - 4A - 4C360 - 5A - 5C360 - 6A 344-348 418420 482 328 456 321 325 330204 218 236 240 250- 252 477 475 467 457 453249235225221 201 60 275 505-509 239- 243 209- 213 210- 214 513-519 460 474472228- 230 535 558 201 16 12 20 209 215 223 231 521 80 239-245 530-540 544-554 212- 216 218-222 333 335- 337 351 457451 465463 489-499360 530 480 420 430 480 463 451443437411 405 419405401 441 480-498 347 351 355 359 525 430 473 332- 342 425415 400 570568 556 550 543 327321315305 343 515 525 551 555 328 309-311 518-528 536-540 552-554 558-562 573 A-E 591-599 557-571 330-332 318-320 406-418 417 542 548568 524 550 500-528 578 564 550 546 540 530 531-535 541 505 525 537 555 565 571 530 619-6 520 440-446 579 567 523610 600 555 581 420-438 437 566 224 228 A-F 244 579 575 565 559 251 355 A-J 335329 604 576 566 345-347 243245 25725920921922723502 505 610-616 727 678 676 674672 642 636-638 567 555 711 701705 725 525 759 730 718 734 738-740 760 746-750 701 721-7 600 827 835 899 850 530 609 759 751753 7 737-62611 601 600 1013 10041000 1006 1001 623 137 145 700 780 790 744 111700 753100 825805 33 51 75 63 841 44 675 49 41 711 799 703 100 101 139654 625 160 1001 1005 1009 1010 1004 930 975 945929931 948 181 940 960 145900 955 999875 853 925 81 855 901-907 909 87 98 917 921 925 735 849 707 847 842828 820248 230-232 212 825 829 833 839 800 812 818 882 165831 801 815 809801 841 791153 718 774 761 795745 201 209 834836 845 895 926 190 934 942 948 203 209 219 225 929200 240 904 910 926 270 935 904 909 909A 217 222 148 171 421 130 312 318 324 317 301 186 192 323 329 151 325 329 334 131 129 355301 235 258 212 163 115 291247 210 201 207 64 202 235 251 249 252 247 244250 177220 261 251-257 205245 231225213205 70 2 206 234240 183 251 270 241-247 215- 237 210- 216 219 235 62 202 245 54 52 50 203 215 221 313-317318 220- 224 238 542-550 531-539 532 759 223-239 905 911-917907 188 190 251- 293 202 206 208 210 212 216 220 1008 275 539 201 400 27 168 865857 302 324 340 795 848 918 903 903A 408 412 440 483A - F 435 751 735 745 532 210 727 733 335 328 330 345 214 350 800 806 441 441A 230302 306 308 312 316 301 303 305 307 309 325 251 807 821 829 801 818-824 420 424 430 832A 832 842A 842 852A 852 862A 862 872A 872 351A 351 355A 355 359A 359 363A 363 367A 367 425 911 943 951 918 936 940 944 271 253 241 301 319 919A 919 935 949 928 936 940-946 353 264 367 361 310 1005 1010 423425413 - 419 457-467 469-471473-481 454 729 A-D 733-743 734-740 724-732 936 824-828 920 949 943941 715 95 445 324 328 545 590 425447 827 565 585 595 904 315 507 561 706 536 200 100 280-290 150 158164 276 516 698 161 159 157777 132 127 180 528 120 247 372 524 548550 538 152 345 336 515 658 227 27 29 539 115 135 321 558 #200-202 558 #C & D 965 140 350 808 915 461 435433 945 1012 421 727 A-C 218 255 206 739 260 840 650 642 351 451 551 375 530 643 415 12 700 802 99 89 87 901 560564568572576580584588592594 906 908 910 912 914 916 918920 922 924 548 423 668 901 305 -313 423 405 352354 611 320322 346 323 471 484 528 426 264 430 1001 508 756 - 760 940 930 544546 515 7 745 7 549 211 213 151 160 257 433-457 482 330 349 401 539 440 691 755 67 312 202 651 443 445 447 716 218 398 998 262 335 218 640-646506 327 469 303 401 403 254 401 91 40 101 819 301 725 595 705 541 Quarry Road Homer Avenue Lane 8 West Medical Foundation Way Lane 7 West Lane 7 East Encina Avenue El Camino Real Urban Lane Wells Avenue Forest Avenue High Street Emerson Street Ch a n n i n g A v e n u e Alma Street El Camino Real Mitchell Lane Everett Avenue Lytton Avenue Lane 15 E High Street Alma Street Bryant Street Lane 6 E Lane 11 W Lane 21 High Street Gilman Street Hamilton Avenue University Avenue Bryant Court Lane 30 Florence Street Kipling Street Tasso Street Cowper Street Everett Avenue Waverley Street Cowper Street Webster Street Everett Court Lytton Avenue Lane A West L L La Addison Avenue Forest Avenue Downing Lane Homer Avenue La Lane 39 Lane 56 Hamilton Avenue Webster Street Waverley Street Kipling Street Bryant Street Ramona Street Addison Avenue Scott Street Webster Street Cowper Street Addison Avenue Channing Avenue Ramona Street Paulsen Ln Lane 15 E Lane 20 W Lane 20 E University Avenue CalTrain ROW Emerson Street Waverley Street Kipling Street Bryant Street Ramona Street Palo Road ay Pear Lane Lane 12 W Lane 5 E Everett Avenue Homer Avenue Emerson Street tal m D r iv e Alma Street Lytton Avenue This map is a product of the City of Palo Alto GIS This document is a graphic representation only of best available sources. Legend abc Zone A (Ground Floor) - Zone B (Upper Floors) abc Zone B 0' 500' Downtown Palo Alto Business ImprovementDistrict Area Map CITY O F PALO A L TO I N C O R P O R ATE D C ALIFOR N IA P a l o A l t oT h e C i t y o f A P RIL 16 1894 The City of Palo Alto assumes no responsibility for any errors ©1989 to 2012 City of Palo Alto rrivera, 2012-04-30 16:57:54CPA BID (\\cc-maps\gis$\gis\admin\Personal\rrivera.mdb) City of Palo Alto (ID # 3533) City Council Staff Report Report Type: Action Items Meeting Date: 5/6/2013 City of Palo Alto Page 1 Summary Title: Fiscal Year 2014 CDBG Allocations Title: Public Hearing: Adoption of a Resolution Approving the Proposed Fiscal Year 2014 Community Development Block Grant Funding Allocations and the Draft 2014 Action Plan From: City Manager Lead Department: Planning and Community Environment Recommendation Staff and the Finance Committee recommend a Council MOTION to: 1. Adopt the attached funding Resolution allocating CDBG funding as recommended by staff in the 2014 Action Plan; 2. Authorize staff to submit the 2014 Action Plan to the Department of Housing and Urban Development by the May 15, 2013 deadline; and 3. Authorize the City Manager, or designee, to execute the 2014 application and Action Plan for CDBG funds and any other necessary documents concerning the application and grant agreements and to otherwise bind the City with respect to the application and commitment of funds. Executive Summary The City of Palo Alto receives funds annually on a formula grant basis from the Department of Housing and Urban Development (HUD) as an entitlement city under the Community Development Block Grant (CDBG) Program, authorized by Title I of the Housing and Community Development Act of 1974, as amended. The purpose of the program is to benefit low and very- low income persons, aid in the prevention or elimination of slums or blight, or meet urgent community needs. City of Palo Alto Page 2 HUD requirements include preparation of a five-year strategic plan, referred to as a Consolidated Plan, to address priority housing and community development needs and to set forth goals for attaining identified objectives. On May 3, 2010, the City Council adopted the 2010-2015 Consolidated Plan. An Action Plan is prepared annually to identify specific projects to be funded in that year that implement the strategies identified in the Consolidate Plan. These programs and projects are summarized in the resolution (Attachment A) approving the use of CDBG funds for Fiscal Year 2014. The draft 2014 Action Plan detailing the programs and projects has been made available for public review from March 7, 2013 through April 8, 2013. An update to the draft was prepared and posted to the CDBG website on April 22, 2013 (Attachment B). HUD requires the submittal of the Action Plan no later than 45 days prior to the start of the program year, or May 15th of every year. Staff and the Human Relations Commission’s CDBG funding recommendations were presented at a Public Hearing before the Finance Committee on April 16, 2013. There were four comments from the public, and the Finance Committee voted 4-0 to recommend to Council the recommendations of staff as outlined in the meeting minutes (Attachment D). Background As of May 6, 2013 the City has not received its final funding allocation for Fiscal Year 2013. The estimated allocation amount used for planning purposes is based on several assumptions; the Continuing Resolution and "sequestration" - an across-the-board set of federal budget cuts totaling $1.2 trillion from defense and non-defense spending over the course of the next ten years. The Continuing Resolution for Federal Fiscal Year 2013 budget includes funding the CDBG program at FY2012 funding levels. Assuming Palo Alto’s share of funding in 2013 will equal its share of funding in 2012 this translates to an allocation of $429,304 prior to the impact of sequestration. Congress’ failure to evade the mandatory across-the-board cuts makes sequestration an official federal mandate. According to the Sequestration Transparency Act of 2012, sequestration impacts for non-exempt nondefense discretionary funds were estimated to face an automatic 8.2% reduction for Federal Fiscal Year 2013. This would result in a Fiscal Year 2014 allocation of $394,101 for Palo Alto, $35,203 less than the current year allocation. A Federal Office of Management and Budget report to Congress dated March 1, 2013 revealed a 5% reduction in non-exempt nondefense discretionary funds. Given these cuts must be achieved over seven months instead of twelve, the effective reduction will be closer to 9%. The City has not received an official notice from HUD regarding the aforementioned. Once congress has passed and the President has signed a full-year FY2013 appropriation for HUD, the exact funding level will be sent to staff and adjustments to the funding levels will be made as necessary. City of Palo Alto Page 3 Review by Human Relations Commission and Finance Committee The CDBG selection-committee, comprised of two members of the Human Relations Commission and staff, met on February 6, 2013 to discuss the applications for funding for Fiscal Year 2014 and 2015. A consensus could not be reached on whether or not to fund Catholic Charities of Santa Clara County’s Long Term Care Ombudsman Program and Silicon Valley Independent Living Center’s Housing and Emergency Services. The final decision was deferred to the full HRC. The Human Relations Commission (HRC) considered funding recommendations for the CDBG budget at a public hearing on February 28, 2013. Deliberations at the HRC public hearing mirrored those of the CDBG-selection committee. Specifically, one member of the HRC expressed concerns regarding the relatively small grant amount for both organizations, the perceived sectarian affiliation of Catholic Charities, risks in funding secular organizations, and concerns about cases of discrimination against Catholic Charities. Staff clarified Catholic Charities is a non-profit 501(c)3 organization eligible for CDBG funding and stated there are no known cases of discrimination against Catholic Charities of Santa Clara County or the Long-Term Care Ombudsman Program in Palo Alto. The majority of the HRC members expressed their support to fund both organizations and a motion was made to fund both organizations at the City’s minimum grant amount of $5,000. The HRC voted 3-2 to fund both organizations, with one member absent and a second member recusing himself from the discussion and vote. While the vote reflected a majority in favor of funding both organizations, according to Section 2.22.030(c) of the Palo Alto Municipal Code, “the affirmative votes of four members are required to take any action.” Based on this technicality and not having sufficient support to fund Catholic Charities, the HRC ultimately made a funding recommendation that did not include funding Catholic Charities. Based on the foregoing, Staff was concerned that the manner in which the decision was made did not recognize the substantial merit of the program and incorrectly emphasized the religious affiliation of an organization that has been designated to administer the Long-Term Care Ombudsman Program in Santa Clara County. As such, staff prepared separate funding recommendations that illustrated the vote of the majority of the HRC for the Finance Committee’s consideration. Staff and the HRC’s CDBG funding recommendations, as outlined in CMR No. 3534 (Attachment C), were presented at a public hearing before the Finance Committee on April 16, 2013. Four comments were received from the public in support of the Catholic Charities and the Ombudsman Program. After taking public comment and clarifying that no complaints of discrimination have been received by the City, the Finance Committee voted 4-0 to recommend to Council the recommendations of staff. The Finance Committee meeting minutes are City of Palo Alto Page 4 included as Attachment D. Discussion Palo Alto’s CDBG program continues to be directed towards expanding and maintaining existing affordable housing supply, promoting housing opportunities and choices, maintaining and improving community facilities, and providing support services for targeted low-income groups including persons who are homeless, persons with disabilities, the elderly, and other speical needs groups. Moreover, the CDBG program places a high priority to expand the goal of creating economic opportunities for low-income persons. All of the proposed projects for Fiscal Year 2014, as presented in the draft 2014 Action Plan, address these priorities identified in the adopted 2010 – 2015 Consolidated Plan. Timeline Funding recommendations made by the City Council will be incorporated into the final 2014 Action Plan and submitted to HUD, along with the appropriate forms and certifications, by the May 15, 2013 deadline. Resource Impact Several measures have been taken to ensure there is no General Fund subsidy for the administration of the CDBG Program. This includes streamlining the program to reduce staffing needs and revised monitoring guidelines to create in-progress monitoring saving time in on-site monitoring visits. Currently, staff recovery from the CDBG entitlement grant is $97,861. The total staff recovery from the CDBG entitlement grant proposed for Fiscal Year 2014 is approximately .75 full time equivalency, or $101,000, thus not further impacting the general fund. While the amount is not sufficient to cover the full cost of 1 full time equivalency position, it does cover the full staffing needs of administering the CDBG program. The balance of staff time can go towards non-CDBG eligible activities. Policy Implications All of the applications recommended for funding in fiscal year 2014 are consistent with the priorities established in the City’s adopted Consolidated Plan for the period 2010 to 2015. Moreover, they are consistent with the housing programs and policies in the adopted 1998- 2010 Comprehensive Plan. Environmental Review City of Palo Alto Page 5 For purposes of the National Environmental Policy Act (NEPA) and the California Environmental Quality Act (CEQA), budgeting in itself is not a project. HUD environmental regulations require that entitlement jurisdictions assume the responsibility for environmental review and decision-making under NEPA. Prior to the commitment or release of funds for each of the proposed projects, staff will carry out the required environmental reviews or assessments, and certify that the review procedures under CEQA, and HUD and NEPA regulations have been satisfied for each particular project. Attachments:  Attachment A: CDBG Resolution FY 2014 (PDF)  Attachment B: Revised Draft FY 2014 Action Plan (PDF)  Attachment C: April 16, 2013 Finance Committee Staff Report (PDF)  Attachment D: April 16, 2013 Finance Committee Draft Excerpt Meeting Minutes (PDF) Resolution No. XXXX Resolution of the Council of the City of Palo Alto Approving The Use of Community Development Block Grant Funds for Fiscal Year 2014 WHEREAS, on May 9, 2010, the Palo Alto City Council approved and adopted a document entitled “Consolidated Plan” which identified and established the Palo Alto housing and non-housing community development needs, objectives and priorities for the period July 1, 2010 to June 30, 2015; and WHEREAS, the 2014 Action Plan, the annual funding update to the Consolidated Plan, was subjected to public review and commentary during the period from March 7, 2013 through April 8, 2013; and WHEREAS, the potential uses of Community Development Block Grant (CDBG) funds were evaluated in light of the needs and objectives identified in the Consolidated Plan and reflected in the recommendations and comments of the Human Relations Commission and other interested citizens; and WHEREAS, under the CDBG program, the highest priority is given to activities which will benefit persons with low and moderate incomes; and WHEREAS, the City Council and the Finance Committee of the City Council have held publicly noticed public hearings on the proposed uses of the CDBG funds for fiscal year 2014; and WHEREAS, CDBG funds allocated to the City for fiscal year 2014 are proposed to implement the programs described in this resolution. NOW, THEREFORE, the Council of the City of Palo Alto does RESOLVE as follows: SECTION 1. The uses of CDBG funds for fiscal year 2014 are hereby approved and authorized for the following programs: Name of Program Amount 1. Palo Alto Housing Corporation - Supportive Housing Counseling. Services to assist low- $24,000 income residents of single room occupancy facilities stabilize and maintain their housing. 2. Catholic Charities - Long-Term Care Ombudsman Program. Advocacy and $ 5,000 complaint investigation services for elderly residents of Palo Alto’s long-term care facilities. 3. InnVision, the Way Home - Opportunity Center. Supportive services for homeless persons including counseling, referrals, $ 35,162 food, rotating church shelter, clothing, showers, health care, and voicemail. 4. YWCA/Support Network for Battered Women. Shelter and supportive services $ 7,500 for adults and children who are victims of domestic violence. 5. Silicon Valley Independent Living Center - Assistance for individuals with disabilities and $ 5,000 their families to transition from homelessness, health care facilities, unstable or temporary housing to permanent affordable housing. 6. Project Sentinel - Fair Housing Provision of fair housing services including $ 26,342 complaint investigation, counseling, advocacy and community education. 7. City of Palo Alto Department of Planning and Community Environment – CDBG $ 65,000 program administration. 8. City of Palo Alto – Department of Planning and Community Environment – CDBG Microenterprise Assistance Program will $150,000 provide resources to support and foster the development of microbusinesses 9. Downtown Streets Team – Workforce Development Program. Job training, readiness and placement $248,753 Services for motivated previously Homeless individuals TOTAL $566,757 SECTION 2. The total amount set forth under Section 1 of this resolution represents the proposed allocation of $394,101, in CDBG funds from the United States Department of Housing and Urban Development (HUD) for fiscal year 2014, $62,607 in anticipated program income for fiscal year 2014 from Palo Alto Housing Corporation, and a total of $110,049 in prior year resources: (Palo Alto Housing Corporation Ventura Rehab Project $44,609 - FY 2012; Palo Alto Housing Corporation Sheridan Rehab Project $16,440 - FY 2012; and $49,000 in excess program income). SECTION 3. The City staff is hereby authorized to submit the 2014 annual Action Plan update and appropriate application forms to HUD for the fiscal year 2014 CDBG funds, and such money shall be spent as set forth in this resolution. The Mayor, City Manager and any other designated City staff or officials are hereby authorized to execute such application forms and any other necessary documents to secure these funds. The City Manager or designee is authorized to sign all necessary grant agreements with the program providers set forth in Section 1. SECTION 4. The funding amounts set forth in Section 1 of this resolution are based on estimated allocation amounts from the Federal Fiscal Year 2013 HUD appropriations; City Staff is authorized to make adjustments increasing or decreasing the funding amounts set forth herein as consistent with the adopted Citizen Participation Plan. SECTION 5. The City Council hereby finds that the fiscal year 2014 CDBG program authorized under Section 1 of this resolution is not a project under the California Environmental Quality Act (CEQA). However, the Council further authorizes and directs City staff to prepare certifications that may be required, under CEQA and the National Environmental Policy Act (NEPA), for each project under the fiscal year 2014 CDBG program prior to the release of funds for any such project. // // // // // INTRODUCED AND PASSED: MAY 6, 2013 AYES: NOES: ABSTENTIONS: ABSENT: ATTEST: APPROVED: _______________________ _______________________ City Clerk Mayor APPROVED AS TO FORM: _______________________ City Manager _______________________ _______________________ Sr. Assistant City Attorney Director of Planning and Community Environment APPROVED AS TO CONTENT: ______________________ Director of Administrative Services _______________________ CDBG Coordinator DRAFT FISCAL YEAR 2014 ONE-YEAR ACTION PLAN Annual Update of the City’s Consolidated Plan for the Period July 1, 2013 to June 30, 2014 Public Review and Comment Period: March 7, 2013 – April 8, 2013 Revised April 17, 2013 Prepared by the Department of Planning & Community Environment 250 Hamilton Avenue Palo Alto, CA 94301 Director Curtis Williams Consuelo Hernandez, Planner – CDBG (650) 329-2428 T: 650-329-2428 E: Consuelo.hernandez@cityofpaloalto.org City of Palo Alto - New Consolidated Plan Template In May 2012, the Federal Department of Housing and Urban Development’s Office of Community Planning and Development introduced the eCon Planning Suite, a collection of new online tools to assist grantees in creating market‐driven, leveraged housing and community development plans. One of these tools, the Consolidated Plan Template, allows grantees to develop and submit their Five Year Consolidated Plans and Annual Action Plans online. While Palo Alto is not required to use the eCon Planning Suite until the next Consolidate Planning cycle, staff has elected to use the online tool. The following document is an exported version of the Annual Action Plan entered in HUD’s Integrated Disbursement and Information System (IDIS). OMB Control No: 2506-0117 (exp. 07/31/2015) DRAFT FISCAL YEAR 2014 ACTION PLAN TABLE OF CONTENTS Executive Summary….……………………………..………………………………………………………………………......1 Objectives…….………..………………………………………………………………………………….………....................................2 Outcomes.…………………………………………………………………………………………………………………………………………….2 Public Participation.................................................................................................................5 Expected Resource..................................................................................................................6 Anticipated Resources………………………………………………………..…………………………………………...………………….6 Maximum Spending Caps………………………………………………..……………………………………………………….………….7 Annual Goals and Objectives……………………………………….………………………………………………………..8 Projects………………………………………………………………………………………………………………………………….9 Geographic Distributions…………………………………………….……………………………………………………….10 Affordable Housing……………………………………………………………………….…………………………………….11 Homeless and Special needs…..……….….……………………………………………………………………………………………..12 Barriers to Affordable Housing..……………….………………………………………………………………………………………..15 Other Actions........................................................................................................................17 Program Specific Requirements.............................................................................................18 APPENDICES Appendix A: Application for Federal Assistance Form SF-424 Appendix B: Certifications Appendix C: Public and Private Resources Appendix D: Proposed Projects Appendix E: Public Hearing Advertisement Appendix F: Map Appendix G: Public Comment PAGE INTENTIONALLY LEFT BLANK EXECUTIVE SUMMARY ES-05 Executive Summary 1. Introduction The Draft Fiscal Year 2014 Action Plan is a one-year plan describing the eligible activities the City of Palo Alto intends to undertake to address the needs and implement the strategies identified in the adopted 2010-2015 Consolidated Plan. It is the fourth Action Plan in the implementation of the five-year plan covering the period from July 1, 2013 to June 30, 2014 and serves as the City’s application for federal funds under the U.S. Department of Housing and Urban Development (HUD) formula grant programs. Both the Consolidated Plan and the Action Plan are implemented by the City’s Planning and Community Environment Department. A total of $566,757 is available for funding projects and programs during the 2013 Program Year. The City anticipates receiving $394,101 from the federal Community Development Block Grant (CDBG) program. In addition, the City will also reprogram $110,049 in previous year resources, and $62,607 in anticipated program income. Palo Alto has access to a variety of federal, state, and local resources to achieve its housing and community development priorities. Specific funding resources will be utilized based on the opportunities and constraints of each particular project or program. Table 1, Fiscal Year 2014 CDBG Budget, summarizes the uses of the funds proposed during Fiscal Year 2014. TABLE 1: FISCAL YEAR 2014 DRAFT BUDGET Applicant Agency Budget Public Services Palo Alto Housing Corporation - SRO Hotels Supportive Services $24,000 Catholic Charities of Santa Clara County – Long-Term Care Ombudsman Program $ 5,000 InnVision Shelter Network - Opportunity Center - Drop-In Center $35,162 YWCA/Support Network - Domestic Violence Services $ 7,500 Silicon Valley Independent Living Center – Housing and Emergency Services $ 5,000 Sub-total $76,662 Planning and Administration Project Sentinel – Fair Housing Services $26,342 City of Palo Alto Administration $ 65,000 Sub-total $ 91,342 Economic Development City of Palo Alto – Microenterprise Assistance Program $150,000 Downtown Streets – Workforce Development Program $248,753 Sub-total $398,753 Grand Total $566,757 Fiscal Year 2014 - Draft Action Plan Duns No. 050520782 1 City of Palo Alto April 2013 OMB Control No: 2506-0117 (exp. 07/31/2015) 2. Summary of the objectives and outcomes identified in the Plan Needs Assessment Overview OBJECTIVES The City intends to provide funding for various activities which are consistent with the adopted Consolidated Plan. Key objectives for Fiscal Year 2014 include the following:  Support efforts to help homeless or low-income Palo Alto residents at risk of homelessness receive necessary supportive services;  Affirmatively further Fair Housing; and  Improve employment opportunities for low-income persons. OUTCOMES The City’s outcomes for this planning period are directed at expanding public services and economic opportunities for low-income persons. Specifically, the City anticipates the following outcomes from its 2014 activities:  131 persons will have improved accessibility to a suitable living environment.  200 persons residing in long term care facilities will have improved access to a suitable living environment  600 homeless persons will be provided with supportive services and have improved accessibility to a suitable living environment.  45 unduplicated adults and children will be provided emergency safety net supportive services and emergency shelter as needed.  25 households will have improved accessibility to decent affordable housing.  25 individuals will be placed in jobs through job training/employment readiness classes  5 Microbusinesses will be provided with resources 3. Evaluation of past performance The City has historically allocated CDBG funds to activities that benefit low and moderate income persons, with a top priority to increase affordable housing opportunities within the City. Palo Alto has one of the most expensive housing markets in the country due in part to the lack of available land. Notwithstanding, 91 new affordable rental housing units have been created during the 2010-2015 Consolidated Planning Period. In addition, Eden Housing’s proposed project at 801-841 Alma Street is expected to create 50 additional new rental units within the next few years. 4. Summary of citizen participation process and consultation process Palo Alto encourages citizen participation through the Action Plan process. This includes consulting local organizations, holding public meetings, and encouraging public comment during the public review period. A total of three public hearings have been planned in order to allow for public input. The City actively reached out to all applicants and posted updates on the CDBG website. A 30-day comment Fiscal Year 2014 - Draft Action Plan Duns No. 050520782 2 City of Palo Alto April 2013 OMB Control No: 2506-0117 (exp. 07/31/2015) period from March 7, 2013 through April 8, 2013 will give citizens an opportunity to offer comments on the draft Action Plan. The draft was be posted on the City’s CDBG website and presented at a public hearing to the Finance Committee on April 16, 2013. Given the recommendations made by the Finance Committee include funding an additional organization the draft has been updated to reflect this change. 5. Summary of public comments A summary of all written comments received during the public comment period will be inserted before the Action Plan is submitted to HUD. 6. Summary of comments or views not accepted and the reasons for not accepting them The City accepts and responds to all comments that are submitted. Fiscal Year 2014 - Draft Action Plan Duns No. 050520782 3 City of Palo Alto April 2013 OMB Control No: 2506-0117 (exp. 07/31/2015) PR-05 Lead & Responsible Agencies 650. Agency/entity responsible for preparing/administering the Consolidated Plan The following are the agencies/entities responsible for preparing the Consolidated Plan and those responsible for administration of each grant program and funding source. TABLE 2: RESPONSIBLE AGENCY Agency Role Name Department/Agency Lead Agency PALO ALTO Planning and Community Environment Consolidated Plan Public Contact Information Consuelo Hernandez, Planner – CDBG City of Palo Alto Department of Planning and Community Environment 250 Hamilton Avenue, 5th Floor Palo Alto, CA 94301 Consuelo.hernandez@cityofpaloalto.org (650) 329-2428 Fiscal Year 2014 - Draft Action Plan Duns No. 050520782 4 City of Palo Alto April 2013 OMB Control No: 2506-0117 (exp. 07/31/2015) PUBLIC PARTICIPATION AP-12 Participation 1. Summary of citizen participation process/Efforts made to broaden citizen participation Summarize citizen participation process and how it impacted goal-setting Citizen Participation Outreach: On October 18, 2010, the Palo Alto City Council adopted an amended Citizen Participation Plan that utilizes the Human Relations Commission (HRC), rather than a separate Citizen Advisory Committee, to promote and encourage citizen participation in the planning, implementation and assessment of the CDBG Program. The HRC is uniquely positioned to understand and consider the needs of low and very low income persons, members of minority groups, the elderly, persons with disabilities, and residents of neighborhoods where CDBG activities may be undertaken. Thus far the revisions to the Citizen Participation Plan have promoted a more coordinate and effective response by the City to the human service needs in the community. A summary of public participation is outlined in Table 3, Citizen Participation Outreach. This Draft Action Plan is being made available for a 30-day comment period to give citizens an opportunity to offer comments. A summary of comments received will be added to Appendix G. TABLE 3: CITIZEN PARTICIPATION OUTREACH Mode of Outreach Target of Outreach Summary of response/attendance Summary of comments received Public Meeting Non-targeted/broad community The Finance Committee held a public hearing on April 16, 2013 to discuss recommendations made by staff and the HRC committee. Representatives from agencies requesting CDBG funds were present. Four individuals spoke to support funding Catholic Charities.  Several emails were received supporting Catholic Charities Public Meeting Non-targeted/broad community The City Council is scheduled to hold a public hearing on May 6, 2013. A summary will be added after the meeting. Public Meeting Non-targeted/broad community CDBG Applicants HRC Selection Committee met on February 6, 2013 to discuss the applications for funding. Representatives from agencies requesting CDBG funds for Fiscal Year 2014 were present and answered questions pertaining to their respective programs.  No comments were received Newspaper Ad Non-targeted/broad community Fiscal Year 2014 - Draft Action Plan Duns No. 050520782 5 City of Palo Alto April 2013 OMB Control No: 2506-0117 (exp. 07/31/2015) EXPECTED RESOURCES AP-15 Expected Resources Introduction In Fiscal Year 2014, Palo Alto will allocate approximately $566,757 to eligible activities that address the needs identified in the Consolidated Plan. As of March 7, 2013 the City has not received its final funding allocation from HUD. The estimated allocation amount is based on several assumptions; the Continuing Resolution and "sequestration" - an across-the-board set of federal budget cuts totaling $1.2 trillion from defense and non-defense spending over the course of the next ten years. The Continuing Resolution for Federal Fiscal Year 2013 budget includes funding the CDBG program at FY2012 funding levels. Assuming Palo Alto’s share of funding in 2013 will equal its share of funding in 2012 this translates to an allocation of $429,304 prior to the impact of sequestration. Sequestration impacts for non-exempt nondefense discretionary funds were estimated to face an automatic 8.2% reduction for Federal Fiscal Year 2013 resulting in a Fiscal Year 2014 allocation of $394,101 for Palo Alto. Congress’ failure to evade the mandatory across-the-board cuts makes sequestration an official federal mandate. While there is no official notice to the City from HUD, a Federal Office of Management and Budget report to Congress dated March 1, 2013 revealed a 5% reduction in non-exempt nondefense discretionary funds. Given these cuts must be achieved over seven months instead of twelve the effective reduction will be closer to 9%. Anticipated Resources Planning Staff has used the estimated 8.2% reduction over FY 2012 funding levels for planning purposes with final adjustments pending the City’s official allocation from HUD. Based on the foregoing, the total amount available for allocation in Fiscal Year 2014 is estimated to be $566,757. The funding available for allocation includes $394,101 in CDBG entitlement funds, $110,049 of prior year CDBG resources, and $62,607 in estimated program income as summarized in Table 4, Funding Available for Allocation. Program income is income directly generated from the use of CDBG funds that is returned to the CDBG program for allocation to new activities. The program income anticipated below is from various loan repayments from Palo Alto Housing Corporation. TABLE 4: FUNDING AVAILABLE FOR ALLOCATION $394,101 Fiscal Year 2013 Entitlement Grant $110,019 Prior Year Resources – Excess Program Income: $ 49,000 - rental income in excess of expenses on specific properties acquired or rehabilitated with CDBG funds. Reallocated funds: $ 44,608.75 – Palo Alto Housing Corp. Ventura Rehab (FY 2012) $ 16,440.64 – Palo Alto Housing Corp. Sheridan Rehab (FY 2012) $ 62,607 Estimated Program Income from Palo Alto Housing Corporation (PAHC) that is generated from loan repayments. $566,757 ESTIMATED TOTAL AVAILABLE FOR ALLOCATION Fiscal Year 2014 - Draft Action Plan Duns No. 050520782 6 City of Palo Alto April 2013 OMB Control No: 2506-0117 (exp. 07/31/2015) The following summarizes calculations for funding limitations that are placed on two funding categories: Maximum Available for Public Services Estimated 2014 CDBG Entitlement Grant $394,101 2013 Actual Program Income Received1 $116,982 Public Service Cap (15% of $511,083) $ 76,662 Maximum Available for Planning/Administration Estimated 2014 CDBG Entitlement Grant $394,101 Estimated 2014 Program Income $ 62,607 Planning/Admin Cap (20% of $456,708) $ 91,342 The difference between the funding caps and the estimated total available, or $398,753, yields the amount that can used to fund projects within the other three funding categories; Economic Development, Housing, and Public Facilities. Additional funding can be made available for these activities if less is provided for administration or public services. Explain how federal funds will leverage those additional resources (private, state and local funds), including a description of how matching requirements will be satisfied In order to comprehensively address community needs and the goals identified in the Consolidated Plan, the City will augment CDBG funds utilizing a variety of additional funding sources. These funding sources include other federal funds, state, and local funds. A full listing of potential funding sources is appended to this Action Plan as Appendix C – Public and Private Resources. If appropriate, describe publically owned land or property located within the jurisdiction that may be used to address the needs identified in the plan Not applicable 1 Actual Program Income received in Fiscal Year 2013 includes $62,607 from Palo Alto Housing Corporation and $54,374 in Fiscal Year 2012 excess program income from Palo Alto Housing Corporation. Fiscal Year 2014 - Draft Action Plan Duns No. 050520782 7 City of Palo Alto April 2013 OMB Control No: 2506-0117 (exp. 07/31/2015) ANNUAL GOALS AND OBJECTIVES AP-20 Annual Goals and Objectives Goals Summary Information TABLE 5: GOALS SUMMARY Goal Name Category Needs Addressed Funding Goal Outcome Indicator Support Activities to end homelessness Affordable Housing Homeless Supportive services CDBG: $59,162 Public service activities other than Low/Moderate Income Housing Benefit: 731 Persons Public Service Activities Homeless Non-Homeless Special Needs Community services CDBG: $17,500 Public service activities other than Low/Moderate Income Housing Benefit: 269 persons Promote Fair Housing Choice Fair Housing Fair Housing CDBG: $26,342 Other: 27 Economic Opportunities Homeless Non-Homeless Special Needs Non-Housing Community Development Economic Development CDBG: $398,753 Jobs created/retained: 25 Jobs Businesses assisted: 5 Estimate the number of extremely low-income, low-income, and moderate-income families to whom the jurisdiction will provide affordable housing as defined by HOME 91.215(b) Fiscal Year 2014 - Draft Action Plan Duns No. 050520782 8 City of Palo Alto April 2013 OMB Control No: 2506-0117 (exp. 07/31/2015) PROJECTS AP-38 Project Summary Project Summary Information Introduction Table 6, Project Summary, provides a list of the activities with the specific priority need identified in the Consolidated Plan the City will fund with CDBG funds during Fiscal Year 2014. Complete project descriptions are located in Appendix D – Proposed Projects (HUD Table 3Cs). TABLE 6: PROJECT SUMMARY No. Project Goals Supported Needs Addressed Funding 1 SRO Resident Support Program Activities to end homelessness supportive services CDBG: $24,865 Description Resident support services program at two SRO properties in Palo Alto Planned Activities One-on-one consultations for information and referral, support counseling 2 Long-Term Care Ombudsman Program Public Service Activities supportive services CDBG: $5,000 Description Advocates for the rights of residents of long term care facilities in Palo Alto. Planned Activities Assists with problem resolution 3 Opportunity Services Center (OSC) Activities to end homelessness supportive services CDBG: $36,027 Description The OSC is a comprehensive one-stop multiservice drop-in day center Planned Activities Access to nutritious food, receive mail, and case management 4 Domestic Violence Services Public Service Activities community services CDBG: $10,000 Description Addresses issues of domestic violence for Palo Alto residents Planned Activities Emergency shelter and essential services to victims of domestic violence 5 Housing and Emergency Services Public Service Activities supportive services CDBG: $5,770 Description Assistance for individuals with disabilities and their families Planned Activities Administrative support of the housing program and emergency info & referral 6 Project Sentinel Promote Fair Housing Choice fair housing education CDBG: $26,342 Description Fair Housing services aim to protect the fundamental rights of housing Planned Activities Community outreach, education, and investigations of complaints 7 Microenterprise Assistance Program Economic Opportunities employment growth CDBG: $150,000 Description Access to new opportunities and builds foundations of entrepreneurship Planned Activities Grants to support microenterprise businesses 8 Workforce Development Program Economic Opportunities workforce training CDBG: $248,753 Description Provides homeless and/or extremely low-income individuals workforce dev. Planned Activities Employment development outreach to local businesses and job search skills Fiscal Year 2014 - Draft Action Plan Duns No. 050520782 9 City of Palo Alto April 2013 OMB Control No: 2506-0117 (exp. 07/31/2015) Describe the reasons for allocation priorities and any obstacles to addressing underserved needs Fiscal Year 2014 - Draft Action Plan Duns No. 050520782 10 City of Palo Alto April 2013 OMB Control No: 2506-0117 (exp. 07/31/2015) GEOGRAPHIC DISTRIBUTION AP-50 Geographic Distribution Description of the geographic areas of the entitlement (including areas of low-income and minority concentration) where assistance will be directed The City considers the provisions of all types of housing assistance on a citywide basis consistent with the policies of the Comprehensive Plan. Palo Alto does not have specific target areas for housing activities, instead the City attempts to provide housing affordable to lower-income persons throughout the City. Minority concentration includes areas in the City where the concentration of racial and ethnic minority population is 10% or higher than their total citywide representation. There are only a few areas that are considered to have a concentration of minority populations or low-income residents in Palo Alto. The CDBG Program defines low-income concentration as any census block group where 51% or more residents earn 80% of MFI or less. An exception exists for a jurisdiction that does not have any areas meeting this definition, such as Palo Alto, which includes the highest quartile of all areas in the City in terms of degree of concentration is used. However, Palo Alto does not qualify activities under the LMI area benefit category. Fiscal Year 2014 - Draft Action Plan Duns No. 050520782 11 City of Palo Alto April 2013 OMB Control No: 2506-0117 (exp. 07/31/2015) AFFORDABLE HOUSING AP-55 Affordable Housing Introduction Palo Alto has identified affordable housing as the primary objective for the expenditure of CDBG funds in the Consolidated Plan. It will continue to allocate the maximum funding available to activities and projects that meet this objective. Several of the projects being proposed for Fiscal Year 2014 provide essential affordable housing services to homeless, non-homeless, and special needs populations. Table 7, One-Year Goals for the Number of Households to be supported, summarizes the number of households to be served through the SRO Resident Support Program, through the Long-Term Care Ombudsman Program, services received at the Opportunity Services Center, emergency shelter to victims of domestic violence, and new proposed services provided through the Housing and Emergency Services Program. TABLE 7: ONE-YEAR GOALS FOR AFFORDABLE HOUSING BY SUPPORT REQUIREMENT One Year Goals for the Number of Households to be Supported Homeless 950 Non-Homeless 205 Special-Needs 24 Total 1,179 Over the past three Fiscal Years Palo Alto has funded a number of projects that have resulted in the production of new affordable housing units, rehabilitation of existing multi-family rental units, and acquisition of existing units. During the current funding cycle the City did not receive any applications for affordable housing supported through the production of new units or rehabilitation of existing units as summarized in Table 8, One-Year goals for Affordable Housing by Support Type. TABLE 8: ONE-YEAR GOALS FOR AFFORDABLE HOUSING BY SUPPORT TYPE One Year Goals for the Number of Households Supported Through Rental Assistance 0 The Production of New Units 0 Rehab of Existing Units 0 Acquisition of Existing Units 0 Total 0 Fiscal Year 2014 - Draft Action Plan Duns No. 050520782 12 City of Palo Alto April 2013 OMB Control No: 2506-0117 (exp. 07/31/2015) AP-65 Homeless and Other Special Needs Activities Introduction The City of Palo Alto plans to use its CDBG funds to promote the local provision of services for low- income Palo Alto residents. A number of the City’s proposed Fiscal Year 2014 programs will directly benefit special needs groups. Moreover, through the City’s Human Services Resource Allocation Process (HSRAP), funding is provided to support services and resources targeted to Homeless and Special Needs populations. Describe the jurisdictions one-year goals and actions for reducing and ending homelessness including: Reaching out to homeless persons (especially unsheltered persons) and assessing their individual needs: In January 2013, a Point‐In‐Time (PIT) count was conducted for Santa Clara County by the City of San Jose in conjunction with the County of Santa Clara. The PIT is an intense survey used to count the number of homeless living throughout Santa Clara County on the streets, in shelters, safe havens or in transitional housing, or in areas not meant for human habitation. The survey was conducted by hundreds of volunteers who asked those living on the streets, as well as the residents of shelters, safe havens and transitional housing, to respond to questions related to their needs. A portion of the survey addresses the needs of those surveyed. Addressing the emergency shelter and transitional housing needs of homeless persons: In addressing the Consolidated Plan and the Continuum of Care strategic plans, Palo Alto will provide funding for essential services and operations to local emergency shelters and transitional housing facilities. The facilities provide shelter and services to homeless families with children, single parents with children, single men and women, victims of domestic violence and sexual abuse, homeless veterans, and the population living on the street. Helping homeless persons (especially chronically homeless individuals and families, families with children, veterans and their families, and unaccompanied youth) make the transition to permanent housing and independent living, including shortening the period of time that individuals and families experience homelessness, facilitating access for homeless individuals and families to affordable housing units, and preventing individuals and families who were recently homeless from becoming homeless again: The City of Palo Alto plans to use its CDBG funds to promote the local provision of services for low- income Palo Alto residents. A number of the City’s proposed Fiscal Year 2013 programs will directly benefit special needs groups. Moreover, through the City’s Human Services Resource Allocation Process (HSRAP), funding is provided to support services and resources targeted to Homeless and Special Needs populations. CDBG Funded InnVision Shelter Network - Opportunity Center: The Opportunity Center facility in Palo Alto provides a clean, safe environment and resources for very- low income or homeless persons including bagged groceries, hot meals, a rotating church shelter program, information and referral, shower and laundry facilities, case-management, and money management (payee) programs, clothing and health services. A daily hot meal is provided at a different location each day and bagged groceries are distributed daily at the Downtown Food Closet. The Hotel Fiscal Year 2014 - Draft Action Plan Duns No. 050520782 13 City of Palo Alto April 2013 OMB Control No: 2506-0117 (exp. 07/31/2015) de Zink rotating church shelter program is housed at a different location each month. Downtown Streets Team – Workforce Development Program: This economic development program will help motivated graduates of the Downtown Streets Team programs move on to stable employment. The program will include mentoring, counseling, job readiness, job training, and assistance. HSRAP Funded Abilities United – Disability Services: This organization provides services and activities for adults and children with mental and physical disabilities. Community Technology Alliance – Shared Technical Infrastracture: Provides shelter hotline and voicemail services for homeless individuals and families. The voicemail service helps case-managed clients attain individual goals such as securing health care, housing or employment. A countywide housing information and referral website and tracking system is maintained to assist service providers and those seeking shelter. Downtown Streets Team – Downtown Streets: Identifies motivated homeless individuals and provides them with jobs cleaning and beautifying the downtown area in exchange for housing and food vouchers. The program includes counseling, coaching and training to help program participants build self-esteem, confidence and connections in the community. Momentum for Mental Health – Homeless Outreach Program: Mental health outreach program that provides emergency on-call services to assist local mentally ill homeless persons. The agency provides services to City departments, libraries, community centers and local homeless service providers. Helping low-income individuals and families avoid becoming homeless, especially extremely low- income individuals and families and those who are: being discharged from publicly funded institutions and systems of care (such as health care facilities, mental health facilities, foster care and other youth facilities, and corrections programs and institutions); or, receiving assistance from public or private agencies that address housing, health, social services, employment, education, or youth needs. Palo Alto Housing Corporation – SRO Tenant Counseling: Provides counseling and case-management services for the low-income residents and prospective residents of single room occupancy hotels in Palo Alto. Many SRO residents have a history of homelessness and special needs. The program plays a vital role in helping residents maintain their stability and housing. Avenidas – Senior Services: Agency is the main provider of senior services in the Mid-Peninsula area. La Comida de California – Hot Meals for The Elderly: Daily meal program for the elderly. Fiscal Year 2014 - Draft Action Plan Duns No. 050520782 14 City of Palo Alto April 2013 OMB Control No: 2506-0117 (exp. 07/31/2015) May View Health Center – Health Care for Low Income & Homeless Palo Alto residents: Basic primary health care services and health education and referral services for uninsured low-income and homeless individuals from the Palo Alto area. Peninsula HealthCare Connection – Project Downtown Connect: Provider of health care services at the Opportunity Center of Palo Alto. Project Downtown Connect provides Section 8 vouchers to eligible homeless individuals and families. SALA – Legal Assistance to Elders: Senior Adults Legal Assistance (SALA) provides affordable legal assistance to elders. Fiscal Year 2014 - Draft Action Plan Duns No. 050520782 15 City of Palo Alto April 2013 OMB Control No: 2506-0117 (exp. 07/31/2015) AP-75 Barriers to affordable housing Introduction A barrier of affordable housing is defined in the Consolidated Plan as a public policy such as land use controls, property taxes, zoning ordinances, building codes, fees, growth limits, and other similar policies. Palo Alto faces a number of obstacles in meeting its affordable housing strategies including governmental and non-governmental constraints that may act as barriers. Governmental constraints can include land use policies governed by local general plans and zoning ordinances. The largest non- governmental constraints are market-related factors, such as land, construction costs, and the availability of financing. For instance, during the economic downturn and slumped housing market almost all of the for-sale and most rental properties in Palo Alto remained out of reach for all but households with above moderate income. Moreover, there continues to be a low vacancy rate for rental housing. According to the 2010 U.S. Census the rental vacancy rate in the City was 5.6%. Some of the barriers to building more housing are the result of decisions and priorities set by the State or the Federal Government that must decide how to best allocate limited funding. Policies and priorities set by these agencies often do not favor high cost areas, and most federal housing resources are not readily available to the City of Palo Alto. Actions it planned to remove or ameliorate the negative effects of public policies that serve as barriers to affordable housing such as land use controls, tax policies affecting land, zoning ordinances, building codes, fees and charges, growth limitations, and policies affecting the return on residential investment: The City of Palo Alto takes a number of actions to eliminate barriers to the development of affordable housing including participation in a county-wide effort to provide additional affordable housing units, programs in the 2007-2014 Housing Element Update to increase the supply of affordable housing, and Development Impact fees for Housing. Housing Trust Fund of Santa Clara County (HTSCC) The HTSCC was created to provide additional financial resources to address the County’s affordable housing deficit. HTSCC’s mission is to make Silicon Valley a more affordable place to live. Loans and grants are issued to increase the supply of affordable housing, assist first-time home buyers, prevent homelessness and stabilize neighborhoods. Palo Alto was among the contributors during its founding and has continued to allocate funding. A provision was added to ensure the City’s funds be used exclusively for qualifying affordable housing projects within the City of Palo Alto. The most recent included $200,000 from the City’s Residential Housing Fund for Fiscal Year 2012. Participation in the HTSCC has increased the available housing funding for a number of Palo Alto Projects as summarized in table 2.4. In addition, HTSCC has invested over $100,000 assisting 16 households to purchase homes in Palo Alto through its first-time homebuyer program. Adjustments or Improvements to Affordable Housing Strategies 2007-2014 Housing Element Update Palo Alto’s Housing Element of the City’s Comprehensive Plan is the chief policy document describing the City’s housing needs and the policies and programs the City will use to meet those needs. The 2007- 2014 Housing Element Update is currently being reviewed by the State Department of Housing and Community Development and it is anticipated to be adopted by the end of the next program year. Fiscal Year 2014 - Draft Action Plan Duns No. 050520782 16 City of Palo Alto April 2013 OMB Control No: 2506-0117 (exp. 07/31/2015) Development Impact Fees for Housing Palo Alto’s impact fees are comprised of four categories: Housing, traffic, community facilities, and Parkland dedication. The housing fee to non-residential development increased from $17.97 to $18.44 per square foot, effective August 28, 2012. The fee rate applies to all net new commercial square footage on a site. Full payment is required at building permit issuance with some exemptions including hospitals and convalescent facilities, private education facilities, public facilities and private clubs, lodges and fraternal organizations. AFFIRMATIVELY FURTHERING FAIR HOUSING Fair Housing is crucial to ensuring persons of like income levels have equal access to housing. HUD requires that jurisdictions receiving federal funds commit to affirmatively further fair housing. A fair housing impediment, according to HUD, is considered to be “any actions, omissions, or decisions which have the effect of restricting housing choices or the availability of housing choices because of race, color, religion, sex, disability, familial status, or national origin.” A key part of affirmatively furthering fair housing includes the preparation of an Analysis of Impediments to Fair Housing Choice (AI). The City of Palo Alto is currently reviewing and updating its AI. ACTIVITIES TO AFFIRMATIVELY FURTHER FAIR HOUSING Palo Alto is committed to fair housing practices and places a priority on promoting and ensuring an atmosphere of non-discrimination in housing choice. In Fiscal Year 2014 the City of Palo Alto will provide $26,342 in CDBG funds to Project Sentinel for the provision of fair housing complaint investigations, public education and information, and referral services. The following actions to foster and maintain affordable housing to address housing:  Provide tenant/landlord counseling and mediation services for Palo Alto residents through the Palo Alto Mediation Program (Project Sentinel).  Support the Human Relations Commission in their documentation and investigation of hate crimes, and in their support of diversity, disability and affordable housing issues.  Continue to monitor the provision of fair housing services to ensure that adequate services are being provided and are cost effective.  Continue to participate in the Santa Clara County Fair Housing Task Force.  Provide funding to Project sentinel to reduce discrimination in housing by: 1. Investigating cased of housing discrimination in Palo Alto 2. Conducting consultation with persons who believe they have been discriminated against 3. Maintaining a pool of trained testers for investigations and conducting trainings 4. Maintaining a panel of participating attorneys for referral 5. Running fair housing ads in the Palo Alto Weekly, San Jose Mercury News and other media outlets 6. Distributing fair housing brochures 7. Running public service announcements for local radio/TV broadcasters 8. Making educational presentations to the community 9. Monitoring and testing rental housing sites for fair housing compliance 10. Organizing an event for National Fair Housing Month Fiscal Year 2014 - Draft Action Plan Duns No. 050520782 17 City of Palo Alto April 2013 OMB Control No: 2506-0117 (exp. 07/31/2015) OTHER ACTIONS AP-85 Other Actions Actions planned to reduce lead-based paint hazards Lead poising can cause permanent damage to the brain and many other organs, and can result in reduced intelligence and behavioral problems in young children. More than 80,000 children younger than 6 years old living in the United States have lead in their blood that is above the level of concern set by the Centers for Disease Control and Prevention (CDC). A significant number of these children are in families of low income and are living in old homes with heavy concentration of lead-based paint and lead-contaminated dust and soil in the environment. The City’s housing and CDBG staff provide information and referral to property owners, developers, and non-profit organizations rehabilitating older housing about lead-based paint hazards. There is no information that indicates lower income households are more likely to be exposed to lead paint hazards in Palo Alto than are families in the general population. The City’s 2010-15 Consolidated Plan has a more detailed discussion of lead based paint in the City. Any house to be rehabilitated with City financial assistance is required to be inspected for the existence of lead paint and lead paint hazards. The City will provide financial assistance for the abatement of such hazards in units rehabilitated with City funding. Actions planned to reduce the number of poverty-level families The City of Palo Alto provided either CDBG or HSRAP funding to several services for persons within the community who are very low-income, homeless, or at-risk of becoming homeless. In summary, the goal of all of the services listed in the section above is to prevent homelessness, help people move out of homelessness and to reduce the number of persons below the poverty line. Actions planned to develop institutional structure Implementation of CDBG funds is overseen by the Department of Planning and Community Environment. Human Services and social service delivery in Palo Alto by non-profit agencies is coordinated through the Human Services Resource Allocation Program (HSRAP). The City Council approves projects and programs that meet the City’s goals. Collectively, the programs funded under CDBG and HSRAP provide essential services to the community. Applications are received and reviewed congruently which allows for internal administrative efficiencies, creates a visible public forum for the CDBG program, and provides a more coordinated and effective approach at addressing the City’s human service needs. CDBG entitlement cities, including Palo Alto, Sunnyvale, Mountain View, Santa Clara, Cupertino, Gilroy, Milpitas, and San Jose, along with the Urban County of Santa Clara continue to meet on a regular schedule to discuss issues of mutual concern and to share information and strategies for addressing a variety of issues of common concern. These meetings have helped participants better understand the County and nonprofit social service structure within the County, and provide input to the Santa Clara County Office of Affordable Housing. Finally, the meeting serves as a forum for HUD representatives to share information and answer questions from entitlement jurisdictions regarding issues of mutual importance. Fiscal Year 2014 - Draft Action Plan Duns No. 050520782 18 City of Palo Alto April 2013 OMB Control No: 2506-0117 (exp. 07/31/2015) PROGRAM SPECIFIC REQUIREMENTS AP-90 Program Specific Requirements Introduction Community Development Block Grant Program (CDBG) Reference 24 CFR 91.220.(I)(1) Projects planned with all CDBG funds expected to be available during the year are identified in the Projects Table. The following identifies program income that is available for use that is included in projects to be carried out. TABLE 9: PROGRAM INCOME SUMMARY 1. The total amount of program income that will have been received before the start of the next program year and that has not yet been reprogrammed $49,000 2. The amount of proceeds from section 108 loan guarantees that will be used during the year to address the priority needs and specific objectives identified in the grantee's strategic plan. 0 3. The amount of surplus funds from urban renewal settlements 0 4. The amount of any grant funds returned to the line of credit for which the planned use has not been included in a prior statement or plan 0 5. The amount of income from float-funded activities 0 Total Program Income: $49,000 TABLE 10: OTHER CDBG REQUIREMENTS 1. The amount of urgent need activities 0 2. The estimated percentage of CDBG funds that will be used for activities that benefit persons of low and moderate income. Overall Benefit - A consecutive period of one, two or three years may be used to determine that a minimum overall benefit of 70% of CDBG funds is used to benefit persons of low and moderate income. Specify the years covered that include this Annual Action Plan. 100% Fiscal Year 2014 - Draft Action Plan Duns No. 050520782 19 City of Palo Alto April 2013 PAGE INTENTIONALLY LEFT BLANK Fiscal Year 2014 - Draft Action Plan Duns No. 050520782 20 City of Palo Alto April 2013 OMB Control No: 2506-0117 (exp. 07/31/2015) Appendix A: Application for Federal Assistance Form SF-424 Fiscal Year 2014 - Draft Action Plan Duns No. 050520782 21 City of Palo Alto April 2013 APPLICATION FOR Version 7/03 FEDERAL ASSISTANCE 2. DATE SUBMITTED Applicant Identifier 1. TYPE OF SUBMISSION: Application Pre-application 3. DATE RECEIVED BY STATE State Application Identifier Construction Construction Non-Construction Non-Construction 4. DATE RECEIVED BY FEDERAL AGENCY Federal Identifier 5. APPLICANT INFORMATION Organizational Unit: Legal Name: Department: Organizational DUNS: Division: Address: Street: Name and telephone number of person to be contacted on matters involving this application (give area code) Prefix:First Name: City: Middle Name County: Last Name State:Zip Code Suffix: Country: Email: 6. EMPLOYER IDENTIFICATION NUMBER (EIN): - Phone Number (give area code) Fax Number (give area code) 8. TYPE OF APPLICATION: New Continuation Revision 7. TYPE OF APPLICANT: (See back of form for Application Types) If Revision, enter appropriate letter(s) in box(es) (See back of form for description of letters.) Other (specify) Other (specify)9. NAME OF FEDERAL AGENCY: 10. CATALOG OF FEDERAL DOMESTIC ASSISTANCE NUMBER: - TITLE (Name of Program): 12. AREAS AFFECTED BY PROJECT (Cities, Counties, States, etc.): 11. DESCRIPTIVE TITLE OF APPLICANT’S PROJECT: 13. PROPOSED PROJECT 14. CONGRESSIONAL DISTRICTS OF: Start Date:Ending Date:a. Applicant b. Project 15. ESTIMATED FUNDING:16. IS APPLICATION SUBJECT TO REVIEW BY STATE EXECUTIVE ORDER 12372 PROCESS? a. Federal $.00 b. Applicant $.00 a. Yes. THIS PREAPPLICATION/APPLICATION WAS MADE AVAILABLE TO THE STATE EXECUTIVE ORDER 12372 PROCESS FOR REVIEW ON c. State $.00 DATE: d. Local $.00 b. No. PROGRAM IS NOT COVERED BY E. O. 12372 e. Other $.00 OR PROGRAM HAS NOT BEEN SELECTED BY STATE FOR REVIEW f. Program Income $.00 17. IS THE APPLICANT DELINQUENT ON ANY FEDERAL DEBT? g. TOTAL $.00 Yes If “Yes” attach an explanation. No 18. TO THE BEST OF MY KNOWLEDGE AND BELIEF, ALL DATA IN THIS APPLICATION/PREAPPLICATION ARE TRUE AND CORRECT. THE DOCUMENT HAS BEEN DULY AUTHORIZED BY THE GOVERNING BODY OF THE APPLICANT AND THE APPLICANT WILL COMPLY WITH THE ATTACHED ASSURANCES IF THE ASSISTANCE IS AWARDED. a. Authorized Representative Prefix First Name Middle Name Last Name Suffix b. Title c. Telephone Number (give area code) d. Signature of Authorized Representative e. Date Signed Previous Edition Usable Authorized for Local Reproduction Standard Form 424 (Rev.9-2003) Prescribed by OMB Circular A-102 B-13-MC-06-0020 B-13-MC-06-0020 City of Palo Alto Planning and Community Environment 050520782 Planning P.O. BOX 10250 Miss Consuelo Palo Alto Santa Clara Hernandez CA 94303 9 (650) 329-2428 consuelo.hernandez@cityofpaloalto.org (650) 329-2154 D. Township Government U.S. Department of Housing and Urban Development The City of Palo Alto's Community Development Block Grant (CDBG) Program for Fiscal Year 2014. Community Development Block Grant (CDBG) City of Palo Alto, County of Santa Clara, State of California 07/01/2013 06/30/2014 14th Congressional District 14th Congressional District 394,101 110,049 62,607 566,757 Mr.James Keene City Manager (650) 329-2563 ✔ ✔ 4 6 983000 1 8124 OMB Approved No. 3076-0006 Fiscal Year 2014 - Draft Action Plan Duns No. 050520782 22 City of Palo Alto April 2013 OMB Control No: 2506-0117 (exp. 07/31/2015) Appendix B: Certifications Fiscal Year 2014 - Draft Action Plan Duns No. 050520782 23 City of Palo Alto April 2013 CPMP Non-State Grantee Certifications 1 Version 2.0 CPMP Non-State Grantee Certifications Many elements of this document may be completed electronically, however a signature must be manually applied and the document must be submitted in paper form to the Field Office. This certification does not apply. This certification is applicable. NON-STATE GOVERNMENT CERTIFICATIONS In accordance with the applicable statutes and the regulations governing the consolidated plan regulations, the jurisdiction certifies that: Affirmatively Further Fair Housing -- The jurisdiction will affirmatively further fair housing, which means it will conduct an analysis of impediments to fair housing choice within the jurisdiction, take appropriate actions to overcome the effects of any impediments identified through that analysis, and maintain records reflecting that analysis and actions in this regard. Anti-displacement and Relocation Plan -- It will comply with the acquisition and relocation requirements of the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970, as amended, and implementing regulations at 49 CFR 24; and it has in effect and is following a residential antidisplacement and relocation assistance plan required under section 104(d) of the Housing and Community Development Act of 1974, as amended, in connection with any activity assisted with funding under the CDBG or HOME programs. Drug Free Workplace -- It will or will continue to provide a drug-free workplace by: 1. Publishing a statement notifying employees that the unlawful manufacture, distribution, dispensing, possession, or use of a controlled substance is prohibited in the grantee's workplace and specifying the actions that will be taken against employees for violation of such prohibition; 2. Establishing an ongoing drug-free awareness program to inform employees about – a. The dangers of drug abuse in the workplace; b. The grantee's policy of maintaining a drug-free workplace; c. Any available drug counseling, rehabilitation, and employee assistance programs; and d. The penalties that may be imposed upon employees for drug abuse violations occurring in the workplace; 3. Making it a requirement that each employee to be engaged in the performance of the grant be given a copy of the statement required by paragraph 1; 4. Notifying the employee in the statement required by paragraph 1 that, as a condition of employment under the grant, the employee will – a. Abide by the terms of the statement; and b. Notify the employer in writing of his or her conviction for a violation of a criminal drug statute occurring in the workplace no later than five calendar days after such conviction; 5. Notifying the agency in writing, within ten calendar days after receiving notice under subparagraph 4(b) from an employee or otherwise receiving actual notice of such conviction. Employers of convicted employees must provide notice, including position title, to every grant officer or other designee on whose grant activity the convicted employee was working, unless the Federal agency has designated a central point for the receipt of such notices. Notice shall include the identification number(s) of each affected grant; 6. Taking one of the following actions, within 30 calendar days of receiving notice under subparagraph 4(b), with respect to any employee who is so convicted – a. Taking appropriate personnel action against such an employee, up to and including termination, consistent with the requirements of the Rehabilitation Act of 1973, as amended; or b. Requiring such employee to participate satisfactorily in a drug abuse assistance or rehabilitation program approved for such purposes by a Federal, State, or local health, law enforcement, or other appropriate agency; 7. Making a good faith effort to continue to maintain a drug-free workplace through implementation of paragraphs 1, 2, 3, 4, 5 and 6. Fiscal Year 2014 - Draft Action Plan Duns No. 050520782 24 City of Palo Alto April 2013 Palo Alto CPMP Non-State Grantee Certifications 2 Version 2.0 Anti-Lobbying -- To the best of the jurisdiction's knowledge and belief: 8. No Federal appropriated funds have been paid or will be paid, by or on behalf of it, to any person for influencing or attempting to influence an officer or employee of any agency, a Member of Congress, an officer or employee of Congress, or an employee of a Member of Congress in connection with the awarding of any Federal contract, the making of any Federal grant, the making of any Federal loan, the entering into of any cooperative agreement, and the extension, continuation, renewal, amendment, or modification of any Federal contract, grant, loan, or cooperative agreement; 9. If any funds other than Federal appropriated funds have been paid or will be paid to any person for influencing or attempting to influence an officer or employee of any agency, a Member of Congress, an officer or employee of Congress, or an employee of a Member of Congress in connection with this Federal contract, grant, loan, or cooperative agreement, it will complete and submit Standard Form-LLL, "Disclosure Form to Report Lobbying," in accordance with its instructions; and 10. It will require that the language of paragraph 1 and 2 of this anti-lobbying certification be included in the award documents for all subawards at all tiers (including subcontracts, subgrants, and contracts under grants, loans, and cooperative agreements) and that all subrecipients shall certify and disclose accordingly. Authority of Jurisdiction -- The consolidated plan is authorized under State and local law (as applicable) and the jurisdiction possesses the legal authority to carry out the programs for which it is seeking funding, in accordance with applicable HUD regulations. Consistency with plan -- The housing activities to be undertaken with CDBG, HOME, ESG, and HOPWA funds are consistent with the strategic plan. Section 3 -- It will comply with section 3 of the Housing and Urban Development Act of 1968, and implementing regulations at 24 CFR Part 135. Signature/Authorized Official Date Name Title Address City/State/Zip Telephone Number James Keene City Manager 250 Hamilton Avenue Palo Alto, CA 94301 650-329-2563 Fiscal Year 2014 - Draft Action Plan Duns No. 050520782 25 City of Palo Alto April 2013 Palo Alto CPMP Non-State Grantee Certifications 3 Version 2.0 This certification does not apply. This certification is applicable. Specific CDBG Certifications The Entitlement Community certifies that: Citizen Participation -- It is in full compliance and following a detailed citizen participation plan that satisfies the requirements of 24 CFR 91.105. Community Development Plan -- Its consolidated housing and community development plan identifies community development and housing needs and specifies both short-term and long-term community development objectives that provide decent housing, expand economic opportunities primarily for persons of low and moderate income. (See CFR 24 570.2 and CFR 24 part 570) Following a Plan -- It is following a current consolidated plan (or Comprehensive Housing Affordability Strategy) that has been approved by HUD. Use of Funds -- It has complied with the following criteria: 11. Maximum Feasible Priority - With respect to activities expected to be assisted with CDBG funds, it certifies that it has developed its Action Plan so as to give maximum feasible priority to activities which benefit low and moderate income families or aid in the prevention or elimination of slums or blight. The Action Plan may also include activities which the grantee certifies are designed to meet other community development needs having a particular urgency because existing conditions pose a serious and immediate threat to the health or welfare of the community, and other financial resources are not available); 12. Overall Benefit - The aggregate use of CDBG funds including section 108 guaranteed loans during program year(s) 2011, 2012, 2013, (a period specified by the grantee consisting of one, two, or three specific consecutive program years), shall principally benefit persons of low and moderate income in a manner that ensures that at least 70 percent of the amount is expended for activities that benefit such persons during the designated period; 13. Special Assessments - It will not attempt to recover any capital costs of public improvements assisted with CDBG funds including Section 108 loan guaranteed funds by assessing any amount against properties owned and occupied by persons of low and moderate income, including any fee charged or assessment made as a condition of obtaining access to such public improvements. However, if CDBG funds are used to pay the proportion of a fee or assessment that relates to the capital costs of public improvements (assisted in part with CDBG funds) financed from other revenue sources, an assessment or charge may be made against the property with respect to the public improvements financed by a source other than CDBG funds. The jurisdiction will not attempt to recover any capital costs of public improvements assisted with CDBG funds, including Section 108, unless CDBG funds are used to pay the proportion of fee or assessment attributable to the capital costs of public improvements financed from other revenue sources. In this case, an assessment or charge may be made against the property with respect to the public improvements financed by a source other than CDBG funds. Also, in the case of properties owned and occupied by moderate-income (not low-income) families, an assessment or charge may be made against the property for public improvements financed by a source other than CDBG funds if the jurisdiction certifies that it lacks CDBG funds to cover the assessment. Excessive Force -- It has adopted and is enforcing: 14. A policy prohibiting the use of excessive force by law enforcement agencies within its jurisdiction against any individuals engaged in non-violent civil rights demonstrations; and 15. A policy of enforcing applicable State and local laws against physically barring entrance to or exit from a facility or location which is the subject of such non-violent civil rights demonstrations within its jurisdiction; Fiscal Year 2014 - Draft Action Plan Duns No. 050520782 26 City of Palo Alto April 2013 Palo Alto CPMP Non-State Grantee Certifications 4 Version 2.0 Compliance With Anti-discrimination laws -- The grant will be conducted and administered in conformity with title VI of the Civil Rights Act of 1964 (42 USC 2000d), the Fair Housing Act (42 USC 3601-3619), and implementing regulations. Lead-Based Paint -- Its activities concerning lead-based paint will comply with the requirements of part 35, subparts A, B, J, K and R, of title 24; Compliance with Laws -- It will comply with applicable laws. Signature/Authorized Official Date Name Title Address City/State/Zip Telephone Number James Keene City Manager 250 Hamilton Avenue Palo Alto, CA 94301 650-329-2563 Fiscal Year 2014 - Draft Action Plan Duns No. 050520782 27 City of Palo Alto April 2013 Palo Alto CPMP Non-State Grantee Certifications 10 Version 2.0 This certification does not apply. This certification is applicable. APPENDIX TO CERTIFICATIONS Instructions Concerning Lobbying and Drug-Free Workplace Requirements Lobbying Certification This certification is a material representation of fact upon which reliance was placed when this transaction was made or entered into. Submission of this certification is a prerequisite for making or entering into this transaction imposed by section 1352, title 31, U.S. Code. Any person who fails to file the required certification shall be subject to a civil penalty of not less than $10,000 and not more than $100,000 for each such failure. Drug-Free Workplace Certification 1. By signing and/or submitting this application or grant agreement, the grantee is providing the certification. 2. The certification is a material representation of fact upon which reliance is placed when the agency awards the grant. If it is later determined that the grantee knowingly rendered a false certification, or otherwise violates the requirements of the Drug-Free Workplace Act, HUD, in addition to any other remedies available to the Federal Government, may take action authorized under the Drug-Free Workplace Act. 3. Workplaces under grants, for grantees other than individuals, need not be identified on the certification. If known, they may be identified in the grant application. If the grantee does not identify the workplaces at the time of application, or upon award, if there is no application, the grantee must keep the identity of the workplace(s) on file in its office and make the information available for Federal inspection. Failure to identify all known workplaces constitutes a violation of the grantee's drug-free workplace requirements. 4. Workplace identifications must include the actual address of buildings (or parts of buildings) or other sites where work under the grant takes place. Categorical descriptions may be used (e.g., all vehicles of a mass transit authority or State highway department while in operation, State employees in each local unemployment office, performers in concert halls or radio stations). 5. If the workplace identified to the agency changes during the performance of the grant, the grantee shall inform the agency of the change(s), if it previously identified the workplaces in question (see paragraph three). 6. The grantee may insert in the space provided below the site(s) for the performance of work done in connection with the specific grant: Place of Performance (Street address, city, county, state, zip code) Check if there are workplaces on file that are not identified here. The certification with regard to the drug-free workplace is required by 24 CFR part 21. Place Name Street City County State Zip Palo Alto City Hall 250 Hamilton Ave. Palo Alto Santa Clara CA 94301 7. Definitions of terms in the Nonprocurement Suspension and Debarment common rule and Drug-Free Workplace common rule apply to this certification. Grantees' attention is called, in particular, to the following definitions from these rules: "Controlled substance" means a controlled substance in Schedules I through V of the Controlled Substances Act (21 U.S.C. 812) and as further defined by regulation (21 CFR 1308.11 through 1308.15); "Conviction" means a finding of guilt (including a plea of nolo contendere) or imposition of sentence, or both, by any judicial body charged with the responsibility to determine violations of the Federal or State criminal drug statutes; "Criminal drug statute" means a Federal or non-Federal criminal statute involving the manufacture, distribution, dispensing, use, or possession of any Fiscal Year 2014 - Draft Action Plan Duns No. 050520782 28 City of Palo Alto April 2013 Palo Alto CPMP Non-State Grantee Certifications 11 Version 2.0 controlled substance; "Employee" means the employee of a grantee directly engaged in the performance of work under a grant, including: a. All "direct charge" employees; b. all "indirect charge" employees unless their impact or involvement is insignificant to the performance of the grant; and c. temporary personnel and consultants who are directly engaged in the performance of work under the grant and who are on the grantee's payroll. This definition does not include workers not on the payroll of the grantee (e.g., volunteers, even if used to meet a matching requirement; consultants or independent contractors not on the grantee's payroll; or employees of subrecipients or subcontractors in covered workplaces). Note that by signing these certifications, certain documents must completed, in use, and on file for verification. These documents include: 1. Analysis of Impediments to Fair Housing 2. Citizen Participation Plan 3. Anti-displacement and Relocation Plan Signature/Authorized Official Date Name Title Address City/State/Zip Telephone Number James Keene City Manager 250 Hamilton Avenue Palo Alto, CA 94301 650-329-2563 Fiscal Year 2014 - Draft Action Plan Duns No. 050520782 29 City of Palo Alto April 2013 PAGE INTENTIONALLY LEFT BLANK Fiscal Year 2014 - Draft Action Plan Duns No. 050520782 30 City of Palo Alto April 2013 OMB Control No: 2506-0117 (exp. 07/31/2015) Appendix C: Public and Private Resources Fiscal Year 2014 - Draft Action Plan Duns No. 050520782 31 City of Palo Alto April 2013 PUBLIC AND PRIVATE RESOURCES Palo Alto has access to a variety of federal, state, and local resources to achieve its housing and community development priorities. The table below identifies potential sources of funding available to carry out housing and community development activities in Palo Alto. To the extent possible, the City will seek to leverage funding from other public and private entities to strengthen programs and activities established in the Consolidated Plan and this Action Plan. PROGRAM NAME DESCRIPTION ELIGIBLE ACTIVITIES FEDERAL PROGRAMS Community Development Block Grant (CDBG) Grants awarded to the City on a formula basis for Housing and Community Development Activities. The City’s CDBG Budget for Fiscal Year 2014 is $566,757. This includes an entitlement grant of $394,101, $110,019 of prior year resources, and $62,607 in estimated Program Income.  Acquisition  Rehabilitation  Home buyer assistance  Economic Dev.  Homeless assistance  Public services HOME Program The City of Palo Alto is not an entitlement grantee under the federal HOME program and thus does not receive a direct grant of HOME Program funds from HUD. HOME funds are available on an annual competitive basis through the State of California HOME program.  Acquisition  Rehabilitation  Home buyer assistance  Rental Assistance Section 8 Housing Vouchers The Housing Authority of the County of Santa Clara administers the federal Section 8 program countywide. The City anticipates that Section 8 vouchers will continue to be available to Palo Alto residents in Fiscal Year 2014 through the Moderate Rehabilitation Program, and the Housing Choice Voucher Program.  Rental Assistance  Homeless Assistance  Support Services McKinney – Vento Homeless Assistance Funds Santa Clara County distributes federal McKinney Homeless Assistance funds to organizations in the County that provide services to homeless persons and persons at-risk of homelessness. None of the funding is currently targeted directly to shelter or supportive services in Palo Alto.  Supportive Housing  Shelter Plus Care  Section 8 SRO STATE PROGRAMS State of California’s Multifamily Housing Program (MHP) MHP has been a major source of funding for affordable housing since 2002. The purpose of this program is to provide low-interest loans to developers of affordable rental housing. The Fabian Way Senior Housing received an award of $5.25 million in permanent MHP funding in 2008.  New construction  Rehabilitation  Preservation of low-income permanent and transitional rental housing Fiscal Year 2014 - Draft Action Plan Duns No. 050520782 32 City of Palo Alto April 2013 PROGRAM NAME DESCRIPTION ELIGIBLE ACTIVITIES State of California’s Local Housing Trust Fund Grant Program Another component of Proposition 46 was funding for new and existing local housing trust funds. A local housing trust fund is a public or private partnership created to receive on-going revenues for affordable housing production such as Palo Alto’s Commercial and Residential Housing Funds.  Rental Housing Projects (deed restricted)  Down payment assistance Low-Income Housing Tax Credits The California Tax Credit Allocation Committee (CTCAC) holds two application cycles each year. Typically, the first cycle is held in March and the second is held in July. Local non-profits apply directly to the CTCAC for these funds when they have identified a project.  New Construction  Acquisition and rehabilitation of eligible projects LOCAL PROGRAMS Human Service Resource Allocation Process (HSRAP) In addition to the CDBG public service funds, the City will provide $1,099,347 million dollars from the General Fund in support of human services through HSRAP. The HSRAP funds, in conjunction with the CDBG public service funds, are distributed to local non-profit agencies.  Public service activities serving the needs of seniors, children, youth and families, persons with disabilities, and those who are homeless or at risk of homelessness Palo Alto Commercial Housing Fund The Commercial Housing fund is used primarily to increase the number of new affordable housing units for Palo Alto’s work force. It is funded with mitigation fees required from developers of commercial and industrial projects. As of March 6, 2013 the Commercial Fund had an available balance of approximately $1,500,000.  New construction Palo Alto Residential Housing Fund The Residential Housing Fund is funded with mitigation fees provided under Palo Alto’s Below Market Rate (BMR) housing program from residential developers and money from other miscellaneous sources, such as proceeds from the sale or lease of City property. As of March 6, 2013 the Residential Fund had a balance of approximately $84,000.  Acquisition  Rehabilitation  New construction  Pre-development costs Below Market Rate Emergency Fund This fund was authorized by council in September 2002 in order to provide funding on an ongoing basis for loans to BMR owners for special assessment loans and for rehabilitation and preservation of the City’s stock of BMR ownership units. As of March 6, 2013 the BMR Emergency Fund had a balance of approximately $283,000.  Special Assessment Loans  Rehabilitation Fiscal Year 2014 - Draft Action Plan Duns No. 050520782 33 City of Palo Alto April 2013 PROGRAM NAME DESCRIPTION ELIGIBLE ACTIVITIES The Housing Trust Fund of Santa Clara County (HTSCC) HTSCC is a non-profit organization that combines private and public funds to support affordable housing activities in the County, including assistance to developers and homebuyers. The HTSCC is a public/private initiative, dedicated to creating more affordable housing in Santa Clara County, using a revolving loan fund and grant-making program to complement and leverage other housing resources.  New Construction  First time homebuyers program  Developer Loans  Homelessness Prevention Programs Santa Clara County Affordable Housing Fund (AHF) The Santa Clara County Board of Supervisors established the Affordable Housing Fund with initial funding of $18.6 million in 2002. The main purpose of the AHF was to assist in the development of affordable housing especially for extremely low income and special needs people throughout Santa Clara County. $960,000 was awarded to the Tree House project developed by the Palo Alto Housing Corporation. The County has awarded over $10 million from the AHF to date.  Construction  Permanent Financing Fiscal Year 2014 - Draft Action Plan Duns No. 050520782 34 City of Palo Alto April 2013 OMB Control No: 2506-0117 (exp. 07/31/2015) Appendix D: Proposed Projects Fiscal Year 2014 - Draft Action Plan Duns No. 050520782 35 City of Palo Alto April 2013 U.S. Department of Housing OMB Approval No. 2506-0117 and Urban Development Exp. 8/31/2014) Table 3C Consolidated Plan Listing of Projects Jurisdiction’s Name City of Palo Alto Priority Need Public Services Project Title SRO Resident Support Services Description Palo Alto Housing Corporation will provide counseling and supportive case management services for low- income residents of single room occupancy facilities in order to help them maintain housing stability. Activities include financial counseling, health maintenance, information and referral, problem solving, employment assistance, crisis intervention and case management. Objective category: Suitable Living Environment Decent Housing Economic Opportunity Outcome category: Availability/Accessibility Affordability Sustainability Location/Target Area Street Address: 439 Emerson Street and 753 Alma Street City, State, Zipcode: Palo Alto, CA 94301 Objective Number SL-1 Project ID 1 HUD Matrix Code 05 Public Services CDBG Citation 570.201 (e) Type of Recipient LMC CDBG National Objective 570.208(a)(2) Start Date (mm/dd/yyyy) 07/01/2013 Completion Date (mm/dd/yyyy) 06/30/2014 Performance Indicator People Annual Units 131 Local ID SR-01048-999 Units Upon Completion 131 Funding Sources: CDBG $24,000 ESG HOME HOPWA Total Formula Prior Year Funds Assisted Housing PHA Other Funding Total $24,000 The primary purpose of the project is to help: the Homeless Persons with HIV/AIDS Persons with Disabilities Public Housing Needs Fiscal Year 2014 - Draft Action Plan Duns No. 050520782 36 City of Palo Alto April 2013 U.S. Department of Housing OMB Approval No. 2506-0117 and Urban Development Exp. 8/31/2014) Table 3C Consolidated Plan Listing of Projects Jurisdiction’s Name City of Palo Alto Priority Need Public Services Project Title Long Term Care Ombudsman Program Description Catholic Charities assists in problem resolution and advocates for the rights of residents of long term care facilities in Palo Alto. The majority of the clients assisted are low-income, frail, elderly, and chronically ill. This program assists these vulnerable, dependent and socially isolated residents receive the care and placement to which they are entitled. Objective category: Suitable Living Environment Decent Housing Economic Opportunity Outcome category: Availability/Accessibility Affordability Sustainability Location/Target Area Community - wide Street Address: City, State, Zipcode: Objective Number SL-1 Project ID 2 HUD Matrix Code 05A Senior Services CDBG Citation 570.201 (e) Type of Recipient LMC CDBG National Objective 570.208(a)(2) Start Date (mm/dd/yyyy) 07/01/2013 Completion Date (mm/dd/yyyy) 06/30/2014 Performance Indicator People Annual Units 260 Local ID SR-01025-999 Units Upon Completion Funding Sources: CDBG $5,000 ESG HOME HOPWA Total Formula Prior Year Funds Assisted Housing PHA Other Funding Total $5,000 The primary purpose of the project is to help: the Homeless Persons with HIV/AIDS Persons with Disabilities Public Housing Needs . Fiscal Year 2014 - Draft Action Plan Duns No. 050520782 37 City of Palo Alto April 2013 U.S. Department of Housing OMB Approval No. 2506-0117 and Urban Development Exp. 8/31/2014) Table 3C Consolidated Plan Listing of Projects Jurisdiction’s Name City of Palo Alto Priority Need Public Services Project Title Opportunity Service Center Description InnVision Shelter Network provides basic necessities for persons who are homeless or at-risk of becoming homeless. The Opportunity Services Center is a comprehensive, one-stop, multi-service, day drop-in center that provides critical services for homeless Palo Alto residents. Specifically, the facility provides showers, laundry, clothing, snacks, case management, and shelter/housing referral services. Objective category: Suitable Living Environment Decent Housing Economic Opportunity Outcome category: Availability/Accessibility Affordability Sustainability Location/Target Area Street Address: 33 Encina Way City, State, Zipcode: Palo Alto, CA 94301 Objective Number SL-1 Project ID 3 HUD Matrix Code 05 Public Services CDBG Citation 570.201 (e) Type of Recipient LMC CDBG National Objective 570.208(a)(2) Start Date (mm/dd/yyyy) 07/01/2012 Completion Date (mm/dd/yyyy) 06/30/2013 Performance Indicator People Annual Units 600 Local ID SR-01082-999 Units Upon Completion 600 Funding Sources: CDBG $35,162 ESG HOME HOPWA Total Formula Prior Year Funds Assisted Housing PHA Other Funding Total $35,162 The primary purpose of the project is to help: the Homeless Persons with HIV/AIDS Persons with Disabilities Public Housing Needs . Fiscal Year 2014 - Draft Action Plan Duns No. 050520782 38 City of Palo Alto April 2013 U.S. Department of Housing OMB Approval No. 2506-0117 and Urban Development Exp. 8/31/2014) Table 3C Consolidated Plan Listing of Projects Jurisdiction’s Name City of Palo Alto Priority Need Public Services Project Title Domestic Violence Services Description Support Network for Battered Women, a Division of YWCA will provide individuals and families experiencing domestic violence, the program provides a bilingual domestic violence hotline, an emergency shelter, crisis counseling, legal assistance, court accompaniment, individual and group therapy, support groups, children’s therapy groups, preventative education, safety planning and community referrals. Objective category: Suitable Living Environment Decent Housing Economic Opportunity Outcome category: Availability/Accessibility Affordability Sustainability Location/Target Area Community-wide Street Address: City, State, Zipcode: Objective Number SL-1 Project ID 4 HUD Matrix Code 05G CDBG Citation 570.201(e) Type of Recipient LMC CDBG National Objective 570.208(a)(2) Start Date (mm/dd/yyyy) 07/01/2013 Completion Date (mm/dd/yyyy) 06/30/2014 Performance Indicator People Annual Units 45 Local ID SR-01105-999 Units Upon Completion 45 Funding Sources: CDBG $7,500 ESG HOME HOPWA Total Formula Prior Year Funds Assisted Housing PHA Other Funding Total $7,500 The primary purpose of the project is to help: the Homeless Persons with HIV/AIDS Persons with Disabilities Public Housing Needs . Fiscal Year 2014 - Draft Action Plan Duns No. 050520782 39 City of Palo Alto April 2013 U.S. Department of Housing OMB Approval No. 2506-0117 and Urban Development Exp. 8/31/2014) Table 3C Consolidated Plan Listing of Projects Jurisdiction’s Name City of Palo Alto Priority Need Public Services Project Title Housing and Emergency Services for Persons with Disabilities Description Silicon Valley Independent Living Center provides assistance for individuals with disabilities and their families to transition from homelessness, health care facilities, unstable or temporary housing to permanent affordable, accessible, integrated housing with emergency assistance, security deposits, rent, information & referral, and other basic essentials. Objective category: Suitable Living Environment Decent Housing Economic Opportunity Outcome category: Availability/Accessibility Affordability Sustainability Location/Target Area Community-wide Street Address: City, State, Zipcode: Objective Number SL-1 Project ID 5 HUD Matrix Code 5B CDBG Citation 570.201(e) Type of Recipient LMC CDBG National Objective 570.208(a)(2) Start Date (mm/dd/yyyy) 07/01/2013 Completion Date (mm/dd/yyyy) 06/30/2014 Performance Indicator People Annual Units 24 Local ID TBD Units Upon Completion 24 Funding Sources: CDBG $5,000 ESG HOME HOPWA Total Formula Prior Year Funds Assisted Housing PHA Other Funding Total $5,000 The primary purpose of the project is to help: the Homeless Persons with HIV/AIDS Persons with Disabilities Public Housing Needs . Fiscal Year 2014 - Draft Action Plan Duns No. 050520782 40 City of Palo Alto April 2013 U.S. Department of Housing OMB Approval No. 2506-0117 and Urban Development Exp. 8/31/2014) Table 3C Consolidated Plan Listing of Projects Jurisdiction’s Name City of Palo Alto Priority Need Public Services Project Title Fair Housing Services Description Project Sentinel will provide community education and outreach regarding fair housing law and practices, investigation, counseling and legal referral for victims of housing discrimination, and analyses for City staff and officials regarding fair housing practices. California and federal fair housing laws assure specific protected classes the right to be treated in terms of their individual merits and qualifications in seeking housing. Unfortunately, some people are not aware of the law or their rights. Objective category: Suitable Living Environment Decent Housing Economic Opportunity Outcome category: Availability/Accessibility Affordability Sustainability Location/Target Area Community-wide Street Address: City, State, Zipcode: Objective Number DH-1 Project ID 6 HUD Matrix Code 21D CDBG Citation 570.206 Type of Recipient LMC CDBG National Objective 570.208(a)(2) Start Date (mm/dd/yyyy) 07/01/2013 Completion Date (mm/dd/yyyy) 06/30/2014 Performance Indicator People Annual Units 27 Local ID SR-01087-999 Units Upon Completion 27 Funding Sources: CDBG $26,342 ESG HOME HOPWA Total Formula Prior Year Funds Assisted Housing PHA Other Funding Total $26,342 The primary purpose of the project is to help: the Homeless Persons with HIV/AIDS Persons with Disabilities Public Housing Needs . Fiscal Year 2014 - Draft Action Plan Duns No. 050520782 41 City of Palo Alto April 2013 U.S. Department of Housing OMB Approval No. 2506-0117 and Urban Development Exp. 8/31/2014) Table 3C Consolidated Plan Listing of Projects Jurisdiction’s Name City of Palo Alto Priority Need Planning and Administration Project Title City of Palo Alto Description Administer the Administrative costs for the overall management, coordination, and evaluation of the CDBG program, and the project delivery costs associated with bringing projects to completion. Objective category: Suitable Living Environment Decent Housing Economic Opportunity Outcome category: Availability/Accessibility Affordability Sustainability Location/Target Area City of Palo Alto Street Address: 250 Hamilton Avenue City, State, Zipcode: Palo Alto, CA 94301 Objective Number Project ID 7 HUD Matrix Code 21 CDBG Citation 570.206 Type of Recipient N/A CDBG National Objective N/A Start Date (mm/dd/yyyy) 07/01/2013 Completion Date (mm/dd/yyyy) 06/30/2014 Performance Indicator N/A Annual Units N/A Local ID SR-01003-999 Units Upon Completion N/A Funding Sources: CDBG $65,000 ESG HOME HOPWA Total Formula Prior Year Funds Assisted Housing PHA Other Funding Total $65,000 The primary purpose of the project is to help: the Homeless Persons with HIV/AIDS Persons with Disabilities Public Housing Needs . Fiscal Year 2014 - Draft Action Plan Duns No. 050520782 42 City of Palo Alto April 2013 U.S. Department of Housing OMB Approval No. 2506-0117 and Urban Development Exp. 8/31/2014) Table 3C Consolidated Plan Listing of Projects Jurisdiction’s Name City of Palo Alto Priority Need Job creation and replacement Project Title Pilot Microenterprise Assistance Program Description The Pilot Microenterprise Assistance Program will provide resources to support and foster the development of microbusinesses by providing grants to eligible low-to moderate income families in conjunction with capacity building and entrepreneurial assistance. Objective category: Suitable Living Environment Decent Housing Economic Opportunity Outcome category: Availability/Accessibility Affordability Sustainability Location/Target Area Community-wide Street Address: City, State, Zipcode: Objective Number E0-1 Project ID 8 HUD Matrix Code 18C CDBG Citation 570.201(o) Type of Recipient LMCMC CDBG National Objective 570.208(a)(2)(iii) Start Date (mm/dd/yyyy) 07/01/2013 Completion Date (mm/dd/yyyy) 06/30/2014 Performance Indicator Jobs Annual Units 5 Local ID SR-01121-999 Units Upon Completion 5 Funding Sources: CDBG $150,000 ESG HOME HOPWA Total Formula Prior Year Funds Assisted Housing PHA Other Funding Total $150,000 The primary purpose of the project is to help: the Homeless Persons with HIV/AIDS Persons with Disabilities Public Housing Needs . Fiscal Year 2014 - Draft Action Plan Duns No. 050520782 43 City of Palo Alto April 2013 U.S. Department of Housing OMB Approval No. 2506-0117 and Urban Development Exp. 8/31/2014) Table 3C Consolidated Plan Listing of Projects Jurisdiction’s Name City of Palo Alto Priority Need Job creation and replacement Project Title Workforce Development Program Description The Workforce Development Program will provide a transition from unemployment and homelessness to regular employment and housing through case management, job training, mentoring, housing, and transportation assistance. Downtown Streets Team will screen and prepare applicants while Manpower will use their community connections to provide training and job opportunities. Objective category: Suitable Living Environment Decent Housing Economic Opportunity Outcome category: Availability/Accessibility Affordability Sustainability Location/Target Area Community-wide Street Address: City, State, Zipcode: Objective Number E0-1 Project ID 9 HUD Matrix Code 05H CDBG Citation 570.204(a)(2) Type of Recipient LMC CDBG National Objective 570.208(a)(2)(A) Start Date (mm/dd/yyyy) 07/01/2013 Completion Date (mm/dd/yyyy) 06/30/2014 Performance Indicator Jobs Annual Units 25 Local ID SR-01121-999 Units Upon Completion 25 Funding Sources: CDBG $248,753 ESG HOME HOPWA Total Formula Prior Year Funds Assisted Housing PHA Other Funding Total $248,753 The primary purpose of the project is to help: the Homeless Persons with HIV/AIDS Persons with Disabilities Public Housing Needs . Fiscal Year 2014 - Draft Action Plan Duns No. 050520782 44 City of Palo Alto April 2013 OMB Control No: 2506-0117 (exp. 07/31/2015) Appendix E: Public Hearing Advertisement Fiscal Year 2014 - Draft Action Plan Duns No. 050520782 45 City of Palo Alto April 2013 REVISED NOTICE OF PUBLIC REVIEW PERIOD AND PUBLIC HEARINGS ON PALO ALTO’S COMMUNITY DEVELOPMENT BLOCKGRANT (CDBG) PROGRAM This is to notify the general public and other interested parties that a 30-day public review period of the Draft Annual Action Plan for the allocation of Fiscal Year 2014 Community Development Block Grant (CDBG) funds, will begin on March 7, 2013 and end on April 8, 2013. The Draft Annual Action Plan describes the activities the City may fund under the 2014 CDBG Program. Collectively these activities are intended to meet Palo Alto’s affordable housing and community development objectives described in the 2010-2015 Consolidated Plan. Copies of the Draft Annual Action Plan will be available on March 7, 2013 at the Department of Planning and Community Environment, 250 Hamilton Avenue, 5th Floor, Palo Alto, CA 94301, on the City’s website http://www.cityofpaloalto.org/depts/pln/advance_planning/cdbg.asp or by calling Consuelo Hernandez, Planner – CDBG, at (650) 329-2428. Interested parties are encouraged to submit written comments on the proposed Draft Annual Action Plan during the public review period, or to comment at the public hearings and meetings described below. PUBLIC HEARINGS AND MEETINGS The City of Palo Alto Human Relations Commission will hold a Public Hearing on February 28, 2013 to review the Fiscal Year 2014 CDBG funding allocations recommended by the CDBG Human Relations Selection Committee. The Public Hearing will be held at 7:00 p.m., or as soon as possible thereafter, in City Hall Council Conference Room, 250 Hamilton Avenue, Palo Alto. The City of Palo Alto Finance Committee will hold a Public Hearing on April 16, 2013 (originally scheduled for April 2, 2013) to review the proposed Fiscal Year 2014 CDBG funding allocations identified in the Draft Annual Action Plan. The Public Hearing will be held at 7:00 p.m., or as soon as possible thereafter, in City Hall Council Conference Room, 250 Hamilton Avenue, Palo Alto. The Palo Alto City Council will hold a Public Hearing on May 6, 2013 to adopt the Annual Action Plan and the associated Fiscal Year 2014 CDBG allocations. The Public Hearing will be held at 7:00p.m., or as soon as possible thereafter, in City Hall Council Chambers, 250 Hamilton Avenue, Palo Alto. 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: ADA Coordinator, City of Palo Alto, 650-329-2550 (Voice) ada@cityofpaloalto.org Fiscal Year 2014 - Draft Action Plan Duns No. 050520782 46 City of Palo Alto April 2013 OMB Control No: 2506-0117 (exp. 07/31/2015) Appendix F: Map Fiscal Year 2014 - Draft Action Plan Duns No. 050520782 47 City of Palo Alto April 2013 ElCaminoRealElCaminoReal AlmaStreet AlmaStreetAlmaSt UniversityAvenue UniversityAve JuniperoSerraBlvdJuniperoSerraBlvd WestPortolaAvenue MarichWay S.RengstorffAvenue CaliforniaStreet LathamStreet DelMedioAvenue ShowersDrive LosAltosAvenue IndependenceAvenue GarciaAvenue ont Road WestridgeDrive DuranzoWay EricaWay SharonParkDrive RosaDrive AltschulAvenue ElenaAvenue TuscaloosaAvenue ColemanRoad LaurelStreet SantaMonicaAvenue GilbertAvenue MenaltoAvenue WoodlandAvenue BellStreet Co o le y A v e n u e O'ConnerStreet RunnymedeStr e et ClarkAvenue WoodlandAvenue PulgasAvenue O'ConnerStreet Beach Street JasmineWay BrannerDrive CampbellLane ShoronRoad LemonStreet OliveAvenue SantaCruzAvenue BayLaurelDrive MiddleAvenue BayLaurelDrive WindsorDrive PeterCouttsCircle LasuenStreet PanamaDr GovernorsAve ElectioneerAve N.LemonAvenue CottonStreetValparaisoAvenue FremontStreet UniversityDrive CambridgeAvenue MiddleAvenue ArborRoad CreekDrive WillowRoad OakGroveAvenue SantaCruzAvenue IsabellaAvenue BrittonAlejandraAvenue EscondidoRoad OlmsteadRoad RingwoodAvenue MiddlefieldRoadMiddlefieldRoadMiddlefieldRd BayshoreFwyBayshoreFwy EmbarcaderoRoad CharlestonRd SantaCruzAvenue SandHillRoad GlenwoodAvenue LomaVerdeAve LyttonAve HomerAve ChanningAve CowperSt EmersonSt AddisonAve EMeadowDr WMeadowDr MaybellAve StanfordAve CaliforniaAve ChimalusDr HeatherLn NewellRd ChurchillAve ParkBlvd RaimundoWay BryantSt CollegeAve LouisRd GreerRd ColoradoAve RossRd ArastraderoRd ArastraderoRd LosRoblesAve GeorgiaAve LaDonnaSt LagunaAve AmarantaAve BarronAve MataderoAve SealeAve SouthCt ParkBlvd LaParaAve BirchSt LincolnAve PageMillRd ElVeranoAve ElDoradoAve EmersonSt AmarilloAve NCaliforniaAve HawthorneAve AshSt OliveAve VenturaAve AlmaSt WilkieWay FerneAve AlvaradoAvenue LinariaWay LaCuestaDrive CloudAvenue AlmaStreet ClarkAvenue AthertonAvenue AthertonAvenue WatkinsAvenue SanMateoDrive SanAntonioAve JuniperoS e rraBlvd ts a E ot l A o l a P dr o f n a t S yt i s r e v i n U A no t r e h t ol n e M kr a P do o w d e R yt iC Mountain View ot l A o l a P Road e las Pulga s d H i l l R o a d Jun ip e r o S erra Boulev a rd P a geMillRoad A r a s t r a d e r o R o a dEl a m i n o R e a l SanAntonioAvenue C h r a l e s t o n R o a d r O e og n E x p e r s s w a y Mi d d l e fi e ld Road ersity Ave B ayshore Fre e w ay 1 0 1 Al m S reet ElCaminoReal MiddlefieldRoad pi n eRoad Foothill Expre s s w a y R o a d UniversityAve. Hi l l vie w E a st B ya s o h re W e st B a y sh roe Fabian Centra lExpressw S a n d Hill R o a d E m b a r c a d e r o R o a d MarshRoad Bay Expressway Willow eh t f o t c u d o r p a s i p a m s i h T SI G o t l A o l a P f o y t i C .s e c r u o s e l b a l i a v a t s e b f o y l n o n o i t a t n e s e r p e r c i h p a r g a s i t n e m u c o d s i h T dn e g e L yr a d n u o B y t i C o t l A o l a P '0 0 5 4 '0 FY 2013 - 2014 CDBG Projects Location map CITY O F PALO A L TO IN C O R P O RAT E D C ALIFOR N IA o t l A o l a P f o y t i C e h T A P RIL 16 1 894 otl A o l a P f o y t i C 7 0 0 2 o t 9 8 9 1 © . s r o r r e y n a r o f y t i l i b i s n o p s e r on s e m u s s a o t l A o l a P f o y t i C e h T 23 : 7 1 : 4 1 5 0 - 5 0 - 1 0 0 2 , a r e v i r r )b d m . a r e v i r r \ l a n o s r e P \ n i m d a \ s i g\$ s i g \ s p a m - cc \ \ ( p a m n o i t a c o l g b d c OR S e c a l P a m l A ) 4 OR S l e t o H r e k r a B ) 3 re t n e C y t i n u t r o p p O ) 2 U ivn ) 1 t C a Fiscaly Year 2014 - Draft Action Plan DUNS No. 050520782 46 City of Palo Alto March 2013Fiscal Year 2014 - Draft Action Plan Duns No. 050520782 48 City of Palo Alto April 2013 OMB Control No: 2506-0117 (exp. 07/31/2015) Appendix G: Public Comments Fiscal Year 2014 - Draft Action Plan Duns No. 050520782 49 City of Palo Alto April 2013 City of Palo Alto (ID # 3534) Finance Committee Staff Report Report Type: Action Items Meeting Date: 4/16/2013 City of Palo Alto Page 1 Summary Title: Fiscal Year 2014 CDBG Allocations Title: Recommendations on Proposed Fiscal Year 2014 Community Development Block Grant Funding Allocations and the Draft Fiscal Year 2014 Annual Action Plan From: City Manager Lead Department: Planning and Community Environment Recommendation Staff recommends that the Finance Committee recommend that the City Council take the following actions: 1. Allocate CDBG funding as recommended by staff and as described in this report; 2. Authorize the City Manager to execute the 2014 CDBG application and 2014 Action Plan for CDBG funds, any other necessary documents concerning the application, and to otherwise bind the City with respect to the applications and commitment of funds; and 3. Authorize staff to submit the 2014 Action Plan to HUD by the May 15, 2013 deadline. Executive Summary The City of Palo Alto receives funds annually from the U.S. Department of Housing and Urban Development (HUD) as an entitlement city under the Community Development Block Grant (CDBG) Program. It is the principal Federal program providing localities with grants to devise innovative and constructive neighborhood approaches to improve the physical, economic, and social conditions in their communities through “the development of viable urban communities, by providing decent housing and a suitable living environment and expanding economic opportunities, principally for persons of low and moderate income.” HUD requirements include preparation of a five-year strategic plan of action, referred to as a Consolidated Plan, to address priority housing and community development needs and to set City of Palo Alto Page 2 goals for attaining identified objectives. On May 3, 2010, the City Council adopted the City’s 2010-2015 Consolidated Plan. An Action Plan is prepared annually to identify specific projects to be funded in that year that implement the strategies identified in the Consolidated Plan. The draft 2014 Action Plan (Attachment B) has been made available for public review from March 7, 2013 through April 8, 2013. The Finance Committee is being asked to review the draft Action Plan and funding recommendations. Upon review of the draft plan and funding recommendations, it is requested that the Finance Committee make recommendations to City Council. The City Council will review the recommendations of the Finance Committee at a public hearing scheduled for May 6, 2013. Staff will then submit the Action Plan to HUD in order to meet the May 15, 2013 deadline. Background The CDBG program is authorized under Title I of the Housing and Community Development Act of 1974, as amended. As an entitlement city under the CDBG program, the City of Palo Alto receives funds annually on a formula grant basis. Palo Alto has historically expended all of its CDBG funds on projects benefiting low- and very-low-income persons. HUD regulations require all CDBG funded activities meet one of the three national objectives:  Benefit low-and very-low-income persons;  Aid in the prevention or elimination of slums or blight; or  Meet other community development needs having a particular urgency, or posing a serious and immediate threat to the health or welfare of the community. Palo Alto has five primary CDBG program activity areas in which to allocate funds; Public Services, Planning and Administration, Economic Development, Housing, and Public Facilities. Federal regulations limit the amount that can be spent on Administration and Public Services. No more than 20 percent of the City’s entitlement grant and estimated program income for the following year can be spent on Administration. It is estimated that $91,342 will be available for this category for Fiscal Year 2014. Similarly, Federal law places a maximum spending cap of 15 percent of the grant allocation and 15 percent of any program income received during the previous fiscal year on public services. It is estimated that $76,662 will be available for public service activities for Fiscal Year 2014. As of April 16, 2013 the City has not received its final funding allocation amount from HUD. City of Palo Alto Page 3 Action Plan HUD requires submittal of an Annual Action Plan no later than 45 days prior to the start of the program year, or May 15th of every year, that identifies the specific projects to be funded to implement strategies identified in the Consolidated Plan. On May 3, 2010, the City Council adopted the 2010-2015 Consolidated Plan, a five-year strategic plan of action that addresses priority housing and community development needs. CDBG Applications Currently, the CDBG program operates under a two-year funding request cycle. Applications for Fiscal Years 2014 and 2015 were made available in November 2012. A notice of CDBG funding availability was published in the Palo Alto Weekly on November 9, 2012 with completed applications due January 8, 2013. Mandatory proposal-writing workshops were conducted on November 28, 2012 and December 20, 2012 to assist applicants with program regulations and project eligibility questions. The CDBG applications considered for funding for Fiscal Year 2014 are identified on the attached chart (Attachment A). During this funding cycle the City did not receive any funding applications for housing or public facilities improvement projects. Citizen Participation A Citizen Participation Plan is a required component of the CDBG Program. HUD regulations require CDBG recipient agencies to prepare and implement a plan that provides adequate opportunity for citizens to participate in an advisory role in the planning, implementation, and assessment of the CDBG program. On October 18, 2010 the City adopted an amended Citizen Participation Plan and shifted the CDBG advisory role from a separate Citizens Advisory Committee to the established Human Relations Commission (HRC). In summary, the intention of the new plan was to provide a collaborative link between the CDBG funding process and the Human Service Resource Allocation Process (HSRAP). The HRC is now charged with reviewing funding recommendations for the City’s two human service funding sources. A sub-committee comprised of staff and two members of the HRC was established to review both the CDBG and HSRAP funding applications and to provide recommendations to the full commission. The sub-committee met on February 6, 2013 at Cubberley Community Center to discuss the Fiscal Year 2014 CDBG budget, reviewed the applications received, and recommended two options for funding amounts based on the estimated funds available. The meeting was open to the public and publicized on the City’s website and in the Palo Alto Weekly. During the deliberations a consensus for funding recommendations of Catholic Charities of Santa Clara County and Silicon Valley Independent Living Center could not be reached. The concerns included the relatively small grant amounts for both agencies, the perceived sectarian affiliation of Catholic Charities of Santa Clara County, and lack of information on the effectiveness of City of Palo Alto Page 4 Silicon Valley Independent Living Center. As such, two funding options were proposed with final recommendations deferred to the full HRC. On February 28, 2013 the HRC considered the funding recommendations of the subcommittee at a public hearing. While a consensus was reached on two of the funding categories, the majority of the discussion centered on whether or not to fund the above mentioned organizations. A motion to approve a funding recommendation which included funding both organizations at the City’s minimum CDBG grant amount of $5,000, had a vote of 3-2 with one member absent and a second member recusing himself from the discussion and vote. While the vote reflected a majority in favor of funding both organizations, the motion did not carry since the three affirming votes do not technically constitute a majority vote of the HRC. After listening to comments from the public and exploring alternative options for public service activities, the HRC ultimately voted not to fund Catholic Charities of Santa Clara County and distributed the $5,000 amongst the other four agencies. Commitment of Funds HUD regulations require that CDBG funds be expended in a timely manner. Specifically, the regulatory requirement is that no more than 1.5 times a jurisdiction’s annual entitlement grant amount remain in the City’s Letter of Credit 60 days prior to the end of the program year. In an effort to reduce the backlog of unspent CDBG funds, HUD employs monetary sanctions against jurisdictions that exceed this timeliness requirement. For this reason, all funding applications are scrutinized to insure the readiness of the program or project to move forward and expend funds in a timely manner. Discussion Palo Alto’s CDBG program continues to be directed towards expanding and maintaining existing affordable housing supply, promoting housing opportunities and choices, maintaining and improving community facilities, and providing supportive services for targeted low-income groups including persons who are homeless, persons with disabilities, the elderly, and other special needs groups. Moreover, the CDBG program places a high priority to expand the goal of creating economic opportunities for low-income persons. All of the proposed projects for CDBG funding for Fiscal Year 2014, as presented in the draft 2014 Action Plan, address the priority housing and supportive service needs identified in the Consolidated Plan. Fiscal Year 2014 Funds Available for Allocation As of April 16, 2013 the City has not received its final funding allocation from HUD. The estimated allocation amount is based on several assumptions; the Continuing Resolution and "sequestration" - an across-the-board set of federal budget cuts totaling $1.2 trillion from defense and non-defense spending over the course of the next ten years. The Continuing City of Palo Alto Page 5 Resolution for Federal Fiscal Year 2013 budget includes funding the CDBG program at Fiscal Year 2012 funding levels. Assuming Palo Alto’s share of funding in 2013 will equal its share of funding in 2012 this translates to an allocation of $429,304 prior to the impact of sequestration. Sequestration impacts for non-exempt nondefense discretionary funds were estimated to face an automatic 8.2% reduction for Federal Fiscal Year 2013, resulting in a Fiscal Year 2014 allocation of $394,101 for Palo Alto. Congress’ failure to avoid the mandatory across-the-board cuts makes sequestration an official federal mandate. While there is no official notice to the City from HUD, a Federal Office of Management and Budget report to Congress dated March 1, 2013 revealed a 5% reduction in non-exempt nondefense discretionary funds. As these cuts must be achieved over a seven–month period instead of over twelve months, the effective reduction will be closer to 9%. Planning Staff has used the estimated 8.2% reduction over FY 2012 funding levels for planning purposes with final adjustments pending the City’s official allocation from HUD. Based on the foregoing, the total amount available for allocation in Fiscal Year 2014 is estimated to be $566,757 and summarized as follows: $394,101 Estimated Fiscal Year 2014 Entitlement Grant $ 62,607 Estimated Program Income from Palo Alto Housing Corporation that is generated from rental income in excess of expenses on specific properties acquired or rehabilitated with CDBG funds. $ 110,049 Prior Year Resources including $61,049 in reallocated funds and $49,000 in excess program income) $566,757 ESTIMATED TOTAL AVAILABLE FOR ALLOCATION The following summarizes calculations for funding limitations that are placed on two funding categories: Maximum Available for Public Services Estimated 2014 CDBG Entitlement Grant $394,101 2013 Actual Program Income Received1 $116,982 $511,083 1 Actual Program Income received in Fiscal Year 2013 includes $62,607 from Palo Alto Housing Corporation and $54,374 in Fiscal Year 2012 excess program income from Palo Alto Housing Corporation. City of Palo Alto Page 6 Public Service Cap (15% of $511,083): $ 76,662 Maximum Available for Planning/Administration Estimated 2014 CDBG Entitlement Grant $394,101 Estimated 2014 Program Income $ 62,607 $456,708 Planning/Admin Cap (20% of $456,708): $ 91,342 The difference between the funding caps and the estimated total available, or $398,753, yields the amount that can used to fund projects within the other three funding categories; Economic Development, Housing, and Public Facilities. Additional funding can be made available for these activities if less is provided for administration or public services. Fiscal Year 2014 – Funding Requests and Recommendations A complete list of funding applications submitted for Fiscal Year 2014, along with separate funding recommendation made by the HRC and Staff, are identified in Attachment A. Unlike recommendations made in previous years, Staff does not agree with the final recommendations made by the HRC for this year. Specifically, Staff is concerned that the manner in which the decision was made regarding Catholic Charities does not recognize the substantial merit of this program and incorrectly emphasizes the religious affiliation of the organization, which could be construed as a denial of equal access to federal funding. Correspondence on this issue can be found in Attachment D, public comment. The primary reason offered for not funding the organization is related to the relatively small grant amount of $5,000, while the secondary reason is related to the perceived religious affiliation of the organization. Palo Alto’s established minimum CDBG grant amount is $5,000. Catholic Charities’ application for funding includes a request for $6,500, which is more than the minimum grant amount set by the City. Therefore, the grant amount should not be a reason not to fund the agency. If there is a desire or interest to increase the City’s minimum CDBG grant amount, this should be held over for a future policy discussion that is made prior to the application period. As a non-profit 501(c)3 organization, Catholic Charities is an eligible organization under the CDBG program. Furthermore, the Long-term Care Ombudsman Program they are requesting funding for provides secular and non-denominational services to approximately two hundred and fifty (250) Palo Alto residents at assisted living facilities on an annual basis. Funding is limited to personnel costs related to the secular services provided through the program and, like all of the City’s CDBG grantees, Catholic Charities is required to submit source documentations to ensure CDBG funds are used in accordance with their subrecipient agreement and in compliance with HUD requirements. Table 1, Fiscal Year 2014 Funding City of Palo Alto Page 7 Recommendations, summarizes the applications for funding and provides separate recommendations made by the HRC and Staff. Table 1: Fiscal Year 2014 Funding Recommendations Applicant Agency FY2014 Funding Request HRC Recommendations Staff Recommendations Public Services - Palo Alto Housing Corporation – SRO Hotels Supportive Services $ 43,166 $24,865 $ 24,000 Catholic Charities of Santa Clara County – Long Term Care Ombudsman $ 6,500 $0 $ 5,000 InnVision Shelter Network- Opportunity Services Center $ 50,000 $36,027 $ 35,162 YWCA/Support Network – Domestic Violence Services $ 10,000 $10,000 $ 7,500 Silicon Valley Independent Living Center – Housing and Emergency Services $ 5,770 $ 5,770 $ 5,000 Sub-total $115,436 $76,662 $ 76,662 Admin/Fair Housing Services Project Sentinel – Fair Housing Services $ 31,950 $ 26,342 $ 26,342 City of Palo Alto - $ 65,000 $ 65,000 $ 65,000 City of Palo Alto Page 8 Over the past three years, staff has actively taken measures to introduce efficiency in program administration that will result in a less staff intensive program. This includes streamlining the program to reduce staffing needs, operating under a two-year funding cycle, and revised monitoring guidelines to improve efficiency and only require on-site monitoring visits for at-risk grantees. Moreover, staff has identified ways to recover certain personnel costs associated with individual projects that require administration beyond the basic CDBG program administrative requirements. These are referred to as project delivery costs and are typically associated with capital outlay projects that require staff to assist with the development of bid documents and assistance with federal procurement guidelines. For Fiscal Year 2014 this includes reducing CDBG staffing level to a .50 full time equivalency position for basic CDBG administration-related activities. These savings materialize into an opportunity for the City to fund Project Sentinel under the Planning and Administration activity category thus reducing the overall impact on all public service activities and sustaining the amount of public services the City is currently receiving through the CDBG Program. Staff is also proposing to launch a Pilot Microenterprise Assistance Program that will provide access to new opportunities to improve the economic self-sufficiency of low-income families and individuals. A draft summary of the program is provided as Attachment C. The City will be able to recapture another .25 full time equivalency position to cover the cost of administering this program. This makes the total staff recovery from the CDBG entitlement grant equal to a .75 full time equivalency position, thereby not further impacting the general fund. The funding amounts recommended for Fiscal Year 2014 will be adjusted by Staff when the City’s final funding allocation is received from HUD. Specifically, the Public Service and Administration funding levels will be adjusted to the maximum available under the public CDBG Administration Sub-total $ 96,950 $ 91,342 $ 91,342 Economic Development City of Palo Alto – Microenterprise Assistance Program $150,000 $150,000 $150,000 Downtown Streets Inc. – Workforce Development Program $314,100 $248,753 $248,753 Sub-total $464,100 $398,753 $398,753 Grand Total $676,486 $566,757 $566,757 City of Palo Alto Page 9 service cap at the same percentage, up to the amount of the request. Decreases will be applied at the same percentages. Fiscal Year 2015 – Funding Requests and Recommendations Palo Alto’s CDBG program is operating under a two-year funding cycle. Funding for Fiscal Year 2015 will be contingent upon the CDBG allocation, program income, and any available funds for reallocation. Public Service and Administration Caps will be recalculated in accordance with available funds. If agencies remain eligible and meet program goals and objectives, the subrecipient agreements will be extended for another year based on the same percentage of the CDBG funds available for public services in Fiscal Year 2014. If the proposed Pilot Microenterprise Assistance Program is determined to be viable and the program goals and objectives are achieved, funding would be requested for a second year based on the CDBG funds available. In the event more money is available than projects, a new application process would be initiated for additional proposals in the Housing funding category. Timeline Funding recommendation made by the Finance Committee will be forwarded to the City Council for review and approval at a public hearing scheduled for May 6, 2013. Subsequently, the adopted Action Plan will be submitted to HUD by May 15, 2013. Resource Impact Several measures have been taken to ensure there is no General Fund subsidy for the administration of the CDBG Program. This includes streamlining the program to reduce staffing needs and revised monitoring guidelines to improve efficiency of the program. Currently, staff recovery from the CDBG entitlement grant is $97,861. The total staff recovery from the CDBG entitlement grant proposed for Fiscal Year 2014 is approximately 0.75 full time equivalency, or $101,000, thus not further impacting the general fund. While the amount is not sufficient to cover the full cost of 1 full time equivalency position, it does cover the full staffing needs of administering the CDBG program. The balance of staff time can go towards non-CDBG eligible activities. Policy Implications All of the applications recommended for funding in Fiscal Year 2014 are consistent with the priorities established in the City’s adopted 2010-2015 Consolidated Plan. Moreover, they are consistent with the housing programs and policies in the adopted Comprehensive Plan. City of Palo Alto Page 10 Environmental Review For purposes of the National Environmental Policy Act (NEPA) and the California Environmental Quality Act (CEQA), budgeting in itself is not a project. Prior to commitment or release of funds for each of the proposed projects, staff will carry out the required environmental reviews or assessments and certify that the review procedures under CEQA, HUD and NEPA regulations have been satisfied for each particular project. Attachments:  Attachment A - FY14 Applications & Recommendations (PDF)  Attachment B - Draft FY 2014 Action Plan (PDF)  Attachment C - Draft MAP Summary (PDF)  Attachment D - Public Comments (PDF) ATTACHMENT A – FY14 APPLICATIONS & RECOMMENDATIONS CITY OF PALO ALTO CDBG APPLICATIONS FISCAL YEAR 2014 1 Project Sentinel’s Application for funding is being considered under the Planning and Administration funding category AGENCY PROGRAM NAME FY 2014 REQUEST HRC RECOMMENDATIONS STAFF RECOMMENDATIONS Public Services (15% CAP = $76,662) Palo Alto Housing Corp. SRO Resident Support Program $ 43,166 $ 24,865 $ 24,000 Catholic Charities of Santa Clara County Long-Term Care Ombudsman Program $ 6,500 $ - $ 5,000 Inn Vision/Shelter Network Opportunity Services Center $ 50,000 $ 36,027 $ 35,162 YWCA/Support Network Domestic Violence Services $ 10,000 $ 10,000 $ 7,500 Silicon Valley Independent Living Center Housing and Emergency Services $ 5,770 $ 5,770 $ 5,000 Public Service Total $115,436 $ 76,662 $ 76,662 Planning & Administration (20% CAP = $91,342) Project Sentinel1 Fair Housing Services $ 31,950 $ 26,342 $ 26,342 City of Palo Alto CDBG Planning & Administration $ 65,000 $ 65,000 $ 65,000 Planning & Administration Total $ 96,950 $ 91,342 $ 91,342 Economic Development City of Palo Alto Microenterprise Assistance Program $150,000 $150,000 $150,000 Downtown Streets Inc. Workforce Development Program $314,100 $248,753 $248,753 Economic Development Total $464,100 $398,753 $398,753 GRAND TOTAL $676,486 $566,757 $566,757 Estimated Funds Available $ 566,757 Available for Public Service (15% Cap) $ 76,662 Available for Planning/Admin (20% Cap) $ 91,342 Available for Economic Development $ 398,753 DRAFT FISCAL YEAR 2014 ONE-YEAR ACTION PLAN Annual Update of the City’s Consolidated Plan for the Period  July 1, 2013 to June 30, 2014  Public Review and Comment Period:  March 7, 2013 – April 8, 2013  Prepared by the Department of Planning & Community Environment  250 Hamilton Avenue  Palo Alto, CA 94301  Director Curtis Williams  Consuelo Hernandez, Planner – CDBG (Ͳͱͬ) ͯͮ͵‐ͮͰͮʹ  T: Ͳͱͬ‐ͯͮ͵‐ͮͰͮʹ E: Consuelo.hernandez@cityofpaloalto.org         City of Palo Alto ‐ New Consolidated Plan Template    In May 2012, the Federal Department of Housing and Urban Development’s Office  of Community Planning and Development introduced the eCon Planning Suite, a  collection of new online tools to assist grantees in creating market‐driven,  leveraged housing and community development plans. One of these tools, the  Consolidated Plan Template, allows grantees to develop and submit their Five  Year Consolidated Plans and Annual Action Plans online. While Palo Alto is not  required to use the eCon Planning Suite until the next Consolidate Planning cycle,  staff has elected to use the online tool.  The following document is an exported  version of the Annual Action Plan entered in HUD’s Integrated Disbursement and  Information System (IDIS).   OMB Control No: 2506‐0117 (exp. 07/31/2015)  DRAFT FISCAL YEAR 2014 ACTION PLAN  TABLE OF CONTENTS  Executive Summary….……………………………..………………………………………………………………………......1    Objectives…….………..………………………………………………………………………………….………....................................2  Outcomes.…………………………………………………………………………………………………………………………………………….2    Public Participation.................................................................................................................5       Expected Resource..................................................................................................................6  Anticipated Resources………………………………………………………..…………………………………………...………………….6  Maximum Spending Caps………………………………………………..……………………………………………………….………….7    Annual Goals and Objectives……………………………………….………………………………………………………..8  Projects………………………………………………………………………………………………………………………………….9    Geographic Distributions…………………………………………….……………………………………………………….10    Affordable Housing……………………………………………………………………….…………………………………….11  Homeless and Special needs…..……….….……………………………………………………………………………………………..12  Barriers to Affordable Housing..……………….………………………………………………………………………………………..15    Other Actions........................................................................................................................17    Program Specific Requirements.............................................................................................18        APPENDICES     Appendix A:  Application for Federal Assistance Form SF‐424  Appendix B:  Certifications  Appendix C:  Public and Private Resources  Appendix D:  Proposed Projects  Appendix E:  Public Hearing Advertisement  Appendix F:  Map  Appendix G:  Public Comment PAGE INTENTIONALLY LEFT BLANK   EXECUTIVE SUMMARY ES‐05 Executive Summary  1. Introduction  The Draft Fiscal Year 2014 Action Plan is a one‐year plan describing the eligible activities the City of Palo  Alto intends to undertake to address the needs and implement the strategies identified in the adopted  2010‐2015 Consolidated Plan.  It is the fourth Action Plan in the implementation of the five‐year plan  covering the period from July 1, 2013 to June 30, 2014 and serves as the City’s application for federal  funds under the U.S. Department of Housing and Urban Development (HUD) formula grant  programs.  Both the Consolidated Plan and the Action Plan are implemented by the City’s Planning and  Community Environment Department.      A total of $566,757 is available for funding projects and programs during the 2013 Program Year.  The  City anticipates receiving $394,101 from the federal Community Development Block Grant (CDBG)  program.  In addition, the City will also reprogram $110,049 in previous year resources, and $62,607 in  anticipated program income.  Palo Alto has access to a variety of federal, state, and local resources to  achieve its housing and community development priorities.  Specific funding resources will be utilized  based on the opportunities and constraints of each particular project or program.  Table 1, Fiscal Year  2014 CDBG Budget, summarizes the uses of the funds proposed during Fiscal Year 2014.    TABLE 1:  FISCAL YEAR 2014 DRAFT BUDGET  Applicant Agency Budget Public Services  Palo Alto Housing Corporation ‐ SRO Hotels Supportive Services $24,865  InnVision Shelter Network ‐ Opportunity Center ‐ Drop‐In Center $36,027  YWCA/Support Network ‐ Domestic Violence Services $10,000  Silicon Valley Independent Living Center – Housing and Emergency Services $   5,770  Sub‐total $76,662  Planning and Administration  Project Sentinel – Fair Housing Services $26,342  City of Palo Alto Administration $ 65,000  Sub‐total $ 91,342  Economic Development  City of Palo Alto – Microenterprise Assistance Program $150,000  Downtown Streets – Workforce Development Program $248,753  Sub‐total $398,753  Grand Total $566,757       Fiscaly Year 2014 - Draft Action Plan DUNS No. 050520782 1 City of Palo Alto March 2013   OMB Control No: 2506‐0117 (exp. 07/31/2015)  2. Summary of the objectives and outcomes identified in the Plan Needs Assessment  Overview  OBJECTIVES The City intends to provide funding for various activities which are consistent with the adopted  Consolidated Plan.  Key objectives for Fiscal Year 2014 include the following:   Support efforts to help homeless or low‐income Palo Alto residents at risk of homelessness  receive necessary supportive services;   Affirmatively further Fair Housing; and   Improve employment opportunities for low‐income persons.  OUTCOMES The City’s outcomes for this planning period are directed at expanding public services and economic  opportunities for low‐income persons.  Specifically, the City anticipates the following outcomes from its  2014 activities:   131 persons will have improved accessibility to a suitable living environment.   600 homeless persons will be provided with supportive services and have improved accessibility  to a suitable living environment.   45 unduplicated adults and children will be provided emergency safety net supportive services  and emergency shelter as needed.   25 households will have improved accessibility to decent affordable housing.   25 individuals will be placed in jobs through job training/employment readiness classes   5 Microbusinesses will be provided with resources    3. Evaluation of past performance  The City has historically allocated CDBG funds to activities that benefit low and moderate income  persons, with a top priority to increase affordable housing opportunities within the City.  Palo Alto has  one of the most expensive housing markets in the country due in part to the lack of available  land.  Notwithstanding, 91 new affordable rental housing units have been created during the 2010‐2015  Consolidated Planning Period.  In addition, Eden Housing’s proposed project at 801‐841 Alma Street is  expected to create 50 additional new rental units within the next few years.      4. Summary of citizen participation process and consultation process  Palo Alto encourages citizen participation through the Action Plan process.  This includes consulting local  organizations, holding public meetings, and encouraging public comment during the public review  period.  A total of three public hearings have been planned in order to allow for public input.  The City  actively reached out to all applicants and posted updates on the CDBG website.  A 30‐day comment  period from March 7, 2013 through April 8, 2013 will give citizens an opportunity to offer comments on  Fiscaly Year 2014 - Draft Action Plan DUNS No. 050520782 2 City of Palo Alto March 2013   OMB Control No: 2506‐0117 (exp. 07/31/2015)  the draft Action Plan.  This draft will be posted on the City’s CDBG website and presented at a public  hearing to the Finance Committee on April 16, 2013.      5. Summary of public comments    A summary of all written comments received during the public comment period will be inserted before  the Action Plan is submitted to HUD.    6. Summary of comments or views not accepted and the reasons for not accepting them  The City accepts and responds to all comments that are submitted.        Fiscaly Year 2014 - Draft Action Plan DUNS No. 050520782 3 City of Palo Alto March 2013   OMB Control No: 2506‐0117 (exp. 07/31/2015)  PR‐05 Lead & Responsible Agencies  1. Agency/entity responsible for preparing/administering the Consolidated Plan  The following are the agencies/entities responsible for preparing the Consolidated Plan and those  responsible for administration of each grant program and funding source.    TABLE 2:  RESPONSIBLE AGENCY  Agency Role Name Department/Agency  Lead Agency PALO ALTO    Planning and Community Environment    Consolidated Plan Public Contact Information    Consuelo Hernandez, Planner ‐ CDBG  City of Palo Alto Department of Planning and Community Environment  250 Hamilton Avenue, 5th Floor  Palo Alto, CA 94301  Consuelo.hernandez@cityofpaloalto.org   (650) 329‐2428 Fiscaly Year 2014 - Draft Action Plan DUNS No. 050520782 4 City of Palo Alto March 2013   OMB Control No: 2506‐0117 (exp. 07/31/2015)  PUBLIC PARTICIPATION AP‐12 Participation    1. Summary of citizen participation process/Efforts made to broaden citizen participation    Summarize citizen participation process and how it impacted goal‐setting Citizen Participation  Outreach:    On October 18, 2010, the Palo Alto City Council adopted an amended Citizen Participation Plan that  utilizes the Human Relations Commission (HRC), rather than a separate Citizen Advisory Committee, to  promote and encourage citizen participation in the planning, implementation and assessment of the  CDBG Program.  The HRC is uniquely positioned to understand and consider the needs of low and very  low income persons, members of minority groups, the elderly, persons with disabilities, and residents of  neighborhoods where CDBG activities may be undertaken.  Thus far the revisions to the Citizen  Participation Plan have promoted a more coordinate and effective response by the City to the human  service needs in the community.  A summary of public participation is outlined in Table 3, Citizen  Participation Outreach. This Draft Action Plan is being made available for a 30‐day comment period to  give citizens an opportunity to offer comments.  A summary of comments received will be added to  Appendix G.    TABLE 3:  CITIZEN PARTICIPATION OUTREACH  Mode of  Outreach  Target of  Outreach  Summary of response/attendance Summary of  comments received  Public  Meeting  Non‐ targeted/broad  community  The Finance Committee is scheduled to hold a public  hearing on April 16, 2013.  A summary will be added  after the meeting.    Public  Meeting  Non‐ targeted/broad  community  The City Council is scheduled to hold a public hearing  on May 6, 2013.  A summary will be added after the  meeting.    Public  Meeting  Non‐ targeted/broad  community     CDBG Applicants  HRC Selection Committee met on February 6, 2013 to  discuss the applications for funding.  Representatives  from agencies requesting CDBG funds for Fiscal Year  2014 were present and answered questions pertaining  to their respective programs.    Newspaper Ad Non‐ targeted/broad  community      Fiscaly Year 2014 - Draft Action Plan DUNS No. 050520782 5 City of Palo Alto March 2013   OMB Control No: 2506‐0117 (exp. 07/31/2015)  EXPECTED RESOURCES AP‐15 Expected Resources     Introduction  In Fiscal Year 2014, Palo Alto will allocate approximately $566,757 to eligible activities that address the  needs identified in the Consolidated Plan.  As of March 7, 2013 the City has not received its final funding  allocation from HUD.  The estimated allocation amount is based on several assumptions; the Continuing  Resolution and "sequestration" ‐ an across‐the‐board set of federal budget cuts totaling $1.2 trillion  from defense and non‐defense spending over the course of the next ten years.  The Continuing  Resolution for Federal Fiscal Year 2013 budget includes funding the CDBG program at FY2012 funding  levels.  Assuming Palo Alto’s share of funding in 2013 will equal its share of funding in 2012 this  translates to an allocation of $429,304 prior to the impact of sequestration.      Sequestration impacts for non‐exempt nondefense discretionary funds were estimated to face an  automatic 8.2% reduction for Federal Fiscal Year 2013 resulting in a Fiscal Year 2014 allocation of  $394,101 for Palo Alto.  Congress’ failure to evade the mandatory across‐the‐board cuts makes  sequestration an official federal mandate.  While there is no official notice to the City from HUD, a  Federal Office of Management and Budget report to Congress dated March 1, 2013 revealed a 5%  reduction in non‐exempt nondefense discretionary funds.  Given these cuts must be achieved over  seven months instead of twelve the effective reduction will be closer to 9%.            Anticipated Resources  Planning Staff has used the estimated 8.2% reduction over FY 2012 funding levels for planning purposes  with final adjustments pending the City’s official allocation from HUD.  Based on the foregoing, the total  amount available for allocation in Fiscal Year 2014 is estimated to be $566,757.  The funding available  for allocation includes $394,101 in CDBG entitlement funds, $110,049 of prior year CDBG resources, and  $62,607 in estimated program income as summarized in Table 4, Funding Available for  Allocation.  Program income is income directly generated from the use of CDBG funds that is returned to  the CDBG program for allocation to new activities.  The program income anticipated below is from  various loan repayments from Palo Alto Housing Corporation.      TABLE 4:  FUNDING AVAILABLE FOR ALLOCATION  $394,101 Fiscal Year 2013 Entitlement Grant $110,019  Prior Year Resources – Excess Program Income:     $ 49,000 ‐ rental income in excess of expenses on specific properties      acquired or  rehabilitated with CDBG funds.  Reallocated funds:      $ 44,608.75 – Palo Alto Housing Corp. Ventura Rehab  (FY 2012)        $  16,440.64 – Palo Alto Housing Corp. Sheridan Rehab  (FY 2012)  $ 62,607 Estimated Program Income from Palo Alto Housing Corporation (PAHC) that is generated  from loan repayments.  $566,757 ESTIMATED TOTAL AVAILABLE FOR ALLOCATION   Fiscaly Year 2014 - Draft Action Plan DUNS No. 050520782 6 City of Palo Alto March 2013   OMB Control No: 2506‐0117 (exp. 07/31/2015)  The following summarizes calculations for funding limitations that are placed on two funding categories:     Maximum Available for Public Services  Estimated 2014 CDBG Entitlement Grant   $394,101  2013 Actual Program Income Received1    $116,982   Public Service Cap (15% of $511,083)    $  76,662    Maximum Available for Planning/Administration  Estimated 2014 CDBG Entitlement Grant   $394,101  Estimated 2014 Program Income    $   62,607  Planning/Admin Cap (20% of $456,708)    $   91,342    The difference between the funding caps and the estimated total available, or $398,753, yields the  amount that can used to fund projects within the other three funding categories; Economic  Development, Housing, and Public Facilities.  Additional funding can be made available for these  activities if less is provided for administration or public services.      Explain how federal funds will leverage those additional resources (private, state and local  funds), including a description of how matching requirements will be satisfied    In order to comprehensively address community needs and the goals identified in the Consolidated Plan,  the City will augment CDBG funds utilizing a variety of additional funding sources.  These funding  sources include other federal funds, state, and local funds.  A full listing of potential funding sources is  appended to this Action Plan as Appendix C – Public and Private Resources.    If appropriate, describe publically owned land or property located within the jurisdiction that  may be used to address the needs identified in the plan    Not applicable                                                               1 Actual Program Income received in Fiscal Year 2013 includes $62,607 from Palo Alto Housing Corporation and  $54,374 in Fiscal Year 2012 excess program income from Palo Alto Housing Corporation.   Fiscaly Year 2014 - Draft Action Plan DUNS No. 050520782 7 City of Palo Alto March 2013   OMB Control No: 2506‐0117 (exp. 07/31/2015)  ANNUAL GOALS AND OBJECTIVES AP‐20 Annual Goals and Objectives     Goals Summary Information  TABLE 5: GOALS SUMMARY  Goal Name Category Needs  Addressed  Funding Goal Outcome Indicator Support Activities to  end homelessness  Affordable Housing  Homeless  Supportive  services  CDBG:  $60,892  Public service activities  other  than Low/Moderate  Income  Housing Benefit:    731 Persons  Public Service Activities  Homeless  Non‐Homeless Special  Needs  Community  services  CDBG:  $15,770  Public service activities  other  than Low/Moderate  Income  Housing Benefit:    69 persons  Promote Fair Housing  Choice Fair Housing Fair Housing CDBG:  $26,342     Other: 27  Economic  Opportunities  Homeless  Non‐Homeless Special  Needs  Non‐Housing  Community  Development  Economic  Development   CDBG:  $398,753  Jobs created/retained:  25 Jobs  Businesses assisted: 5     Estimate the number of extremely low‐income, low‐income, and moderate‐income families  to whom the jurisdiction will provide affordable housing as defined by HOME 91.215(b)    Fiscaly Year 2014 - Draft Action Plan DUNS No. 050520782 8 City of Palo Alto March 2013   OMB Control No: 2506‐0117 (exp. 07/31/2015)  PROJECTS AP‐38 Project Summary  Project Summary Information    Introduction     Table 6, Project Summary, provides a list of the activities with the specific priority need identified in the  Consolidated Plan the City will fund with CDBG funds during Fiscal Year 2014.  Complete project  descriptions are located in Appendix D – Proposed Projects (HUD Table 3Cs).     TABLE 6: PROJECT SUMMARY  No.   Project Goals Supported Needs Addressed Funding  1  SRO Resident Support Program Activities to end homelessness supportive services CDBG: $24,865  Description Resident support services program at two SRO properties in Palo Alto  Planned Activities One‐on‐one consultations for information and referral, support counseling         2  Opportunity Services Center (OSC) Activities to end homelessness supportive services CDBG: $36,027  Description The OSC is a comprehensive one‐stop multiservice drop‐in day center  Planned Activities Access to nutritious food, receive mail, and case management         3  Domestic Violence Services Public Service Activities community services CDBG: $10,000  Description Addresses issues of domestic violence for Palo Alto residents  Planned Activities Emergency shelter and essential services to victims of domestic violence         4  Housing and Emergency Services Public Service Activities supportive services CDBG: $5,770  Description Assistance for individuals with disabilities and their families  Planned Activities Administrative support of the housing program and emergency info & referral         5  Project Sentinel Promote Fair Housing Choice fair housing education CDBG: $26,342  Description Fair Housing services aim to protect the fundamental rights of housing  Planned Activities Community outreach, education, and investigations of complaints         6  Microenterprise Assistance Program Economic Opportunities employment growth CDBG: $150,000  Description Access to new opportunities and builds foundations of entrepreneurship  Planned Activities Grants to support microenterprise businesses         7  Workforce Development Program Economic Opportunities workforce training CDBG: $248,753  Description Provides homeless and/or extremely low‐income individuals workforce dev.  Planned Activities    Employment development outreach to local businesses and job search skills   Describe the reasons for allocation priorities and any obstacles to addressing underserved  needs  Fiscaly Year 2014 - Draft Action Plan DUNS No. 050520782 9 City of Palo Alto March 2013   OMB Control No: 2506‐0117 (exp. 07/31/2015)  GEOGRAPHIC DISTRIBUTION AP‐50 Geographic Distribution     Description of the geographic areas of the entitlement (including areas of low‐income and  minority concentration) where assistance will be directed     The City considers the provisions of all types of housing assistance on a citywide basis consistent with  the policies of the Comprehensive Plan.  Palo Alto does not have specific target areas for housing  activities, instead the City attempts to provide housing affordable to lower‐income persons throughout  the City.     Minority concentration includes areas in the City where the concentration of racial and ethnic minority  population is 10% or higher than their total citywide representation.  There are only a few areas that are  considered to have a concentration of minority populations or low‐income residents in Palo Alto.  The  CDBG Program defines low‐income concentration as any census block group where 51% or more  residents earn 80% of MFI or less.  An exception exists for a jurisdiction that does not have any areas  meeting this definition, such as Palo Alto, which includes the highest quartile of all areas in the City in  terms of degree of concentration is used.  However, Palo Alto does not qualify activities under the LMI  area benefit category.               Fiscaly Year 2014 - Draft Action Plan DUNS No. 050520782 10 City of Palo Alto March 2013   OMB Control No: 2506‐0117 (exp. 07/31/2015)  AFFORDABLE HOUSING AP‐55 Affordable Housing     Introduction  Palo Alto has identified affordable housing as the primary objective for the expenditure of CDBG funds  in the Consolidated Plan.  It will continue to allocate the maximum funding available to activities and  projects that meet this objective.  Several of the projects being proposed for Fiscal Year 2014 provide  essential affordable housing services to homeless, non‐homeless, and special needs populations.  Table  7, One‐Year Goals for the Number of Households to be supported, summarizes the number of  households to be served through the SRO Resident Support Program, services received at the  Opportunity Services Center, emergency shelter to victims of domestic violence, and new proposed  services provided through the Housing and Emergency Services Program.      TABLE 7:  ONE‐YEAR GOALS FOR AFFORDABLE HOUSING BY SUPPORT REQUIREMENT  One Year Goals for the Number of Households to be Supported  Homeless 950  Non‐Homeless 5  Special‐Needs 24  Total 979      Over the past three Fiscal Years Palo Alto has funded a number of projects that have resulted in the  production of new affordable housing units, rehabilitation of existing multi‐family rental units, and  acquisition of existing units.  During the current funding cycle the City did not receive any applications  for affordable housing supported through the production of new units or rehabilitation of existing units  as summarized in Table 8, One‐Year goals for Affordable Housing by Support Type.        TABLE 8:  ONE‐YEAR GOALS FOR AFFORDABLE HOUSING BY SUPPORT TYPE   One Year Goals for the Number of Households Supported Through  Rental Assistance 0  The Production of New Units 0  Rehab of Existing Units 0  Acquisition of Existing Units 0  Total 0             Fiscaly Year 2014 - Draft Action Plan DUNS No. 050520782 11 City of Palo Alto March 2013   OMB Control No: 2506‐0117 (exp. 07/31/2015)  AP‐65 Homeless and Other Special Needs Activities   Introduction    The City of Palo Alto plans to use its CDBG funds to promote the local provision of services for low‐ income Palo Alto residents.  A number of the City’s proposed Fiscal Year 2014 programs will directly  benefit special needs groups.   Moreover, through the City’s Human Services Resource Allocation  Process (HSRAP), funding is provided to support services and resources targeted to Homeless and  Special Needs populations.       Describe the jurisdictions one‐year goals and actions for reducing and ending homelessness including:  Reaching out to homeless persons (especially unsheltered persons) and assessing their individual  needs:  In January 2013, a Point‐In‐Time (PIT) count was conducted for Santa Clara County by the City of San  Jose in conjunction with the County of Santa Clara. The PIT is an intense survey used to count the  number of homeless living throughout Santa Clara County on the streets, in shelters, safe havens or in  transitional housing, or in areas not meant for human habitation. The survey was conducted by  hundreds of volunteers who asked those living on the streets, as well as the residents of shelters, safe  havens and transitional housing, to respond to questions related to their needs. A portion of the survey  addresses the needs of those surveyed.     Addressing the emergency shelter and transitional housing needs of homeless persons:  In addressing the Consolidated Plan and the Continuum of Care strategic plans, Palo Alto will provide  funding for essential services and operations to local emergency shelters and transitional housing  facilities. The facilities provide shelter and services to homeless families with children, single parents  with children, single men and women, victims of domestic violence and sexual abuse, homeless  veterans, and the population living on the street.     Helping homeless persons (especially chronically homeless individuals and families, families with  children, veterans and their families, and unaccompanied youth) make the transition to permanent  housing and independent living, including shortening the period of time that individuals and families  experience homelessness, facilitating access for homeless individuals and families to affordable  housing units, and preventing individuals and families who were recently homeless from becoming  homeless again:    The City of Palo Alto plans to use its CDBG funds to promote the local provision of services for low‐ income Palo Alto residents.  A number of the City’s proposed Fiscal Year 2013 programs will directly  benefit special needs groups.   Moreover, through the City’s Human Services Resource Allocation  Process (HSRAP), funding is provided to support services and resources targeted to Homeless and  Special Needs populations.      CDBG Funded  InnVision Shelter Network ‐ Opportunity Center:  The Opportunity Center facility in Palo Alto provides a clean, safe environment and resources for very‐ low income or homeless persons including bagged groceries, hot meals, a rotating church shelter  program, information and referral, shower and laundry facilities, case‐management, and money  management (payee) programs, clothing and health services.  A daily hot meal is provided at a different  location each day and bagged groceries are distributed daily at the Downtown Food Closet.  The Hotel  Fiscaly Year 2014 - Draft Action Plan DUNS No. 050520782 12 City of Palo Alto March 2013   OMB Control No: 2506‐0117 (exp. 07/31/2015)  de Zink rotating church shelter program is housed at a different location each month.      Downtown Streets Team – Workforce Development Program:   This economic development program will help motivated graduates of the Downtown Streets Team  programs move on to stable employment.  The program will include mentoring, counseling, job  readiness, job training, and assistance.  HSRAP Funded    Abilities United – Disability Services:  This organization provides services and activities for adults and children with mental and physical  disabilities.    Community Technology Alliance – Shared Technical Infrastracture:  Provides shelter hotline and voicemail services for homeless individuals and families.  The voicemail  service helps case‐managed clients attain individual goals such as securing health care, housing or  employment.  A countywide housing information and referral website and tracking system is maintained  to assist service providers and those seeking shelter.    Downtown Streets Team – Downtown Streets:    Identifies motivated homeless individuals and provides them with jobs cleaning and beautifying the  downtown area in exchange for housing and food vouchers. The program includes counseling, coaching  and training to help program participants build self‐esteem, confidence and connections in the  community.    Momentum for Mental Health – Homeless Outreach Program:  Mental health outreach program that provides emergency on‐call services to assist local mentally ill  homeless persons.  The agency provides services to City departments, libraries, community centers and  local homeless service providers.    Helping low‐income individuals and families avoid becoming homeless, especially extremely low‐ income individuals and families and those who are: being discharged from publicly funded institutions  and systems of care (such as health care facilities, mental health facilities, foster care and other youth  facilities, and corrections programs and institutions); or, receiving assistance from public or private  agencies that address housing, health, social services, employment, education, or youth needs.    Palo Alto Housing Corporation – SRO Tenant Counseling:  Provides counseling and case‐management services for the low‐income residents and prospective  residents of single room occupancy hotels in Palo Alto.  Many SRO residents have a history of  homelessness and special needs.  The program plays a vital role in helping residents maintain their  stability and housing.    Avenidas – Senior Services:  Agency is the main provider of senior services in the Mid‐Peninsula area.    La Comida de California – Hot Meals for The Elderly:  Daily meal program for the elderly.       Fiscaly Year 2014 - Draft Action Plan DUNS No. 050520782 13 City of Palo Alto March 2013   OMB Control No: 2506‐0117 (exp. 07/31/2015)  May View Health Center – Health Care for Low Income & Homeless Palo Alto residents:  Basic primary health care services and health education and referral services for uninsured low‐income  and homeless individuals from the Palo Alto area.    Peninsula HealthCare Connection – Project Downtown Connect:  Provider of health care services at the Opportunity Center of Palo Alto.  Project Downtown Connect  provides Section 8 vouchers to eligible homeless individuals and families.    SALA – Legal Assistance to Elders:  Senior Adults Legal Assistance (SALA) provides affordable legal assistance to elders.    Fiscaly Year 2014 - Draft Action Plan DUNS No. 050520782 14 City of Palo Alto March 2013   OMB Control No: 2506‐0117 (exp. 07/31/2015)  AP‐75 Barriers to affordable housing  Introduction  A barrier of affordable housing is defined in the Consolidated Plan as a public policy such as land use  controls, property taxes, zoning ordinances, building codes, fees, growth limits, and other similar  policies.  Palo Alto faces a number of obstacles in meeting its affordable housing strategies including  governmental and non‐governmental constraints that may act as barriers.  Governmental constraints  can include land use policies governed by local general plans and zoning ordinances.  The largest non‐ governmental constraints are market‐related factors, such as land, construction costs, and the  availability of financing.  For instance, during the economic downturn and slumped housing market  almost all of the for‐sale and most rental properties in Palo Alto remained out of reach for all but  households with above moderate income.  Moreover, there continues to be a low vacancy rate for  rental housing.  According to the 2010 U.S. Census the rental vacancy rate in the City was 5.6%.  Some of  the barriers to building more housing are the result of decisions and priorities set by the State or the  Federal Government that must decide how to best allocate limited funding.  Policies and priorities set by  these agencies often do not favor high cost areas, and most federal housing resources are not readily  available to the City of Palo Alto.      Actions it planned to remove or ameliorate the negative effects of public policies that serve as  barriers to affordable housing such as land use controls, tax policies affecting land, zoning ordinances,  building codes, fees and charges, growth limitations, and policies affecting the return on residential  investment:    The City of Palo Alto takes a number of actions to eliminate barriers to the development of affordable  housing including participation in a county‐wide effort to provide additional affordable housing units,  programs in the 2007‐2014 Housing Element Update to increase the supply of affordable housing, and  Development Impact fees for Housing.     Housing Trust Fund of Santa Clara County (HTSCC)  The HTSCC was created to provide additional financial resources to address the County’s affordable  housing deficit.  HTSCC’s mission is to make Silicon Valley a more affordable place to live.  Loans and  grants are issued to increase the supply of affordable housing, assist first‐time home buyers, prevent  homelessness and stabilize neighborhoods.  Palo Alto was among the contributors during its founding  and has continued to allocate funding.  A provision was added to ensure the City’s funds be used  exclusively for qualifying affordable housing projects within the City of Palo Alto.  The most recent  included $200,000 from the City’s Residential Housing Fund for Fiscal Year 2012.   Participation in the HTSCC has increased the available housing funding for a number of Palo Alto Projects  as summarized in table 2.4.  In addition, HTSCC has invested over $100,000 assisting 16 households to  purchase homes in Palo Alto through its first‐time homebuyer program.    Adjustments or Improvements to Affordable Housing Strategies    2007‐2014 Housing Element Update  Palo Alto’s Housing Element of the City’s Comprehensive Plan is the chief policy document describing  the City’s housing needs and the policies and programs the City will use to meet those needs.  The 2007‐ 2014 Housing Element Update is currently being reviewed by the State Department of Housing and  Community Development and it is anticipated to be adopted by the end of the next program year.      Fiscaly Year 2014 - Draft Action Plan DUNS No. 050520782 15 City of Palo Alto March 2013   OMB Control No: 2506‐0117 (exp. 07/31/2015)  Development Impact Fees for Housing  Palo Alto’s impact fees are comprised of four categories: Housing, traffic, community facilities, and  Parkland dedication.  The housing fee to non‐residential development increased from $17.97 to $18.44  per square foot, effective August 28, 2012.  The fee rate applies to all net new commercial square  footage on a site.  Full payment is required at building permit issuance with some exemptions including  hospitals and convalescent facilities, private education facilities, public facilities and private clubs, lodges  and fraternal organizations.     AFFIRMATIVELY FURTHERING FAIR HOUSING  Fair Housing is crucial to ensuring persons of like income levels have equal access to housing.  HUD  requires that jurisdictions receiving federal funds commit to affirmatively further fair housing.  A fair  housing impediment, according to HUD, is considered to be “any actions, omissions, or decisions which  have the effect of restricting housing choices or the availability of housing choices because of race,  color, religion, sex, disability, familial status, or national origin.”  A key part of affirmatively furthering fair housing includes the preparation of an Analysis of  Impediments to Fair Housing Choice (AI).  The City of Palo Alto is currently reviewing and updating its AI.    ACTIVITIES TO AFFIRMATIVELY FURTHER FAIR HOUSING  Palo Alto is committed to fair housing practices and places a priority on promoting and ensuring an  atmosphere of non‐discrimination in housing choice.  In Fiscal Year 2014 the City of Palo Alto will  provide $26,342 in CDBG funds to Project Sentinel for the provision of fair housing complaint  investigations, public education and information, and referral services.  The following actions to foster  and maintain affordable housing to address housing:     Provide tenant/landlord counseling and mediation services for Palo Alto residents through the  Palo Alto Mediation Program (Project Sentinel).   Support the Human Relations Commission in their documentation and investigation of hate  crimes, and in their support of diversity, disability and affordable housing issues.   Continue to monitor the provision of fair housing services to ensure that adequate services are  being provided and are cost effective.   Continue to participate in the Santa Clara County Fair Housing Task Force.   Provide funding to Project sentinel to reduce discrimination in housing by:    1. Investigating cased of housing discrimination in Palo Alto  2. Conducting consultation with persons who believe they have been discriminated against  3. Maintaining a pool of trained testers for investigations and conducting trainings  4. Maintaining a panel of participating attorneys for referral  5. Running fair housing ads in the Palo Alto Weekly, San Jose Mercury News and other  media outlets  6. Distributing fair housing brochures   7. Running public service announcements for local radio/TV broadcasters  8. Making educational presentations to the community  9. Monitoring and testing rental housing sites for fair housing compliance  10. Organizing an event for National Fair Housing Month    Fiscaly Year 2014 - Draft Action Plan DUNS No. 050520782 16 City of Palo Alto March 2013   OMB Control No: 2506‐0117 (exp. 07/31/2015)  OTHER ACTIONS AP‐85 Other Actions     Actions planned to reduce lead‐based paint hazards   Lead poising can cause permanent damage to the brain and many other organs, and can result in  reduced intelligence and behavioral problems in young children.  More than 80,000 children younger  than 6 years old living in the United States have lead in their blood that is above the level of concern set  by the Centers for Disease Control and Prevention (CDC).  A significant number of these children are in  families of low income and are living in old homes with heavy concentration of lead‐based paint and  lead‐contaminated dust and soil in the environment.     The City’s housing and CDBG staff provide information and referral to property owners, developers, and  non‐profit organizations rehabilitating older housing about lead‐based paint hazards.  There is no  information that indicates lower income households are more likely to be exposed to lead paint hazards  in Palo Alto than are families in the general population.  The City’s 2010‐15 Consolidated Plan has a  more detailed discussion of lead based paint in the City.  Any house to be rehabilitated with City  financial assistance is required to be inspected for the existence of lead paint and lead paint  hazards.  The City will provide financial assistance for the abatement of such hazards in units  rehabilitated with City funding.    Actions planned to reduce the number of poverty‐level families   The City of Palo Alto provided either CDBG or HSRAP funding to several services for persons within the  community who are very low‐income, homeless, or at‐risk of becoming homeless.  In summary, the goal  of all of the services listed in the section above is to prevent homelessness, help people move out of  homelessness and to reduce the number of persons below the poverty line.     Actions planned to develop institutional structure    Implementation of CDBG funds is overseen by the Department of Planning and Community  Environment.  Human Services and social service delivery in Palo Alto by non‐profit agencies is  coordinated through the Human Services Resource Allocation Program (HSRAP).  The City Council  approves projects and programs that meet the City’s goals.  Collectively, the programs funded under  CDBG and HSRAP provide essential services to the community.  Applications are received and reviewed  congruently which allows for internal administrative efficiencies, creates a visible public forum for the  CDBG program, and provides a more coordinated and effective approach at addressing the City’s human  service needs.      CDBG entitlement cities, including Palo Alto, Sunnyvale, Mountain View, Santa Clara, Cupertino, Gilroy,  Milpitas, and San Jose, along with the Urban County of Santa Clara continue to meet on a regular  schedule to discuss issues of mutual concern and to share information and strategies for addressing a  variety of issues of common concern.  These meetings have helped participants better understand the  County and nonprofit social service structure within the County, and provide input to the Santa Clara  County Office of Affordable Housing.  Finally, the meeting serves as a forum for HUD representatives to  share information and answer questions from entitlement jurisdictions regarding issues of mutual  importance.           Fiscaly Year 2014 - Draft Action Plan DUNS No. 050520782 17 City of Palo Alto March 2013   OMB Control No: 2506‐0117 (exp. 07/31/2015)  PROGRAM SPECIFIC REQUIREMENTS AP‐90 Program Specific Requirements     Introduction    Community Development Block Grant Program (CDBG)   Reference 24 CFR 91.220.(I)(1)   Projects planned with all CDBG funds expected to be available during the year are identified in the  Projects Table. The following identifies program income that is available for use that is included in  projects to be carried out.   TABLE 9:  PROGRAM INCOME SUMMARY  1. The total amount of program income that will have been received before the start of the  next program year and that has not yet been reprogrammed  $49,000 2. The amount of proceeds from section 108 loan guarantees that will be used during the year  to address the priority needs and specific objectives identified in the grantee's strategic plan.  0 3. The amount of surplus funds from urban renewal settlements 0 4. The amount of any grant funds returned to the line of credit for which the planned use has  not been included in a prior statement or plan  0 5. The amount of income from float‐funded activities 0 Total Program Income: $49,000   TABLE 10: OTHER CDBG REQUIREMENTS  1. The amount of urgent need activities 0 2. The estimated percentage of CDBG funds that will be used for activities that benefit  persons of low and moderate income.  Overall Benefit ‐ A consecutive period of one,  two or three years may be used to determine that a minimum overall benefit of 70%  of CDBG funds is used to benefit persons of low and moderate income. Specify the  years covered that include this Annual Action Plan. 100%                       Fiscaly Year 2014 - Draft Action Plan DUNS No. 050520782 18 City of Palo Alto March 2013 Appendix A: Application for Federal Assistance Form SF-424 Fiscaly Year 2014 - Draft Action Plan DUNS No. 050520782 19 City of Palo Alto March 2013 APPLICATION FOR Version 7/03 FEDERAL ASSISTANCE 2. DATE SUBMITTED Applicant Identifier 1. TYPE OF SUBMISSION: Application Pre-application 3. DATE RECEIVED BY STATE State Application Identifier Construction Construction Non-Construction Non-Construction 4. DATE RECEIVED BY FEDERAL AGENCY Federal Identifier 5. APPLICANT INFORMATION Organizational Unit: Legal Name: Department: Organizational DUNS: Division: Address: Street: Name and telephone number of person to be contacted on matters involving this application (give area code) Prefix:First Name: City: Middle Name County: Last Name State:Zip Code Suffix: Country: Email: 6. EMPLOYER IDENTIFICATION NUMBER (EIN): - Phone Number (give area code) Fax Number (give area code) 8. TYPE OF APPLICATION: New Continuation Revision 7. TYPE OF APPLICANT: (See back of form for Application Types) If Revision, enter appropriate letter(s) in box(es) (See back of form for description of letters.) Other (specify) Other (specify)9. NAME OF FEDERAL AGENCY: 10. CATALOG OF FEDERAL DOMESTIC ASSISTANCE NUMBER: - TITLE (Name of Program): 12. AREAS AFFECTED BY PROJECT (Cities, Counties, States, etc.): 11. DESCRIPTIVE TITLE OF APPLICANT’S PROJECT: 13. PROPOSED PROJECT 14. CONGRESSIONAL DISTRICTS OF: Start Date:Ending Date:a. Applicant b. Project 15. ESTIMATED FUNDING:16. IS APPLICATION SUBJECT TO REVIEW BY STATE EXECUTIVE ORDER 12372 PROCESS? a. Federal $.00 b. Applicant $.00 a. Yes. THIS PREAPPLICATION/APPLICATION WAS MADE AVAILABLE TO THE STATE EXECUTIVE ORDER 12372 PROCESS FOR REVIEW ON c. State $.00 DATE: d. Local $.00 b. No. PROGRAM IS NOT COVERED BY E. O. 12372 e. Other $.00 OR PROGRAM HAS NOT BEEN SELECTED BY STATE FOR REVIEW f. Program Income $.00 17. IS THE APPLICANT DELINQUENT ON ANY FEDERAL DEBT? g. TOTAL $.00 Yes If “Yes” attach an explanation. No 18. TO THE BEST OF MY KNOWLEDGE AND BELIEF, ALL DATA IN THIS APPLICATION/PREAPPLICATION ARE TRUE AND CORRECT. THE DOCUMENT HAS BEEN DULY AUTHORIZED BY THE GOVERNING BODY OF THE APPLICANT AND THE APPLICANT WILL COMPLY WITH THE ATTACHED ASSURANCES IF THE ASSISTANCE IS AWARDED. a. Authorized Representative Prefix First Name Middle Name Last Name Suffix b. Title c. Telephone Number (give area code) d. Signature of Authorized Representative e. Date Signed Previous Edition Usable Authorized for Local Reproduction Standard Form 424 (Rev.9-2003) Prescribed by OMB Circular A-102 B-13-MC-06-0020 B-13-MC-06-0020 City of Palo Alto Planning and Community Environment 050520782 Planning P.O. BOX 10250 Miss Consuelo Palo Alto Santa Clara Hernandez CA 94303 9 (650) 329-2428 consuelo.hernandez@cityofpaloalto.org (650) 329-2154 D. Township Government U.S. Department of Housing and Urban Development The City of Palo Alto's Community Development Block Grant (CDBG) Program for Fiscal Year 2014. Community Development Block Grant (CDBG) City of Palo Alto, County of Santa Clara, State of California 07/01/2013 06/30/2014 14th Congressional District 14th Congressional District 394,101 110,049 62,607 566,757 Mr.James Keene City Manager (650) 329-2563 ✔ ✔ 4 6 983000 1 8124 OMB Approved No. 3076-0006 Fiscaly Year 2014 - Draft Action Plan DUNS No. 050520782 20 City of Palo Alto March 2013 Appendix B: Certifications Fiscaly Year 2014 - Draft Action Plan DUNS No. 050520782 21 City of Palo Alto March 2013 CPMP Non-State Grantee Certifications 1 Version 2.0 CPMP Non-State Grantee Certifications Many elements of this document may be completed electronically, however a signature must be manually applied and the document must be submitted in paper form to the Field Office. This certification does not apply. This certification is applicable. NON-STATE GOVERNMENT CERTIFICATIONS In accordance with the applicable statutes and the regulations governing the consolidated plan regulations, the jurisdiction certifies that: Affirmatively Further Fair Housing -- The jurisdiction will affirmatively further fair housing, which means it will conduct an analysis of impediments to fair housing choice within the jurisdiction, take appropriate actions to overcome the effects of any impediments identified through that analysis, and maintain records reflecting that analysis and actions in this regard. Anti-displacement and Relocation Plan -- It will comply with the acquisition and relocation requirements of the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970, as amended, and implementing regulations at 49 CFR 24; and it has in effect and is following a residential antidisplacement and relocation assistance plan required under section 104(d) of the Housing and Community Development Act of 1974, as amended, in connection with any activity assisted with funding under the CDBG or HOME programs. Drug Free Workplace -- It will or will continue to provide a drug-free workplace by: 1. Publishing a statement notifying employees that the unlawful manufacture, distribution, dispensing, possession, or use of a controlled substance is prohibited in the grantee's workplace and specifying the actions that will be taken against employees for violation of such prohibition; 2. Establishing an ongoing drug-free awareness program to inform employees about – a. The dangers of drug abuse in the workplace; b. The grantee's policy of maintaining a drug-free workplace; c. Any available drug counseling, rehabilitation, and employee assistance programs; and d. The penalties that may be imposed upon employees for drug abuse violations occurring in the workplace; 3. Making it a requirement that each employee to be engaged in the performance of the grant be given a copy of the statement required by paragraph 1; 4. Notifying the employee in the statement required by paragraph 1 that, as a condition of employment under the grant, the employee will – a. Abide by the terms of the statement; and b. Notify the employer in writing of his or her conviction for a violation of a criminal drug statute occurring in the workplace no later than five calendar days after such conviction; 5. Notifying the agency in writing, within ten calendar days after receiving notice under subparagraph 4(b) from an employee or otherwise receiving actual notice of such conviction. Employers of convicted employees must provide notice, including position title, to every grant officer or other designee on whose grant activity the convicted employee was working, unless the Federal agency has designated a central point for the receipt of such notices. Notice shall include the identification number(s) of each affected grant; 6. Taking one of the following actions, within 30 calendar days of receiving notice under subparagraph 4(b), with respect to any employee who is so convicted – a. Taking appropriate personnel action against such an employee, up to and including termination, consistent with the requirements of the Rehabilitation Act of 1973, as amended; or b. Requiring such employee to participate satisfactorily in a drug abuse assistance or rehabilitation program approved for such purposes by a Federal, State, or local health, law enforcement, or other appropriate agency; 7. Making a good faith effort to continue to maintain a drug-free workplace through implementation of paragraphs 1, 2, 3, 4, 5 and 6. Fiscaly Year 2014 - Draft Action Plan DUNS No. 050520782 22 City of Palo Alto March 2013 Palo Alto CPMP Non-State Grantee Certifications 2 Version 2.0 Anti-Lobbying -- To the best of the jurisdiction's knowledge and belief: 8. No Federal appropriated funds have been paid or will be paid, by or on behalf of it, to any person for influencing or attempting to influence an officer or employee of any agency, a Member of Congress, an officer or employee of Congress, or an employee of a Member of Congress in connection with the awarding of any Federal contract, the making of any Federal grant, the making of any Federal loan, the entering into of any cooperative agreement, and the extension, continuation, renewal, amendment, or modification of any Federal contract, grant, loan, or cooperative agreement; 9. If any funds other than Federal appropriated funds have been paid or will be paid to any person for influencing or attempting to influence an officer or employee of any agency, a Member of Congress, an officer or employee of Congress, or an employee of a Member of Congress in connection with this Federal contract, grant, loan, or cooperative agreement, it will complete and submit Standard Form-LLL, "Disclosure Form to Report Lobbying," in accordance with its instructions; and 10. It will require that the language of paragraph 1 and 2 of this anti-lobbying certification be included in the award documents for all subawards at all tiers (including subcontracts, subgrants, and contracts under grants, loans, and cooperative agreements) and that all subrecipients shall certify and disclose accordingly. Authority of Jurisdiction -- The consolidated plan is authorized under State and local law (as applicable) and the jurisdiction possesses the legal authority to carry out the programs for which it is seeking funding, in accordance with applicable HUD regulations. Consistency with plan -- The housing activities to be undertaken with CDBG, HOME, ESG, and HOPWA funds are consistent with the strategic plan. Section 3 -- It will comply with section 3 of the Housing and Urban Development Act of 1968, and implementing regulations at 24 CFR Part 135. Signature/Authorized Official Date Name Title Address City/State/Zip Telephone Number James Keene City Manager 250 Hamilton Avenue Palo Alto, CA 94301 650-329-2563 Fiscaly Year 2014 - Draft Action Plan DUNS No. 050520782 23 City of Palo Alto March 2013 Palo Alto CPMP Non-State Grantee Certifications 3 Version 2.0 This certification does not apply. This certification is applicable. Specific CDBG Certifications The Entitlement Community certifies that: Citizen Participation -- It is in full compliance and following a detailed citizen participation plan that satisfies the requirements of 24 CFR 91.105. Community Development Plan -- Its consolidated housing and community development plan identifies community development and housing needs and specifies both short-term and long-term community development objectives that provide decent housing, expand economic opportunities primarily for persons of low and moderate income. (See CFR 24 570.2 and CFR 24 part 570) Following a Plan -- It is following a current consolidated plan (or Comprehensive Housing Affordability Strategy) that has been approved by HUD. Use of Funds -- It has complied with the following criteria: 11. Maximum Feasible Priority - With respect to activities expected to be assisted with CDBG funds, it certifies that it has developed its Action Plan so as to give maximum feasible priority to activities which benefit low and moderate income families or aid in the prevention or elimination of slums or blight. The Action Plan may also include activities which the grantee certifies are designed to meet other community development needs having a particular urgency because existing conditions pose a serious and immediate threat to the health or welfare of the community, and other financial resources are not available); 12. Overall Benefit - The aggregate use of CDBG funds including section 108 guaranteed loans during program year(s) 2011, 2012, 2013, (a period specified by the grantee consisting of one, two, or three specific consecutive program years), shall principally benefit persons of low and moderate income in a manner that ensures that at least 70 percent of the amount is expended for activities that benefit such persons during the designated period; 13. Special Assessments - It will not attempt to recover any capital costs of public improvements assisted with CDBG funds including Section 108 loan guaranteed funds by assessing any amount against properties owned and occupied by persons of low and moderate income, including any fee charged or assessment made as a condition of obtaining access to such public improvements. However, if CDBG funds are used to pay the proportion of a fee or assessment that relates to the capital costs of public improvements (assisted in part with CDBG funds) financed from other revenue sources, an assessment or charge may be made against the property with respect to the public improvements financed by a source other than CDBG funds. The jurisdiction will not attempt to recover any capital costs of public improvements assisted with CDBG funds, including Section 108, unless CDBG funds are used to pay the proportion of fee or assessment attributable to the capital costs of public improvements financed from other revenue sources. In this case, an assessment or charge may be made against the property with respect to the public improvements financed by a source other than CDBG funds. Also, in the case of properties owned and occupied by moderate-income (not low-income) families, an assessment or charge may be made against the property for public improvements financed by a source other than CDBG funds if the jurisdiction certifies that it lacks CDBG funds to cover the assessment. Excessive Force -- It has adopted and is enforcing: 14. A policy prohibiting the use of excessive force by law enforcement agencies within its jurisdiction against any individuals engaged in non-violent civil rights demonstrations; and 15. A policy of enforcing applicable State and local laws against physically barring entrance to or exit from a facility or location which is the subject of such non-violent civil rights demonstrations within its jurisdiction; Fiscaly Year 2014 - Draft Action Plan DUNS No. 050520782 24 City of Palo Alto March 2013 Palo Alto CPMP Non-State Grantee Certifications 4 Version 2.0 Compliance With Anti-discrimination laws -- The grant will be conducted and administered in conformity with title VI of the Civil Rights Act of 1964 (42 USC 2000d), the Fair Housing Act (42 USC 3601-3619), and implementing regulations. Lead-Based Paint -- Its activities concerning lead-based paint will comply with the requirements of part 35, subparts A, B, J, K and R, of title 24; Compliance with Laws -- It will comply with applicable laws. Signature/Authorized Official Date Name Title Address City/State/Zip Telephone Number James Keene City Manager 250 Hamilton Avenue Palo Alto, CA 94301 650-329-2563 Fiscaly Year 2014 - Draft Action Plan DUNS No. 050520782 25 City of Palo Alto March 2013 Palo Alto CPMP Non-State Grantee Certifications 10 Version 2.0 This certification does not apply. This certification is applicable. APPENDIX TO CERTIFICATIONS Instructions Concerning Lobbying and Drug-Free Workplace Requirements Lobbying Certification This certification is a material representation of fact upon which reliance was placed when this transaction was made or entered into. Submission of this certification is a prerequisite for making or entering into this transaction imposed by section 1352, title 31, U.S. Code. Any person who fails to file the required certification shall be subject to a civil penalty of not less than $10,000 and not more than $100,000 for each such failure. Drug-Free Workplace Certification 1. By signing and/or submitting this application or grant agreement, the grantee is providing the certification. 2. The certification is a material representation of fact upon which reliance is placed when the agency awards the grant. If it is later determined that the grantee knowingly rendered a false certification, or otherwise violates the requirements of the Drug-Free Workplace Act, HUD, in addition to any other remedies available to the Federal Government, may take action authorized under the Drug-Free Workplace Act. 3. Workplaces under grants, for grantees other than individuals, need not be identified on the certification. If known, they may be identified in the grant application. If the grantee does not identify the workplaces at the time of application, or upon award, if there is no application, the grantee must keep the identity of the workplace(s) on file in its office and make the information available for Federal inspection. Failure to identify all known workplaces constitutes a violation of the grantee's drug-free workplace requirements. 4. Workplace identifications must include the actual address of buildings (or parts of buildings) or other sites where work under the grant takes place. Categorical descriptions may be used (e.g., all vehicles of a mass transit authority or State highway department while in operation, State employees in each local unemployment office, performers in concert halls or radio stations). 5. If the workplace identified to the agency changes during the performance of the grant, the grantee shall inform the agency of the change(s), if it previously identified the workplaces in question (see paragraph three). 6. The grantee may insert in the space provided below the site(s) for the performance of work done in connection with the specific grant: Place of Performance (Street address, city, county, state, zip code) Check if there are workplaces on file that are not identified here. The certification with regard to the drug-free workplace is required by 24 CFR part 21. Place Name Street City County State Zip Palo Alto City Hall 250 Hamilton Ave. Palo Alto Santa Clara CA 94301 7. Definitions of terms in the Nonprocurement Suspension and Debarment common rule and Drug-Free Workplace common rule apply to this certification. Grantees' attention is called, in particular, to the following definitions from these rules: "Controlled substance" means a controlled substance in Schedules I through V of the Controlled Substances Act (21 U.S.C. 812) and as further defined by regulation (21 CFR 1308.11 through 1308.15); "Conviction" means a finding of guilt (including a plea of nolo contendere) or imposition of sentence, or both, by any judicial body charged with the responsibility to determine violations of the Federal or State criminal drug statutes; "Criminal drug statute" means a Federal or non-Federal criminal statute involving the manufacture, distribution, dispensing, use, or possession of any Fiscaly Year 2014 - Draft Action Plan DUNS No. 050520782 26 City of Palo Alto March 2013 Palo Alto CPMP Non-State Grantee Certifications 11 Version 2.0 controlled substance; "Employee" means the employee of a grantee directly engaged in the performance of work under a grant, including: a. All "direct charge" employees; b. all "indirect charge" employees unless their impact or involvement is insignificant to the performance of the grant; and c. temporary personnel and consultants who are directly engaged in the performance of work under the grant and who are on the grantee's payroll. This definition does not include workers not on the payroll of the grantee (e.g., volunteers, even if used to meet a matching requirement; consultants or independent contractors not on the grantee's payroll; or employees of subrecipients or subcontractors in covered workplaces). Note that by signing these certifications, certain documents must completed, in use, and on file for verification. These documents include: 1. Analysis of Impediments to Fair Housing 2. Citizen Participation Plan 3. Anti-displacement and Relocation Plan Signature/Authorized Official Date Name Title Address City/State/Zip Telephone Number James Keene City Manager 250 Hamilton Avenue Palo Alto, CA 94301 650-329-2563 Fiscaly Year 2014 - Draft Action Plan DUNS No. 050520782 27 City of Palo Alto March 2013 Appendix C: Public and Private Resources Fiscaly Year 2014 - Draft Action Plan DUNS No. 050520782 28 City of Palo Alto March 2013 PUBLIC AND PRIVATE RESOURCES Palo Alto has access to a variety of federal, state, and local resources to achieve its housing and community development priorities. The table below identifies potential sources of funding available to carry out housing and community development activities in Palo Alto. To the extent possible, the City will seek to leverage funding from other public and private entities to strengthen programs and activities established in the Consolidated Plan and this Action Plan. PROGRAM NAME DESCRIPTION ELIGIBLE ACTIVITIES FEDERAL PROGRAMS Community Development Block Grant (CDBG) Grants awarded to the City on a formula basis for Housing and Community Development Activities. The City’s CDBG Budget for Fiscal Year 2014 is $566,757. This includes an entitlement grant of $394,101, $110,019 of prior year resources, and $62,607 in estimated Program Income.  Acquisition  Rehabilitation  Home buyer assistance  Economic Dev.  Homeless assistance  Public services HOME Program The City of Palo Alto is not an entitlement grantee under the federal HOME program and thus does not receive a direct grant of HOME Program funds from HUD. HOME funds are available on an annual competitive basis through the State of California HOME program.  Acquisition  Rehabilitation  Home buyer assistance  Rental Assistance Section 8 Housing Vouchers The Housing Authority of the County of Santa Clara administers the federal Section 8 program countywide. The City anticipates that Section 8 vouchers will continue to be available to Palo Alto residents in fiscal year 2012/13 through the Moderate Rehabilitation Program, and the Housing Choice Voucher Program.  Rental Assistance  Homeless Assistance  Support Services McKinney – Vento Homeless Assistance Funds Santa Clara County distributes federal McKinney Homeless Assistance funds to organizations in the County that provide services to homeless persons and persons at-risk of homelessness. None of the funding is currently targeted directly to shelter or supportive services in Palo Alto.  Supportive Housing  Shelter Plus Care  Section 8 SRO STATE PROGRAMS State of California’s Multifamily Housing Program (MHP) MHP has been a major source of funding for affordable housing since 2002. The purpose of this program is to provide low-interest loans to developers of affordable rental housing. The Fabian Way Senior Housing received an award of $5.25 million in permanent MHP funding in 2008.  New construction  Rehabilitation  Preservation of low-income permanent and transitional rental housing Fiscaly Year 2014 - Draft Action Plan DUNS No. 050520782 29 City of Palo Alto March 2013 PROGRAM NAME DESCRIPTION ELIGIBLE ACTIVITIES State of California’s Local Housing Trust Fund Grant Program Another component of Proposition 46 was funding for new and existing local housing trust funds. A local housing trust fund is a public or private partnership created to receive on-going revenues for affordable housing production such as Palo Alto’s Commercial and Residential Housing Funds.  Rental Housing Projects (deed restricted)  Down payment assistance Low-Income Housing Tax Credits The California Tax Credit Allocation Committee (CTCAC) holds two application cycles each year. Typically, the first cycle is held in March and the second is held in July. Local non-profits apply directly to the CTCAC for these funds when they have identified a project.  New Construction  Acquisition and rehabilitation of eligible projects LOCAL PROGRAMS Human Service Resource Allocation Process (HSRAP) In addition to the CDBG public service funds, the City will provide $1,099,347 million dollars from the General Fund in support of human services through HSRAP. The HSRAP funds, in conjunction with the CDBG public service funds, are distributed to local non-profit agencies.  Public service activities serving the needs of seniors, children, youth and families, persons with disabilities, and those who are homeless or at risk of homelessness Palo Alto Commercial Housing Fund The Commercial Housing fund is used primarily to increase the number of new affordable housing units for Palo Alto’s work force. It is funded with mitigation fees required from developers of commercial and industrial projects. As of March 6, 2013 the Commercial Fund had an available balance of approximately $1,500,000.  New construction Palo Alto Residential Housing Fund The Residential Housing Fund is funded with mitigation fees provided under Palo Alto’s Below Market Rate (BMR) housing program from residential developers and money from other miscellaneous sources, such as proceeds from the sale or lease of City property. As of March 6, 2013 the Residential Fund had a balance of approximately $84,000.  Acquisition  Rehabilitation  New construction  Pre-development costs Below Market Rate Emergency Fund This fund was authorized by council in September 2002 in order to provide funding on an ongoing basis for loans to BMR owners for special assessment loans and for rehabilitation and preservation of the City’s stock of BMR ownership units. As of March 6, 2013 the BMR Emergency Fund had a balance of approximately $283,000.  Special Assessment Loans  Rehabilitation Fiscaly Year 2014 - Draft Action Plan DUNS No. 050520782 30 City of Palo Alto March 2013 PROGRAM NAME DESCRIPTION ELIGIBLE ACTIVITIES The Housing Trust Fund of Santa Clara County (HTSCC) HTSCC is a non-profit organization that combines private and public funds to support affordable housing activities in the County, including assistance to developers and homebuyers. The HTSCC is a public/private initiative, dedicated to creating more affordable housing in Santa Clara County, using a revolving loan fund and grant-making program to complement and leverage other housing resources.  New Construction  First time homebuyers program  Developer Loans  Homelessness Prevention Programs Santa Clara County Affordable Housing Fund (AHF) The Santa Clara County Board of Supervisors established the Affordable Housing Fund with initial funding of $18.6 million in 2002. The main purpose of the AHF was to assist in the development of affordable housing especially for extremely low income and special needs people throughout Santa Clara County. $960,000 was awarded to the Tree House project developed by the Palo Alto Housing Corporation. The County has awarded over $10 million from the AHF to date.  Construction  Permanent Financing Fiscaly Year 2014 - Draft Action Plan DUNS No. 050520782 31 City of Palo Alto March 2013 Appendix D: Proposed Projects Fiscaly Year 2014 - Draft Action Plan DUNS No. 050520782 32 City of Palo Alto March 2013 U.S. Department of Housing OMB Approval No. 2506-0117 and Urban Development Exp. 8/31/2014) Table 3C Consolidated Plan Listing of Projects Jurisdiction’s Name City of Palo Alto Priority Need Public Services Project Title SRO Resident Support Services Description Palo Alto Housing Corporation will provide counseling and supportive case management services for low- income residents of single room occupancy facilities in order to help them maintain housing stability. Activities include financial counseling, health maintenance, information and referral, problem solving, employment assistance, crisis intervention and case management. Objective category: Suitable Living Environment Decent Housing Economic Opportunity Outcome category: Availability/Accessibility Affordability Sustainability Location/Target Area Street Address: 439 Emerson Street and 753 Alma Street City, State, Zipcode: Palo Alto, CA 94301 Objective Number SL-1 Project ID 1 HUD Matrix Code 05 Public Services CDBG Citation 570.201 (e) Type of Recipient LMC CDBG National Objective 570.208(a)(2) Start Date (mm/dd/yyyy) 07/01/2013 Completion Date (mm/dd/yyyy) 06/30/2014 Performance Indicator People Annual Units 131 Local ID SR-01048-999 Units Upon Completion 131 Funding Sources: CDBG $24,865 ESG HOME HOPWA Total Formula Prior Year Funds Assisted Housing PHA Other Funding Total $24,865 The primary purpose of the project is to help: the Homeless Persons with HIV/AIDS Persons with Disabilities Public Housing Needs Fiscaly Year 2014 - Draft Action Plan DUNS No. 050520782 33 City of Palo Alto March 2013 U.S. Department of Housing OMB Approval No. 2506-0117 and Urban Development Exp. 8/31/2014) Table 3C Consolidated Plan Listing of Projects Jurisdiction’s Name City of Palo Alto Priority Need Public Services Project Title Opportunity Service Center Description InnVision Shelter Network provides basic necessities for persons who are homeless or at-risk of becoming homeless. The Opportunity Services Center is a comprehensive, one-stop, multi-service, day drop-in center that provides critical services for homeless Palo Alto residents. Specifically, the facility provides showers, laundry, clothing, snacks, case management, and shelter/housing referral services. Objective category: Suitable Living Environment Decent Housing Economic Opportunity Outcome category: Availability/Accessibility Affordability Sustainability Location/Target Area Street Address: 33 Encina Way City, State, Zipcode: Palo Alto, CA 94301 Objective Number SL-1 Project ID 3 HUD Matrix Code 05 Public Services CDBG Citation 570.201 (e) Type of Recipient LMC CDBG National Objective 570.208(a)(2) Start Date (mm/dd/yyyy) 07/01/2012 Completion Date (mm/dd/yyyy) 06/30/2013 Performance Indicator People Annual Units 600 Local ID SR-01082-999 Units Upon Completion 600 Funding Sources: CDBG $35,162 ESG HOME HOPWA Total Formula Prior Year Funds Assisted Housing PHA Other Funding Total $35,162 The primary purpose of the project is to help: the Homeless Persons with HIV/AIDS Persons with Disabilities Public Housing Needs . Fiscaly Year 2014 - Draft Action Plan DUNS No. 050520782 34 City of Palo Alto March 2013 U.S. Department of Housing OMB Approval No. 2506-0117 and Urban Development Exp. 8/31/2014) Table 3C Consolidated Plan Listing of Projects Jurisdiction’s Name City of Palo Alto Priority Need Public Services Project Title Domestic Violence Services Description Support Network for Battered Women, a Division of YWCA will provide individuals and families experiencing domestic violence, the program provides a bilingual domestic violence hotline, an emergency shelter, crisis counseling, legal assistance, court accompaniment, individual and group therapy, support groups, children’s therapy groups, preventative education, safety planning and community referrals. Objective category: Suitable Living Environment Decent Housing Economic Opportunity Outcome category: Availability/Accessibility Affordability Sustainability Location/Target Area Community-wide Street Address: City, State, Zipcode: Objective Number SL-1 Project ID 4 HUD Matrix Code 05G CDBG Citation 570.201(e) Type of Recipient LMC CDBG National Objective 570.208(a)(2) Start Date (mm/dd/yyyy) 07/01/2013 Completion Date (mm/dd/yyyy) 06/30/2014 Performance Indicator People Annual Units 45 Local ID SR-01105-999 Units Upon Completion 45 Funding Sources: CDBG 10,000 ESG HOME HOPWA Total Formula Prior Year Funds Assisted Housing PHA Other Funding Total 10,000 The primary purpose of the project is to help: the Homeless Persons with HIV/AIDS Persons with Disabilities Public Housing Needs . Fiscaly Year 2014 - Draft Action Plan DUNS No. 050520782 35 City of Palo Alto March 2013 U.S. Department of Housing OMB Approval No. 2506-0117 and Urban Development Exp. 8/31/2014) Table 3C Consolidated Plan Listing of Projects Jurisdiction’s Name City of Palo Alto Priority Need Public Services Project Title Housing and Emergency Services for Persons with Disabilities Description Silicon Valley Independent Living Center provides assistance for individuals with disabilities and their families to transition from homelessness, health care facilities, unstable or temporary housing to permanent affordable, accessible, integrated housing with emergency assistance, security deposits, rent, information & referral, and other basic essentials. Objective category: Suitable Living Environment Decent Housing Economic Opportunity Outcome category: Availability/Accessibility Affordability Sustainability Location/Target Area Community-wide Street Address: City, State, Zipcode: Objective Number SL-1 Project ID 5 HUD Matrix Code 5B CDBG Citation 570.201(e) Type of Recipient LMC CDBG National Objective 570.208(a)(2) Start Date (mm/dd/yyyy) 07/01/2013 Completion Date (mm/dd/yyyy) 06/30/2014 Performance Indicator People Annual Units 24 Local ID TBD Units Upon Completion 24 Funding Sources: CDBG 5,770 ESG HOME HOPWA Total Formula Prior Year Funds Assisted Housing PHA Other Funding Total 5,770 The primary purpose of the project is to help: the Homeless Persons with HIV/AIDS Persons with Disabilities Public Housing Needs . Fiscaly Year 2014 - Draft Action Plan DUNS No. 050520782 36 City of Palo Alto March 2013 U.S. Department of Housing OMB Approval No. 2506-0117 and Urban Development Exp. 8/31/2014) Table 3C Consolidated Plan Listing of Projects Jurisdiction’s Name City of Palo Alto Priority Need Public Services Project Title Fair Housing Services Description Project Sentinel will provide community education and outreach regarding fair housing law and practices, investigation, counseling and legal referral for victims of housing discrimination, and analyses for City staff and officials regarding fair housing practices. California and federal fair housing laws assure specific protected classes the right to be treated in terms of their individual merits and qualifications in seeking housing. Unfortunately, some people are not aware of the law or their rights. Objective category: Suitable Living Environment Decent Housing Economic Opportunity Outcome category: Availability/Accessibility Affordability Sustainability Location/Target Area Community-wide Street Address: City, State, Zipcode: Objective Number DH-1 Project ID 6 HUD Matrix Code 21D CDBG Citation 570.206 Type of Recipient LMC CDBG National Objective 570.208(a)(2) Start Date (mm/dd/yyyy) 07/01/2013 Completion Date (mm/dd/yyyy) 06/30/2014 Performance Indicator People Annual Units 27 Local ID SR-01087-999 Units Upon Completion 27 Funding Sources: CDBG $26,342 ESG HOME HOPWA Total Formula Prior Year Funds Assisted Housing PHA Other Funding Total $26,342 The primary purpose of the project is to help: the Homeless Persons with HIV/AIDS Persons with Disabilities Public Housing Needs . Fiscaly Year 2014 - Draft Action Plan DUNS No. 050520782 37 City of Palo Alto March 2013 U.S. Department of Housing OMB Approval No. 2506-0117 and Urban Development Exp. 8/31/2014) Table 3C Consolidated Plan Listing of Projects Jurisdiction’s Name City of Palo Alto Priority Need Planning and Administration Project Title City of Palo Alto Description Administer the Administrative costs for the overall management, coordination, and evaluation of the CDBG program, and the project delivery costs associated with bringing projects to completion. Objective category: Suitable Living Environment Decent Housing Economic Opportunity Outcome category: Availability/Accessibility Affordability Sustainability Location/Target Area City of Palo Alto Street Address: 250 Hamilton Avenue City, State, Zipcode: Palo Alto, CA 94301 Objective Number Project ID 7 HUD Matrix Code 21 CDBG Citation 570.206 Type of Recipient N/A CDBG National Objective N/A Start Date (mm/dd/yyyy) 07/01/2013 Completion Date (mm/dd/yyyy) 06/30/2014 Performance Indicator N/A Annual Units N/A Local ID SR-01003-999 Units Upon Completion N/A Funding Sources: CDBG $65,000 ESG HOME HOPWA Total Formula Prior Year Funds Assisted Housing PHA Other Funding Total $65,000 The primary purpose of the project is to help: the Homeless Persons with HIV/AIDS Persons with Disabilities Public Housing Needs . Fiscaly Year 2014 - Draft Action Plan DUNS No. 050520782 38 City of Palo Alto March 2013 U.S. Department of Housing OMB Approval No. 2506-0117 and Urban Development Exp. 8/31/2014) Table 3C Consolidated Plan Listing of Projects Jurisdiction’s Name City of Palo Alto Priority Need Job creation and replacement Project Title Pilot Microenterprise Assistance Program Description The Pilot Microenterprise Assistance Program will provide resources to support and foster the development of microbusinesses by providing grants to eligible low-to moderate income families in conjunction with capacity building and entrepreneurial assistance. Objective category: Suitable Living Environment Decent Housing Economic Opportunity Outcome category: Availability/Accessibility Affordability Sustainability Location/Target Area Community-wide Street Address: City, State, Zipcode: Objective Number E0-1 Project ID 8 HUD Matrix Code 18C CDBG Citation 570.201(o) Type of Recipient LMCMC CDBG National Objective 570.208(a)(2)(iii) Start Date (mm/dd/yyyy) 07/01/2013 Completion Date (mm/dd/yyyy) 06/30/2014 Performance Indicator Jobs Annual Units 5 Local ID SR-01121-999 Units Upon Completion 5 Funding Sources: CDBG $150,000 ESG HOME HOPWA Total Formula Prior Year Funds Assisted Housing PHA Other Funding Total $150,000 The primary purpose of the project is to help: the Homeless Persons with HIV/AIDS Persons with Disabilities Public Housing Needs . Fiscaly Year 2014 - Draft Action Plan DUNS No. 050520782 39 City of Palo Alto March 2013 U.S. Department of Housing OMB Approval No. 2506-0117 and Urban Development Exp. 8/31/2014) Table 3C Consolidated Plan Listing of Projects Jurisdiction’s Name City of Palo Alto Priority Need Job creation and replacement Project Title Workforce Development Program Description The Workforce Development Program will provide a transition from unemployment and homelessness to regular employment and housing through case management, job training, mentoring, housing, and transportation assistance. Downtown Streets Team will screen and prepare applicants while Manpower will use their community connections to provide training and job opportunities. Objective category: Suitable Living Environment Decent Housing Economic Opportunity Outcome category: Availability/Accessibility Affordability Sustainability Location/Target Area Community-wide Street Address: City, State, Zipcode: Objective Number E0-1 Project ID 9 HUD Matrix Code 05H CDBG Citation 570.204(a)(2) Type of Recipient LMC CDBG National Objective 570.208(a)(2)(A) Start Date (mm/dd/yyyy) 07/01/2013 Completion Date (mm/dd/yyyy) 06/30/2014 Performance Indicator Jobs Annual Units 25 Local ID SR-01121-999 Units Upon Completion 25 Funding Sources: CDBG $248,753 ESG HOME HOPWA Total Formula Prior Year Funds Assisted Housing PHA Other Funding Total $248,753 The primary purpose of the project is to help: the Homeless Persons with HIV/AIDS Persons with Disabilities Public Housing Needs . Fiscaly Year 2014 - Draft Action Plan DUNS No. 050520782 40 City of Palo Alto March 2013 Appendix E: Public Hearing Advertisement Fiscaly Year 2014 - Draft Action Plan DUNS No. 050520782 41 City of Palo Alto March 2013 NOTICE OF PUBLIC REVIEW PERIOD AND PUBLIC HEARINGS ON PALO ALTO’S COMMUNITY DEVELOPMENT BLOCKGRANT (CDBG) PROGRAM This is to notify the general public and other interested parties that a 30-day public review period of the Draft Annual Action Plan for the allocation of Fiscal Year 2014 Community Development Block Grant (CDBG) funds, will begin on March 7, 2013 and end on April 8, 2013. The Draft Annual Action Plan describes the activities the City may fund under the 2014 CDBG Program. Collectively these activities are intended to meet Palo Alto’s affordable housing and community development objectives described in the 2010-2015 Consolidated Plan. Copies of the Draft Annual Action Plan will be available on March 7, 2013 at the Department of Planning and Community Environment, 250 Hamilton Avenue, 5th Floor, Palo Alto, CA 94301, on the City’s website http://www.cityofpaloalto.org/depts/pln/advance_planning/cdbg.asp or by calling Consuelo Hernandez, Planner – CDBG, at (650) 329-2428. Interested parties are encouraged to submit written comments on the proposed Draft Annual Action Plan during the public review period, or to comment at the public hearings and meetings described below. PUBLIC HEARINGS AND MEETINGS The City of Palo Alto Human Relations Commission will hold a Public Hearing on February 28, 2013 to review the Fiscal Year 2014 CDBG funding allocations recommended by the CDBG Human Relations Selection Committee. The Public Hearing will be held at 7:00 p.m., or as soon as possible thereafter, in City Hall Council Conference Room, 250 Hamilton Avenue, Palo Alto. The City of Palo Alto Finance Committee will hold a Public Hearing on April 2, 2013 to review the proposed Fiscal Year 2014 CDBG funding allocations identified in the Draft Annual Action Plan. The Public Hearing will be held at 6:00 p.m., or as soon as possible thereafter, in City Hall Council Conference Room, 250 Hamilton Avenue, Palo Alto. The Palo Alto City Council will hold a Public Hearing on May 6, 2013 to adopt the Annual Action Plan and the associated Fiscal Year 2014 CDBG allocations. The Public Hearing will be held at 7:00p.m., or as soon as possible thereafter, in City Hall Council Chambers, 250 Hamilton Avenue, Palo Alto. 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: ADA Coordinator, City of Palo Alto, 650-329-2550 (Voice) ada@cityofpaloalto.org Fiscaly Year 2014 - Draft Action Plan DUNS No. 050520782 42 City of Palo Alto March 2013 Appendix F: Map Fiscaly Year 2014 - Draft Action Plan DUNS No. 050520782 43 City of Palo Alto March 2013 ElCaminoRealElCaminoReal AlmaStreet AlmaStreetAlmaSt UniversityAvenue UniversityAve JuniperoSerraBlvdJuniperoSerraBlvd WestPortolaAvenue MarichWay S.RengstorffAvenue CaliforniaStreet LathamStreet DelMedioAvenue ShowersDrive LosAltosAvenue IndependenceAvenue GarciaAvenue ont Road WestridgeDrive DuranzoWay EricaWay SharonParkDrive RosaDrive AltschulAvenue ElenaAvenue TuscaloosaAvenue ColemanRoad LaurelStreet SantaMonicaAvenue GilbertAvenue MenaltoAvenue WoodlandAvenue BellStreet Co o le y A v e n u e O'ConnerStreet RunnymedeStr e et ClarkAvenue WoodlandAvenue PulgasAvenue O'ConnerStreet Beach Street JasmineWay BrannerDrive CampbellLane ShoronRoad LemonStreet OliveAvenue SantaCruzAvenue BayLaurelDrive MiddleAvenue BayLaurelDrive WindsorDrive PeterCouttsCircle LasuenStreet PanamaDr GovernorsAve ElectioneerAve N.LemonAvenue CottonStreetValparaisoAvenue FremontStreet UniversityDrive CambridgeAvenue MiddleAvenue ArborRoad CreekDrive WillowRoad OakGroveAvenue SantaCruzAvenue IsabellaAvenue BrittonAlejandraAvenue EscondidoRoad OlmsteadRoad RingwoodAvenue MiddlefieldRoadMiddlefieldRoadMiddlefieldRd BayshoreFwyBayshoreFwy EmbarcaderoRoad CharlestonRd SantaCruzAvenue SandHillRoad GlenwoodAvenue LomaVerdeAve LyttonAve HomerAve ChanningAve CowperSt EmersonSt AddisonAve EMeadowDr WMeadowDr MaybellAve StanfordAve CaliforniaAve ChimalusDr HeatherLn NewellRd ChurchillAve ParkBlvd RaimundoWay BryantSt CollegeAve LouisRd GreerRd ColoradoAve RossRd ArastraderoRd ArastraderoRd LosRoblesAve GeorgiaAve LaDonnaSt LagunaAve AmarantaAve BarronAve MataderoAve SealeAve SouthCt ParkBlvd LaParaAve BirchSt LincolnAve PageMillRd ElVeranoAve ElDoradoAve EmersonSt AmarilloAve NCaliforniaAve HawthorneAve AshSt OliveAve VenturaAve AlmaSt WilkieWay FerneAve AlvaradoAvenue LinariaWay LaCuestaDrive CloudAvenue AlmaStreet ClarkAvenue AthertonAvenue AthertonAvenue WatkinsAvenue SanMateoDrive SanAntonioAve JuniperoS e rraBlvd ts a E ot l A o l a P dr o f n a t S yt i s r e v i n U A no t r e h t ol n e M kr a P do o w d e R yt iC Mountain View ot l A o l a P Road e las Pulga s d H i l l R o a d Jun ip e r o S erra Boulev a rd P a geMillRoad A r a s t r a d e r o R o a dEl a m i n o R e a l SanAntonioAvenue C h r a l e s t o n R o a d r O e og n E x p e r s s w a y Mi d d l e fi e ld Road ersity Ave B ayshore Fre e w ay 1 0 1 Al m S reet ElCaminoReal MiddlefieldRoad pi n eRoad Foothill Expre s s w a y R o a d UniversityAve. Hi l l vie w E a st B ya s o h re W e st B a y sh roe Fabian Centra lExpressw S a n d Hill R o a d E m b a r c a d e r o R o a d MarshRoad Bay Expressway Willow eh t f o t c u d o r p a s i p a m s i h T SI G o t l A o l a P f o y t i C .s e c r u o s e l b a l i a v a t s e b f o y l n o n o i t a t n e s e r p e r c i h p a r g a s i t n e m u c o d s i h T dn e g e L yr a d n u o B y t i C o t l A o l a P '0 0 5 4 '0 FY 2013 - 2014 CDBG Projects Location map CITY O F PALO A L TO IN C O R P O RAT E D C ALIFOR N IA o t l A o l a P f o y t i C e h T A P RIL 16 1 894 otl A o l a P f o y t i C 7 0 0 2 o t 9 8 9 1 © . s r o r r e y n a r o f y t i l i b i s n o p s e r on s e m u s s a o t l A o l a P f o y t i C e h T 23 : 7 1 : 4 1 5 0 - 5 0 - 1 0 0 2 , a r e v i r r )b d m . a r e v i r r \ l a n o s r e P \ n i m d a \ s i g\$ s i g \ s p a m - cc \ \ ( p a m n o i t a c o l g b d c OR S e c a l P a m l A ) 4 OR S l e t o H r e k r a B ) 3 re t n e C y t i n u t r o p p O ) 2 U ivn ) 1 t C a Fiscaly Year 2014 - Draft Action Plan DUNS No. 050520782 44 City of Palo Alto March 2013 Appendix G: Public Comments Fiscaly Year 2014 - Draft Action Plan DUNS No. 050520782 45 City of Palo Alto March 2013 ATTACHMENT C – DRAFT MAP SUMMARY DRAFT COMMUNITY DEVELOPMENT BLOCK GRANT PROGRAM Planning and Community Environment Department PILOT MICROENTERPRISE ASSISTANCE PROGRAM SUMMARY The City of Palo Alto proposes to establish a Pilot Microenterprise Assistance Program (MAP) using Community Development Block Grant (CDBG) funds. This pilot program will be administered by Planning and Community Environment Advanced Planning staff who will be working with the Economic Development Manager, the business community, and local social service providers. The goal of MAP is to provide low to moderate income families and individuals with financial assistance and technical support that will improve their economic self-sufficiency and increase their income, thereby reducing dependence on public assistance. Funds will be provided to cover the cost of technical assistance and will take the form of seed capital grants to eligible applicants and microenterprise businesses as defined by the U.S. Department of Housing and Urban Development (HUD). Proposed Program Strategy The purpose of MAP is to help low income families and individuals gain access to new opportunities that will enable them to move out of poverty. While the program will be open to all eligible applicants in Palo Alto, MAP will target Downtown Streets Team participants and tenants of SRO developments. A two-prong approach is proposed combining Business Development with a Poverty Alleviation strategy. The business development strategy will focus on increasing both the number of businesses owned by low to moderate income individuals and their performance. The poverty alleviation strategy will build on the foundation of entrepreneurship and empower clients by increasing their economic literacy, business skills, self-esteem, and personal behavior appropriate to the workplace. In summary, MAP will help accomplish the following:  Provide an innovative path out of poverty  Create self-sufficiency  Improve the survival rate of microenterprise business  Improve employment skills  Promote economic development Eligible Use of Funds and Activities Grant funding expenditures have to be allowed, necessary, and reasonable as stipulated in the Office of Management and Budget Circular A‐122 (OMB A‐122) for the type of business applying for funding. Examples include:  Purchase of machinery, equipment, furniture  Technology infrastructure and upgrades  Inventory and supplies  Marketing  Payment of utilities, licenses and insurance. Grant Approval A Microenterprise Assistance approval committee(s) will be created to evaluate the grant applications. The committee will be made up of four (4) members who will make funding recommendations based upon the applications submitted. Once the recommendations have been made, final funding decisions will be made by City Staff. The grant applications will be approved on first come, first ready, first served basis, subject to the availability of funds. 1 Claude Ezran 2/28/13 CDBG Funding Dear Human Relations Commission Colleagues, I respectfully suggest that you vote against funding Silicon Valley Independent Living Center and Catholic Charities of Santa Clara County for the following reasons: Silicon Valley Independent Living Center 1.0 Primary reason to turn down request: administrative Proposed grant amount of $5K is too small to be worthwhile to manage in a $567K pool (less than 1%). The City is substantially cutting its CDBG admin cost. It would be highly inefficient to have to manage 1% line items. 2.0 Secondary reason to turn down request: lack of information Lack of information, including from their web site, regarding the actual effectiveness of the organization. With public money involved, a conservative approach is preferable. Catholic Charities of Santa Clara County 1.0 Primary reason to turn down request: administrative Proposed grant amount of $5K is too small to be worthwhile manage in a $567K pool (less than 1%). The City is substantially cutting its CDBG admin cost. It would be highly inefficient to have to manage 1% line items. 2.0 Secondary reason to turn down request: granting public money to religious organizations, while widely done at the Federal, State, County and Local level, is less than ideal; it is riskier, more treacherous, than when one is dealing with secular organizations 2.1 Separation of Church and State The Long Term Ombudsman Program is a government program mandated under the Older American Act. When you breach the “wall” separating Church and State and mandate that the law be executed by religious organizations you take risks: e.g. judges who forced people guilty of DUI to go to Alcoholic Anonymous (a faith driven program) lost their cases in lawsuits brought by the ACLU due to violations of the Freedom of Conscience. It is much less of a slippery slope, and much less prone to conflicts and abuses, to let all religious organizations perform their extraordinary work, exactly as they wish (within the framework of the law), with their own private money and to direct public money to secular organizations only. 2.2 Systemic biases of religious organizations Versus the random distribution of biases with the volunteers/employees of secular organizations. Many religious organizations, of many different faiths, are known, for instance, to be hostile to, or biased against gays & lesbians, or against unmarried people of opposite sexes living together, and to discriminate against them. Example: Boy Scouts of America is still trying to decide if it will continue its policy of discrimination against gays. 2 2.3 Put yourself into the shoes of the recipients of the service, the people we are trying to help! How will very vulnerable elderly people of Faith X, or no faith at all, feel about being compelled to deal with an employee/volunteer with a badge or business card that says Faith Y, if they want access to the service? Will they feel uncomfortable? Will they fear they will receive lesser service than somebody from Faith Y? Will they feel puzzled that religion is somewhat injected into something that has nothing to do with what they need? Will they feel angry about the lack of secular provider for a government mandated program? Sometimes the service provided is extremely significant and impactful (we are not talking about distributing chocolates for Valentine’s Day), e.g. adoption services. Why should people be forced to go to a religious organization in order to have access to that type of critical and life altering service? 3.0 Other secondary reasons to turn down request: objections specific to Catholic Charities 3.1 Potentially discriminatory, and definitely inappropriate, volunteer recruitment practices. Public CDBG funds would be used by Catholic Charities to manage volunteers who will provide the actual service. Catholic Charities requests that volunteer fill a Volunteer Application Form that asks for “Church Affiliation (optional)”. See http://www.catholiccharitiesscc.org/volunteer- application-form First, there no such thing as an “optional” question. No answer is an answer. Example: Q: Have you ever stolen anything?… no worries, your answer is optional…. Second, why is Catholic Charities asking such a question if they are truly, as they claim, not discriminating? What do they do with the answer or lack of an answer? If they do nothing, then why do they ask the question? And if they do something with the information about religious affiliation that could be a form of discrimination. Please bear in mind that they are not recruiting here for a religious program such as a Church Choir (in which case questions about religion would definitely be warranted), but for a federally mandated program. Third, the question itself is showing an implicit discriminating bias towards Christians vs. other faiths, even before any answer is, or is not, provided. It says “Church”, it could at least have asked: Religious Affiliation. Does it mean that if you go to a mosque, a synagogue or a temple you are a bit less welcome as a volunteer for Catholic Charities? How does it feel to answer: I am affiliated with the “Moslem/Jewish/Hindu/Atheist Church”? And what about non-religious applicants? How comfortable are they supposed to feel about that question? Public funds should not go to an organization that asks its volunteers, ready to perform a mandated public service, questions about their religious beliefs. Asking such questions is highly uncommon, inappropriate, and a big crossing of the line/wall that separates Religion from State. Any company, administration or organization, that asks questions about religion (even “optional” ones) in its recruitment form would expose itself to be sued and would most likely lose in court. The potential for discrimination is just too high. 3.2 Catholic Charities of Santa Clara County is not a non-profit agency which just happens to have a religious name (e.g. YWCA). It is truly a religious organization that asks its employees and volunteers to follow specific religious principles when they deliver services: 3 - The Chairman is the Bishop of San Jose and there is another reverend on its board http://catholiccharitiesscc.org/board-directors - Its mission statement http://catholiccharitiesscc.org/mission-statement is not secular, it is clearly religious and could lead to issues and biases (e.g. against gays & lesbians and unmarried couples), and could make some employees and volunteers (whom we are asked to fund) and especially their vulnerable clients highly uncomfortable: “Catholic Charities of Santa Clara County serves and advocates for families and individuals in need, especially those living in poverty. Rooted in gospel values, we work to create a more just and compassionate community in which people of all cultures and beliefs can participate.” 3.3 Discrimination against women employees of Catholic Charities Maybe not in California (due to a California Supreme Court decision), but probably in most of the rest of the country as Catholic Charities is a nationwide organization. If you are a man, you get pretty much the same type of health benefits that you would get with another employer. If you are a woman, you do not get the same benefits as you would get if employed by another employer. This is discrimination, exactly as it would be a case of discrimination if you stated: in our organization, African Americans do not get coverage for flu shots. 3.4 Catholic Charities of Santa Clara County is part of a national organization, Catholic Charities USA, that through its nationwide network, has a track record of blatant discrimination, even very recently See Chicago Tribune article: http://articles.chicagotribune.com/2011-08-02/news/ct-met-aclu-foster-care-20110802_1_couples-in- civil-unions-catholic-charities-parents ACLU joins suit against Catholic Charities Policy of rejecting same-sex couples as foster parents is challenged August 02, 2011|By Manya A. Brachear, Tribune reporter “The American Civil Liberties Union of Illinois got the go-ahead Monday to intervene in a lawsuit and join the state's battle against Catholic Charities' policy of turning away prospective parents who are in civil unions. Catholic Charities in Joliet, Peoria, Springfield and Belleville filed the lawsuit this summer, asking a Sangamon County judge to uphold their policy of providing publicly funded foster care and adoption services only to married couples and single parents living alone, while referring couples in civil unions to other agencies.” This was not a case of an isolated rogue employee caught doing the wrong thing; this was the agency’s own policy, in violation of the law, all of this while using public money for a state mandated program. See also PR Newswire article: http://www.prnewswire.com/news-releases/aclu-challenges-catholic-charities-exclusionary-adoption- and-foster-care-policies-on-behalf-of-children-in-dcfs-care-126516518.html “The ACLU's filing on Friday noted that both the federal constitution and the consent decree in the federal case (known as B.H. v. McEwen) requires the State of Illinois to make all decisions with regard to children in DCFS care solely on the basis of the "best interests of the child" and not the religious beliefs of a private foster agency. "Best interests", according to experts in social welfare policy, require the State to consider only how a placement affects the child -- whether the unique skills and characteristics of the potential parent or parents' best fit the needs of the child 4 resulting in a safe, loving and secure home for the child. These Catholic Charities agencies, who accept State funds to act on behalf of DCFS in placing children, seek judicial authority to elevate their religious views about homosexuality and marriage over the best interests of the children under their care. In response to Catholic Charities' claim that it has a religious right to discriminate, the interveners assert that Catholic Charities are performing a "state function" when they choose homes for DCFS state wards and process prospective foster parents for state licensing.” "Illinois law says that Catholic Charities cannot discriminate against our clients based on their sexual orientation and because they have a civil union rather being able to marry," said John Knight, director of the Lesbian, Gay, Bisexual and Transgender Project of the ACLU of Illinois. "But they are asking the court to authorize such discrimination. This is not tolerable in an inclusive society. It harms children by limiting the pool of potential adoptive parents and harms our clients – basically telling them that they are not capable of parenting solely because they are lesbians." “The ACLU also takes issue with the assertion that the possibility of disruption for children if Catholic Charities withdraws from providing services on behalf of DCFS trumps the constitutional and legal issues involved, as well as the best interests of children. The ACLU notes that this situation is not unique. Catholic Charities already has withdrawn from provision of adoptive and foster care services in the Rockford area and the entirety of Cook County. Other, secular agencies stepped up and met the needs of children in the care of DCFS in those areas. The same can happen in the areas at issue in this case. "Catholic Charities is entitled to hold its religious beliefs," added Harvey Grossman, legal director of the ACLU of Illinois. "But those religious beliefs simply cannot be a factor when the agency is acting as a social service agency on behalf of the State." Conclusion First and foremost, for administrative reasons, I recommend we turn down both Silicon Valley Independent Living Center and Catholic Charities of Santa Clara County. I am also very concerned that Catholic Charities could potentially discriminate against very vulnerable gay and lesbian, or unmarried senior citizens in Palo Alto, and offer them lesser service, or no service at all by ignoring them, if we let them manage the Long Term Ombudsman Program. The facts speak for themselves, and I think ought to disqualify them from public funding. Furthermore, regardless of the issue of protecting senior citizens, I do not think that the City of Palo Alto should associate itself with an organization that, as a policy, violates the law and discriminates; that’s just not who we are in Palo Alto. My view on that last point, could be changed, were Catholic Charities of Santa Clara County to make a public statement saying that they: 1) Completely disavow the position taken by Catholic Charities affiliates in Illinois regarding discrimination against gays and lesbians and unmarried couples, and 2) Provide, and will continue to provide, coverage for contraception to all their female employees in Santa Clara County, and were they to also 3) Change their volunteer recruitment form to take out any question about religious affiliation. From: Mary Jane Parrine [mailto:parrine@stanford.edu] Sent: Wednesday, March 27, 20134:37 PM To: Clerk, City Cc:HRC Subject: Memo to Finance Committee re CDBG funding TO: The Honorable City Council AT1N: Finance Committee FROM: Mary Jane Parrine 8 Bolton Place Menlo Park CA 94025 parrine@stanford.edu March 27,2013 RE: February 28 meeting of Human Relations Commission on CnBG I am concerned with the proceedings at the February 28 meeting where the Commission denied CBDG funding for the Santa Clara County Long Term Care Ombudsman Program (LTCOP) that serves Palo Alto. The video tape of the meeting and the report on church and state that Chairman Claude Ezran distributed on that date prompt thes comments. They reflect my views as a local resident who may have to be in a facility due to injury or illness and as a State-certified Long Term Care Ombudsman (volunteer) who has been working in the program since 2004. My responsibilities include two large facilities in Palo Alto serving ca. 500 residents within 4 separate entities. First I respect Claude Ezran's commitment to community issues and to ethical principles that were evident in his past stand against the death penalty. I and my colleagues also support the need for separation of church and state. My concern is that the focus of the Commission on Feb. 28 was to evaluate each proposal on its merits by fully understanding the scope and administration of each program, its current services, and history in the community. Possibly Mr. Ezran inadvertently misinterpreted the nature of our program. A person unfamiliar with our work might wonder about the program's connections with the agency that houses us and ask that the issue be clarified. Unfortunately Mr. Ezran made an absolute assumption about religious parameters of a program that is secular and subject to strict government regulation in the very area of his concern. Ombudsman staff member Olivia Garcia's preliminary comments and our grant proposal outlined the fact that the L TCOP in Santa Clara County is part of a nationwide network administered by each county's Area Agency on Aging (http://www.aging.ca.gov). If further information on our relationship with Catholic Charities was not fully understood by one or more member of the Human Relations Commission, there should have been a request for clarification. In one or two City Council CnBG hearings where I· have helped to represent the Ombudsman Program in another community, a council member asked about the proportion of funding we received from Catholic Charities, thinking that perhaps we were largely funded by them and hence a CnBG might not be vital. Though Catholic Charities' financial donation is appreciated, it is minor and unpredictable, never anywhere near the proportion we receive from government support from federal (and until recently) state allocations. Local government support is very important. Once this was clarified, we moved on. 2 Pursuant to Older Americans Act of 1965, Title 3 (reauthorized in 2012), the LTCOP exists in every county in the United States. Each Ombudsman office is housed independently, sometimes in a stand-alone setting, sometimes in a county office, sometimes in a social services agency, occasionally one associated with a religious denomination. In each setting the LTCOP has to be a totally secular program. No religious organization can legally direct the program or determine its policies. By law we are forbidden to impose any religious beliefs or prejudices on any client we serve. An Ombudsman -coordinator, staff, or volunteer-would be dismissed for doing otherwise. Catholic Charities, as the largest multipurpose social services agency in the county, won out as contractor to provide our office space many years ago, largely due to the agency's related services for older adults, many of whom are sources of cross referral. Its name does not appear on the badges we wear on entering facilities, though Mr. Ezran claims otherwise. The logo for the State of Cali fomi a heads our calling cards, while the location of Catholic Charities appears only in small print as part of the address area. The more useable side of the card offers L TCOP program contact information in large bold print. To make sure that the residents we serve understand this, I and others in our program introduce ourselves with information about the program being free and confidential, created to work for them and not affiliated with any religious denomination. Had all members of the Human Relations Commission been able to look objectively at this and other basic information, there could have been fulfillment of the Commission's charge to review and judge the Ombudsman Program on its merits, outlined in the statement made to the commission and the grant proposal. I believe that the recommendation of the Human Relations Commission to deny funding should be reconsidered since it was denied because of an unjust process. The funding amount involved here is admittedly small. Yet the funding itself is just one part of what our program considers a vote of confidence, from each community, in the services we provide. Of course many good programs cannot be funded by CDBGs or other departments in local government. The ultimate decision is up to you as Committee members within the City Council. We ask only that we be judged on the merits of our program. Important though it is, a discussion of current problems of religious discrimination belongs in another forum. Failings of a pluralistic church in a national setting, where many opposing viewpoints vie for recognition, should not be the focal point for debate on funding for a program with a clearly defined commitment to be non-sectarian. Each commissioner promises in the Oath of Office to uphold the U.S. Constitution, including its provisions on due process that require all levels of American government to provide fair procedures. This w~ not the case when Mr. Ezran stated in writing "I do not think the City of Palo Alto should associate itself with an . organization that [with his emphasis] as a policy, violates the law and discriminates; that's just not who we are in Palo Alto." It seems that a desire to make a broad statement on human rights trumped recognition of the facts at hand. Mr. Ezram's misguided position not only influenced the vote of the Human Relations Committee but also dealt a heavy blow to those of us who serve Palo Alto in the Ombudsman Program above all to protect the rights of our clients, often their diverse religious rights, regardless of race, age, economic status, faith, or sexual preference. Thank you for your consideration [original will be sent to City Council signed] Mary Jane Parrine State Certified Long Term Care Ombudsman (volunteer) certification no. 10-413 One of several in Ombudsman program to receive U.S. President's Volunteer Service Award (Gold), 2011 CC members of Human Relations Commission 3 Dear Nancy Shepard, Finance Committee: I am writing to you to ask for consideration and recommendation of funding the Long Term Care Ombudsman Program CDBG application at your upcoming April 16th meeting. As a staff member with the Ombudsman Program for more than sixteen (16) years, I have had the opportunity in the past to appear before the Palo Alto Citizen Committees reviewing the CDBG proposals. My experience with the committee members was always professional and pleasant. Questions asked of me by the committee pertained to the proposed services, clients to be served, volunteers working along side staff and the type of complaints Ombudsmen resolve. My experience was that the questions were always appropriate to the grant application. For the funding years 13-14 and 14-15, the questions and comments by the Chair of the Human Relations Committee appear to be unrelated to the Ombudsman Program proposal. Statements by the Chair of the Human Relations Committee at the first meeting on February 6,2013, and the multi page memo he distributed at the February 28, 2013 meeting do not relate to the proposal. The Ombudsman Program has a long history of providing services under contract with the City. The Program has always met or exceeded the contract goals and has never been advised by the City of any complaints received regarding our services. At the February 28, 2013, Human Relations Committee a vote of 4 was need for a recommendation. While the Program received majority vote of the committee members present, the absence ofa committee member and need for another to recuse themselves due to association.with another agency under consideration for a grant made the required 4 votes under the direction of the Chair more difficult. I would ask that the Long Term Care Ombudsman proposal be considered on the merits of the service to be provided. The Long Term Care Ombudsman Program is a unique and unduplicated service. I would like to highlight that as stated in the proposal certified long. term care Ombudsmen provide services with respect for human dignity and the individuality of the resident unrestricted by consideration of age, social or economic status, personal characteristic or lifestyle. Cordially, Marlene Siebert Marlene Siebert Progrrun Assistant/ Volunteer Coordinator Long Ternl Care Ombudsman Program Catholic Charities of Santa Clara County 2625 Zanker Road, Suite 200 San Jose, CA 95134-2107 1-408-944-0567 Onlbudsman Prograln 1-408-325-5260 Direct line 1-408-944-0776 Fax marlenes@catholiccharitiesscc.org FINANCE COMMITTEE DRAFT EXCERPT MINUTES 6:00 P.M. Special Meeting Tuesday, April 16, 2013 Council Conference Room EXCERPT OF MEETING Agenda Item 2. Recommendations on Proposed Fiscal Year 2014 Community Development Block Grant Funding Allocations and the Draft Fiscal Year 2014 Annual Action Plan Consuelo Hernandez, Community Development Block Grant Planner, presented recommendations for the Fiscal Year (FY) 2014 Community Development Block Grant (CDBG) allocations and a draft FY 2014 annual Action Plan. The City of Palo Alto receives annual funding from the Department of Housing and Urban Development (HUD) as an entitlement city under the CDBG Program. CDBG is the principal Federal Program providing grants to improve physical, economic and social conditions primarily for persons of low and moderate income. All Palo Alto programs meet the first CDBG Program objective of benefiting low and very-low- income persons. The City has not received its final allocation amount for FY 2014 because of delays in the Federal budget. Staff used an estimated allocation amount for planning purposes based on several assumptions. Under the sequestration assumption, the City would receive $394,101, representing $35,203 less than the FY 2013 allocation. Staff would make the necessary adjustments once they know the official allocation amount. The total estimated funding amount for FY 2014 is $566,757 including the estimated entitlement grant, $62,607 estimated program income, and $110,049 in prior year resources. Prior year resources are excess funds returned by projects at the end of FY 2013. Palo Alto utilizes five funding categories to allocate funding: Public Services, Planning and Administration, Economic Development, Housing, and Public Facilities. For FY 2014, the City did not receive any applications for improvements of public facilities or any housing-related projects. The CDBG statute places spending caps on Public Service and Planning and Administration activities. No more than 15 percent of entitlement funds and no more than 15 percent of program income funds received during the previous year can be allocated to Public Service activities. Similarly, Planning and Administration activities have a 20 percent spending cap on entitlement grant and projected program income. Staff for the CDBG Program will be reduced to 0.5 full time equivalency, which affords the City the opportunity to fund an additional program under the administrative cap. HUD requires a five-year Consolidated Plan with one-year updates. The City is required to provide the public an opportunity to voice their opinions on proposed funding allocations. Staff held two public hearings. Staff did not agree with the Human Relations Commission's (HRC) recommendations for funds allocated to Catholic Charities and Silicon Valley Independent Living Center. On February 28, 2013, Staff presented the applications and sub-committee recommendations to the HRC. The HRC sub-committee had three primary concerns related to Catholic Charities of Santa Clara County (Catholic Charities): 1) the relatively small grant amount of $5,000; 2) the amount of administrative time required to monitor Catholic Charities activities; and 3) the risks in funding secular organizations and concerns of discrimination. The HRC sub-committee had two concerns related to Silicon Valley Independent Living Center: 1) the grant amount and effectiveness of the organization; and 2) lack of sufficient information to make a determination of funding. The HRC voted 3-2 with regard to funding both agencies. Under HRC Guidelines, the vote did not reflect a majority vote of the HRC. Ultimately, HRC voted not to fund Catholic Charities and distributed the $5,000 grant request amongst other public service agencies. Staff respectfully disagreed with the funding recommendations. Staff was concerned that the HRC did not recognize the substantial merit of the Program, and incorrectly emphasized the religious affiliation of Catholic Charities. That emphasis could be construed as a denial of equal access to federal funding. Catholic Charities served 250 people in Palo Alto that would otherwise not be served. Staff recommended the Finance Committee (FC) recommend the City Council allocate CDBG funding as recommended by Staff; authorize the City Manager to execute the FY 2014 CDBG application and Action Plan and any other necessary documents; and authorize Staff to submit the FY 2014 Action Plan to HUD by the May 15, 2013 deadline. Chair Burt questioned the number of votes needed for an HRC vote. Molly Stump, City Attorney, reported a majority of the seats of the HRC were considered a majority vote. Chair Burt inquired whether Catholic Charities was eligible as an applicant under Federal guidelines. Ms. Stump stated Catholic Charities was eligible for CDBG funding. Under City policies and practices, Catholic Charities was required to enter into an agreement not to discriminate across a variety of well-known protected categories with respect to prospective recipients of services and with respect to employees. Chair Burt asked if the FC could choose not to fund Catholic Charities based upon its sectarian characteristics. Ms. Stump indicated the Federal Government determined Catholic Charities was eligible to receive funding. A Council decision not to fund services should be based on a decision to spend limited funds on other services. Chair Burt understood the FC could not make a recommendation based on perceived sectarian issues. Ms. Stump reported the Federal Government indicated Catholic Charities was non-sectarian with respect to the requirements to provide services. Chair Burt asked Commissioner Ezran if he was present to represent his or the HRC's positions. Claude Ezran, Human Resource Commission Member, stated both. The HRC Chair requested he attend the meeting. Chair Burt indicated Commissioner Ezran was not permitted to present his opinions as the representative of the HRC. Commissioner Ezran agreed. It was easy to follow Staff's recommendation to approve a grant for Catholic Charities. Chair Burt reiterated that a Board or Commission representative could only represent and clarify the positions of the Board or Commission. He wished to ensure Commissioner Ezran spoke as the representative of the HRC. Commissioner Ezran wished to explain why Catholic Charities' request was denied by the HRC. The HRC's vote was a negative, minority vote. Chair Burt inquired whether that was correct. Commissioner Ezran noted the application was turned down. Four votes were needed to approve the grant request. Chair Burt indicated the request received a 3-2 majority, which was not adequate. He disagreed with characterizing the vote as "turned down." Commissioner Ezran stated Catholic Charities received funds annually, and the Ombudsman Program was valuable to the community. Two HRC Commissioners voted against Catholic Charities because Catholic Charities discriminated against gays, lesbians and unmarried heterosexual couples. The key question for the FC was whether to fund a local organization that was part of a nationwide organization with a blatant record of discrimination through its affiliates. The local organization did not speak against the discrimination policies of its parent and sister organizations. He related Catholic Charities' discriminatory practices in Illinois, Massachusetts and Washington DC. In instances where Catholic Charities stopped providing services, replacement agencies were found. The City could find another, more suitable organization to provide the valuable Ombudsman Program. He would waive his objections to Catholic Charities if it would publicly disavow the anti-gay policies of its affiliates in Illinois, Massachusetts and Washington DC. The City of Palo Alto should not associate itself with an organization that violated the law. Chair Burt was disappointed that Commissioner Ezran ignored the guidance and commitment that he was present to represent the position of the HRC. Commissioner Ezran's obligation was to represent the HRC as a whole, which he did not do. Commissioner Ezran felt he represented the HRC's vote. Chair Burt believed he represented one side of the vote. Commissioner Ezran indicated there was not much additional discussion. Other Commissioners agreed to fund Catholic Charities because it was funded in the past and did not discriminate in Santa Clara County. Council Member Berman understood Santa Clara County held a contract with Catholic Charities to provide the Ombudsman Program, and that cities determined whether to provide funding. He requested clarification of how Catholic Charities was chosen to provide the Ombudsman Program. Ms. Hernandez explained Catholic Charities was selected by the State Ombudsman Program. The State identified 26 partner agencies throughout California. In Santa Clara County, the partner agency is Catholic Charities. Council Member Berman inquired whether Palo Alto would continue to receive services from the Ombudsman Program if the Council decided not to fund the application. Ms. Hernandez indicated Palo Alto would continue to receive services; however, response time would be affected. Council Member Berman requested an explanation of the Microenterprise Assistance Program. Ms. Hernandez explained the Program would serve five individuals or five businesses, depending on the structure of the Program. One pillar of the CDBG Program is economic development. In the prior two years, Palo Alto funded Downtown Streets team for a pilot Workforce Development Program. From that Program, Staff identified a need for additional funding for individuals with long periods of unemployment or criminal records, and who wished to become entrepreneurs. Staff would partner with Downtown Streets team, the Palo Alto Housing Corporation, and the City's Economic Development Manager in developing the Program. Council Member Berman felt $150,000 was a substantial amount of money for a pilot program. Ms. Hernandez reported Staff allowed approximately six months to determine if the Program was viable. If it was not effective or efficient, Staff could cancel the Program and reallocate funds. Vice Mayor Shepherd recalled the Council allocated discretionary funds to Innvision, and asked if it would be requested to fund Innvision again. Ms. Hernandez explained the CDBG Program experienced a significant reduction in funding in the prior two years. The concern was the amount of funds to be allocated to the City in FY 2014. If some programs did not expend all funds allocated in FY 2013, Staff would utilize that funding to make up the difference between the estimated and actual Federal Government allocation. Vice Mayor Shepherd inquired whether the Appropriations Bill restored funding to the CDBG Program, because Staff indicated Palo Alto could receive more funds than in past years. Ms. Hernandez indicated funds could be perhaps $10,000 more than the projection. Vice Mayor Shepherd inquired about the level of service Palo Alto residents received from Catholic Charities. Ms. Hernandez reported the intent of the Ombudsman Program was to protect the rights of individuals living in long-term care facilities. Five Palo Alto facilities received services through this funding. Without funding, Catholic Charities would continue to provide services, but not as timely. Two ombudsmen and other volunteers in Palo Alto responded immediately to complaints and audited services. Vice Mayor Shepherd understood that local service providers for Catholic Charities served community individuals, but did not serve a political agenda. Ms. Hernandez agreed. The City had not received any discrimination complaints. Sub-recipient agreements contained a process for investigating complaints. Chair Burt inquired whether Santa Clara County or the City received any assurances of non-discrimination. Ms. Hernandez explained Catholic Charities was required to sign certifications that it would not discriminate against any of the protected classes and would practice equal opportunity employment. Debra Sue Stevens, Silicon Valley Independent Living Center Development Director, worked with Catholic Charities to find housing solutions. Silicon Valley Independent Living Center was mandated through the Department of Rehabilitation, and funded to uphold the Rehabilitation Act and Americans with Disabilities Act. She recommended funding for Catholic Charities. Wanda Hale, Long-Term Care Ombudsman Program Manager, stated Catholic Charities held the contract for the Ombudsman Program; however Ombudsman Staff reported to the State Ombudsman Program. The Program did not discriminate in its advocacy for residents in long-term care facilities. Olivia Garcia, Long-Term Care Field Ombudsman, provided statements from volunteers regarding their service with Catholic Charities. Their primary focus was to act as a voice for residents of long-term care facilities. They were mandated to investigate and mediate on behalf of all residents in skilled nursing facilities and long-term care facilities. Sike Johnson, Palo Alto Sub Acute and Rehabilitation Administrator, partnered with ombudsmen to investigate reports of elder abuse. Long-term care facilities needed ombudsmen. Local service providers were not discriminatory. Council Member Schmid noted Staff recommendations were located on page 6 of the Staff Report and in the draft Action Plan. He asked which was Staff's recommendation. Ms. Hernandez reported Staff's recommendation was located on page 6. Depending on FC action, Staff would amend the draft Action Plan for public comment. Council Member Schmid asked what the Action Plan was. Ms. Hernandez explained it was the City's application for funding. Council Member Schmid noted the draft Action Plan contained amounts different from Staff's recommendation. Ms. Hernandez stated the Action Plan reflected HRC recommendations. Staff would amend the Action Plan to reflect FC recommendations. Council Member Schmid remarked that the City would lose many organizations if the Council considered actions of affiliates in other states. A resident could initiate a discussion with the Council regarding not having public-private partnerships with religious organizations. The faith community in Palo Alto is a strong supporter of public-private partnerships. With no evidence of discrimination in the local community, he could not discriminate against one organization providing services to the community. Catholic Charities delivered good benefits to the community without asking questions or imposing their principles on the community. MOTION: Council Member Schmid, seconded by Vice Mayor Shepherd moved that the Finance Committee recommend to the City Council to: 1) allocate CDBG funding as recommended by Staff and as described in the Staff Report on page 6; 2) authorize the City Manager to execute the 2014 CDBG application and 2014 Action Plan for CDBG funds, any other necessary documents concerning the application, and to otherwise bind the City with respect to the applications and commitment of funds; and 3) authorize Staff to submit the 2014 Action Plan to HUD by the May 15, 2013 deadline. Vice Mayor Shepherd requested Staff present Commission and Board discussion in the future. She understood that Catholic Charities worked at a basic level of human need. Catholic Charities filled an important community need. Council Member Berman noted as the Palo Alto population grew older, the need for assistance would increase. Palo Alto residents were fortunate to have volunteers provide these services. Chair Burt inquired about the reason for one HRC Commissioner recusing himself from the discussion. Ms. Hernandez explained the Commissioner was also a board member for one of the applicants. Chair Burt supported the Motion because of assurances regarding the contract, significant testimony of non-discriminatory practices, and the history of the local Ombudsman Program. MOTION PASSED: 4-0 City of Palo Alto (ID # 3753) City Council Staff Report Report Type: Action Items Meeting Date: 5/6/2013 City of Palo Alto Page 1 Summary Title: Library GO Bond Second (2013) Series Title: Adoption of a Resolution Authorizing the Issuance and Sale of General Obligation Bonds Series 2013A For Measure N Projects in the Principal Amount of $20,695,000, Authorizing and Directing the Execution of a Paying Agent Agreement, and Certain Other Related Documents, and Authorizing Official Actions Related Thereto From: City Manager Lead Department: Administrative Services RECOMMENDATION Staff recommends that the City Council approve the attached resolution (Attachment A) to: 1) Authorize staff to issue and sell General Obligation Bonds (Election of 2008, Series 2013A) for Measure N Projects in an amount of $20,695,000 to finance City library capital improvements 2) Approve Paying Agent Agreement, Official Notice of Sale, Preliminary Official Statement; and authorize official actions related thereto MOTION I move staff’s recommendation. BACKGROUND On November 4, 2008, City voters passed Measure N, which gave the City the authority to issue a maximum amount of $76,000,000 million of General Obligation bonds (the “Bonds”) for capital improvements to the Mitchell Park, Downtown, and Main libraries and to the Mitchell Park community center. On May 10, 2010, staff requested and Council authorized the issuance of up to $60,000,000 in bonds. Based on actual and estimated construction costs just prior to City of Palo Alto Page 2 the first bond issue, it was anticipated that $55,305,000 in par amount would cover design and construction costs associated with the Mitchell Park library and community center, downtown library, and design costs for the Main library, and the first series of the Bonds were issued on June 30, 2010 in that amount. As a consequence, there remained $20,695,000 in authority to issue a second series of the Bonds under Measure N, primarily for the Main library project. DISCUSSION Staff is requesting Council approval to issue $20,695,000 in General Obligation (GO) Bonds to make planned improvements to the Main Library and potentially to cover any unanticipated costs associated with the Mitchell Park library and community center projects. City staff has kept Council informed about the status and costs associated with the Mitchell Park projects through periodic reports. The bond amount being requested constitutes the remaining authority or balance approved by voters under Measure N. To issue Bonds, the Council first will need to adopt the attached resolution (Attachment A) which: 1. Authorizes the issuance and sale of $20,695,000 in the second series of Bonds (“Series 2013A Bonds”) 2. Approves the required financial documents (Exhibits 1, 2, and 3) which are discussed below; and 3. Grants staff the authority to take all necessary actions related to the sale of the Series 2013A Bonds Adoption of the resolution would confer formal approval of the following documents:  Paying Agent Agreement which outlines the responsibilities of the City and U.S. Bank in all financial transactions related to receipt of bond proceeds, disbursement of funds, payment of debt service, and payments to bond holders (Exhibit 1)  An official Notice of Sale, which describes the Series 2013A Bonds to the investment community (potential bidders), for the purpose of seeking bids to be received via an electronic platform, on or around June 12, 2013 (Exhibit 2)  Preliminary Official Statement containing and discussing information about the City, its economic and property tax base, the Series 2013A Bonds, and other information material to the offering and sale of the Bonds, which will be approved by the Council in near “final” form (i.e., it is complete, except for the interest rates and amount of final numbers which will result from the sale of the Series 2013A Bonds) (Exhibit 3) City of Palo Alto Page 3 As with the previous sale in 2010, costs of issuance such as underwriter fees will be paid through a “premium” instead of a payment, using bond proceeds. This is a consequence of legal requirements that GO bonds must be sold competitively and that bids be for not less than the par amount of the bonds. The effect of this requirement is that a “premium” is generated by configuring the coupon rate higher than the bond yield. “Premium” monies are then used for the costs of issuance and, if the amount of premium received exceeds the amount needed to pay costs of issuance, such additional premium will be deposited to the debt service fund created for the Series 2013A Bonds and applied to offset forthcoming debt service payments. Based on a par offering of $20,695,000, the underwriter’s discount is estimated at $166,000 and other issuance costs (e.g., financial advisor, bond counsel, disclosure counsel, and paying agent) are estimated at $200,000. (Attachment B). Precise costs for the underwriter will not be known until the day of sale. The interest rates on the principal amount of the Series 2013A Bond sold also will be determined on the day of the sale and will reflect prevailing market conditions at that time. When the interest rates are established, annual debt service payments will be calculated and used to determine the 2013-14 assessment for property owners in Palo Alto. The current levy rate for the first series of bonds is $14.76 per $100,000 of assessed valuation (AV). At this time, the estimated levy rate for 2013-14 that will include the first and second series of the Bonds will be $19.98 per $100,000 of AV. This amount is an estimate, and will be revised, depending upon the interest rates determined at the time of sale. A June bond sale allows sufficient time to notify the County of the additional levy for next year. To minimize interest expense and to promote the bond issue, staff will deliver a ratings presentation to Moody’s and Standard and Poor’s (S&P) on May 6th. The City Manager and staff from the Administrative Services, Public Works, and Library departments, as well as the City’s financial advisor and bond counsel, will participate in the presentation. Information on City demographics, property values, businesses, educational institutions, and financial condition will be provided to the rating agencies. This information is factored into each agency’s credit rating, which investors use in determining whether or not to buy the City’s bonds. A high credit rating results in lower interest costs and vice versa. The current underlying issuer credit rating for the City’s General Fund is triple A from Standard and Poor’s, the highest possible. As soon as the ratings are received, staff will relay the results to Council and the public. The timeline for selling bonds, receiving bond proceeds, and placing assessments on the county role is provided below. Receiving Council approval tonight is crucial to maintaining this timeline. City of Palo Alto Page 4 RESOURCE IMPACT Pending Council approval, the City will issue its second series of Measure N General Obligation bonds in an amount of $20,695,000. The costs of issuance, estimated at $366,000 will be paid through a “premium” that is discussed above. Actual debt service and the assessment on property owners will not be determined until the bonds are sold, on or around June 12, 2013. POLICY IMPLICATIONS This report is consistent with prior policy direction received from Council. TIME LINE May 6, 2013 City Council Action on Financing Documents to Issue Bonds May 6 Ratings Presentation to S&P and Moody’s May 13 Award of (Main Library) Contract Week of May 27 Ratings Received May 27 Preliminary Official Statement/Underwriter Bid Form Finalized and Circulated June 12 Close Bond Issue and Receive Bond Proceeds August Send Property Assessments to County ENVIRONMENTAL REVIEW On July 21, 2008, the Council confirmed the Director of Planning and Community Environment’s (PCE) approvals of a Mitigated Negative Declaration (MND) for the Mitchell Park Library and Community Center and a 2007 Addendum to the 2002 final Environmental Impact Report (EIR) for Main Library. Attachments: City of Palo Alto Page 5  Attachment A: Resolution Authorizing the Issuance and Sale of General Obligation Bonds For Measure N Projects, Authorizing and Directing the Execution of Related Documents, and (PDF)  Exhibit 1: Paying Agent Agreement (PDF)  Exhibit 2: Official Notice of Sale (PDF)  Exhibit 3: Preliminary Official Statement (POS) Containing and Discussing Information Material to the Offering and Sale of Bonds (excluding FY 2012 Comprehensive Annual Financial Report).pdf (PDF) *NOT YET APPROVED*  1  130416 dm 00710193   Resolution No. ______  Resolution of the Council of the City of Palo Alto Authorizing the Issuance and  Sale of Its General Obligation Bonds for Measure N Projects in the Principal  Amount of $20,695,000, Authorizing and Directing the Execution of a Paying  Agent Agreement and Certain Other Related Documents, and Authorizing  Actions Related Thereto      R E C I T A L S    A. More than two‐thirds of the qualified voters in the City of Palo Alto (the “City”),  voting at a municipal election on November 4, 2008, approved the issuance of up to  $76,000,000 of general obligation bonds to finance the costs of constructing a new energy  efficient, environmentally friendly Mitchell Park Library and Community Center, renovating and  expanding the Main Library, and renovating the Downtown Library, including enhancements at  all three facilities for seismic safety and disabled access, expanded space for library collections,  meeting and study areas, and new air conditioning, ventilation and lighting systems.    B. Pursuant to the authorization received at such election, and the authorization  contained in the applicable provisions of California law, including Chapter 4 (commencing with  section 43600) of Division 4 of Title 4 of the California Government Code and Section 53506 et  seq. of the California Government Code (collectively, the “Act”), the City issued the first series  of the general obligation bonds authorized as described above (the “Bonds”) in the principal  amount of $55,305,000 on June 30, 2010.    C. Pursuant to the authorization received at such election, and the authorization  contained in the Act, the City intends to issue the second and final series of the Bonds pursuant  to the Paying Agent Agreement (defined below) in a principal amount of $20,695,000, to be  designated as the “City of Palo Alto General Obligation Bonds, Election of 2008, Series 2013A”  (the “Series 2013A Bonds”.    D. The City Council of the City has duly considered such transactions and desires at  this time to approve said transactions and the documents related thereto.    NOW, THEREFORE, THE COUNCIL OF THE CITY OF PALO ALTO does resolve AS FOLLOWS:    SECTION 1.  Approval of Paying Agent Agreement.  The proposed form of paying agent  agreement dated as of June 1, 2013, by and between the City and U.S. Bank National  Association  (the “Paying Agent”), which is on file with the City Clerk (the “Paying Agent  Agreement”) is hereby approved, and the City Manager and Director of Administrative Services  (the “Authorized Officers”, and individually, an “Authorized Officer”) are hereby separately  authorized and directed, for and in the name and on behalf of the City, to execute and deliver  the Paying Agent Agreement in substantially the form, with the additions thereto (including the  insertion of the maturity dates, principal amounts and interest rates of the Series 2013A Bonds)  *NOT YET APPROVED*  2  130401 dm 00710193  and changes therein as the Authorized Officer may approve, such approval to be conclusively  evidenced by the execution and delivery thereof.  The Council hereby authorizes the issuance of  the Series 2013A Bonds pursuant to the Paying Agent Agreement, and the performance by the  City of its obligations under the Paying Agent Agreement.  The selection of U.S. Bank National  Association, as Paying Agent, is hereby approved and ratified.    SECTION 2.  Approval of Form of Series 2013A Bonds.  The form of Series 2013A Bonds  set forth in Exhibit A to the Paying Agent Agreement is hereby approved, and the City Manager  is hereby authorized and directed to execute the Series 2013A Bonds, and the City Clerk to  countersign in the name and on behalf of the City and under its seal, and to cause the delivery  thereof as provided for below.    SECTION 3.  Sale and Issuance of Series 2013A Bonds.  The Series 2013A Bonds shall be  sold by competitive sale, provided that (a) the true interest cost of the Series 2013A Bonds shall  not exceed 4.2% per annum, (b) the principal amount of the Series 2013A Bonds shall not  exceed $20,695,000, and (c) the final maturity date of the Series 2013A Bonds shall not extend  beyond August 1, 2043.  The Authorized Officers are hereby separately authorized and directed  to evidence the City’s acceptance of an offer to purchase the Series 2013A Bonds following  competitive bidding pursuant to the Official Notice of Sale relating to the competitive sale of  the Series 2013A Bonds (the “Official Notice of Sale”).  The City Council hereby approves the  Official Notice of Sale in substantially the form on file with the City Clerk.    Jones Hall, A Professional Law Corporation, as bond counsel to the City, is hereby  authorized and directed to cause a Notice of Intention to Sell Bonds, in form and substance  acceptable to the firm, to be published once in The Bond Buyer in accordance with Section  53692 of the California Government Code.    SECTION 4.  Approval of Preliminary and Final Official Statement. Quint & Thimmig LLP,  as disclosure counsel to the City, has prepared a preliminary official statement describing the  Series 2013A Bonds (the “Preliminary Official Statement”). The City Council hereby approves  the Preliminary Official Statement in the form presented to the Council at this meeting.  The  Authorized Officer is hereby authorized and directed to execute a certificate to the effect that  the Preliminary Official Statement was deemed "final" as of its date for purposes of Rule 15c2‐ 12 of the Securities Exchange Act of 1934, and the Authorized Officer is hereby authorized to so  deem such Preliminary Official Statement final.      The execution of the final Official Statement (the “Official Statement”), which shall  include such changes and additions to the Preliminary Official Statement deemed advisable by  the Authorized Officer or any other qualified officer of the City and such information permitted  to be excluded from the Preliminary Official Statement pursuant to the Rule, shall be conclusive  evidence of the approval of the Official Statement by the City.  The City Council authorizes the  distribution by Public Financial Management, Inc. (the “Financial Advisor”) of the Official  Statement to prospective purchasers of the Series 2013A Bonds.    *NOT YET APPROVED*  3  130401 dm 00710193  The Authorized Officer is authorized and directed to execute the Official Statement and  a statement that the facts contained in the Official Statement, and any supplement or  amendment thereto (which shall be deemed an original part thereof for the purpose of such  statement) were, at the time of sale of the Series 2013A Bonds, true and correct in all material  respects and that the Official Statement did not, on the date of sale of the Series 2013A Bonds,  and does not, as of the date of delivery of the Series 2013A Bonds, contain any untrue  statement of a material fact with respect to the City or omit to state material facts with respect  to the City required to be stated where necessary to make any statement made therein not  misleading in the light of the circumstances under which it was made. The Authorized Officer  shall take such further actions prior to the signing of the Official Statement as are deemed  necessary or appropriate to verify the accuracy thereof.    SECTION 5.  Delegation of Authority to Authorized Officers.  The Authorized Officers are  hereby authorized and directed to execute, sign and deliver any and all approvals, certificates,  statements, requests, requisitions and orders of the City in connection with the sale and  issuance of the Series 2013A Bonds, the purchase of the Series 2013A Bonds and the other  transactions described herein.  The Authorized Officers may authorize such other officers of the  City as they deem appropriate to undertake any of the actions which he is authorized or  directed to undertake pursuant hereto.    SECTION 6.  General Authority.  The officers of the City are hereby authorized and  directed, jointly and severally, to do any and all things and to execute and deliver any and all  documents which they may deem necessary or advisable in order to consummate the  transactions described herein or to otherwise effectuate the purposes of this resolution,  including preparing, or causing to be prepared, and executing all appropriate disclosure  documents relating to the Series 2013A Bonds and agreements necessary to comply with the  disclosure requirements of Rule 15c2‐12, as amended, of the Securities and Exchange  Commission.  Any such actions previously taken by such officers are hereby ratified and  confirmed.    SECTION 7.  Severability.  If any section, paragraph or provision of this resolution shall be  held to be invalid or unenforceable for any reason, such invalidity or unenforceability shall not  affect any remaining provisions hereof.    SECTION 8.  Effective Date.  This resolution shall take effect from and after the date of  its passage and adoption.    //    //    //    //  *NOT YET APPROVED*  4  130401 dm 00710193  SECTION 9.   CEQA Finding.  The Council finds that this resolution is not a project under  the California Environmental Quality Act and, therefore, no environmental impact assessment is  necessary.       INTRODUCED AND PASSED:    AYES:    NOES:    ABSENT:    ABSTENTIONS:    ATTEST:          __________________________  ______________________________  City Clerk     Mayor    APPROVED AS TO FORM:    APPROVED:    __________________________  ______________________________  Senior Assistant City Attorney  City Manager          ______________________________        Director of Administrative         Services      I HEREBY CERTIFY that the foregoing resolution was duly and regularly passed and adopted by  the City Council of the City of Palo Alto at a regular meeting thereof held on the _____ day of  _____, 2013, and that the foregoing is a full, true and correct copy of said Resolution.          City Clerk    26005-66 JH:WHM 3/18/13 4/5/13 4/16/13 PAYING AGENT AGREEMENT By and Between CITY OF PALO ALTO and U.S. BANK NATIONAL ASSOCIATION, as Paying Agent Dated as of June 1, 2013 Relating to $20,695,000 City of Palo Alto General Obligation Bonds Election of 2008, Series 2013A i TABLE OF CONTENTS ARTICLE I DEFINITIONS; AUTHORITY Section 1.01. Definitions. ............................................................................................................................... 2 Section 1.02. Authority for this Agreement. ............................................................................................... 5 ARTICLE II THE BONDS Section 2.01. Authorization........................................................................................................................... 6 Section 2.02. Terms of Bonds. ....................................................................................................................... 6 Section 2.03. Redemption. ............................................................................................................................. 7 Section 2.04. Form of Bonds. ........................................................................................................................ 9 Section 2.05. Execution of Bonds. ................................................................................................................ 9 Section 2.06. Transfer of Bonds. ................................................................................................................... 9 Section 2.07. Exchange of Bonds. ............................................................................................................... 10 Section 2.08. Bond Register. ........................................................................................................................ 10 Section 2.09. Temporary Bonds. ................................................................................................................. 10 Section 2.10. Bonds Mutilated, Lost, Destroyed or Stolen. ..................................................................... 10 Section 2.11. Book-Entry; Limited Obligation of City. ............................................................................ 11 Section 2.12. Representation Letter............................................................................................................ 12 Section 2.13. Transfers Outside Book-Entry System. .............................................................................. 12 Section 2.14. Payments and Notices to the Nominee. ............................................................................. 12 ARTICLE III ISSUANCE OF BONDS; APPLICATION OF BOND PROCEEDS; SECURITY FOR THE BONDS Section 3.01. Issuance and Delivery of Bonds. ......................................................................................... 13 Section 3.02. Application of Proceeds of Sale of Bonds. ......................................................................... 13 Section 3.03. Validity of Bonds. .................................................................................................................. 13 Section 3.04. Security for the Bonds. ......................................................................................................... 13 ARTICLE IV FUNDS AND ACCOUNTS Section 4.01. Project Fund. .......................................................................................................................... 14 Section 4.02. Debt Service Fund ................................................................................................................. 14 Section 4.03. Administration and Disbursements From Debt Service Fund ....................................... 14 Section 4.04. Bond Service Fund ................................................................................................................ 14 Section 4.05. Costs of Issuance Account ................................................................................................... 14 Section 4.06. Investment of Moneys .......................................................................................................... 14 ARTICLE V OTHER COVENANTS OF THE CITY Section 5.01. Punctual Payment. ................................................................................................................ 16 Section 5.02. Extension of Time for Payment. .......................................................................................... 16 Section 5.03. Payment of Claims. ............................................................................................................... 16 Section 5.04. Books and Accounts. ............................................................................................................. 16 Section 5.05. Protection of Security and Rights of Bondowners. ........................................................... 16 Section 5.06. Continuing Disclosure. ......................................................................................................... 16 ii Section 5.07. Further Assurances. .............................................................................................................. 17 Section 5.08. No Arbitrage. ......................................................................................................................... 17 Section 5.09. Federal Guarantee Prohibition. ........................................................................................... 17 Section 5.10. Private Activity Bond Limitation. ....................................................................................... 17 Section 5.11. Maintenance of Tax-Exemption .......................................................................................... 17 Section 5.12. Rebate Requirement. ............................................................................................................. 17 Section 5.13. Information Report. .............................................................................................................. 17 ARTICLE VI THE PAYING AGENT Section 6.01. Appointment of Paying Agent. ........................................................................................... 18 Section 6.02. Paying Agent May Hold Bonds. ......................................................................................... 18 Section 6.03. Liability of Agents. ................................................................................................................ 18 Section 6.04. Notice to Agents. ................................................................................................................... 19 Section 6.05. Compensation, Indemnification. ......................................................................................... 19 Section 6.06. Funds and Accounts. ............................................................................................................ 20 ARTICLE VII EVENTS OF DEFAULT AND REMEDIES OF BONDOWNERS Section 7.01. Events of Default. .................................................................................................................. 21 Section 7.02. Application of Funds. ........................................................................................................... 22 Section 7.03. Other Remedies of Bondowners. ........................................................................................ 22 Section 7.04. Non-Waiver. .......................................................................................................................... 22 Section 7.05. Remedies Not Exclusive. ...................................................................................................... 23 ARTICLE VIII SUPPLEMENTAL AGREEMENTS Section 8.01. Amendments Permitted. ...................................................................................................... 24 Section 8.02. Owners’ Meetings. ................................................................................................................ 24 Section 8.03. Procedure for Amendment with Written Consent of Owners. ....................................... 25 Section 8.04. Disqualified Bonds. ............................................................................................................... 25 Section 8.05. Effect of Supplemental Agreement. .................................................................................... 25 Section 8.06. Endorsement or Replacement of Bonds Issued After Amendments. ............................ 26 Section 8.07. Amendatory Endorsement of Bonds. ................................................................................. 26 ARTICLE IX MISCELLANEOUS Section 9.01. Benefits of Agreement Limited to Parties. ......................................................................... 27 Section 9.02. Successor is Deemed Included in All References to Predecessor. .................................. 27 Section 9.03. Discharge of Agreement. ...................................................................................................... 27 Section 9.04. Execution of Documents and Proof of Ownership by Owners. ...................................... 28 Section 9.05. Waiver of Personal Liability. ............................................................................................... 28 Section 9.06. Notices to and Demands on City and Paying Agent. ...................................................... 28 Section 9.07. Partial Invalidity. ................................................................................................................... 29 Section 9.08. Unclaimed Moneys. .............................................................................................................. 29 Section 9.09. Applicable Law...................................................................................................................... 29 Section 9.10. Conflict with Act. .................................................................................................................. 29 Section 9.11. Conclusive Evidence of Regularity. .................................................................................... 29 Section 9.12. Payment on Business Day. ................................................................................................... 29 Section 9.13. Counterparts. ......................................................................................................................... 30 iii EXHIBIT A FORM OF BOND PAYING AGENT AGREEMENT This Paying Agent Agreement (the “Agreement”) is made and entered into as of June 1, 2013, by and between the City of Palo Alto, a charter city organized and existing under the laws of the State of California (the “City”) and U.S. Bank National Association, a national banking association duly organized and existing under the laws of the United States, as Paying Agent (the “Paying Agent”) W I T N E S S ET H: WHEREAS, an election was duly and regularly held in the City on November 4, 2008 for the purpose of submitting to the qualified electors of Palo Alto the question whether bonds should be issued in the principal amount of not to exceed $76,000,000 to finance the costs of constructing a new energy efficient, environmentally friendly Mitchell Park Library and Community Center, renovating and expanding the Main Library, and renovating the Downtown Library, including enhancements at all three facilities for seismic safety and disabled access, expanded space for library collections, meeting and study areas, and new air conditioning, ventilation and lighting systems (the “Project”); and WHEREAS, more than two-thirds of the votes cast at the election were in favor of the issuance of the bonds; and WHEREAS, pursuant to the authorization received at such election, and the authorization contained in Chapter 4 (commencing with section 43600) of Division 4 of Title 4 of the California Government Code and Section 53506 et seq. of the California Government Code (together, the “Act”), the City issued its first series of general obligation bonds pursuant to a resolution adopted on May 10, 2010 and a Paying Agent Agreement, dated as of June 1, 2010, in a principal amount equal to $55,305,000; WHEREAS, pursuant to the authorization received at such election, and the authorization contained in the Act, the City is issuing its second and final series of general obligation bonds pursuant to a resolution adopted on May 6, 2013 (the “City Resolution”), and this Agreement in a principal amount equal to $20,695,000 (the “Bonds”); NOW THEREFORE, the City and the Paying Agent agree as follows: 2 ARTICLE I DEFINITIONS; AUTHORITY Section 1.01. Definitions. The terms defined in this Section 1.01, as used and capitalized herein, shall, for all purposes of this Agreement, have the meanings ascribed to them below, unless the context clearly requires some other meaning. “Act” means, collectively, Chapter 4 (commencing with section 43600) of Division 4 of Title 4 of the California Government Code and Section 53506 et seq. of the California Government Code, as in effect on the date of adoption hereof and as amended hereafter. “Articles,” “Sections” and other subdivisions are to the corresponding Articles, Sections or subdivisions of this Agreement, and the words “herein,” “hereof,” “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section or subdivision hereof. “Beneficial Owner” means any person who has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any Bonds, including persons holding Bonds through nominees or depositories including, but not limited to, through the Nominee. “Bond Counsel” means any attorney or firm of attorneys nationally recognized for expertise in rendering opinions as to the legality and tax exempt status of securities issued by public entities. “Bond Service Fund” means the Series 2013A Bond Service Fund established pursuant to Section 4.04 hereof. “Bonds” means the City of Palo Alto General Obligation Bonds, Election of 2008, Series 2013A, Outstanding pursuant to this Agreement. “Business Day” means a day which is not a Saturday or Sunday or a day on which banks in San Francisco and Los Angeles, California, and New York, New York, are not required or permitted to be closed. “City Representative” means the City Manager, the Director of Administrative Services, or any other person authorized by resolution of the City Council of the City to act on behalf of the City with respect to this Agreement. “City Resolution” has the meaning given to the term in the recitals hereto. “Closing Date” means the date upon which there is an exchange of Bonds for the proceeds representing the purchase price of the Bonds by the Purchaser. “Code” means the Internal Revenue Code of 1986,as amended. 3 “Continuing Disclosure Certificate” means that certain Continuing Disclosure Certificate dated the Closing Date and executed by the City, as originally executed and as it may be amended from time to time in accordance with the terms thereof. “Contractor” means the contractor(s) or vendor(s) from whom the City has ordered or caused to be ordered or with whom the City has contracted or caused to be contracted with respect to the construction of the Project, or any portion of the Project. “Costs of Issuance Account” means the account of that name established and held by the Paying Agent as provided in Section 4.05. “Debt Service” means the scheduled amount of interest and principal, including principal paid pursuant to mandatory sinking fund redemption, payable on the Bonds during the period of computation, excluding amounts scheduled during such period which relate to principal which has been retired before the beginning of such period. “Debt Service Fund” means the Series 2013A Debt Service Fund established pursuant to Section 4.02 hereof. “Depository” means any securities depository appointed to act as Depository under Section 2.13 hereof. “Fair Market Value” means the price at which a willing buyer would purchase the investment from a willing seller in a bona fide, arm’s length transaction (determined as of the date the contract to purchase or sell the investment becomes binding) if the investment is traded on an established securities market (within the meaning of section 1273 of the Code) and, otherwise, the term “Fair Market Value” means the acquisition price in a bona fide arm’s length transaction (as referenced above) if (i) the investment is a certificate of deposit that is acquired in accordance with applicable regulations under the Code, (ii) the investment is an agreement with specifically negotiated withdrawal or reinvestment provisions and a specifically negotiated interest rate (for example, a guaranteed investment contract, a forward supply contract or other investment agreement) that is acquired in accordance with applicable regulations under the Code, (iii) the investment is a United States Treasury Security--State and Local Government Series that is acquired in accordance with applicable regulations of the United States Bureau of Public Debt, or (iv) any commingled investment fund in which the City and related parties do not own more than a ten percent (10%) beneficial interest if the return paid by the fund is without regard to the source of investment. “Federal Securities” means Federal agency or United States government-sponsored enterprise obligations, participations, or other instruments, including those issued by or fully guaranteed as to principal and interest by federal agencies or United States government- sponsored enterprises. “Issuance Expenses” means all items of expense directly or indirectly reimbursable to the City relating to the execution and delivery of the Bonds, including but not limited to, filing and recording costs, settlement costs, printing costs, reproduction and binding costs, legal fees 4 and charges, bond insurance premiums, fees and expenses of the Paying Agent, financial and other professional consultant fees, and costs of obtaining credit ratings. “Moody’s” means Moody’s Investors Service, a corporation organized and existing under the laws of the State of Delaware, its successors and assigns, except that if such corporation shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency for any reason, the term “Moody’s” shall be deemed to refer to any other nationally recognized securities rating agency selected by the City. “Nominee” means the nominee of the Depository as determined from time to time in accordance with Section 2.13. “Outstanding,” when used as of any particular time with reference to Bonds, means all Bonds except: (a) Bonds theretofore canceled by the Paying Agent or surrendered to the Paying Agent for cancellation; (b) Bonds paid or deemed to have been paid within the meaning of Section 9.03 hereof; and (c) Bonds in lieu of or in substitution for which other Bonds shall have been authorized, executed, issued and delivered by the City pursuant to the Agreement. “Owner” or “Bondowner” means any person who shall be the registered owner of any Outstanding Bond. “Participant” means those broker-dealers, banks and other financial institutions from time to time for which the Depository holds Bonds as a securities depository. “Participating Underwriter” has the meaning assigned to such term in the Continuing Disclosure Certificate. “Person” means an individual, corporation, firm, association, partnership, trust or other legal entity or group of entities, including a governmental entity or any agency or political subdivision thereof. “Principal Office” means, with respect to the Trustee, the corporate trust office of the Paying Agent at One California Street, Suite 1000, San Francisco, California, Attention Corporate Trust Services (except with respect to the payment of the principal or prepayment price of the Bonds, in which case Principal Office means Corporate Trust Services of the Paying Agent, 60 Livingston Avenue, St. Paul, Minnesota, or such other location as designated by the Paying Agent. “Project” has the meaning given to the term in the recitals of this Agreement. “Project Costs” means: 5 (a) all costs of payment of, or reimbursement for, acquisition, construction, installation and equipping of the Project including, but not limited to, architect and engineering fees, Contractor payments, costs of feasibility and other reports, inspection costs, performance bond premiums, and permit fees, provided that any such costs are directly related to the acquisition or improvement of real property; (b) Issuance Expenses not paid by the Original Purchaser from original issue premium on the Bonds; and (c) costs directly related to the administration of the funds and accounts created under this Agreement. “Project Fund” means the Series 2013A Project Fund established pursuant to Section 4.01 hereof. “Purchaser” means __________________. “Regulations” means temporary and permanent regulations promulgated under the Code. “S&P” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc., a corporation organized and existing under the laws of the State of New York, its successors and assigns, except that if such corporation shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency for any reason, the term “S&P” shall be deemed to refer to any other nationally recognized securities rating agency selected by the City. “Securities Depositories” means: The Depository Trust Company, 711 Stewart Avenue, Garden City, New York 11530, Fax (516) 277-4039 or 4190; or, in accordance with the then current guidelines promulgated by the Securities and Exchange Commission at such other addresses and/or to such other securities depositories as the City may designate in writing to the Paying Agent. “Supplemental Agreement” means any agreement supplemental to or amendatory of this Agreement entered into in accordance with Article VIII hereof. “Written Request of the City” means an instrument in writing signed by the City Representative. Section 1.02. Authority for this Agreement. This Agreement is being entered into pursuant to the authority set forth in the Act and the City Resolution, constitutes a continuing agreement with the Owners of all of the Bonds issued or to be issued hereunder and then Outstanding, to secure the full and final payment of principal of and premiums, if any, and the interest on the Bonds, all pursuant to the provisions of the Act. 6 ARTICLE II THE BONDS Section 2.01. Authorization. Bonds in the aggregate principal amount of Twenty Million Six Hundred Ninety-Five Thousand dollars ($20,695,000) are hereby authorized to be issued by the City under and subject to the terms of the Act and which may from time to time be executed and delivered hereunder, subject to the covenants, agreements, provisions and conditions herein contained. The Bonds shall be designated the “City of Palo Alto General Obligation Bonds, Election of 2008, Series 2013A”. Section 2.02. Terms of Bonds. (a) Form; Numbering. The Bonds shall be issued as fully registered Bonds, without coupons, in the denomination of $5,000 each or any integral multiple of $5,000, but in an amount not to exceed the aggregate principal amount of Bonds maturing in the year of maturity of the Bond for which the denomination is specified. Bonds shall be lettered and numbered as the Paying Agent shall prescribe. (b) Date of Bonds. The Bonds shall be dated the Closing Date. (c) CUSIP Identification Numbers. “CUSIP” identification numbers shall be imprinted on the Bonds, but such numbers shall not constitute a part of the contract evidenced by the Bonds and any error or omission with respect thereto shall not constitute cause for refusal of the Purchaser to accept delivery of and pay for the Bonds. In addition, failure on the part of the City to use such CUSIP numbers in any notice to Owners of the Bonds shall not constitute an event of default or any violation of the City’s contract with such Owners and shall not impair the effectiveness of any such notice. (d) Maturities; Interest. The Bonds shall bear interest at the rate or rates set forth below, payable on February 1 and August 1 of each year, commencing February 1, 2014 (each an “Interest Payment Date”), and shall mature and become payable as to principal on August 1 of the years and in the amounts as set forth below: Maturity Year (August 1) Principal Amount Interest Rate Maturity Year (August 1) Principal Amount Interest Rate 7 Each Bond shall bear interest from the Interest Payment Date next preceding the date of registration and authentication thereof unless (i) it is registered and authenticated as of an Interest Payment Date, in which event it shall bear interest from such date, or (ii) it is registered and authenticated prior to an Interest Payment Date and after the close of business on the fifteenth day of the month preceding such Interest Payment Date, in which event it shall bear interest from such Interest Payment Date, or (iii) it is registered and authenticated on or prior to January 15, 2014, in which event it shall bear interest from the date of original issuance and authentication of the Bonds; provided, however, that if at the time of registration and authentication of a Bond, interest is in default thereon, such Bond shall bear interest from the Interest Payment Date to which interest has previously been paid or made available for payment thereon. Interest on the Bonds shall be calculated on the basis of a 360-day year composed of twelve 30-day months. (e) Payment. Interest on the Bonds (including the final interest payment upon maturity or earlier redemption) is payable by check mailed on the applicable Interest Payment Date to the Owner thereof at his or her address as it appears on the registration books maintained by the Paying Agent at the close of business on the fifteenth (15th) day of the month preceding the Interest Payment Date, or at such other address as the Owner may have filed with the Paying Agent for that purpose; provided that an Owner of $1,000,000 or more aggregate principal amount of Bonds, or the Owner of all of the Bonds at the time Outstanding, shall, at his or her option, receive payment of interest by wire transfer to an account in the United States of America designated by such Owner to the Paying Agent no later than the fifteenth (15) day of the month immediately preceding the applicable Interest Payment Date. Principal of the Bonds is payable in lawful money of the United States of America at the Principal Office of the Paying Agent. Section 2.03. Redemption. (a) Optional Redemption. Bonds maturing on or before August 1, 20__ are not subject to redemption prior to their respective maturity dates. Bonds maturing [after August 1, 20__], shall be subject to redemption prior to their respective maturity dates as a whole or in part on any date, as designated by the City and, absent any such designation, pro rata among maturities and by lot within a maturity, from moneys provided at the option of the City, in each case on and after August 1, 20__, at a redemption price equal to the principal amount of the Bonds to be redeemed, plus accrued interest to the date of redemption, without premium. (b) Mandatory Sinking Fund Redemption. (i) The Bonds maturing August 1, 20__ are subject to mandatory sinking fund redemption in part, by lot, prior to their stated maturity date, on each August 1 on and after August 1, 20__, at a redemption price equal to 100% of the principal amount thereof called for redemption, plus accrued interest to the redemption date, without premium, as follows: 8 Date (August 1) Amount (ii) The Bonds maturing August 1, 20__ are subject to mandatory sinking fund redemption in part, by lot, prior to their stated maturity date, on each August 1 on and after August 1, 20__, at a redemption price equal to 100% of the principal amount thereof called for redemption, plus accrued interest to the redemption date, without premium, as follows: Date (August 1) Amount (iii) The Bonds maturing August 1, 20__ are subject to mandatory sinking fund redemption in part, by lot, prior to their stated maturity date, on each August 1 on and after the August 1, 20__, at a redemption price equal to 100% of the principal amount thereof called for redemption, plus accrued interest to the redemption date, without premium, as follows: Date (August 1) Amount (c) Redemption Procedure. The Paying Agent shall cause notice of any redemption to be mailed, first class mail, postage prepaid, at least thirty (30) days but not more than sixty (60) days prior to the date fixed for redemption, to the respective Owners of any Bonds designated for redemption, at their addresses appearing on the Bond registration books maintained by the Paying Agent and to the Securities Depositories; but such mailing shall not be a condition precedent to such redemption and failure to mail or to receive any such notice shall not affect the validity of the proceedings for the redemption of such Bonds. The City has the right to rescind any notice of the redemption of Bonds by written notice to the Paying Agent on or prior to the dated fixed for redemption. Any notice of redemption shall be cancelled and annulled if for any reason funds will not be or are not available on the date fixed for redemption for the payment in full of the Bonds then called for redemption, and such cancellation shall not constitute an Event of Default. The City and the Paying Agent have no liability to the Bond Owners or any other party related to or arising from such rescission of notice of redemption. The Paying Agent shall mail notice of such rescission of notice of redemption in the same manner as the original notice of redemption was sent under this Section 2.03. Such notice shall state the redemption date and the redemption price and, if less than all of the then Outstanding Bonds are to be called for redemption, shall designate the serial numbers of the Bonds to be redeemed by giving the individual number of each Bond or by 9 stating that all Bonds between two stated numbers, both inclusive, or by stating that all of the Bonds of one or more maturities have been called for redemption, and shall require that such Bonds be then surrendered at the Principal Office of the Paying Agent for redemption at the said redemption price, giving notice also that further interest on such Bonds will not accrue from and after the redemption date. Upon surrender of Bonds redeemed in part only, the City shall execute and the Paying Agent shall authenticate and deliver to the Owner, at the expense of the City, a new Bond or Bonds, of the same maturity, of authorized denominations in aggregate principal amount equal to the unredeemed portion of the Bond or Bonds. From and after the date fixed for redemption, if notice of such redemption shall have been duly given and funds available for the payment of the principal of and interest (and premium, if any) on the Bonds so called for redemption shall have been duly provided, such Bonds so called shall cease to be entitled to any benefit under this Agreement other than the right to receive payment of the redemption price, and no interest shall accrue thereon on or after the redemption date specified in such notice. All Bonds redeemed pursuant to this Section 2.03 shall be canceled by the Paying Agent, and a certificate of cancellation shall be submitted by the Paying Agent to the City. Section 2.04. Form of Bonds. The Bonds, the form of the Paying Agent’s certificate of authentication and registration and the form of assignment to appear thereon shall be substantially in the forms, respectively, with necessary or appropriate variations, omissions and insertions, as permitted or required by this Agreement, as are set forth in Exhibit A attached hereto. Section 2.05. Execution of Bonds. The Bonds shall be executed on behalf of the City by the manual or facsimile signatures of its City Manager, and attested by the manual or facsimile signature of its City Clerk, who are in office on the date of execution of this Agreement or at any time thereafter, and the seal of the City shall be impressed, imprinted or reproduced by facsimile thereon. If any officer whose signature appears on any Bond ceases to be such officer before delivery of the Bonds to the Purchaser, such signature shall nevertheless be as effective as if the officer had remained in office until the delivery of the Bonds to the Purchaser. Any Bond may be signed and attested on behalf of the City by such persons as at the actual date of the execution of such Bond shall be the proper officers of the City although at the nominal date of such Bond any such person shall not have been such officer of the City. Only such Bonds as shall bear thereon a certificate of authentication and registration in the form set forth in Exhibit A attached hereto, executed and dated by the Paying Agent, shall be valid or obligatory for any purpose or entitled to the benefits of this Agreement, and such certificate of the Paying Agent shall be conclusive evidence that the Bonds so registered have been duly authenticated, registered and delivered hereunder and are entitled to the benefits of this Agreement. Section 2.06. Transfer of Bonds. Any Bond may, in accordance with its terms, be transferred, upon the books required to be kept pursuant to the provisions of Section 2.08 10 hereof, by the person in whose name it is registered, in person or by his duly authorized attorney, upon surrender of such Bond for cancellation at the Principal Office at the Paying Agent, accompanied by delivery of a written instrument of transfer in a form approved by the Paying Agent, duly executed. The Paying Agent shall require the payment by the Owner requesting such transfer of any tax or other governmental charge required to be paid with respect to such transfer. Whenever any Bond or Bonds shall be surrendered for transfer, the City shall execute and the Paying Agent shall authenticate and deliver a new Bond or Bonds, for like aggregate principal amount. No transfers of Bonds shall be required to be made (a) fifteen days prior to the date established for selection of Bonds for redemption or (b) with respect to a Bond after such Bond has been selected for redemption (except with respect to the unredeemed portion thereof). Section 2.07. Exchange of Bonds. Bonds may be exchanged at the Principal Office of the Paying Agent for a like aggregate principal amount of Bonds of authorized denominations and of the same maturity. The Paying Agent shall require the payment by the Owner requesting such exchange of any tax or other governmental charge required to be paid with respect to such exchange. No exchanges of Bonds shall be required to be made (a) fifteen days prior to the date established for selection of Bonds for redemption or (b) with respect to a Bond after such Bond has been selected for redemption (except with respect to the unredeemed portion thereof). Section 2.08. Bond Register. The Paying Agent shall keep or cause to be kept sufficient books for the registration and transfer of the Bonds, which shall at all times be open to inspection by the City upon reasonable notice; and, upon presentation for such purpose, the Paying Agent shall, under such reasonable regulations as it may prescribe, register or transfer or cause to be registered or transferred, on the books, Bonds as herein before provided. Section 2.09. Temporary Bonds. The Bonds may be initially issued in temporary form exchangeable for definitive Bonds when ready for delivery. The temporary Bonds may be printed, lithographed or typewritten, shall be of such denominations as may be determined by the City, and may contain such reference to any of the provisions of this Agreement as may be appropriate. Every temporary Bond shall be executed by the City upon the same conditions and in substantially the same manner as the definitive Bonds. If the City issues temporary Bonds it will execute and furnish definitive Bonds without delay, and thereupon the temporary Bonds may be surrendered, for cancellation, in exchange therefor at the Principal Office of the Paying Agent and the Paying Agent shall deliver in exchange for such temporary Bonds an equal aggregate principal amount of definitive Bonds of authorized denominations. Until so exchanged, the temporary Bonds shall be entitled to the same benefits pursuant to this Agreement as definitive Bonds executed and delivered hereunder. Section 2.10. Bonds Mutilated, Lost, Destroyed or Stolen. If any Bond shall become mutilated the City, at the expense of the Owner of that Bond, shall execute, and the Paying Agent shall thereupon authenticate and deliver, a new Bond of like maturity and principal 11 amount in exchange and substitution for the Bond so mutilated, but only upon surrender to the Paying Agent of the Bond so mutilated. Every mutilated Bond so surrendered to the Paying Agent shall be canceled by it and delivered to, or upon the order of, the City. If any Bond shall be lost, destroyed or stolen, evidence of such loss, destruction or theft may be submitted to the City and, if such evidence be satisfactory to the City and indemnity satisfactory to it shall be given, the City, at the expense of the Owner, shall execute, and the Paying Agent shall thereupon authenticate and deliver, a new Bond of like maturity and principal amount in lieu of and in substitution for the Bond so lost, destroyed or stolen. The City may require payment of a sum not exceeding the actual cost of preparing each new Bond issued under this Section and of the expenses which may be incurred by the City and the Paying Agent in the premises. Any Bond issued under the provisions of this Section 2.10 in lieu of any Bond alleged to be lost, destroyed or stolen shall constitute an original additional contractual obligation on the part of the City whether or not the Bond so alleged to be lost, destroyed or stolen be at any time enforceable by anyone, and shall be equally and proportionately entitled to the benefits of this Agreement with all other Bonds issued pursuant to this Agreement. Section 2.11. Book-Entry; Limited Obligation of City. The Bonds may be issued in the form of a separate single fully registered Bond (which may be typewritten) for each maturity. The ownership of such Bond shall be registered in the registration books kept by the Paying Agent in the name of the Nominee as nominee of the Depository. With respect to Bonds registered in the registration books kept by the Paying Agent in the name of the Nominee, the City and the Paying Agent shall have no responsibility or obligation to such Participant or to any Person on behalf of which such a Participant holds an interest in the Bonds. Without limiting the immediately preceding sentence, the City and the Paying Agent shall have no responsibility or obligation with respect to (i) the accuracy of the records of the Depository, the Nominee, or any Participant with respect to any ownership interest in the Bonds, (ii) the delivery to any Participant or any other Person, other than as shown in the registration books kept by the Paying Agent, of any notice with respect to the Bonds, including any notice of redemption, (iii) the selection by the Depository and its Participants of the beneficial interests in the Bonds to be redeemed in the event the Bonds are redeemed in part, or (iv) the payment to any Participant or any other Person, other than a Nominee as shown in the registration books kept by the Paying Agent, of any principal of, premium, if any, or interest on the Bonds. The City and the Paying Agent may treat and consider the Person in whose name each Bond is registered in the registration books kept by the Paying Agent as the owner and absolute Owner of such Bond for the purpose of payment of principal of, premium, if any, and interest on such Bond, for the purpose of giving notices of prepayment and other matters with respect to such Bond, for the purposes of registering transfers with respect to such Bond, and for all other purposes whatsoever. The Paying Agent shall pay all principal, premium, if any, and interest with respect to the Bonds, only to or upon the order of the respective Owners, as shown in the registration books kept by the Paying Agent, or their respective attorneys duly authorized in writing, and all such payments shall be valid and effective to fully satisfy and discharge the City’s obligations with respect to payment of principal, premium, if any, and interest on the Bonds to the extent of the sum or sums so paid. No person other than an Owner, as shown in the registration books kept by the Paying Agent, shall receive a Bond evidencing the obligation of 12 the City to make payments of principal, premium, if any, and interest pursuant to this Paying Agent Agreement. Upon delivery by the Depository to the Nominee, the Paying Agent and the City of written notice to the effect that the Depository has determined to substitute a new nominee in place of the Nominee, and subject to the provisions regarding the payment of the principal of and interest on the Bonds set forth in Section 2.02(e), the word Nominee in this Agreement shall refer to such new nominee of the Depository. Section 2.12. Representation Letter. In order to qualify the Bonds for the Depository’s book-entry system, the City shall execute, seal, countersign and deliver to such Depository a letter from the City representing such matters as shall be necessary to so qualify the Bonds (the “Representation Letter”). The execution and delivery of the Representation Letter shall not in any way limit the provisions of Section 2.12 hereof or in any other way impose upon the City or the Paying Agent any obligation whatsoever with respect to Persons having interests in the Bonds other than the Owners, as shown on the registration books kept by the Paying Agent. In the written acceptance of the Paying Agent, such Paying Agent shall agree to take all actions necessary for all representations of the City in the Representation Letter with respect to the Paying Agent to at all times be complied with. In addition to the execution and delivery of the Representation Letter, the City shall take any other actions, not inconsistent with this Agreement, to qualify the Bonds for the Depository’s book-entry system. Section 2.13. Transfers Outside Book-Entry System. The City may, by written request, at any time or for any reason, remove the Depository and appoint a successor or successors thereto. In the event (i) the Depository determines not to continue to act as securities depository for any series of Bonds, or (ii) the City determines that the Depository shall no longer so act, then the City will discontinue the book-entry system with the Depository. If the City fails to identify another qualified securities depository to replace the Depository then the Bonds shall no longer be restricted to being registered in the registration books kept by the Paying Agent in the name of the Nominee, but shall be registered in whatever name or names Owners of such Bonds transferring or exchanging such Bonds shall designate, in accordance with the provisions of Section 2.06. Section 2.14. Payments and Notices to the Nominee. Notwithstanding any other provision of this Agreement to the contrary, so long as any Bond is registered in the name of the Nominee, all payments of principal of, premium, if any, and interest on such Bond and all notices with respect to such Bond shall be made and given, respectively, as provided in the Representation Letter or as otherwise instructed in writing by the Depository. 13 ARTICLE III ISSUANCE OF BONDS; APPLICATION OF BOND PROCEEDS; SECURITY FOR THE BONDS Section 3.01. Issuance and Delivery of Bonds. At any time after the execution of this Agreement the City may issue and deliver Bonds in the aggregate principal amount of Twenty Million Six Hundred Ninety-Five Thousand dollars ($20,695,000). The Bonds, substantially in the form attached hereto as Exhibit A, shall be printed, signed and sealed, and delivered to the Purchaser through the Depository on receipt of the purchase price therefor. The appropriate officials of the City are hereby authorized to take any and all action any of them deem reasonable in order to enable the City to execute and deliver the Bonds. The Paying Agent is hereby authorized to deliver the Bonds to the Purchaser, upon receipt of a Written Request of the City. Section 3.02. Application of Proceeds of Sale of Bonds. Upon the receipt of payment for the Bonds, being $_______________, the proceeds thereof shall be paid to the Paying Agent, to be transferred or deposited as follows: (a) The Paying Agent shall deposit $_____________ into the Costs of Issuance Account; and (b) The Paying Agent shall transfer to the City, for deposit in the Project Fund, the remainder of the proceeds of the Bonds, being $_______________. Section 3.03. Validity of Bonds. The validity of the authorization and issuance of the Bonds shall not be dependent upon the completion of the Project or upon the performance by any person of his or her obligation with respect to such Project. Section 3.04. Security for the Bonds. The Bonds are general obligations of the City and the City has the power, is obligated and hereby covenants to levy ad valorem taxes upon all property within the City subject to taxation by the City, without limitation of rate or amount (except with respect to certain personal property which is taxed at limited rates), for the payment of the Bonds and the interest thereon, in accordance with all relevant provisions of law. The City hereby covenants to direct the Board of Supervisors of Santa Clara County to levy and collect such ad valorem taxes in such amounts and at such times as is necessary to ensure the timely payment of Debt Service. 14 ARTICLE IV FUNDS AND ACCOUNTS Section 4.01. Project Fund. There is hereby established with the City as a separate fund, to be maintained distinct from all other funds of the City, the Series 2013A Project Fund, to the credit of which a deposit shall be made as required by clause (b) of Section 3.02. Money in the Project Fund shall be held by the City and disbursed for the payment of Project Costs. If, upon completion of the Project, amounts remain in the Project Fund, the City shall transfer such amounts to the Debt Service Fund. At such time that no amounts remain on deposit in the Project Fund, the City shall close the Project Fund. Section 4.02. Debt Service Fund. There is hereby established with the City as a separate fund, to be maintained distinct from all other funds of the City, the Series 2013A Debt Service Fund. Upon the receipt thereof, the City shall deposit the proceeds of the ad valorem property taxes levied to pay Debt Service in the Debt Service Fund and, if any, other moneys lawfully available to pay debt service on the Bonds as provided in Section 3.04. The City shall also deposit in the Debt Service Fund the amount required by Section 3.02(a) and any other amounts required by Section 3.04 hereof. The Debt Service Fund shall be administered and disbursements made in the manner and in the order set forth in Section 4.03 hereof. Section 4.03. Administration and Disbursements From Debt Service Fund. All moneys in the Debt Service Fund shall be used and withdrawn by the City solely for the purpose of paying the principal of and interest on the Bonds as the same shall become due and payable. At least five (5) Business Days prior to each Interest Payment Date, commencing January 25, 2014, the City shall transfer to the Paying Agent moneys on deposit in the Debt Service Fund for application by the Paying Agent on the next succeeding Interest Payment Date to the payment of principal of and interest on the Bonds. Section 4.04. Bond Service Fund. There is hereby established as a separate fund the Bond Service Fund, to be held by the Paying Agent. All moneys received by the Paying Agent from the City pursuant to Section 4.03 shall be deposited into the Bond Service Fund. The moneys on deposit in the Bond Service Fund shall be used solely to pay principal and interest on the Bonds when due. Section 4.05. Costs of Issuance Account. There is hereby established as a separate account the Costs of Issuance Account, to be held by the Paying Agent. There shall be deposited into the Costs of Issuance Account the amount specified in Section 3.02(b). The moneys in the Cost of Issuance Account shall be used solely for the purpose of the payment of Issuance Expenses upon receipt by the Paying Agent of invoices approved by the City, on or after the Closing Date. Any funds remaining in the Cost of Issuance Account on September 1, 2013, shall be transferred by the Paying Agent to the City, for deposit to the Debt Service Fund. Section 4.06. Investment of Moneys. 15 (a) Subject to the provisions of Section 5.08 hereof, amounts on deposit in the Project Fund and the Debt Service Fund may be invested by the City in investments selected by the City, which are included as “Investment Instruments” in the City’s approved Investment Policy in effect at the time such investment is made, and earnings on such investments shall remain in the respective fund therein. Such investments shall be purchased at their Fair Market Value. (b) Subject to the provisions of Section 5.08 hereof, amounts on deposit in the Bond Service Fund and Costs of Issuance Account may only be invested by the Paying Agent in a money market fund registered under the Federal Investment Company Act of 1940, whose shares are registered under the Securities Act of 1933, comprised of investments described in Federal Securities or of repurchase agreements comprised of such investments, and having a rating of “AAAm-G” or “AAAm” by S&P or “Aaa” by Moody's, which fund may include a fund for which the Paying Agent, its affiliates or subsidiaries provide investment, advisory or other services, and earnings on such investments shall remain in the Bond Service Fund. (c) The City acknowledges that to the extent that regulations of the Comptroller of the Currency or other applicable regulatory agency grant the City the right to receive brokerage confirmations of security transactions, the City waives receipt of such confirmations. The Paying Agent shall furnish to the City periodic statements of account which shall include detail of all investment transactions made by the Paying Agent. 16 ARTICLE V OTHER COVENANTS OF THE CITY Section 5.01. Punctual Payment. The City will punctually pay, or cause to be paid, the principal of and interest on the Bonds, in strict conformity with the terms of the Bonds and of this Agreement, and it will faithfully observe and perform all of the conditions, covenants and requirements of this Agreement and of the Bonds. Nothing herein contained shall prevent the City from making advances of its own moneys, howsoever derived, to any of the uses or purposes permitted by law. Section 5.02. Extension of Time for Payment. In order to prevent any accumulation of claims for interest after maturity, the City will not, directly or indirectly, extend or consent to the extension of the time for the payment of any claim for interest on any of the Bonds and will not, directly or indirectly, approve any such arrangement by purchasing or funding the claims for interest or in any other manner. In case any such claim for interest shall be extended or funded, whether or not with the consent of the City, such claim for interest so extended or funded shall not be entitled, in case of default hereunder, to the benefits of this Agreement, except subject to the prior payment in full of the principal of all of the Bonds then Outstanding and of all claims for interest which shall not have so extended or funded. Section 5.03. Payment of Claims. The City will pay and discharge, or cause to be paid and discharged, any and all lawful claims for labor, materials or supplies which, if unpaid, might become a lien or charge upon the Project financed with the proceeds of the Bonds which might impair the security of the Bonds. Nothing herein contained shall require the City to make any such payment so long as the City in good faith shall contest the validity of the claims. Section 5.04. Books and Accounts. The City will keep, or cause to be kept, proper books of record and accounts, separate from all other records and accounts of the City in which complete and correct entries shall be made of all transactions relating to the Project financed with proceeds of the Bonds. Such books of record and accounts shall at all times during business hours be subject to inspection by the Owners of not less than ten percent (10%) of the principal amount of the Bonds then Outstanding, or their representatives authorized in writing. Section 5.05. Protection of Security and Rights of Bondowners. The City will preserve and protect the security of the Bonds and the rights of the Bondowners, and will warrant and defend their rights against all claims and demands of all persons. From and after the sale and delivery of any of the Bonds by the City, the Bonds shall be incontestable by the City. Section 5.06. Continuing Disclosure. The City hereby covenants and agrees that it will comply with and carry out all of the terms of the Continuing Disclosure Certificate. Notwithstanding any other provision of this Agreement, failure of the City to comply with the Continuing Disclosure Certificate shall not be an Event of Default under Section 7.01 hereof; provided, however, any Participating Underwriter, any Owner or any Beneficial Owner may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the City to comply with its obligations under this Section 5.06 and the Continuing Disclosure Certificate. 17 Section 5.07. Further Assurances. The City will adopt, make, execute and deliver any and all such further resolutions, instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the performance of this Agreement, and for the better assuring and confirming unto the Owners of the Bonds of the rights and benefits provided in this Agreement. Section 5.08. No Arbitrage. The City shall not take, or permit or suffer to be taken by the Paying Agent or otherwise, any action with respect to the proceeds of the Bonds which, if such action had been reasonably expected to have been taken, or had been deliberately and intentionally taken, on the date of issuance of the Bonds would have caused the Bonds to be “arbitrage bonds” within the meaning of section 148 of the Code. Section 5.09. Federal Guarantee Prohibition. The City shall not take any action or permit or suffer any action to be taken if the result of the same would be to cause the Bonds to be “federally guaranteed” within the meaning of section 149(b) of the Code. Section 5.10. Private Activity Bond Limitation. The City shall assure that the proceeds of the Bonds are not so used as to cause the Bonds to satisfy the private business tests of section 141(b) of the Code or the private loan financing test of section 141(c) of the Code. Section 5.11. Maintenance of Tax-Exemption. The City shall take all actions necessary to assure the exclusion of interest on the Bonds from the gross income of the Owners of the Bonds to the same extent as such interest is permitted to be excluded from gross income under the Code as in effect on the date of issuance of the Bonds. Section 5.12. Rebate Requirement. The City shall take any and all actions necessary to assure compliance with section 148(f) of the Code, relating to the rebate of excess investment earnings, if any, to the federal government, to the extent that such section is applicable to the Bonds. Section 5.13. Information Report. The Director of Administrative Services is hereby directed to assure the filing of an information report for the Bonds in compliance with Section 149(e) of the Code. 18 ARTICLE VI THE PAYING AGENT Section 6.01. Appointment of Paying Agent. U.S. Bank National Association, at its Principal Office in St. Paul, Minnesota, or in such other location as approved by the City, is hereby appointed Paying Agent for the Bonds. The Paying Agent undertakes to perform such duties, and only such duties, as are specifically set forth in this Agreement, and, even during the continuance of an Event of Default, no implied covenants or obligations shall be read into this Agreement against the Paying Agent. The Paying Agent shall signify its acceptance of the duties and obligations imposed upon it by this Agreement by executing and delivering to the City this Agreement. The City may remove the Paying Agent initially appointed, and any successor thereto, and may appoint a successor or successors thereto, but any such successor shall be a bank or trust company doing business in the State of California, having (or, if such bank or trust company is a member of a bank holding company, its parent holding company has) a combined capital (exclusive of borrowed capital) and surplus of at least fifty million dollars ($50,000,000), and subject to supervision or examination by federal or state authority. If such bank or trust company publishes a report of condition at least annually, pursuant to law or to the requirements of any supervising or examining authority above referred to, then for the purposes of this Section 6.01 the combined capital and surplus of such bank or trust company shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. The Paying Agent may at any time resign by giving written notice to the City and the Bondowners of such resignation. Upon receiving notice of such resignation, the City shall promptly appoint a successor Paying Agent by an instrument in writing. Any resignation or removal of the Paying Agent and appointment of a successor Paying Agent shall become effective upon acceptance of appointment by the successor Paying Agent. Section 6.02. Paying Agent May Hold Bonds. The Paying Agent may become the owner of any of the Bonds in its own or any other capacity with the same rights it would have if it were not Paying Agent. Section 6.03. Liability of Agents. The recitals of facts, covenants and agreements herein and in the Bonds contained shall be taken as statements, covenants and agreements of the City, and the Paying Agent assumes no responsibility for the correctness of the same, nor makes any representations as to the validity or sufficiency of this Agreement or of the Bonds, nor shall incur any responsibility in respect thereof, other than as set forth in this Agreement. The Paying Agent shall not be liable in connection with the performance of its duties hereunder, except for its own negligence or willful default. In the absence of bad faith, the Paying Agent may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Paying Agent and conforming to the requirements of this Agreement; but in the case of any such certificates or opinions by which any provision hereof are specifically required to be furnished to the Paying Agent, the Paying Agent shall be under a duty to 19 examine the same to determine whether or not they conform to the requirements of this Agreement. The Paying Agent shall not be liable for any error of judgment made in good faith by a responsible officer unless it shall be proved that the Paying Agent was negligent in ascertaining the pertinent facts. No provision of this Agreement shall require the Paying Agent to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. The Paying Agent may execute any of the powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys and the Paying Agent shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder. Section 6.04. Notice to Agents. The Paying Agent may rely and shall be protected in acting or refraining from acting upon any notice, resolution, request, consent, order, certificate, report, warrant, bond or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or proper parties. The Paying Agent may consult with counsel, who may be of counsel to the City, with regard to legal questions, and the opinion of such counsel shall be full and complete authorization and protection in respect of any action taken or suffered by it hereunder in good faith and in accordance therewith. Whenever in the administration of its duties under this Agreement the Paying Agent shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering any action hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed) may, in the absence of bad faith on the part of the Paying Agent, be deemed to be conclusively proved and established by a certificate of the City, and such certificate shall be full warrant to the Paying Agent for any action taken or suffered under the provisions of this Agreement upon the faith thereof, but in its discretion the Paying Agent may, in lieu thereof, accept other evidence of such matter or may require such additional evidence as to it may seem reasonable. Section 6.05. Compensation, Indemnification. The City shall pay to the Paying Agent from time to time reasonable compensation for all services rendered under this Agreement, and also all reasonable expenses, charges, counsel fees and other disbursements, including those of their attorneys, agents and employees, incurred in and about the performance of their powers and duties under this Agreement. A City Representative is hereby authorized to execute an agreement or agreements with the Paying Agent in connection with such fees and expenses. The City further agrees to indemnify and save the Paying Agent harmless against any liabilities, costs, claims and expenses of any kind which it may incur in the exercise and performance of its powers and duties hereunder which are not due to its negligence or bad faith. 20 Section 6.06. Funds and Accounts. The Paying Agent may establish such funds and accounts as it reasonably deems necessary or appropriate to perform its obligations under this Agreement. 21 ARTICLE VII EVENTS OF DEFAULT AND REMEDIES OF BONDOWNERS Section 7.01. Events of Default. If one or more of the following events (“Events of Default”) shall happen, that is to say: (a) if default shall be made by the City in the due and punctual payment of the principal of or redemption premium, if any, on any Bond when and as the same shall become due and payable, whether at maturity as therein expressed or by declaration or otherwise; (b) if default shall be made by the City in the due and punctual payment of any installment of interest on any Bond when and as such interest installment shall become due and payable; (c) if default shall be made by the City in the observance of any of the covenants, agreements or conditions on its part in this Agreement or in the Bonds contained, and such default shall have continued for a period of thirty (30) days after written notice thereof to the City Representative; or (d) if the City shall file a petition seeking reorganization or arrangement under the federal bankruptcy laws or any other applicable law of the United States of America, or if a court of competent jurisdiction shall approve a petition, seeking reorganization of the City under the federal bankruptcy laws or any other applicable law of the United States of America, or if, under the provisions of any other law for the relief or aid of debtors, any court of competent jurisdiction shall assume custody or control of the City or of the whole or any substantial part of its property; then, and in each and every event of default and upon written request of the Owners of not less than sixty percent (60%) in aggregate principal amount of the Bonds at the time Outstanding, the principal of all of the Bonds then Outstanding, and the interest accrued thereon, shall be declared to be due and payable immediately, and upon any such declaration the same shall become and shall be immediately due and payable, anything in this Agreement or in the Bonds contained to the contrary notwithstanding. Such declaration may be rescinded by the Owners of not less than sixty percent (60%) in aggregate principal amount of the Bonds at the time Outstanding provided the City cures such default or defaults, making the deposit with the Paying Agent of a sum sufficient to pay all principal on the respective Bonds matured prior to such declaration and all matured installments of interest (if any) on the Bonds, with interest at the rate of twelve percent (12%) per annum on such overdue installments of principal and, to the extent such payment of interest is lawful at that time, on such overdue installments of interest, so that the City is currently in compliance with all payment, deposit and transfer provisions of this Agreement, and a sum sufficient to pay any expenses incurred by the Paying Agent in connection with such default. 22 Section 7.02. Application of Funds. All of the sums in the funds and accounts provided for in Sections 4.02 and 4.03 hereof, upon the date of the Event of Default as provided in Section 7.01 hereof, and all sums thereafter received by the Paying Agent hereunder, shall be applied by the Paying Agent in the following order upon presentation of the Bonds, and the stamping thereon of the payment if only partially paid, or upon the surrender thereof if fully paid: First, to the payment of the costs and expenses of the Paying Agent hereunder and of the costs and expenses of Bondowners in declaring such event of default, including reasonable compensation to her or their agents, attorneys and counsel; Second, in case the principal of the Bonds shall not have become due and payable, to the payment of the interest in default in the order of the seniority of the installments of such interest, with interest on the overdue installments at the rate of twelve percent (12%) per annum (to the extent that such interest on overdue installments shall have been collected), such payments to be made ratably to the persons entitled thereto without discrimination or preference; Third, in case the principal of the Bonds shall have become and shall be then due and payable, all such sums shall be applied to the payment of the whole amount then owing and unpaid upon the Bonds for principal and interest, with interest on the overdue principal and installments of interest at the rate of twelve percent (12%) per annum (to the extent that such interest on overdue installments of interest shall have been collected), and in case such moneys shall be insufficient to pay in full the whole amount so owing and unpaid upon the Bonds, then to the payment of such principal and interest without preference or priority of principal over interest, or interest over principal, or of any installment of interest over any other installment of interest, ratably to the aggregate of such principal and interest. Section 7.03. Other Remedies of Bondowners. Any Bondowner shall have the right, for the equal benefit and protection of all Bondowners similarly situated: (a) by mandamus, suit, action or proceeding, to compel the City and its members, officers, agents or employees to perform each and every term, provision and covenant contained in this Agreement and in the Bonds, and to require the carrying out of any or all such covenants and agreements of the City and the fulfillment of all duties imposed upon it; (b) by suit, action or proceeding in equity, to enjoin any acts or things which are unlawful, or the violation of any of the Bondowners’ rights; or (c) upon the happening of any event of default (as defined in Section 7.01 hereon, by suit, action or proceeding in any court of competent jurisdiction, to require the City and its members and employees to account as if it and they were the Paying Agents of an express trust. Section 7.04. Non-Waiver. Nothing in this Article VII or in any other provision of this Agreement, or in the Bonds, shall affect or impair the obligation of the City, which is absolute 23 and unconditional, to pay the principal of and interest on the Bonds to the respective Owners of the Bonds at the respective dates of maturity, as herein provided, or affect or impair the right of action, which is also absolute and unconditional, of such Owners to institute suit to enforce such payment by virtue of the contract embodied in the Bonds. A waiver of any default by any Bondowner shall not affect any subsequent default or impair any rights or remedies on the subsequent default. No delay or omission of any Owner of any of the Bonds to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed to be a waiver of any such default or an acquiescence therein, and every power and remedy conferred upon the Bondowners by this Article VI may be enforced and exercised from time to time and as often as shall be deemed expedient by the Owners of the Bonds. If a suit, action or proceeding to enforce any right or exercise any remedy be abandoned or determined adversely to the Bondowners, the City and the Bondowners shall be restored to their former positions, rights and remedies as if such suit, action or proceeding had not been brought or taken. Section 7.05. Remedies Not Exclusive. No remedy herein conferred upon the Owners of Bonds shall be exclusive of any other remedy and that each and every remedy shall be cumulative and shall be in addition to every other remedy given hereunder or thereafter conferred on the Bondowners. 24 ARTICLE VIII SUPPLEMENTAL AGREEMENTS Section 8.01. Amendments Permitted. This Agreement and the rights and obligations of the City and of the Owners of the Bonds may be modified or amended at any time by a Supplemental Agreement pursuant to the affirmative vote at a meeting of Owners, or with the written consent without a meeting, of the Owners of at least sixty percent (60%) in aggregate principal amount of the Bonds then Outstanding, exclusive of Bonds disqualified as provided in Section 8.04. No such modification or amendment shall (i) extend the maturity of any Bond or reduce the interest rate thereon, or otherwise alter or impair the obligation of the City to pay the principal of, and the interest and any premium on, any Bond, without the express consent of the Owner of such Bond, or (ii) permit the creation by the City of any pledge or lien upon the ad valorem taxes of the taxes superior to or on a parity with the pledge and lien created for the benefit of the Bonds (except as otherwise permitted by the Act, the laws of the State of California or this Agreement), or reduce the percentage of Bonds required for the amendment hereof. Any such amendment may not modify any of the rights or obligations of the Paying Agent without its written consent. This Agreement and the rights and obligations of the City and of the Owners may also be modified or amended at any time by a Supplemental Agreement, without the consent of any Owners, only to the extent permitted by law and only for any one or more of the following purposes: (a) to add to the covenants and agreements of the City in this Agreement contained, other covenants and agreements thereafter to be observed, or to limit or surrender any right or power herein reserved to or conferred upon the City; (b) to make modifications not adversely affecting any outstanding series of Bonds of the City in any material respect; (c) to make such provisions for the purpose of curing any ambiguity, or of curing, correcting or supplementing any defective provision contained in this Agreement, or in regard to questions arising under this Agreement, as the City and the Paying Agent may deem necessary or desirable and not inconsistent with this Agreement, and which shall not adversely affect the rights of the Owners of the Bonds; and (d) to make such additions, deletions or modifications as may be necessary or desirable to assure compliance with Section 148 of the Code relating to required rebate of excess investment earnings to the United States or otherwise as may be necessary to assure exclusion from gross income for federal income tax purposes of interest on the Bonds or to conform with the Regulations. Section 8.02. Owners’ Meetings. The City may at any time call a meeting of the Owners. In such event the City is authorized to fix the time and place of said meeting and to provide for the giving of notice thereof, and to fix and adopt rules and regulations for the conduct of said meeting. 25 Section 8.03. Procedure for Amendment with Written Consent of Owners. The City and the Paying Agent may at any time adopt a Supplemental Agreement amending the provisions of the Bonds or of this Agreement or any Supplemental Agreement, to the extent that such amendment is permitted by Section 8.01, to take effect when and as provided in this Section. A copy of such Supplemental Agreement, together with a request to Owners for their consent thereto, shall be mailed by first class mail, by the Paying Agent to each Owner of Bonds Outstanding, but failure to mail copies of such Supplemental Agreement and request shall not affect the validity of the Supplemental Agreement when assented to as in this Section provided. Such Supplemental Agreement shall not become effective unless there shall be filed with the Paying Agent the written consents of the Owners of at least sixty percent (60%) in aggregate principal amount of the Bonds then Outstanding (exclusive of Bonds disqualified as provided in Section 8.04) and a notice shall have been mailed as hereinafter in this Section provided. Each such consent shall be effective only if accompanied by proof of ownership of the Bonds for which such consent is given, which proof shall be such as is permitted by Section 9.04. Any such consent shall be binding upon the Owner of the Bonds giving such consent and on any subsequent Owner (whether or not such subsequent Owner has notice thereof) unless such consent is revoked in writing by the Owner giving such consent or a subsequent Owner by filing such revocation with the Paying Agent prior to the date when the notice hereinafter in this Section provided for has been mailed. After the Owners of the required percentage of Bonds shall have filed their consents to the Supplemental Agreement, the City shall mail a notice to the Owners in the manner hereinbefore provided in this Section for the mailing of the Supplemental Agreement, stating in substance that the Supplemental Agreement has been consented to by the Owners of the required percentage of Bonds and will be effective as provided in this Section (but failure to mail copies of the notice shall not affect the validity of the Supplemental Agreement or consents thereto). Proof of the mailing of such notice shall be filed with the Paying Agent. A record, consisting of the papers required by this Section 8.03 to be filed with the Paying Agent, shall be proof of the matters therein stated until the contrary is proved. The Supplemental Agreement shall become effective upon the filing with the Paying Agent of the proof of mailing of such notice, and the Supplemental Agreement shall be deemed conclusively binding (except as otherwise hereinabove specifically provided in this Article) upon the City and the Owners of all Bonds at the expiration of sixty (60) days after such filing, except in the event of a final decree of a court of competent jurisdiction setting aside such consent in a legal action or equitable proceeding for such purpose commenced within such sixty-day period. Section 8.04. Disqualified Bonds. Bonds owned or held for the account of the City, excepting any pension or retirement fund, shall not be deemed Outstanding for the purpose of any vote, consent or other action or any calculation of Outstanding Bonds provided for in this Article VIII, and shall not be entitled to vote upon, consent to, or take any other action provided for in this Article VIII. Section 8.05. Effect of Supplemental Agreement. From and after the time any Supplemental Agreement becomes effective pursuant to this Article VIII, this Agreement shall be deemed to be modified and amended in accordance therewith, the respective rights, duties 26 and obligations under this Agreement of the City and all owners of Bonds Outstanding shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modifications and amendments, and all the terms and conditions of any such Supplemental Agreement shall be deemed to be part of the terms and conditions of this Agreement for any and all purposes. Section 8.06. Endorsement or Replacement of Bonds Issued After Amendments. The City may determine that Bonds issued and delivered after the effective date of any action taken as provided in this Article VIII shall bear a notation, by endorsement or otherwise, in form approved by the City, as to such action. In that case, upon demand of the Owner of any Bond Outstanding at such effective date and presentation of his Bond for that purpose at the Principal Office of the Paying Agent or at such other office as the City may select and designate for that purpose, a suitable notation shall be made on such Bond. The City may determine that new Bonds, so modified as in the opinion of the City is necessary to conform to such Owners’ action, shall be prepared, executed and delivered. In that case, upon demand of the Owner of any Bonds then Outstanding, such new Bonds shall be exchanged at the Principal Office of the Paying Agent without cost to any Owner, for Bonds then Outstanding, upon surrender of such Bonds. Section 8.07. Amendatory Endorsement of Bonds. The provisions of this Article VIII shall not prevent any Owner from accepting any amendment as to the particular Bonds held by him, provided that due notation thereof is made on such Bonds. 27 ARTICLE IX MISCELLANEOUS Section 9.01. Benefits of Agreement Limited to Parties. Nothing in this Agreement, expressed or implied, is intended to give to any person other than the City, the Paying Agent and the Owners, any right, remedy, claim under or by reason of this Agreement. Any covenants, stipulations, promises or agreements in this Agreement contained by and on behalf of the City shall be for the sole and exclusive benefit of the Owners and the Paying Agent. Section 9.02. Successor is Deemed Included in All References to Predecessor. Whenever in this Agreement or any Supplemental Agreement either the City or the Paying Agent is named or referred to, such reference shall be deemed to include the successors or assigns thereof, and all the covenants and agreements in this Agreement contained by or on behalf of the City or the Paying Agent shall bind and inure to the benefit of the respective successors and assigns thereof whether so expressed or not. Section 9.03. Discharge of Agreement. The City shall have the option to pay and discharge the entire indebtedness on all or any portion of the Bonds Outstanding in any one or more of the following ways: (a) by paying or causing to be paid the principal of, and interest and any premium on, such Bonds Outstanding, as and when the same become due and payable; (b) by depositing with the Paying Agent, in trust, at or before maturity, money which, together with, in the event of a discharge of all of the Bonds, the amounts then on deposit in the funds and accounts provided for in Sections 4.02 and 4.03 is fully sufficient to pay such Bonds Outstanding, including all principal, interest and redemption premiums; or (c) by irrevocably depositing with the Paying Agent, in trust, cash and Federal Securities in such amount as the City shall determine as confirmed by an independent certified public accountant will, together with the interest to accrue thereon and, in the event of a discharge of all of the Bonds, moneys then on deposit in the fund and accounts provided for in Sections 4.02 and 4.03, be fully sufficient to pay and discharge the indebtedness on such Bonds (including all principal, interest and redemption premiums) at or before their respective maturity dates. If the City shall have taken any of the actions specified in (a), (b) or (c) above, and if such Bonds are to be redeemed prior to the maturity thereof notice of such redemption shall have been given as in this Agreement provided or provision satisfactory to the Paying Agent shall have been made for the giving of such notice, then, at the election of the City, and notwithstanding that any Bonds shall not have been surrendered for payment, the pledge of the funds and moneys provided for in this Agreement and all other obligations of the City under this Agreement with respect to such Bonds Outstanding shall cease and terminate. Notice of such election shall be filed with the Paying Agent. Notwithstanding the foregoing, the obligation of the City to pay or cause to be paid to the Owners of the Bonds not so surrendered 28 and paid all sums due thereon and all amounts owing to the Paying Agent pursuant to Section 7.05 shall continue in any event. Upon compliance by the City with the foregoing with respect to all Bonds Outstanding, any funds held by the Paying Agent after payment of all fees and expenses of the Paying Agent, which are not required for the purposes of the preceding paragraph, shall be paid over to the City. Section 9.04. Execution of Documents and Proof of Ownership by Owners. Any request, declaration or other instrument which this Agreement may require or permit to be executed by Owners may be in one or more instruments of similar tenor, and shall be executed by Owners in person or by their attorneys appointed in writing. Except as otherwise herein expressly provided, the fact and date of the execution by any Owner or his attorney of such request, declaration or other instrument, or of such writing appointing such attorney, may be proved by the certificate of any notary public or other officer authorized to take acknowledgments of deeds to be recorded in the state in which he purports to act, that the person signing such request, declaration or other instrument or writing acknowledged to him the execution thereof, or by an affidavit of a witness of such execution, duly sworn to before such notary public or other officer. Except as otherwise herein expressly provided, the ownership of registered Bonds and the amount, maturity, number and date of holding the same shall be proved by the registry books. Any request, declaration or other instrument or writing of the Owner of any Bond shall bind all future Owners of such Bond in respect of anything done or suffered to be done by the City or the Paying Agent in good faith and in accordance therewith. Section 9.05. Waiver of Personal Liability. No member, officer, agent or employee of the City shall be individually or personally liable for the payment of the principal of, or interest or any premium on, the Bonds; but nothing herein contained shall relieve any such member, officer, agent or employee from the performance of any official duty provided by law. Section 9.06. Notices to and Demands on City and Paying Agent. Any notice or demand which by any provision of this Agreement is required or permitted to be given or served by the Paying Agent to or on the City may be given or served by being deposited postage prepaid in a post office letter box addressed (until another address is filed by the City with the Paying Agent) to: The City of Palo Alto 250 Hamilton Avenue Palo Alto, California 94301 Attn: Director of Administrative Services Any notice or demand which by any provision of this Agreement is required or permitted to be given or served by the City to or on the Paying Agent may be given or served 29 by being deposited postage prepaid in a post office letter box addressed (until another address is filed by the Paying Agent with the City) to: U.S. Bank National Association One California Street, Suite 1000 San Francisco, CA 94111 Attn: Corporate Trust Services Section 9.07. Partial Invalidity. If any Section, paragraph, sentence, clause or phrase of this Agreement shall for any reason be held illegal or unenforceable, such holding shall not affect the validity of the remaining portions of this Agreement. The City hereby declares that it would have adopted this Agreement and each and every other Section, paragraph, sentence, clause or phrase hereof and authorized the issue of the Bonds pursuant thereto irrespective of the fact that any one or more Sections, paragraphs, sentences, clauses, or phrases of this Agreement may be held illegal, invalid or unenforceable. Section 9.08. Unclaimed Moneys. Anything contained herein to the contrary notwithstanding, any moneys held by the Paying Agent in trust for the payment and discharge of the principal of, and the interest and any premium on, the Bonds which remains unclaimed for two (2) years after the date when the payments of such principal, interest and premium have become payable, if such moneys was held by the Paying Agent at such date, shall be repaid by the Paying Agent to the City as its absolute property free from any trust, and the Paying Agent shall thereupon be released and discharged with respect thereto and the Bond Owners shall look only to the City for the payment of the principal of, and interest and any premium on, such Bonds. Section 9.09. Applicable Law. This Agreement shall be governed by and enforced in accordance with the laws of the State of California applicable to contracts made and performed in the State of California. Section 9.10. Conflict with Act. In the event of a conflict between any provision of this Agreement with any provision of the Act as in effect on the Closing Date, the provision of the Act shall prevail over the conflicting provision of this Agreement. Section 9.11. Conclusive Evidence of Regularity. Bonds issued pursuant to this Agreement shall constitute conclusive evidence of the regularity of all proceedings under the Act relative to their issuance and the levy of the ad valorem taxes securing the payment of the Bonds. Section 9.12. Payment on Business Day. In any case where the date of the maturity of interest or of principal (and premium, if any) of the Bonds or the date fixed for redemption of any Bonds or the date any action is to be taken pursuant to this Agreement is other than a Business Day, the payment of interest or principal (and premium, if any) or the action need not be made on such date but may be made on the next succeeding day which is a Business Day with the same force and effect as if made on the date required and no interest shall accrue for the period from and after such date. 30 Section 9.13. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original. [Signature Page to Paying Agent Agreement, dated as of June 1, 2013] IN WITNESS WHEREOF, the City has caused this Agreement to be executed in its name and the Paying Agent has caused this Agreement to be executed in its name, all as of the date first written above. CITY OF PALO ALTO By: _______________ City Manager U.S. BANK NATIONAL ASSOCIATION, as Paying Agent By: Authorized Officer A-1 No._______________ $______________________ EXHIBIT A FORM OF BOND UNITED STATES OF AMERICA STATE OF CALIFORNIA COUNTY OF SANTA CLARA CITY OF PALO ALTO GENERAL OBLIGATION BOND ELECTION OF 2008, SERIES 2013A Interest Rate Maturity Date Issue Date CUSIP August 1, _____ June 26, 2013 REGISTERED OWNER: Cede & Co. PRINCIPAL SUM:___________ DOLLARS The CITY OF PALO ALTO, a charter city duly organized and existing under and by virtue of the Constitution and laws of the State of California (the “City”), for value received hereby promises to pay to the Registered Owner stated above, or registered assigns (the “Owner”), on the Maturity Date stated above (subject to any right of prior redemption hereinafter provided for), the Principal Sum stated above, in lawful money of the United States of America, and to pay interest thereon in like lawful money from the interest payment date next preceding the date of authentication of this Bond (unless (i) this Bond is authenticated on an interest payment date, in which event it shall bear interest from such date of authentication, or (ii) this Bond is authenticated prior to an interest payment date and after the close of business on the fifteenth day of the month preceding such interest payment date, in which event it shall bear interest from such interest payment date, or (iii) this Bond is authenticated on or prior to January 15, 2014, in which event it shall bear interest from the Issue Date stated above; provided however, that if at the time of authentication of this Bond, interest is in default on this Bond, this Bond shall bear interest from the interest payment date to which interest has previously been paid or made available for payment on this Bond) until payment of such Principal Sum in full, at the rate per annum stated above, payable on February 1 and August 1 in each year, commencing February 1, 2014, calculated on the basis of 360-day year composed of twelve 30- day months. Principal hereof and premium, if any, upon early redemption hereof are payable at the corporate trust office of U.S. Bank National Association (the “Paying Agent”), in St. Paul, Minnesota, or in such other location as approved by the City. Interest hereon (including the A-2 final interest payment upon maturity or earlier redemption) is payable by check mailed on the applicable Interest Payment Date to the Owner at his or her address as it appears on the registration books maintained by the Paying Agent as of the close of business on the fifteenth day of the month next preceding such interest payment date, or at such other address as the Owner may have filed with the Paying Agent for that purpose. This Bond is one of a duly authorized issue of bonds of the City designated as “City of Palo Alto General Obligation Bonds, Election of 2008, Series 2013A” (the “Bonds”), in an aggregate principal amount of Twenty Million Six Hundred Ninety-Five Thousand dollars ($20,695,000), all of like tenor and date (except for such variation, if any, as may be required to designate varying numbers, maturities, interest rates or redemption and other provisions) and all issued pursuant to the provisions of Chapter 4 of Division 4 of Title 4 of the California Government Code and Section 53506 et seq. of the California Government Code (together, the “Act”), pursuant to a resolution of the City adopted May 6, 2013 (the “Resolution”), authorizing the issuance of the Bonds and a Paying Agent Agreement dated as of June 1, 2013 (the “Agreement”) between the City and the Paying Agent. Reference is hereby made to the Resolution and the Agreement (copies of which are on file at the office of the Paying Agent) and the Act for a description of the terms on which the Bonds are issued and the rights thereunder of the owners of the Bonds and the rights, duties and immunities of the Paying Agent and the rights and obligations of the City thereunder, to all of the provisions of which Resolution and Agreement the Owner of this Bond, by acceptance hereof, assents and agrees. The Bonds have been issued to finance the costs of acquiring and constructing a new energy efficient, environmentally friendly Mitchell Park Library and Community Center, renovating and expanding the Main Library, and renovating the Downtown Library, including enhancements at all three facilities for seismic safety and disabled access, expanded space for library collections, meeting and study areas, and new air conditioning, ventilation and lighting systems. This Bond and the interest hereon and on all other Bonds and the interest thereon (to the extent set forth in the Agreement) are general obligations of the City and the City has the power, is obligated and has covenanted to levy ad valorem taxes for the payment of the Bonds and the interest thereon, in accordance with all relevant provisions of law. The City has covenanted in the Agreement to direct Santa Clara County to levy and collect such ad valorem taxes in such amounts and at such times is necessary to ensure the timely payment of debt service on the Bonds. Bonds maturing on or before August 1, 20__ are not subject to redemption prior to their respective maturity dates. Bonds maturing on or after August 1, 20__ shall be subject to redemption in whole or in part prior to their respective maturity dates on any date, as designated by the City and, absent any such designation, in pro rata among maturities and by lot within a maturity, from moneys provided at the option of the City, in each case on and after August 1, 20__, at a redemption price equal to the principal amount of the Bonds to be redeemed, plus accrued interest to the date of redemption, without premium. The Bonds maturing August 1, 20__ are subject to mandatory sinking fund redemption in part, by lot, prior to their stated maturity date, on each August 1 on and after August 1, 20__, A-3 at a redemption price equal to 100% of the principal amount thereof called for redemption, plus accrued interest to the redemption date, without premium, as follows: Date (August 1) Amount The Bonds maturing August 1, 20__ are subject to mandatory sinking fund redemption in part, by lot, prior to their stated maturity date, on each August 1 on and after August 1, 20__, at a redemption price equal to 100% of the principal amount thereof called for redemption, plus accrued interest to the redemption date, without premium, as follows: Date (August 1) Amount The Bonds maturing August 1, 20__ are subject to mandatory sinking fund redemption in part, by lot, prior to their stated maturity date, on each August 1 on and after the August 1, 20__, at a redemption price equal to 100% of the principal amount thereof called for redemption, plus accrued interest to the redemption date, without premium, as follows: Date (August 1) Amount As provided in the Agreement, notice of redemption shall be given by mail no less than thirty (30) nor more than sixty (60) days prior to the redemption date to the respective registered owners of any Bonds designated for redemption at their addresses appearing on the Bond registration books maintained by the Paying Agent, but neither failure to receive such notice nor any defect in the notice so mailed shall affect the sufficiency of the proceedings for redemption. If this Bond is called for redemption and payment is duly provided therefor as specified in the Agreement, interest shall cease to accrue hereon from and after the date fixed for redemption. If an Event of Default, as defined in the Agreement, shall occur, the principal of all Bonds may be declared due and payable upon the conditions, in the manner and with the effect A-4 provided in the Agreement, but such declaration and its consequences may be rescinded and annulled as further provided in the Agreement. The Bonds are issuable as fully registered Bonds, without coupons, in denominations of $5,000 and any integral multiple thereof. Subject to the limitations and conditions and upon payment of the charges, if any, as provided in the Agreement, Bonds may be exchanged for a like aggregate principal amount of Bonds of other authorized denominations and of the same maturity. This Bond is transferable by the Owner hereof, in person or by his attorney duly authorized in writing, at the office of the Paying Agent in St. Paul, Minnesota, but only in the manner and subject to the limitations provided in the Agreement, and upon surrender and cancellation of this Bond. Upon registration of such transfer a new Bond or Bonds, of authorized denomination or denominations, for the same aggregate principal amount and of the same maturity will be issued to the transferee in exchange herefor. The City and the Paying Agent may treat the Owner hereof as the absolute owner hereof for all purposes, and the City and the Paying Agent shall not be affected by any notice to the contrary. The Agreement may be amended without the consent of the Owners of the Bonds to the extent set forth in the Agreement. Unless this Bond is presented by an authorized representative of The Depository Trust Company, a New York corporation (“DTC”), to the Paying Agent for registration of transfer, exchange, or payment, and any Bond issued is registered in the name of Cede & Co. or in such other name as is requested by an authorized representative of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest herein. It is hereby certified that all of the things, conditions and acts required to exist, to have happened or to have been performed precedent to and in the issuance of this Bond do exist, have happened or have been performed in due and regular time and manner as required by the laws of the State of California, and that the amount of this Bond, together with all other indebtedness of the City, does not exceed any limit prescribed by any laws of the State of California, and is not in excess of the amount of Bonds permitted to be issued under the Agreement. This Bond shall not be entitled to any benefit under the Agreement or become valid or obligatory for any purpose until the Certificate of Authentication hereon shall have been signed by the Paying Agent. A-5 IN WITNESS WHEREOF, the City of Palo Alto has caused this Bond to be executed in its name and on its behalf with the facsimile signatures of its City Manager and its City Clerk and its seal to be reproduced hereon, all as of the Issue Date stated above. CITY OF PALO ALTO By: (S E A L) ATTEST: City Clerk A-6 [FORM OF PAYING AGENT’S CERTIFICATE OF AUTHENTICATION] CERTIFICATE OF AUTHENTICATION This is one of the Bonds described in the within-mentioned Agreement. Date of Authentication: __________ U.S. Bank National Association, as Paying Agent Authorized Signatory A-7 ABBREVIATIONS The following abbreviations, when used in the inscription on the face of this Bond, shall be construed as though they were written out in full according to applicable laws or Tax Regulations: TEN COMM--as tenants in common TEN ENT--as tenants by the entireties JT TEN--as joint tenants with right of survivorship and not as tenants in common COMM PROP--as community property UNIF TRANS MIN ACT _________________ Custodian _________________ (Cust.) (Minor) under Uniform Transfers to Minors Act ____________________ (State) ADDITIONAL ABBREVIATIONS MAY ALSO BE USED THROUGH NOT IN THE LIST ABOVE A-8 ASSIGNMENT For value received, the undersigned do(es) hereby sell, assign and transfer unto the within (Name, Address and Tax Identification or Social Security Number of Assignee) the within Bond and do(es) hereby irrevocably constitute and appoint ______________________, attorney, to transfer the same on the registration books of the Paying Agent, with full power of substitution in the premises. Dated:_______________________ _____________________________________ Notice: The signature(s) on this assignment must correspond with the name(s) as written on the face of the within Bond in every particular without alteration or enlargement or any change whatsoever. Signature Guaranteed: Notice: Signature(s) must be guaranteed by a qualified guarantor institution OFFICIAL NOTICE OF SALE $20,695,000* CITY OF PALO ALTO (Santa Clara County, California) GENERAL OBLIGATION BONDS, ELECTION OF 2008, SERIES 2013A (TAX-EXEMPT) NOTICE IS HEREBY GIVEN by the City of Palo Alto (the “City”) that electronic bids will be received by the City for the purchase of $20,695,000* City of Palo Alto General Obligation Bonds, Election of 2008, Series 2013A (the “Bonds”). Only electronic bids will be accepted, via PARITY®. No hand delivered or facsimile bids will be accepted. The bids will be received in the manner and up to the time and date specified below: DATE AND TIME: 9:30 A.M. California Time on Wednesday, June 12, 2013, (subject to postponement or cancellation in accordance with this Official Notice of Sale). ELECTRONIC BIDS: Bid proposals may only be submitted electronically, via i- Deal LLC’s PARITY® system (“Parity®”), as provided below. See “TERMS OF SALE - Warnings Regarding Electronic Bids” herein. The City reserves the right to postpone or cancel the sale or change the terms thereof prior to the time on June 12, 2013 when bids are to be received. Notice of such postponement, cancellation or revision shall be communicated through PARITY® and Thomson Municipal Market Monitor (www.tm3.com), as soon as practicable following such postponement, cancellation or revision. See “TERMS OF SALE - Right to Postponement or Cancellation.” If the sale is postponed, bids will be received on any weekday at such time as the City shall determine. Notice of the new date or a new date and time for the receipt of bids, if any, will be given through PARITY® and Thomson Municipal Market Monitor (www.tm3.com). The City further reserves the right to modify or amend this Official Notice of Sale in any respect, including, without limitation, the principal amount of the Bonds being offered, upon notice given as described above. As an accommodation to bidders, telephonic, electronic or faxed notice of any postponement of the sale date and of the new sale date and time or any amendment or modification of this Official Notice of Sale will be given to any bidder requesting such notice from the City’s Financial Advisor: Public Financial Management, Inc., 50 California Street, Suite 2300, San Francisco, California 94111, Attention: Bob Gamble, email: gambler@pfm.com, telephone: (415) 982-5544, fax: (415) 982-4513. Failure of any bidder to receive such supplemental notice shall not affect the sufficiency of any required notice or the legality of the sale. * Preliminary, subject to change, as provided herein. -2- Notice of any change to the principal payment schedule for the Bonds to be utilized for the bidding process will be given via PARITY® not later than 1:00 p.m. (California time) on the day prior to the date prescribed for the receipt of bids. Potential bidders must obtain any such revised principal payment schedule before bidding on the Bonds. See also “TERMS OF SALE” “- Adjustment of Principal Amounts” below. DESCRIPTION OF THE BONDS DATE; FORM; DENOMINATION: The Bonds will be dated as of the date of their delivery, and will be authenticated and delivered in non-negotiable, fully registered form, without coupons, in denomination of $5,000 each or any integral multiple of $5,000. The Bonds will be delivered in a book-entry only system with no physical distribution of the Bonds to the public. Depository Trust Company, New York, New York (“DTC”) will act as depository for the Bonds. The Bonds will be registered in the name of Cede & Co., as nominee for DTC, on behalf of the participants in the DTC system and the subsequent beneficial owners of the Bonds. The Bonds are being issued pursuant to a Paying Agent Agreement, dated as of June 1, 2013 (the “Paying Agent Agreement”), by and between the City and U.S. Bank National Association, as Paying Agent (the “Paying Agent”). Reference is made to the Paying Agent Agreement for further details regarding the terms and provisions of the Bonds. MATURITIES: The Bonds will mature, or be subject to mandatory sinking fund redemption, on the maturity dates and in the amounts set forth in the following table. Each bidder is required to specify in its bid whether, for any particular year, the Bonds will mature or, alternatively, be subject to sinking fund redemption in such year. No serial Bonds may mature following the commencement of the first mandatory sinking fund payment. For any term Bonds specified, the principal amount for a given year may be allocated only to a single term bond and must be part of an uninterrupted annual sequence from the first mandatory sinking fund payment to the term bond maturity. Maturity Date (August 1 Principal Amount* Maturity Date (August 1) Principal Amount* * Preliminary, subject to change, as provided herein. -3- 2014 $370,000 2029 $ 635,000 2015 375,000 2030 665,000 2016 385,000 2031 700,000 2017 395,000 2032 735,000 2018 405,000 2033 775,000 2019 415,000 2034 815,000 2020 425,000 2035 855,000 2021 440,000 2036 900,000 2022 455,000 2037 945,000 2023 475,000 2038 995,000 2024 495,000 2039 1,045,000 2025 520,000 2040 1,100,000 2026 545,000 2041 1,155,000 2027 575,000 2042 1,215,000 2028 605,000 2043 1,280,000 Following the receipt of bids, the City reserves the right to increase or to decrease the total principal amount of the Bonds, and the principal amount of any maturity of the Bonds, as the City deems advisable, based on the actual rates of interest to be borne by the Bonds. Any such increase or decrease shall be allocated among the various maturities of the Bonds on such basis as the City deems advisable, and shall result in a proportionate increase or decrease (as the case may be) in the amount of any premium or discount bid. The total principal amount of the Bonds and the principal amount of each maturity of the Bonds shall not change by more than 10%. Notice of such increase or decrease shall be given to the successful bidder within 24 hours of bid opening, as described below. No such adjustment will have the effect of altering the basis upon which the best bid is determined. In the event of any such adjustment, no re-bidding or re- calculation of the bids submitted will be required or permitted, and the successful bid or bids may not be withdrawn, and the successful bidder will not be permitted to change the interest rate(s) in its bid for the Bonds. INTEREST: Interest on the Bonds will be payable from their date of delivery at such rate or rates to be fixed upon the sale thereof, payable semiannually on each February 1 and August 1 (each, an “Interest Payment Date”), commencing February 1, 2014. PAYMENT: The Bonds and interest thereon are payable in lawful money of the United States of America, interest being payable by check mailed on each Interest Payment Date to the registered owners thereof at the address shown on the Bond registration books maintained by the Paying Agent on the 15th day of the month preceding an Interest Payment Date. Principal will be payable upon surrender at the principal corporate trust office of the Paying Agent in St. Paul, Minnesota. OPTIONAL REDEMPTION: The Bonds are subject to optional redemption prior to maturity, as follows: Bonds maturing [on or before August 1, 2023 are not subject to optional redemption prior to maturity. Bonds maturing [on or after August 1, 2024, shall be subject to redemption prior to their respective maturity dates, as designated by the City and, absent any such designation, pro rata among maturities and by lot within a maturity, from moneys provided at the option of the City, in each case, on any date occurring on or after August 1, 2023, at a -4- redemption price equal to the principal amount of the Bonds to be redeemed, plus accrued interest to the date of redemption, without premium. MANDATORY REDEMPTION. Term Bonds, if any, are subject to redemption prior to their respective stated maturity dates, in part, by lot, from mandatory sinking fund payments, on each August 1, designated by the successful bidder as a date upon which a mandatory sinking fund payment is to be made, at a redemption price equal to the principal amount thereof plus accrued interest thereon to the date fixed for redemption, without premium. No Term Bonds may be redeemed from mandatory sinking fund payments until all Term Bonds maturing on preceding term maturity dates, if any, have been retired. PURPOSE: The proceeds of the Bonds will be used to finance the costs of acquiring and constructing a new Mitchell Park Library and Community Center, renovating and expanding the Main Library, renovating the Downtown Library, including enhancements at all three facilities for seismic safety and disabled access, expanded space for library collections, meeting and study areas, and new air conditioning, ventilation and lighting systems. SECURITY: The Bonds are general obligations of the City payable from ad valorem taxes levied by the City and collected by Santa Clara County (the “County”). The City has the power and is obligated to cause the Board of Supervisors of the County to levy ad valorem taxes for the payment of the principal of the Bonds and the interest thereon, upon all property within the City subject to taxation by the City, without limitation of rate or amount (except with respect to certain personal property which is taxed at limited rates), in accordance with all relevant provisions of law. The City has covenanted in the Paying Agent Agreement to levy ad valorem taxes and direct the Board of Supervisors of the County to collect such ad valorem taxes in such amounts and at such times as is necessary to ensure the timely payment of debt service on the Bonds. TAX-EXEMPT STATUS: In the opinion of Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel, subject, however to certain qualifications, under existing law, interest on the Bonds is excluded from gross income for federal income tax purposes, and such interest is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations; although for the purpose of computing the alternative minimum tax imposed on corporations (as defined for federal income tax purposes), such interest is taken into account in determining certain income and earnings. In the further opinion of Bond Counsel, such interest is exempt from California personal income taxes. In the event that, prior to the delivery of the Bonds (a) the interest on other obligations of the same type and character shall be declared to be subject to taxation (either at the time of such declaration or at any future date) under any federal income tax laws, either by the terms of such laws or by ruling of a federal income tax authority or official which is followed by the Internal Revenue Service, or by decision of any federal court, or (b) any federal income tax law is enacted which will have a substantial adverse effect upon the owners of the Bonds as such, the successful bidder may, at its option, prior to the tender of the Bonds, be relieved of its obligation to purchase the Bonds. LEGAL OPINION: The legal opinion of Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel, approving the validity of the Paying Agent Agreement -5- and the Bonds will be furnished to the successful bidder without cost. A copy of the legal opinion, certified by the official in whose office the original is filed, will be printed on each Bond without charge to the successful bidder. FURTHER INFORMATION: A copy of the preliminary Official Statement describing the Bonds, and any other information concerning the proposed financing, will be posted electronically on Parity’s® website and furnished upon request to the City’s Financial Advisor, Public Financial Management, Inc., 50 California Street, Suite 2300, San Francisco, California 94111, Attention: Bob Gamble, email: gambler@pfm.com, telephone: (415) 982-5544, fax: (415) 982-4513. TERMS OF SALE FORM OF BID: All bids must be for not less than all of the Bonds hereby offered for sale, and for not less than the aggregate par value thereof, plus a net premium of at least $180,000, for a total minimum bid of at least $20,875,000. The City intends to apply up to $180,000 of such premium to pay costs of issuance incurred in connection with the issuance of the Bonds (see “Payment of Costs of Issuance” herein). Bidders may submit only one bid, electronically through PARITY®. ELECTRONIC BIDS. Electronic bids must conform with the procedures established by PARITY®. Electronic bids will be received exclusively through PARITY® in accordance with this Official Notice of Sale until 9:30 a.m. California time on the sale date, but no bid will be received after the time specified for receiving bids. To the extent any instructions or directions set forth in PARITY® conflict with this Official Notice of Sale, the terms of this Official Notice of Sale shall control. For further information about PARITY®, including any fees charged by PARITY®, potential bidders may contact PARITY® directly at (212) 849-5021 or at the Parity® website: www.newissuehome.i-deal.com. In the event Parity’s® summary of the terms of sale of the Bonds conflicts with this Notice of Sale in any particulars, the terms of this Notice of Sale shall control. THE CITY RETAINS ABSOLUTE DISCRETION TO DETERMINE WHETHER ANY BID IS TIMELY, LEGIBLE AND COMPLETE. THE CITY TAKES NO RESPONSIBILITY FOR INFORMING ANY BIDDER PRIOR TO THE TIME FOR RECEIVING BIDS THAT ITS BID IS INCOMPLETE, ILLEGIBLE OR NOT RECEIVED. WARNING REGARDING ELECTRONIC BIDS: THE CITY WILL ACCEPT BIDS IN ELECTRONIC FORM SOLELY THROUGH PARITY®. EACH BIDDER SUBMITTING AN ELECTRONIC BID UNDERSTANDS AND AGREES BY DOING SO THAT IT IS SOLELY RESPONSIBLE FOR ALL ARRANGEMENTS WITH PARITY®, AND THAT PARITY® IS NOT ACTING AS AN AGENT OF THE CITY. INSTRUCTIONS FOR SUBMITTING ELECTRONIC BIDS MUST BE OBTAINED FROM PARITY®, AND THE CITY ASSUMES NO RESPONSIBILITY FOR ENSURING OR VERIFYING BIDDER COMPLIANCE WITH THE PROCEDURES OF PARITY®. THE CITY SHALL ASSUME THAT ANY BID RECEIVED THROUGH PARITY® HAS BEEN MADE BY A DULY AUTHORIZED AGENT OF THE BIDDER. -6- THE CITY, THE FINANCIAL ADVISOR, BOND COUNSEL AND DISCLOSURE COUNSEL ASSUME NO RESPONSIBILITY FOR ANY ERROR CONTAINED IN ANY BID SUBMITTED ELECTRONICALLY, OR FOR FAILURE OF ANY BID TO BE TRANSMITTED, RECEIVED OR OPENED AT THE OFFICIAL TIME FOR RECEIPT OF BIDS. THE OFFICIAL TIME FOR RECEIPT OF BIDS WILL BE DETERMINED BY THE CITY AT THE PLACE OF BID OPENING, AND THE CITY SHALL NOT BE REQUIRED TO ACCEPT THE TIME KEPT BY PARITY® AS THE OFFICIAL TIME. INTEREST RATE: Bidders must specify the rate or rates of interest which shall be payable on the Bonds. The maximum rate bid may not exceed five percent (5%) per annum. Interest on the Bonds is payable semiannually on each Interest Payment Date. Bidders will be permitted to bid different rates of interest but (a) each interest rate specified in any bid must be in a multiple of one-twentieth (1/20) or one-eighth (1/8) of one percent; (b) interest on each Bond shall be computed from the closing date (expected to be June 26, 2013), to its stated maturity date, at the interest rate specified in the bid, payable semiannually as set forth above; (c) interest on all Bonds maturing at any one time shall be payable at the same rate of interest; and no bid will be accepted which contemplates the waiver of any interest or other concession by the bidder as a substitute for payment in full of the purchase price. BEST BID: The Bonds will be awarded to the best responsible bidder therefor, considering the interest rate or rates specified and the premium offered, if any, or discount taken, if any, and the best bid will be determined on the basis of the lowest true interest cost. The true interest cost (“TIC”) will be that nominal annual discount rate which, when discounted semiannually and when used to discount all payments of principal and interest on the Bonds at the rate or rates specified in the bid to the estimated closing date of the date of the Bonds, June 26, 2013, results in the amount equal to the purchase price, which is the principal amount of the Bonds plus the amount of any premium, less the amount of any discount. For the purpose of calculating the TIC, the mandatory sinking fund payments, if any, shall be treated as serial maturities in such years. In the event two or more bids setting forth identical interest rates are received, the City reserves the right to allow its authorized representative to exercise his or her own discretion and judgment in making the award and may award the Bonds on a pro rata basis in such denominations as he or she shall determine. PAYMENT OF COSTS OF ISSUANCE: The successful bidder will be required to deposit with the Paying Agent on the closing date of the Bonds, the amount of $180,000 from the premium described above in “Form of Bid”, to be used to pay for costs of issuance. ADJUSTMENT OF PRINCIPAL AMOUNTS: Following the receipt of bids, the City reserves the right to increase or to decrease the total principal amount of the Bonds, and the principal amount of any maturity of the Bonds, as the City deems advisable, based on the actual rates of interest to be borne by the Bonds. Any such increase or decrease shall be allocated among the various maturities of the Bonds on such basis as the City deems advisable, and shall result in a proportionate increase or decrease (as the case may be) in the amount of any premium or discount bid. The total principal amount and the principal amount of each maturity of the Bonds shall not change by more than 10% as a result of such adjustment. Notice of such increase or decrease shall be given to the successful bidder within 24 hours of bid opening. No such adjustment will have the effect of altering the basis upon which the best bid is determined. In the event of any such adjustment, no re-bidding or re-calculation of the bids -7- submitted will be required or permitted, and the successful bid or bids may not be withdrawn, and the successful bidder will not be permitted to change the interest rate(s) in its bid for the Bonds. RIGHT TO MODIFY OR AMEND: The City reserves the right, in its sole discretion, to modify or amend this Official Notice of Sale including, but not limited to, the right to adjust and change the principal amount and principal amortization schedule of the Bonds being offered, however, such modifications or amendments shall be made not later than 1:00 P.M., California time, on the business day prior to the bid opening and communicated through PARITY®. RIGHT TO POSTPONEMENT OR CANCELLATION: The City may postpone or cancel the sale prior to the time bids are to be received as provided on page one hereof, provided that notice is communicated to prospective bidders through PARITY® and Thomson Municipal Market Monitor prior to the time then scheduled for the receipt of such bids. Notice of a new time, or of a new date and time, if any, will be given through PARITY®, and Thomson Municipal Market Monitor as soon as practicable following a postponement. In the event of a postponement of the sale only, any subsequent bid submitted by the bidder will supersede any prior bid made. Failure of any bidder to receive notice of any postponement or cancellation shall not invalidate the sufficiency of any such notice. RIGHT OF REJECTION: The City reserves the right, in its sole discretion, to reject any and all bids and to waive any irregularity or informality in any bid. PROMPT AWARD: An authorized representative of the City will take action awarding the sale of the Bonds or reject all bids not later than twenty-six (26) hours after the expiration of time herein prescribed for the receipt of bids and until such expiration of time all bids received shall be irrevocable. Unless such time of award is waived by the successful bidder, the award may be made after the expiration of the specified time if the bidder shall not have given to the City notice in writing of the withdrawal of such proposal. Notice of the award will be given promptly to the successful bidder. DELIVERY AND PAYMENT: Delivery of the Bonds will be made to the successful bidder through the facilities of DTC in New York, New York, as soon as the Bonds can be prepared, which is estimated to be June 26, 2013 (the “Closing Date”). The Bonds will be delivered in full book-entry form. Payment for the Bonds must be made in immediately available funds to the Paying Agent. Any expense in providing immediately available funds shall be borne by the purchaser. RIGHT OF CANCELLATION: The successful bidder shall have the right, at its option, to cancel its purchase of the Bonds if the City shall fail to cause the execution and delivery of the Bonds and tender the same for delivery within 45 days from the date of sale thereof and in such event the successful bidder shall be entitled to the return of the deposit accompanying its bid. GOOD FAITH DEPOSIT. The successful bidder will be required to deposit with the City, within 24 hours of the award of sale of the Bonds, a good faith deposit in the amount of $206,950 (the “Good Faith Deposit”), to protect the City against any loss resulting from the successful bidder’s failure to comply with the terms of its bid. The Good Faith Deposit shall be delivered to the City either in the form of a cashier’s check made out to the City of Palo Alto, or by wire transfer pursuant to instructions delivered by the City to the successful bidder. No -8- interest will be paid upon the Good Faith Deposit. The Good Faith Deposit will become the property of the City, and if in the form of a check, will be cashed. The Good Faith Deposit will be held and invested for the exclusive benefit of the City. The Good Faith Deposit, without interest thereon, will be credited against the purchase price of the Bonds purchased by the winning bidder at the time of delivery thereof. ESTIMATE OF TRUE INTEREST COST: Each bidder is requested, but not required, to state in its bid the true interest cost, as described under the caption “BEST BID” herein, which shall be considered as informative only and not binding on either the bidder or the City. CERTIFICATION OF REOFFERING PRICE: The successful bidder will, as of the date the Bonds are sold pursuant to this Notice of Sale, certify to the City the prices at which it reasonably expects to initially offer each maturity of the Bonds to the general public (the “Initial Offering Prices”). For this purpose, the general public does not include bond houses, brokers or similar persons or organizations acting in the capacity of underwriters or wholesalers. The successful bidder agrees that, on or prior to the Closing Date, it will actually offer 100% of each maturity of the Bonds to the general public in a bona fide public offering for prices equal to or less than the Initial Offering Prices. The successful bidder agrees that, prior to the Closing Date, it will deliver a certificate dated as of the Closing Date in form and substance attached as Exhibit A and satisfactory to Bond Counsel. CALIFORNIA DEBT AND INVESTMENT ADVISORY COMMISSION: The City has duly notified the California Debt and Investment Advisory Commission of the proposed sale of the Bonds. Payment of all fees, to the California Debt and Investment Advisory Commission in connection with the execution, sale and delivery of the Bonds shall be the responsibility of the successful bidder, and not of the City. NO LITIGATION: There is no litigation pending concerning the validity of the Bonds, the existence of the City or the entitlement of the officers thereof to their respective offices, and the successful bidder will be furnished a no-litigation certificate certifying to the foregoing as of and at the time of delivery of the Bonds. CUSIP NUMBERS: It is anticipated that CUSIP numbers will be printed on the Bonds, but neither the failure to print such numbers on any Bonds nor any error with respect thereto shall constitute cause for a failure or refusal by the purchaser thereof to accept delivery of and pay for the Bonds in accordance with the terms hereof. The CUSIP Service Bureau charge for the assignment of CUSIP numbers shall be the responsibility of and shall be paid for by the purchaser. OFFICIAL STATEMENT: The City will approve an Official Statement relating to the Bonds. Copies of a preliminary Official Statement will be distributed prior to the sale in a form “deemed final” by the City for purposes of Rule 15c2-12 under the Securities Exchange Act of 1934 (the “Rule”) and approved for distribution by resolution of the City. Within seven business days from the sale date, the City will deliver to the purchaser up to 100 copies of the final Official Statement, executed by an authorized representative of the City and dated the date of sale of the Bonds to the purchaser, to allow the purchaser to comply with paragraph (b)(4) of -9- the Rule and to satisfy the Municipal Securities Rulemaking Board (the “MSRB”) Rule G-32 or any other rules adopted by the MSRB, which shall include information permitted to be omitted by paragraph (b)(1) of the Rule and such other amendments or supplements as shall have been approved by the City (the “Final Official Statement”). The successful bidder agrees to supply the City all pricing information necessary to complete the Final Official Statement within 24 hours after the award of the Bonds. The purchaser agrees that it will not confirm the sale of any Bonds unless the confirmation of sale is accompanied or preceded by the delivery of a copy of the Final Official Statement. CERTIFICATE REGARDING OFFICIAL STATEMENT: A responsible officer of the City will certify to the original purchaser of the Bonds, as a condition of closing, that based on such officer’s participation in the preparation of the Official Statement, nothing has come to his or her attention to lead him or her to believe that the Official Statement (except for certain financial statements, statistical data and other information) contains any untrue statement of a material fact or omits to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. CONTINUING DISCLOSURE: In order to assist bidders in complying with the Rule, the City has committed to undertake, pursuant to the Paying Agent Agreement and a Continuing Disclosure Certificate, to provide certain annual financial information and notices of the occurrence of certain events, if material. A description of this undertaking is set forth in the preliminary Official Statement and will also be set forth in the final Official Statement. Such Continuing Disclosure Certificate will be a document required to be delivered at closing by the City, and the failure by the City to deliver such document in form and substance acceptable to Bond Counsel and the successful bidder will relieve the successful bidder of its obligation to purchase the Bonds. Dated: As of May 29, 2013 CITY OF PALO ALTO By: /s/ Lalo Perez Director of Administrative Services Exhibit A-1 EXHIBIT A Reoffering Price Certificate $20,695,000* CITY OF PALO ALTO (Santa Clara County, California) GENERAL OBLIGATION BONDS, ELECTION OF 2008, SERIES 2013A (TAX-EXEMPT) CERTIFICATE OF PURCHASER The undersigned, on behalf of ________________, as underwriter (the “Underwriter”) of the above-captioned bonds (the “Bonds”), hereby confirms our advice that: (i) Based upon reasonable expectations and actual facts that existed on June 12, 2013, being the date upon which the City of Palo Alto (the “Issuer”) sold the Bonds to the Underwriter (the “Sale Date”), the Underwriter reasonably expected that the first prices at which a substantial amount of each maturity of the Bonds (being at least 10% of each maturity) would be offered and sold to the general public (excluding bond houses, brokers or similar persons or organizations acting in the capacity of underwriters or wholesalers) in a bona fide public offering at the prices, or in the case of obligations sold on a yield basis, at the respective yields set forth in Exhibit A attached hereto and by this reference incorporated herein and shown on the cover or inside cover of the Official Statement (together, the “Initial Offering Prices”). (ii) The aggregate of the Initial Offering Prices is $_________________. (iii) The Initial Offering Prices of the Bonds of each maturity (and stated interest rate) reflected the assessment by the Underwriter of the fair market prices of the Bonds as of the Sale Date. (iv) As of the date hereof, 100% of the Bonds of each maturity were actually offered to the general public in a bona fide public offering for the Initial Offering Prices. (v) As of the Sale Date, the Underwriter, taking into account market conditions, had no reason to believe any of the Bonds would be initially sold to the general public at prices greater than the Initial Offering Prices. (vi) As of the Sale Date, at least 10% of the principal amount of each maturity of the Bonds initially was sold at the respective Initial Offering Price for that maturity shown in Exhibit A, except for the Bonds with the following maturities and stated interest rates. Maturity Rate * Preliminary, subject to change, as provided herein. Exhibit A-2 Capitalized terms used herein and not otherwise defined shall have the meanings ascribed thereto in that certain Paying Agent Agreement, dated as of June 1, 2013, by and between the Issuer and U.S. Bank National Association, as paying agent, authorizing the issuance of the Bonds. Dated: June 26, 2013 as Underwriter By Name, Title Th i s P r e l i m i n a r y O f f i c i a l S t a t e m e n t a n d t h e i n f o r m a t i o n c o n t a i n e d he r e i n a r e s u b j e c t t o c o m p l e t i o n o r a m e n d m e n t . T h e s e s e c u r i t i es m a y n o t b e s o l d n o r m a y o f f e r s t o b u y b e a c c e p t ed p r i o r t o t h e t i m e t h e O f f i c i a l S t a t e m e n t i s de l i v e r e d i n f i n a l f o r m . U n d e r n o c i r c u m s t a n ce s s h a l l t h i s P r e l i m i n a r y O f f i c i a l S t a t e m en t c o n s t i t u t e a n o f f e r t o s e l l o r a s o l i ci t a t i o n o f a n o f f e r t o b u y n o r s h a l l t h e r e b e a n y s a l e o f th e s e s e c u r i t i e s i n a n y j u r i s d i c t i o n i n w h i c h s u c h o f f e r , so l i c i t a t i o n o r s a l e w o u l d b e u n l a w f u l p r i o r t o r e g i s t r a t i o n o r q u a l i f i c a t i o n u n d e r t h e s e c u r i t i e s l a w s o f s u c h j u r i s d i c t i o n . PRELIMINARY OFFICIAL STATEMENT DATED MAY 29, 2013 NEW ISSUE—-BOOK-ENTRY ONLY RATINGS: Moody’s: “___” S&P: “___” (See “RATINGS” herein) In the opinion of Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel, subject, however to certain qualifications described herein, under existing law, the interest on the Bonds is excluded from gross income for federal income tax purposes, and such interest is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals; although for the purpose of computing the alternative minimum tax imposed on certain corporations, interest on the Bonds is taken into account in determining certain income and earnings. In the further opinion of Bond Counsel, such interest is exempt from California personal income taxes. See “LEGAL MATTERS—Tax Matters” herein. $20,695,000* (Santa Clara County, California) General Obligation Bonds, Election of 2008, Series 2013A Dated: Date of Delivery Due: August 1 as shown below The general obligation bonds captioned above (the “Bonds”) are being issued by the City of Palo Alto (the “City”) under the provisions of Chapter 4 (commencing with section 43600) of Division 4 of Title 4 of the California Government Code and section 53506 et seq. of the California Government Code, a Resolution adopted by the City Council of the City on May 6, 2013, and a Paying Agent Agreement, dated as of June 1, 2013, by and between the City and U.S. Bank National Association, as paying agent (the “Paying Agent”). The Bonds were authorized at an election of the registered voters of the City held on November 4, 2008 (the “Authorization”), at which more than two-thirds of the persons voting on the proposition voted to authorize the issuance and sale of not to exceed $76,000,000 principal amount of general obligation bonds to finance the costs of constructing a new energy efficient, environmentally friendly Mitchell Park Library and Community Center, renovating and expanding Main Library, and renovating and the Downtown Library, including enhancements at all three facilities for seismic safety and disabled access, expanded space for library collections, meeting and study areas, and new air conditioning, ventilation and lighting systems (the “Project”). See “PLAN OF FINANCE—Purpose of Issue” herein. An initial series of bonds in the amount of $55,305,000 was issued and sold under the Authorization on June 30, 2010. The Bonds are the second and final series of bonds to be issued and sold and issued under the Authorization. See “THE BONDS—Authority for Issuance” herein. The Bonds are general obligations of the City, payable solely from ad valorem property taxes levied by the City and collected by Santa Clara County (the “County”). The City Council is empowered and is obligated to levy ad valorem taxes for the payment of principal of and interest on the Bonds upon all property subject to taxation by the City, without limitation of rate or amount (except certain personal property which is taxable at limited rates). See “SECURITY FOR THE BONDS” herein. The Bonds will be issued in book-entry form only, and will be initially issued and registered in the name of Cede & Co. as nominee of The Depository Trust Company, New York, New York (“DTC”). The Bonds are issuable as fully registered securities in denominations of $5,000 or any integral multiple of $5,000. Purchasers of the Bonds (the “Beneficial Owners”) will not receive physical certificates representing their interest in the Bonds. See “THE BONDS” herein and “APPENDIX F—DTC AND THE BOOK-ENTRY ONLY SYSTEM.” Interest on the Bonds accrues from the date of delivery and is payable semiannually on February 1 and August 1 of each year, commencing February 1, 2014. Payments of principal of and interest on the Bonds will be paid by the Paying Agent, to DTC for subsequent disbursement to DTC Participants, which will remit such payments to the Beneficial Owners of the Bonds. See “THE BONDS—Description of the Bonds” herein. The Bonds are subject to redemption prior to maturity. See “THE BONDS—Redemption” herein. MATURITY SCHEDULE SEE INSIDE COVER Bids for the purchase of the Bonds will be received by the City on Wednesday, June 12, 2013, until 9:30 A.M., Pacific Daylight time, as provided in the Official Notice of Sale, dated May 29, 2013. The Bonds will be sold pursuant to the terms of sale set forth in the Official Notice of Sale. This cover page contains information for general reference only. It is not a summary of this issue. Potential purchasers of the Bonds are advised to read the entire Official Statement to obtain information essential to making an informed investment decision. The Bonds will be offered when, as and if issued and received by the Underwriter subject to the approval of legality by Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel. Certain disclosure matters will be passed upon for the City by Quint & Thimmig LLP, San Francisco, California, Disclosure Counsel. Certain matters will be passed upon for the City by Molly S. Stump, Esq., the City Attorney. It is expected that the Bonds, in book-entry form, will be available for delivery on or about June 26, 2013. Dated: June ___, 2013 *Preliminary, subject to change. $20,695,000* City of Palo Alto (Santa Clara County, California) General Obligation Bonds, Election of 2008, Series 2013A MATURITY SCHEDULE* CUSIP Prefix _________† Maturity Principal Interest CUSIP Maturity Principal Interest CUSIP (August 1) Amount Rate Yield Suffix (August 1) Amount Rate Yield Suffix 2014 2029 2015 2030 2016 2031 2017 2032 2018 2033 2019 2034 2020 2035 2021 2036 2022 2037 2023 2038 2024 2039 2025 2040 2026 2041 2027 2042 2028 2043 *Preliminary, subject to change. † Copyright 2013, American Bankers Association. CUSIP® is a registered trademark of the American Bankers Association. CUSIP data herein is provided by CUSIP Global Services Bureau, operated by Standard & Poor’s. This data is not intended to create a database and does not serve in any way as a substitute for CUSIP Global Services. CUSIP numbers have been assigned by an independent company not affiliated with the City and are included solely for the convenience of the holders of the Bonds. The City is not responsible for the selection or uses of these CUSIP numbers, and no representation is made as to their correctness on the Bonds or as included herein. The CUSIP number for a specific maturity is subject to being changed after the issuance of the Bonds as a result of various subsequent actions including, but not limited to, a refunding in whole or in part or as a result of the procurement of secondary market portfolio insurance or other similar enhancement by investors that is applicable to all or a portion of certain maturities of the Bonds. GENERAL INFORMATION ABOUT THIS OFFICIAL STATEMENT For purposes of compliance with Rule 15c2-12 of the United States Securities and Exchange Commission, as amended (“Rule 15c2-12”), this Preliminary Official Statement constitutes an “official statement” of the City with respect to the Bonds that has been deemed “final” by the City as of its date except for the omission of no more than the information permitted by Rule 15c2-12. Use of Official Statement. This Official Statement is submitted in connection with the sale of the Bonds referred to herein and may not be reproduced or used, in whole or in part, for any other purpose. This Official Statement is not a contract between any bond owner and the City or the Underwriter. This Official Statement and the information contained herein are subject to completion or amendment without notice. No Offering Except by This Official Statement. No dealer, broker, salesperson or other person has been authorized by the City or the Underwriter to give any information or to make any representations other than those contained in this Official Statement and, if given or made, such other information or representation must not be relied upon as having been authorized by the City or the Underwriter. No Unlawful Offers or Solicitations. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy nor may there be any sale of the Bonds by a person in any jurisdiction in which it is unlawful for such person to make such an offer, solicitation or sale. Estimates and Projections. When used in this Official Statement and in any continuing disclosure by the City, in any press release and in any oral statement made with the approval of an authorized officer of the City, the words or phrases “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimate,” “project,” “forecast,” “expect,” “intend” and similar expressions identify “forward looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated in such forward-looking statements. Any forecast is subject to such uncertainties. Inevitably, some assumptions used to develop the forecasts will not be realized and unanticipated events and circumstances may occur. Therefore, there are likely to be differences between forecasts and actual results, and those differences may be material. Information in Official Statement. The information set forth in this Official Statement has been furnished by the City and other sources which are believed to be reliable, but it is not guaranteed as to accuracy or completeness by the City. The City maintains a website. Unless specifically indicated otherwise, the information presented on such website is not incorporated by reference as part of this Official Statement and should not be relied upon in making investment decisions with respect to the Bonds. Document Summaries. All summaries of the Paying Agent Agreement or other documents referred to in this Official Statement are made subject to the provisions of such documents and qualified in their entirety to reference to such documents, and do not purport to be complete statements of any or all of such provisions. No Securities Laws Registration. The Bonds have not been registered under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, in reliance upon exceptions therein for the issuance and sale of municipal securities. The Bonds have not been registered or qualified under the securities laws of any state. Effective Date. This Official Statement speaks only as of its date, and the information and expressions of opinion contained in this Official Statement are subject to change without notice. Neither the delivery of this Official Statement nor any sale of the Bonds will, under any circumstances, give rise to any implication that there has been no change in the affairs of the City, or the other parties described in this Official Statement, or the condition of the property within the City since the date of this Official Statement. CITY OF PALO ALTO 250 Hamilton Avenue, 4th Floor Palo Alto, California 94301 http://www.cityofpaloalto.org/ CITY COUNCIL MEMBERS Gregory Scharff, Mayor Nancy Shepherd, Vice Mayor Marc Berman, Council Member Patrick Burt, Council Member Karen Holman, Council Member Larry Klein, Council Member Liz Kniss, Council Member Gail A. Price, Council Member Greg Schmid, Council Member CITY STAFF James Keene, City Manager Pamela Antil, Assistant City Manager/Chief Operating Officer Lalo Perez, Director of Administrative Services/Chief Financial Officer Joe Saccio, Assistant Director of Administrative Services Tarun Narayan, Senior Financial Analyst Molly S. Stump, City Attorney Donna Grider, City Clerk SPECIAL SERVICES Bond Counsel Jones Hall A Professional Law Corporation San Francisco, California Disclosure Counsel Quint & Thimmig LLP San Francisco, California Financial Advisor Public Financial Management, Inc. San Francisco, California Paying Agent U.S. Bank National Association San Francisco, California i TABLE OF CONTENTS INTRODUCTION.....................................................................1 PLAN OF FINANCE...............................................................3 Purpose of Issue.....................................................................3 Sources and Uses of Funds...............................................4 THE BONDS................................................................................4 Authority for Issuance........................................................4 Description of the Bonds...................................................4 Payment....................................................................................5 Redemption.............................................................................5 Registration, Transfer and Exchange of Bonds.....6 Defeasance...............................................................................7 DEBT SERVICE SCHEDULE..............................................8 SECURITY FOR THE BONDS...........................................9 Ad Valorem Taxes................................................................9 Debt Service Fund...............................................................9 Bond Service Fund............................................................10 Limited Obligation...........................................................10 PROPERTY TAXATION...................................................10 Property Tax Collection Procedures........................10 Taxation of State-Assessed Utility Property ........11 Alternative Method of Tax Apportionment - Teeter Plan..........................................................................11 Assessed Valuation...........................................................12 Tax Rates................................................................................14 Tax Levies and Delinquencies...................................14 Major Taxpayers.................................................................15 Direct and Overlapping Debt....................................15 CONSTITUTIONAL AND STATUTORY PROVISIONS AFFECTING CITY REVENUES AND APPROPRIATIONS................................................17 Article XIIIA of the State Constitution.....................17 Legislation Implementing Article XIIIA...............17 Article XIIIB of the State Constitution......................18 Articles XIIIC and XIIID of the State Constitution........................................................................18 Proposition 62......................................................................19 Proposition 1A.....................................................................20 Possible Future Initiatives............................................20 LEGAL MATTERS................................................................20 Approval of Legal Proceedings.................................20 Absence of Material Litigation...................................21 Tax Matters............................................................................21 CONTINUING DISCLOSURE........................................22 RATINGS...................................................................................22 FINANCIAL ADVISOR.....................................................22 UNDERWRITING.................................................................22 EXECUTION............................................................................23 APPENDIX A - GENERAL DEMOGRAPHIC AND ECONOMIC INFORMATION REGARDING THE CITY OF PALO ALTO AND SANTA CLARA COUNTY APPENDIX B - CITY OF PALO ALTO COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2012 APPENDIX C - PROPOSED FORM OF OPINION OF BOND COUNSEL APPENDIX D - FORM OF CONTINUING DISCLOSURE CERTIFICATE APPENDIX E - DTC AND THE BOOK-ENTRY ONLY SYSTEM CITY OF PALO ALTO LOCATION MAP OFFICIAL STATEMENT $20,695,000* CITY OF PALO ALTO General Obligation Bonds Election of 2008, Series 2013A The purpose of this Official Statement, which includes the cover page and attached appendices, is to set forth certain information concerning the sale and delivery of the bonds captioned above (the “Bonds”) by the City of Palo Alto (the “City”). All capitalized terms used in this Official Statement, unless noted otherwise, have the meanings set forth in the Paying Agent Agreement (as defined below). INTRODUCTION This Introduction is not a summary of this Official Statement. It is only a brief description of and guide to, and is qualified by, more complete and detailed information contained in the entire Official Statement and the documents summarized or described herein. A full review should be made of the entire Official Statement. The offering of Bonds to potential investors is made only by means of the entire Official Statement. The City. The City is located in northern Santa Clara County (the “County”), approximately 35 miles south of the City of San Francisco. It is part of the San Francisco Bay metropolitan area. The City was incorporated in 1894. Its first Charter was granted by the State of California in 1909, and the City continues to operate as a charter city. Municipal operations are conducted under the Council-Manager form of government. The City has a current population of approximately 65,500. See APPENDIX A—GENERAL DEMOGRAPHIC AND ECONOMIC INFORMATION REGARDING THE CITY OF PALO ALTO AND SANTA CLARA COUNTY and APPENDIX B—CITY OF PALO ALTO COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2012, for certain demographic, statistical and financial information regarding the City. Authority for Issuance. The Bonds were authorized at an election of the registered voters of the City held on November 4, 2008, at which more than two-thirds of the persons voting on the measure voted to authorize the issuance and sale of not to exceed $76,000,000 principal amount of general obligation bonds (the “Authorization”). An initial series of bonds in the amount of $55,305,000 was issued and sold under the Authorization on June 30, 2010. The Bonds are being issued under the provisions of Chapter 4 (commencing with section 43600) of Division 4 of Title 4 of the California Government Code, a Resolution adopted by the City Council of the City (the “City Council”) on May 6 2013 (the “Bond Resolution”); and a Paying Agent Agreement (the “Paying Agent Agreement”), dated as of June 1, 2013, by and between the City and U.S. Bank National Association, as paying agent (the “Paying Agent”). The Bonds are the second and final series of bonds to be sold and issued under the Authorization. See “THE BONDS—Authority for Issuance.” * Preliminary, subject to change. -2- Purpose for Issuance. Pursuant to the Authorization, bonds were approved to finance the costs of constructing a new energy efficient, environmentally friendly Mitchell Park Library and Community Center, renovating and expanding Main Library, and renovating the Downtown Library, including enhancements at all three facilities for seismic safety and disabled access, expanded space for library collections, meeting and study areas, and new air conditioning, ventilation and lighting systems (the “Project”). An initial series of bonds in the amount of $55,305,000 was issued and sold under the Authorization on June 30, 2010, to finance the Project. The Bonds are the second and final series of bonds to be issued and sold and issued under the Authorization. See “PLAN OF FINANCE—Purpose of Issue.” Security and Sources of Payment for the Bonds. The Bonds are general obligations of the City payable solely from ad valorem property taxes levied by the City and collected by the County. The City Council is empowered and is obligated to annually levy ad valorem taxes for the payment of the Bonds and the interest thereon upon all property within the City subject to taxation by the City, without limitation of rate or amount (except with respect to certain personal property which is taxable at limited rates). See “SECURITY FOR THE BONDS.” Payment and Registration of the Bonds. The Bonds will be dated their date of original issuance and delivery (the “Dated Date”) and will be issued as fully registered bonds, without coupons, in the denominations of $5,000 or any integral multiple of $5,000, registered in the name of Cede & Co. as nominee of The Depository Trust Company, New York, New York (“DTC”), and will be available under the book-entry system maintained by DTC, only through brokers and dealers who are or act through DTC Participants as described below. Beneficial Owners will not be entitled to receive physical delivery of the Bonds. See “THE BONDS” and APPENDIX E—DTC AND THE BOOK-ENTRY ONLY SYSTEM. Interest on the Bonds accrues from the Dated Date and is payable semiannually on February 1 and August 1 of each year, commencing February 1, 2014. See “THE BONDS— Description of the Bonds.” Early Redemption. The Bonds are subject to optional and mandatory sinking fund redemption prior to their maturity as described in “THE BONDS—Redemption.” Other Information. This Official Statement speaks only as of its date, and the information contained herein is subject to change. Copies of documents referred to in this Official Statement and information concerning the Bonds are available from the City of Palo Alto City Clerk, 250 Hamilton Avenue, Palo Alto, California 94301, (650) 329-2571. The City may impose a charge for copying, mailing and handling. -3- PLAN OF FINANCE Purpose of Issue The Project consists of the following components: • Mitchell Park Library and Community Center. Construction of the Mitchell Park Library and Community Center is in progress and is expected to be complete in late 2013. The existing Mitchell Park Library was about 10,000 square feet and is being replaced with a new facility of approximately 36,000 square feet. The new library has two stories to accommodate an enlarged collection, a children’s area, an acoustically separated teen area, group study rooms, staff areas and a program room. Increases in collection, seating, computers, children’s area and programming space will serve the needs of the projected population. Technical Services staff located at the Downtown Library will be relocated to the Mitchell Park Library in order to facilitate the increased intake of new materials for the entire library system. The existing Community Center was approximately 10,000 square feet and is being replaced with a new facility of approximately 15,000 square feet. Similar to the existing community center, the new building is a one-story building attached to the new library. By sharing activity space, the joint facility is smaller in size than two independent buildings and creates a more efficient use of the library/community center site. • Main Library. The Main Library improvements include small group study rooms that are acoustically separated from the rest of the existing building and a new program space that seats 100 people. To accommodate the new program space, the Main Library will expand by approximately 4,000 square feet from the current 21,000 square feet on the ground floor of the building. The interior of the existing library will also be reconfigured. Lighting and other building systems will also be upgraded. All of the improvements will be made with consideration for the historic nature of the existing building. • Downtown Library. The Downtown Library renovation was completed in 2011. The interior space was reconfigured and the technical staff relocated to provide larger public and program areas. A small program room was added. Systems upgrades, such as improved lighting and mechanical systems were also provided. The proceeds of the Bonds, being the second and final series of bonds under the Authorization, will be used to complete the Project. -4- Sources and Uses of Funds The estimated sources and uses of funds with respect to the Bonds will be applied as follows: Sources of Funds Principal Amount of Bonds Plus: Original Issue Premium Less: Underwriter’s Discount Total Sources Uses of Funds Deposit to Project Fund Deposit to Costs of Issuance Account (1) Total Uses (1) Includes Bond Counsel and Disclosure Counsel fees, financial advisor fees, rating fees, printing expenses and other costs of issuance with respect to the Bonds. THE BONDS Authority for Issuance The Bonds are issued under the provisions of Chapter 4 (commencing with section 43600) of Division 4 of Title 4 of the California Government Code and section 53506 et seq. of the California Government Code, the Bond Resolution and the Paying Agent Agreement. Description of the Bonds Book-Entry Form. The Bonds will be issued in book-entry form only, and will be initially issued and registered in the name of Cede & Co. as nominee of DTC. Purchasers of the Bonds (the “Beneficial Owners”) will not receive physical certificates representing their interest in the Bonds. Payments of principal of and interest on the Bonds will be paid by the Paying Agent to DTC for subsequent disbursement to DTC Participants which will remit such payments to the Beneficial Owners of the Bonds. As long as DTC’s book-entry method is used for the Bonds, the Paying Agent will send any notice of prepayment or other notices to owners only to DTC. Any failure of DTC to advise any DTC Participant, or of any DTC Participant to notify any Beneficial Owner, of any such notice and its content or effect will not affect the validity or sufficiency of the proceedings relating to the prepayment of the Bonds called for prepayment or of any other action premised on such notice. The Paying Agent, the City, and the Underwriter of the Bonds have no responsibility or liability for any aspects of the records relating to or payments made on account of beneficial ownership, or for maintaining, supervising or reviewing any records relating to beneficial ownership, of interests in the Bonds. See APPENDIX E—DTC AND THE BOOK-ENTRY ONLY SYSTEM. Interest. Interest on the Bonds is payable semiannually on February 1 and August 1 of each year (the “Interest Payment Dates”), commencing February 1, 2014. -5- Each Bond will bear interest from the Interest Payment Date next preceding the date of registration and authentication thereof unless (i) it is registered and authenticated prior to an Interest Payment Date, in which event it will bear interest from such date, or (ii) it is registered and authenticated prior to a Interest Payment Date and after the close of business on the fifteenth day of the month preceding such Interest Payment Date, in which event it will bear interest from such Interest Payment Date, or (iii) it is registered and authenticated prior to January 15, 2011, in which event it will bear interest from the date of original issuance and authentication of the Bonds; provided, however, that if at the time of authentication of a Bond, interest is in default thereon, such Bond will bear interest from the Interest Payment Date to which interest has previously been paid or made available for payment thereon. Interest on the Bonds will be calculated on the basis of a 360-day year comprised of twelve 30-day months. Denominations and Maturity. The Bonds will be issued in the denomination of $5,000 each or any integral multiple of $5,000. The Bonds mature August 1 in the years 2014 through 2043, in the amounts set forth on the cover page of this Official Statement. See the maturity schedule on the cover page hereof and “DEBT SERVICE SCHEDULE” below. Payment Interest on the Bonds (including the final interest payment upon maturity or early redemption) is payable by check of the Paying Agent mailed on the Interest Payment Date to the owner thereof at such owner’s address as it appears on the Bond Register maintained by the Paying Agent at the close of business on the 15th day of the month preceding the Interest Payment Date, or at such other address as the owner may have filed with the Paying Agent for that purpose; provided that an owner of $1,000,000 or more aggregate principal amount of Bonds, or the owner of all of the Bonds at the time outstanding, will, at his or her option, receive payment of interest by wire transfer to an account in the United States of America designated by such owner to the Paying Agent no later than the 15th day of the month immediately preceding the applicable Interest Payment Date. Principal of the Bonds is payable in lawful money of the United States of America at the principal office of the Paying Agent. Redemption Optional Redemption. The Bonds maturing on or before August 1, 2023, are not subject to redemption prior to their fixed maturity dates. The Bonds maturing on or after August 1, 2024, are subject to redemption prior to their respective maturity dates as a whole or in part on any date, as designated by the City and, absent any such designation, pro rata among maturities and by lot within a maturity, from money provided at the option of the City, in each case on and after August 1, 2023, at a redemption price equal to the principal amount of the Bonds to be redeemed, plus accrued interest to the date of redemption, without premium. Redemption Procedure. The Paying Agent will cause notice of any redemption to be mailed, first class mail, postage prepaid, at least 30 days but not more than 60 days prior to the date fixed for redemption, to the respective Owners of any Bonds designated for redemption, at their addresses appearing on the bond registration books maintained by the Paying Agent and to the Securities Depositories (as such term is defined in the Paying Agent Agreement); but such mailing will not be a condition precedent to such redemption and failure to mail or to receive any such notice will not affect the validity of the proceedings for the redemption of such Bonds. -6- The Paying Agent will not mail any notice of redemption until it has sufficient moneys on deposit to pay the redemption price of all Bonds to be redeemed; provided, however, that such restriction will not apply when the Bonds are redeemed with the proceeds of another obligation of the City; and provided further that in the event the Bonds are being redeemed with such proceeds, the City will have the right to cancel the notice of redemption by providing written notice of such cancellation to the Paying Agent at least seven business days prior to the date set for redemption. Such notice will state the redemption date and the redemption price and, if less than all of the then outstanding Bonds are to be called for redemption, will designate the serial numbers of the Bonds to be redeemed by giving the individual number of each Bond or by stating that all Bonds between two stated numbers, both inclusive, or by stating that all of the Bonds of one or more maturities have been called for redemption, and will require that such Bonds be then surrendered at the principal office of the Paying Agent for redemption at the said redemption price, giving notice also that further interest on such Bonds will not accrue from and after the redemption date. Partial Redemption. Upon surrender of Bonds redeemed in part only, the City will execute and the Paying Agent will authenticate and deliver to the owner, at the expense of the City, a new Bond or Bonds, of the same maturity, of authorized denominations in aggregate principal amount equal to the unredeemed portion of the Bond or Bonds. Effect of Redemption. From and after the date fixed for redemption, if notice of such redemption has been duly given as provided in the Paying Agent Agreement and funds available for the payment of the principal of and interest (and premium, if any) on the Bonds so called for redemption will has been duly provided, such Bonds so called will cease to be entitled to any benefit under the Paying Agent Agreement other than the right to receive payment of the redemption price, and no interest will accrue thereon on or after the redemption date specified in such notice. Registration, Transfer and Exchange of Bonds If the book-entry system as described above and in Appendix E is no longer used with respect to the Bonds, the following provisions will govern the registration, transfer, and exchange of the Bonds. Bond Register. The Paying Agent will keep or cause to be kept sufficient books for the registration and transfer of the Bonds (the “Bond Register”), which will at all times be open to inspection by the City upon reasonable notice; and, upon presentation for such purpose, the Paying Agent shall, under such reasonable regulations as it may prescribe, register or transfer or cause to be registered or transferred, on said books, the Bonds. Transfer. Any Bond may, in accordance with its terms, be transferred, upon the books required to be kept by the Paying Agent, by the person in whose name it is registered, in person or by his duly authorized attorney, upon surrender of such Bond for cancellation at the principal office at the Paying Agent, accompanied by delivery of a written instrument of transfer in a form approved by the Paying Agent, duly executed. The Paying Agent will require the payment by the owner requesting such transfer of any tax or other governmental charge required to be paid with respect to such transfer. Whenever any Bond or Bonds are surrendered for transfer, the City will execute and the Paying Agent will authenticate and deliver a new Bond or Bonds, for like aggregate principal amount. -7- No transfers of Bonds will be required to be made (a) 15 days prior to the date established by the Paying Agent for selection of Bonds for redemption or (b) with respect to a Bond after such Bond has been selected for redemption (except with respect to the unredeemed portion thereof). Exchange. Bonds may be exchanged at the principal office of the Paying Agent for a like aggregate principal amount of Bonds of authorized denominations and of the same maturity. The Paying Agent will require the payment by the owner requesting such exchange of any tax or other governmental charge required to be paid with respect to such exchange. No exchanges of Bonds will be required to be made (a) 15 days prior to the date established by the Paying Agent for selection of Bonds for redemption or (b) with respect to a Bond after such Bond has been selected for redemption (except with respect to the unredeemed portion thereof). Defeasance The City has the option to pay and discharge the entire indebtedness on all or any portion of the outstanding Bonds in any one or more of the following ways: (a) by paying or causing to be paid the principal of, and interest and any premium on, such outstanding Bonds, as and when they become due and payable; (b) by depositing with the Paying Agent, in trust, at or before maturity, money which, together with, in the event of a discharge of all of the Bonds, the amounts then on deposit in the funds and accounts provided for in the Paying Agent Agreement is fully sufficient to pay such outstanding Bonds, including all principal, interest and redemption premiums; or (c) by irrevocably depositing with the Paying Agent or other agent designated by the City, in trust, cash and Federal Securities (as defined below) in such amount as the City will determine as confirmed by an independent certified public accountant will, together with the interest to accrue thereon and, in the event of a discharge of all of the Bonds, moneys then on deposit in the fund and accounts provided for in the Paying Agent Agreement, be fully sufficient to pay and discharge the indebtedness on such Bonds (including all principal, interest and redemption premiums) at or before their respective maturity dates. If the City has taken any of the actions specified in (a), (b) or (c) above, and if such Bonds are to be redeemed prior to the maturity thereof notice of such redemption will have been given as in the Paying Agent Agreement provided or provision satisfactory to the Paying Agent will have been made for the giving of such notice, then, at the election of the City, and notwithstanding that any Bonds will not have been surrendered for payment, the pledge of the funds and moneys provided for in the Paying Agent Agreement and all other obligations of the City under the Paying Agent Agreement with respect to such outstanding Bonds will cease and terminate. Notice of such election will be filed with the Paying Agent. Notwithstanding the foregoing, the obligation of the City to pay or cause to be paid to the owners of the Bonds not so surrendered and paid all sums due thereon and all amounts owing to the Paying Agent pursuant to the Paying Agent Agreement will continue in any event. Upon compliance by the City with the foregoing with respect to all bonds outstanding, any funds held by the Paying Agent after payment of all fees and expenses of the Paying Agent, which are not required for the purposes of the preceding paragraph, will be paid over to the City. -8- “Federal Securities” means Federal agency or United States government-sponsored enterprise obligations, participations, or other instruments, including those issued by or fully guaranteed as to principal and interest by federal agencies or United States government- sponsored enterprises. DEBT SERVICE SCHEDULE The following table shows the debt service schedule with respect to the Bonds (assuming no optional redemptions). Year Ending August 1 Principal Payment Interest Payment Total Bonds Debt Service 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 -9- SECURITY FOR THE BONDS Ad Valorem Taxes Bonds Payable from Ad Valorem Property Taxes. The Bonds are general obligations of the City, payable solely from ad valorem property taxes levied by the City and collected by the County. The City is empowered and is obligated to annually levy ad valorem taxes for the payment of the Bonds and the interest thereon upon all property within the City subject to taxation by the City, without limitation of rate or amount (except certain personal property which is taxable at limited rates). Levy and Collection. The City will levy and the County will collect such ad valorem taxes in such amounts and at such times as is necessary to ensure the timely payment of debt service. Such taxes, when collected, will be deposited into a debt service fund for the Bonds, which is maintained by the City and which is irrevocably pledged for the payment of principal of and interest on the Bonds when due. If and to the extent the amount of such ad valorem taxes collected is insufficient to pay debt service on the Bonds, the City is obligated under the Paying Agent Agreement to use any other moneys lawfully available therefore to pay debt service on the Bonds. City property taxes are assessed and collected by the County in the same manner and at the same time, and in the same installments as other ad valorem taxes on real property, and will have the same priority, become delinquent at the same times and in the same proportionate amounts, and bear the same proportionate penalties and interest after delinquency, as do the other ad valorem taxes on real property. Annual Tax Rates. The amount of the annual ad valorem tax levied by the County to repay the Bonds will be determined by the relationship between the assessed valuation of taxable property in the City and the amount of debt service due on the Bonds. Fluctuations in the annual debt service on the Bonds and the assessed value of taxable property in the City may cause the annual tax rate to fluctuate. Economic and other factors beyond the City’s control, such as economic recession, deflation of land values, a relocation out of the City or financial difficulty or bankruptcy by one or more major property taxpayers, or the complete or partial destruction of taxable property caused by, among other eventualities, earthquake, flood or other natural disaster, could cause a reduction in the assessed value within the City and necessitate a corresponding increase in the annual tax rate. Debt Service Fund The City will establish the Debt Service Fund (the “Debt Service Fund”), which will be established as a separate fund to be maintained distinct from all other funds of the City. Into the Debt Service Fund will be deposited: (1) the proceeds of ad valorem taxes levied to pay debt service on the Bonds; and (2) if any, other moneys lawfully available to pay debt service on the Bonds as provided in the Paying Agent Agreement. All moneys in the Debt Service Fund will be used and withdrawn by the City solely for the purpose of paying the principal of and interest on the Bonds as they become due and payable. At least five Business Days prior to each Interest Payment Date, commencing in January 1 the City will transfer to the Paying Agent moneys on deposit in the Debt Service Fund for application by the Paying Agent on the next succeeding Interest Payment Date to the payment of principal of and interest on the Bonds. -10- Bond Service Fund The Paying Agent Agreement establishes, as a separate fund, the Bond Service Fund, to be held by the Paying Agent. All moneys received by the Paying Agent from the City from the Debt Service Fund will be deposited into the Bond Service Fund. The moneys on deposit in the Bond Service Fund will be used solely to pay principal and interest on the Bonds when due. Limited Obligation The Bonds are payable solely from the proceeds of an ad valorem tax levied by the City, and collected by the County, for the payment of principal and interest on the Bonds. Although the County is obligated to levy and collect the ad valorem tax for the payment of the Bonds, the Bonds are not a debt of the County. PROPERTY TAXATION Property Tax Collection Procedures In California, property which is subject to ad valorem taxes is classified as “secured” or “unsecured.” The “secured roll” is that part of the assessment roll containing state assessed public utilities’ property and property, the taxes on which are a lien on real property sufficient, in the opinion of the county assessor, to secure payment of the taxes. A tax levied on unsecured property does not become a lien against such unsecured property, but may become a lien on certain other property owned by the taxpayer. Every tax which becomes a lien on secured property has priority over all other liens arising pursuant to State law on such secured property, regardless of the time of the creation of the other liens. Secured and unsecured property are entered separately on the assessment roll maintained by the county assessor. The method of collecting delinquent taxes is substantially different for the two classifications of property. Property taxes on the secured roll are due in two installments, on November 1 and February 1 of each fiscal year. If unpaid, such taxes become delinquent after December 10 and April 10, respectively, and a 10% penalty attaches to any delinquent payment. In addition, property on the secured roll with respect to which taxes are delinquent is declared tax defaulted on or about June 30 of the fiscal year. Such property may thereafter be redeemed by payment of the delinquent taxes and a delinquency penalty, plus a redemption penalty of 1-1/2% per month to the time of redemption. If taxes are unpaid for a period of five years or more, the property is subject to sale by the County. Property taxes are levied for each fiscal year on taxable real and personal property situated in the taxing jurisdiction as of the preceding January 1. A bill enacted in 1983, SB813 (Statutes of 1983, Chapter 498), however, provided for the supplemental assessment and taxation of property as of the occurrence of a change of ownership or completion of new construction. Thus, this legislation eliminated delays in the realization of increased property taxes from new assessments. As amended, SB813 provided increased revenue to taxing jurisdictions to the extent that supplemental assessments of new construction or changes of ownership occur subsequent to the January 1 lien date and result in increased assessed value. Property taxes on the unsecured roll are due on the January 1 lien date and become delinquent, if unpaid on the following August 31. A 10% penalty is also attached to delinquent taxes in respect of property on the unsecured roll, and further, an additional penalty of 1-1/2% per month accrues with respect to such taxes beginning the first day of the third month -11- following the delinquency date. The taxing authority has four ways of collecting unsecured personal property taxes: (1) a civil action against the taxpayer; (2) filing a certificate in the office of the county clerk specifying certain facts in order to obtain a judgment lien on certain property of the taxpayer; (3) filing a certificate of delinquency for record in the county recorder’s office, in order to obtain a lien on certain property of the taxpayer; and (4) seizure and sale of personal property, improvements or possessory interests belonging or assessed to the assessee. The exclusive means of enforcing the payment of delinquent taxes in respect of property on the secured roll is the sale of the property securing the taxes for the amount of taxes which are delinquent. Taxation of State-Assessed Utility Property The State Constitution provides that most classes of property owned or used by regulated utilities be assessed by the State Board of Equalization (“SBE”) and taxed locally. Property valued by the SBE as an operating unit in a primary function of the utility taxpayer is known as “unitary property,” a concept designed to permit assessment of the utility as a going concern rather than assessment of each individual element of real and personal property owned by the utility taxpayer. State-assessed unitary and “operating nonunitary” property (which excludes nonunitary property of regulated railways) is allocated to the counties based on the situs of the various components of the unitary property. Except for unitary property of regulated railways and certain other excepted property, all unitary and operating nonunitary property is taxed at special county-wide rates and tax proceeds are distributed to taxing jurisdictions according to statutory formulae generally based on the distribution of taxes in the prior year. Alternative Method of Tax Apportionment - Teeter Plan The Board of Supervisors of the County has approved the implementation of the Alternative Method of Distribution of Tax Levies and Collections and of Tax Sale Proceeds (the “Teeter Plan”), as provided for in Section 4701 et seq. of the California Revenue and Taxation Code. Under the Teeter Plan, the County apportions secured property taxes on an accrual basis when due (irrespective of actual collections) to local political subdivisions, including the City, for which the County acts as the tax-levying or tax-collecting agency. The Teeter Plan was effective beginning the fiscal year commencing July 1, 1993. The Teeter Plan is applicable to all tax levies on secured property for which the County acts as the tax-levying or tax-collecting agency, or for which the County treasury is the legal depository of the tax collections. The ad valorem property tax to be levied to pay the interest on and principal of the Bonds will be subject to the Teeter Plan, beginning in the first year of such levy in fiscal year 2009-10. The City will receive 100% of the ad valorem property tax on secured property levied to pay the Bonds irrespective of actual delinquencies in the collection of the tax by the County. The Teeter Plan is to remain in effect unless the Board of Supervisors of the County orders its discontinuance or unless, prior to the commencement of any fiscal year of the County (which commences on July 1), the Board of Supervisors receives a petition for its discontinuance joined in by resolutions adopted by at least two-thirds of the participating revenue districts in the County, in which event the Board of Supervisors is to order discontinuance of the Teeter Plan effective at the commencement of the subsequent fiscal year. If the Teeter Plan is discontinued subsequent to its implementation, only those secured property taxes actually collected would be allocated to political subdivisions (including the City) for which the County acts as the tax-levying or tax-collecting agency. -12- Assessed Valuation Assessed Valuation History. The table below shows a five-year history of the City’s assessed valuation. CITY OF PALO ALTO Assessed Valuations of Taxable Property Fiscal Years 2007-08 to 2012-13 Fiscal Year Local Secured Utility Unsecured Total Before Redevelopment Increment 2007-08 $17,382,729,942 $3,174,384 $1,536,583,502 $18,922,487,828 2008-09 19,380,152,340 2,572,716 1,702,884,064 21,085,609,120 2009-10 20,239,349,432 2,572,716 1,638,435,945 21,880,358,093 2010-11 20,458,126,804 2,572,716 1,495,574,504 21,956,274,024 2011-12 20,967,297,668 2,572,716 1,516,837,280 22,486,707,664 2012-13 22,334,464,145 2,572,716 1,355,969,707 23,693,006,568 Source: California Municipal Statistics, Inc. Assessed Valuation by Land Use. The following table shows the land use of parcels in the City, according to assessed valuation. As shown, the majority of land in the City is used for residential purposes. CITY OF PALO ALTO Assessed Valuation and Parcels by Land Use Fiscal Year 2012-13 2012-13 Assessed Valuation(1) % of Total No. of Parcels % of Total No. of Taxable Parcels % of 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/Apartments 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 $22,334,464,145 100.00% 20,329 100.00% 20,138 100.00% Source: California Municipal Statistics, Inc. (1) Local Secured Assessed Valuation; excluding tax-exempt property. -13- Assessed Valuation of Single Family Residential Parcels. The following table shows a break down of the assessed valuations of Single Family Residential parcels in the City, according to assessed valuation. CITY OF PALO ALTO Per Parcel 2012-13 Assessed Valuation of Single Family Homes No. of 2012-13 Average Median Parcels Assessed Valuation Assessed Valuation Assessed Valuation Single Family Residential 14,870 $12,974,042,711 $872,498 $654,003 2012-13 No. of % of Cumulative Total % of Cumulative Assessed Valuation Parcels(1) Total % of Total Valuation Total % of Total $0 - $99,999 1,719 11.560% 11.560% $ 133,245,071 1.027% 1.027% $100,000 - $199,999 1,952 13.127 24.687 267,951,878 2.065 3.092 $200,000 - $299,999 951 6.395 31.083 237,455,035 1.830 4.923 $300,000 - $399,999 788 5.299 36.382 274,869,785 2.119 7.041 $400,000 - $499,999 805 5.414 41.796 363,316,163 2.800 9.841 $500,000 - $599,999 815 5.481 47.276 447,604,628 3.450 13.291 $600,000 - $699,999 710 4.775 52.051 461,026,908 3.553 16.845 $700,000 - $799,999 650 4.371 56.422 486,717,325 3.751 20.596 $800,000 - $899,999 739 4.970 61.392 629,372,213 4.851 25.447 $900,000 - $999,999 706 4.748 66.140 670,819,782 5.170 30.618 $1,000,000 - $1,099,999 648 4.358 70.498 679,741,352 5.239 35.857 $1,100,000 - $1,199,999 544 3.658 74.156 624,153,570 4.811 40.668 $1,200,000 - $1,299,999 569 3.826 77.983 709,285,340 5.467 46.135 $1,300,000 - $1,399,999 498 3.349 81.332 670,599,984 5.169 51.304 $1,400,000 - $1,499,999 424 2.851 84.183 614,353,307 4.735 56.039 $1,500,000 - $1,599,999 293 1.970 86.153 453,227,422 3.493 59.532 $1,600,000 - $1,699,999 250 1.681 87.835 412,235,173 3.177 62.710 $1,700,000 - $1,799,999 217 1.459 89.294 379,788,024 2.927 65.637 $1,800,000 - $1,899,999 165 1.110 90.403 304,876,011 2.350 67.987 $1,900,000 - $1,999,999 180 1.210 91.614 350,451,706 2.701 70.688 $2,000,000 and greater 1,247 8.386 100.00% 3,802,952,034 29.312 100.00% Total 14,870 100.000% $12,974,042,711 100.000% Source: California Municipal Statistics, Inc. (1) Improved single family residential parcels. Excludes condominiums and parcels with multiple family units. -14- Tax Rates The table below summarizes the total ad valorem tax rates levied by all taxing entities in Tax Rate Area 6-001 for each $100 of assessed valuation during the fiscal years 2007-08 through 2011-12. CITY OF PALO ALTO Summary of Ad Valorem Tax Rates $1 per $100 of Assessed Valuation Fiscal Years 2008-09 to 2012-13 (Tax Rate Area 6-001) Ad Valorem Tax 2008-09 2009-10 2010-11 2011-12 2012-13 General 1.00000 1.00000 1.0000 1.0000 1.0000 County Retirement Levy .03880 .03880 .0388 .0388 .0388 County Hospital Bond — .01220 .00950 .00470 .00510 City of Palo Alto — — .01711 .01550 .01290 Palo Alto Unified School District .04040 .04450 .04450 .04560 .09510 Foothill-De Anza Community College District .01230 .03220 .03260 .02970 .02870 Total All Property 1.09150 1.12770 1.14251 1.13430 1.18060 Santa Clara Valley Water District - State Water Project .00590 .00710 .00700 .00630 .00690 Total Land and Improvement .00590 .00710 .00700 .00630 .00690 Source: California Municipal Statistics, Inc. (1) 2012-13 assessed valuation of TRA 6-001 is $19,301,097,845 which is 81.46% of the City’s total assessed valuation. Tax Levies and Delinquencies The following table is a five-year summary of ad valorem property tax levies, dollars delinquent and delinquency rates on property within the City. Because the City currently participates in the Teeter Plan, the amount of ad valorem property taxes received by the City is equal to the amount levied rather than the amount collected by the County. See “—Alternative Method of Apportionment—Teeter Plan,” above. CITY OF PALO ALTO Total Tax Levies and Collections (As of June 30) 2007-08 through 2011-12 (In Thousands) Fiscal Year Gross Tax Levy Current Tax Collections Percentage of Current Levy Collected Delinquent Tax Collections Total Collections 2007-08 $23,084 $23,084 100% — $23,084 2008-09 25,432 25,432 100 — 25,432 2009-10 25,981 25,981 100 — 25,981 2010-11 25,688 25,688 100 — 25,688 2011-12 26,494 26,494 100 — 26,494 Source: Annual Financial Statements, Government Funds, Statement of Revenues, Expenditures and Changes in Fund Balances. -15- Major Taxpayers The following table shows the largest taxpayers in the City as determined by their secured assessed valuations in 2012-13: CITY OF PALO ALTO Largest 2012-13 Local Secured Taxpayers 2012-13 Assessed % of Property Owner Primary Land Use Valuation Total(1) Board of Regents Leland Stanford Jr. University Various Land Uses $3,645,322,693(2) 16.32% Loral Space & Communications Inc. Industrial 250,323,541 1.12 Arden Realty LP Office Building 114,721,939 0.51 Whisman Ventures LLC Office Building 107,167,819 0.48 SRP Valley LLC Office Building 60,872,322 0.27 Ronald & Ann Williams Charitable Foundation Shopping Center 59,979,717 0.27 PPC Forest Towers LLC Apartments 54,271,862 0.24 Blackhawk Parent LLC Office Building 51,199,907 0.23 529 Bryant St. Partners LLC Office Building 43,488,086 0.19 Park Village Peninsula LLC Apartments 38,283,335 0.17 ECI 2 Bayshore LLC Office Building 37,599,935 0.17 Hohbach Realty Co. LP Apartments 34,917,777 0.16 Dennis A. Levett Apartments 34,275,175 0.15 Thoits Bros. Inc. Office Building 32,557,325 0.15 Hamilton Associates 400 Office Building 30,454,881 0.14 Pacific Hotel Development Venture LP Hotel 29,281,333 0.13 Salvatore And Stella Giovannotto Apartments 29,202,574 0.13 Calif Pacific Commercial Corp. Industrial 28,838,259 0.13 APIP 2007 LLC Apartments 26,347,300 0.12 Inspire Real Estate Holdings LLC Office Building 25,468,944 0.11 TOTAL $4,734,574,724 21.20% Source: California Municipal Statistics, Inc. (1) 2012-13 Local Secured Assessed Valuation: $22,334,464,145. (2) Net taxable valuation. Direct and Overlapping Debt Set forth below is a direct and overlapping debt report (the “Debt Report”) prepared by California Municipal Statistics, Inc. and effective as of March 1, 2013. The Debt Report is included for general information purposes only. The City has not reviewed the Debt Report for completeness or accuracy and makes no representation in connection therewith. The Debt Report generally includes long-term obligations sold in the public credit markets by public agencies whose boundaries overlap the boundaries of the City in whole or in part. Such long-term obligations generally are not payable from revenues of the City (except as indicated) nor are they necessarily obligations secured by land within the City. In many cases, long-term obligations issued by a public agency are payable only from the general fund or other revenues of such public agency. -16- CITY OF PALO ALTO STATEMENT OF DIRECT AND OVERLAPPING BONDED DEBT (As of March 1, 2013) 2012-13 Assessed Valuation: $23,693,006,568 DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT: % Applicable Debt 3/1/13 Santa Clara County 7.677% $ 24,243,966 Foothill-De Anza Community College District 22.683 140,989,427 Palo Alto Unified School District 89.195 195,849,251 Fremont Union High School District 0.023 57,857 Los Gatos-Saratoga Joint Union High School District 0.010 4,691 Mountain View-Los Altos Union High School District 0.896 616,731 Cupertino Union School District 0.038 63,237 Los Altos School District 1.028 807,140 Mountain View-Whisman School District 0.769 384,500 Saratoga Union School District 0.022 9,459 Whisman School District 1.911 320,832 City of Palo Alto 100.000 53,540,000 (1) El Camino Hospital District 0.092 130,005 City of Palo Alto Special Assessment Bonds 100.000 31,170,000 Santa Clara Valley Water District Benefit Assessment District 7.677 9,450,387 TOTAL DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT $457,637,483 DIRECT AND OVERLAPPING GENERAL FUND DEBT: Santa Clara County General Fund Obligations 7.677% $ 64,333,017 Santa Clara County Pension Obligations 7.677 29,095,432 Santa Clara County Board of Education Certificates of Participation 7.677 885,926 Foothill-DeAnza Community College District Certificates of Participation 22.683 3,907,147 Los Gatos-Saratoga Joint Union High School District Certificates of Participation 0.010 859 Mountain View-Los Altos Union High School District Certificates of Participation 0.896 41,261 Saratoga Union School District Certificates of Participation 0.022 1,219 City of Palo Alto General Fund Obligations 100.000 1,560,000 Santa Clara County Vector Control District Certificates of Participation 7.677 278,675 Midpeninsula Regional Open Space Park District General Fund Obligations 13.237 17,955,953 TOTAL DIRECT AND OVERLAPPING GENERAL FUND DEBT $118,059,489 COMBINED TOTAL DEBT $575,696,972 (2) (1) Excludes issue to be sold. (2) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and non-bonded capital lease obligations. Ratios to Assessed Valuation: Direct Debt ($53,540,000) 0.23% Combined Direct Debt ($55,100,000) 0.23% Total Overlapping Tax and Assessment Debt 1.93% Combined Total Debt 2.43% Source: California Municipal Statistics, Inc. -17- CONSTITUTIONAL AND STATUTORY PROVISIONS AFFECTING CITY REVENUES AND APPROPRIATIONS Principal of and interest on the Bonds are payable from the proceeds of an ad valorem tax levied by the City for the payment thereof. See “The Bonds—Security for the Bonds” above. Articles XIIIA, XIIIB, XIIIC and XIIID of the State Constitution, Propositions 62, 111, and 218 and 1A, and certain other provisions of law discussed below are included in this section to describe the potential effect of these Constitutional and statutory measures on the ability of the City to levy taxes and spend tax proceeds for operating and other purposes, and it should not be inferred from the inclusion of such materials that these laws impose any limitation on the ability of the City to levy taxes for payment of the Bonds. The tax levied by the City for payment of the Bonds was approved by the City’s voters in compliance with Article XIIIA and all applicable laws. Article XIIIA of the State Constitution On June 6, 1978, California voters approved Proposition 13, which added Article XIIIA to the State Constitution. Article XIIIA, as amended, limits the amount of any ad valorem tax on real property to one percent of the full cash value thereof, except that additional ad valorem taxes may be levied to pay debt service (i) on indebtedness approved by the voters prior to July 1, 1978, (ii) on bonded indebtedness approved by a two-thirds vote on or after July 1, 1978, for the acquisition or improvement of real property or (iii) bonded indebtedness incurred by a school district, community college district or county office of education for the construction, reconstruction, rehabilitation or replacement of school facilities, including the furnishing and equipping of school facilities or the acquisition or lease of real property for school facilities, approved by 55 percent of the voters voting on the proposition. Article XIIIA defines full cash value to mean “the county assessor’s valuation of real property as shown on the 1975-76 tax bill under “full cash value,” or thereafter, the appraised value of real property when purchased, newly constructed, or a change in ownership has occurred after the 1975 assessment.” This full cash value may be increased at a rate not to exceed two percent per year to account for inflation. Article XIIIA has subsequently been amended to permit reduction of the “full cash value” base in the event of declining property values caused by damage, destruction or other factors, to provide that there would be no increase in the “full cash value” base in the event of reconstruction of property damaged or destroyed in a disaster, and in other minor or technical ways. Legislation Implementing Article XIIIA Legislation has been enacted and amended a number of times since 1978 to implement Article XIIIA. Under current law, local agencies are no longer permitted to levy directly any property tax (except to pay voter-approved indebtedness). The one percent property tax is automatically levied by the County and distributed according to a formula among taxing agencies. The formula apportions the tax roughly in proportion to the relative shares of taxes levied prior to 1989. Increases of assessed valuation resulting from reappraisals of property due to new construction, change in ownership or from the two percent annual adjustment are allocated among the various jurisdictions in the “taxing area” based upon their respective “situs.” Any such allocation made to a local agency continues as part of its allocation in future years. All taxable property is shown at full market value on the tax rolls. Consequently, the tax rate is expressed as $1 per $100 of taxable value. All taxable property value included in this -18- Official Statement is shown at 100 percent of market value (unless noted differently) and all tax rates reflect the $1 per $100 of taxable value. Article XIIIB of the State Constitution In addition to the limits Article XIIIA imposes on property taxes that may be collected by local governments, certain other revenues of the State and most local governments are subject to an annual “appropriations limit” imposed by Article XIIIB which effectively limits the amount of such revenues those entities are permitted to spend. Article XIIIB, approved by the voters in June 1979, was modified substantially by Proposition 111 in 1990. The appropriations limit of each government entity applies to “proceeds of taxes,” which consist of tax revenues, State subventions and certain other funds, including proceeds from regulatory licenses, user charges or other fees to the extent that such proceeds exceed “the cost reasonably borne by such entity in providing the regulation, product or service.” “Proceeds of taxes” excludes tax refunds and some benefit payments such as unemployment insurance. No limit is imposed on the appropriation of funds which are not “proceeds of taxes,” such as reasonable user charges or fees, and certain other non-tax funds. Article XIIIB also does not limit appropriation of local revenues to pay debt service on Bonds existing or authorized by January 1, 1979, or subsequently authorized by the voters, appropriations required to comply with mandates of courts or the federal government, appropriations for qualified capital outlay projects, and appropriation by the State of revenues derived from any increase in gasoline taxes and motor vehicle weight fees above January 1, 1990, levels. The appropriations limit may also be exceeded in case of emergency; however, the appropriations limit for the next three years following such emergency appropriation must be reduced to the extent by which it was exceeded, unless the emergency arises from civil disturbance or natural disaster declared by the Governor, and the expenditure is approved by two-thirds of the legislative body of the local government. The State and each local government entity has its own appropriations limit. Each year, the limit is adjusted to allow for changes, if any, in the cost of living, the population of the jurisdiction, and any transfer to or from another government entity of financial responsibility for providing services. Proposition 111 requires that each agency’s actual appropriations be tested against its limit every two years. If the aggregate “proceeds of taxes” for the preceding two-year period exceeds the aggregate limit, the excess must be returned to the agency’s taxpayers through tax rate or fee reductions over the following two years. The City has never exceeded its appropriations limit. Articles XIIIC and XIIID of the State Constitution On November 5, 1996, the voters of the State approved Proposition 218, known as the “Right to Vote on Taxes Act.” Proposition 218 adds Articles XIIIC and XIIID to the California Constitution and contains a number of interrelated provisions affecting the ability of the City to levy and collect both existing and future taxes, assessments, fees and charges. The interpretation and application of Proposition 218 will ultimately be determined by the courts with respect to a number of the matters discussed below, and it is not possible at this time to predict with certainty the outcome of such determination. Article XIIIC requires that all new local taxes be submitted to the electorate before they become effective. Taxes for general governmental purposes of the City require a majority vote and taxes for specific purposes, even if deposited in the City’s General Fund, require a two- thirds vote. The voter approval requirements of Proposition 218 reduce the flexibility of the City -19- to raise revenues for the General Fund, and no assurance can be given that the City will be able to impose, extend or increase such taxes in the future to meet increased expenditure needs. Article XIIID also adds several provisions making it generally more difficult for local agencies to levy and maintain property-related fees, charges, and assessments for municipal services and programs. These provisions include, among other things, (i) a prohibition against assessments which exceed the reasonable cost of the proportional special benefit conferred on a parcel, (ii) a requirement that assessments must confer a “special benefit,” as defined in Article XIIID, over and above any general benefits conferred, (iii) a majority protest procedure for assessments which involves the mailing of notice and a ballot to the record owner of each affected parcel, a public hearing and the tabulation of ballots weighted according to the proportional financial obligation of the affected party, and (iv) a prohibition against fees and charges which are used for general governmental services, including police, fire or library services, where the service is available to the public at large in substantially the same manner as it is to property owners. If the City is unable to continue to collect these revenues, the services and programs funded with these revenues would have to be curtailed and/or the City’s General Fund might have to be used to support them. The City is unable to predict whether or not in the future it will be able to continue all existing services and programs funded by the fees, charges and assessments in light of Proposition 218 or, if these services and programs are continued, which amounts (if any) would be used from the City’s General Fund to continue to support these activities. Article XIIIC also removes limitations on the initiative power in matters of reducing or repealing local taxes, assessments, fees or charges. No assurance can be given that the voters of the City will not, in the future, approve an initiative or initiatives which reduce or repeal local taxes, assessments, fees or charges currently comprising a substantial part of the City’s General Fund. Proposition 62 Proposition 62 was adopted by the voters at the November 4, 1986, general election and (a) requires that any new or higher taxes for general governmental purposes imposed by local governmental entities such as the City be approved by a two-thirds vote of the governmental entity’s legislative body and by a majority vote of the voters of the governmental entity voting in an election on the tax, (b) requires that any special tax (defined as taxes levied for other than general governmental purposes) imposed by a local governmental entity be approved by a two- thirds vote of the voters of the governmental entity voting in an election on the tax, (c) restricts the use of revenues from a special tax to the purposes or for the service for which the special tax was imposed, (d) prohibits the imposition of ad valorem taxes on real property by local governmental entities except as permitted by Article XIIIA, (e) prohibits the imposition of transaction taxes and sales taxes on the sale of real property by local governmental entities, and (f) requires that any tax imposed by a local governmental entity on or after August 1, 1985, be ratified by a majority vote of the voters voting in an election on the tax within two years of the adoption of the initiative or be terminated by November 15, 1988. California appellate court cases have overturned the provisions of Proposition 62 pertaining to the imposition of taxes for general government purposes. However, the California Supreme Court upheld Proposition 62 in its decision on August 28, 1995, in Fresno County Transportation Authority v. Guardino. This decision reaffirmed the constitutionality of Proposition 62. Certain matters regarding Proposition 62 were not addressed in the Supreme Court’s decision, such as what remedies exist for taxpayers subject to a tax not in compliance with Proposition 62, and whether the decision applies to charter cities. The City has not experienced any substantive adverse financial impact as a result of the passage of this initiative. -20- Proposition 1A Proposition 1A, proposed by the Legislature in connection with the State’s Fiscal Year 2004-05 Budget, approved by the voters in November 2004 and generally effective in Fiscal Year 2006-07, provides that the State may not reduce any local sales tax rate, limit existing local government authority to levy a sales tax rate or change the allocation of local sales tax revenues, subject to certain exceptions. Proposition 1A generally prohibits the State from shifting to schools or community colleges any share of property tax revenues allocated to local governments for any fiscal year, as set forth under the laws in effect as of November 3, 2004. Any change in the allocation of property tax revenues among local governments within a county must be approved by two-thirds of both houses of the Legislature. Proposition 1A provides, however, that beginning in fiscal year 2008-09, the State may shift to schools and community colleges up to 8% of local government property tax revenues, which amount must be repaid, with interest, within three years, if the Governor proclaims that the shift is needed due to a severe state financial hardship, the shift is approved by two-thirds of both houses and certain other conditions are met. The State may also approve voluntary exchanges of local sales tax and property tax revenues among local governments within a county. Proposition 1A also provides that if the State reduces the motor vehicle license fee rate currently in effect, 0.65 percent of vehicle value, the State must provide local governments with equal replacement revenues. Further, Proposition 1A requires the State, beginning July 1, 2005, to suspend State mandates affecting cities, counties and special districts, excepting mandates relating to employee rights, schools or community colleges, in any year that the State does not fully reimburse local governments for their costs to comply with such mandates. Proposition 1A may result in increased and more stable City revenues. The magnitude of such increase and stability is unknown and would depend on future actions by the State. However, Proposition 1A could also result in decreased resources being available for State programs. This reduction, in turn, could affect actions taken by the State to resolve budget difficulties. Such actions could include increasing State taxes, decreasing spending on other State programs or other action, some of which could be adverse to the City. Possible Future Initiatives Articles XIIIA, XIIIB, XIIIC and XIIID and Propositions 62, 111, 218 and 1A were each adopted as measures that qualified for the ballot pursuant to the State’s initiative process. From time to time other initiative measures could be adopted, further affecting revenues of the City or the City’s ability to expend revenues. The nature and impact of these measures cannot be anticipated by the City. LEGAL MATTERS Approval of Legal Proceedings The legality of the sale, execution and delivery of the Bonds is subject to the approval of Jones Hall, A Professional Law Corporation, San Francisco, California, acting as Bond Counsel. A proposed form of such legal opinion is attached hereto as Appendix C. Quint & Thimmig LLP, San Francisco, California, is acting as disclosure counsel to the City in connection with the issuance of the Bonds. Certain matters will be passed upon for the City by Molly S. Stump, Esq., the City Attorney. Payment of the fees and expenses of Jones Hall and of Quint & Thimmig LLP are contingent upon issuance of the Bonds. -21- Absence of Material Litigation No litigation is pending or threatened concerning the validity of the Bonds, and a certificate to that effect will be furnished to the purchasers at the time of the original delivery of the Bonds. The City is not aware of any litigation pending or threatened questioning the political existence of the City or contesting the City’s ability to receive ad valorem taxes or to collect other revenues or contesting the City’s ability to issue and repay the Bonds. Tax Matters In the opinion of Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel, subject, however to certain qualifications set forth below, under existing law, the interest on the Bonds is excluded from gross income for federal income tax purposes, and such interest is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations; although for the purpose of computing the alternative minimum tax imposed on certain corporations, interest on the Bonds is taken into account in determining certain income and earnings. The opinions set forth in the preceding paragraphs are subject to the condition that the City comply with all requirements of the Internal Revenue Code of 1986, as amended (the “Code”) that must be satisfied subsequent to the issuance of the Bonds in order that such interest be, or continue to be, excluded from gross income for federal income tax purposes. The City has covenanted to comply with each such requirement. Failure to comply with certain of such requirements may cause the inclusion of such interest in gross income for federal income tax purposes to be retroactive to the date of issuance of the Bonds. If the initial offering price to the public (excluding bond houses and brokers) at which a Bond is sold is less than the amount payable at maturity thereof, then such difference constitutes “original issue discount” for purposes of federal income taxes and State of California personal income taxes. If the initial offering price to the public (excluding bond houses and brokers) at which each Bond is sold is greater than the amount payable at maturity thereof, then such difference constitutes “original issue premium” for purposes of federal income taxes and State of California personal income taxes. De minimis original issue discount and original issue premium is disregarded. Owners of Bonds with original issue discount or original issue premium, including purchasers who do not purchase in the original offering, should consult their own tax advisors with respect to federal income tax and State of California personal income tax consequences of owning such Bonds. In the further opinion of Bond Counsel, interest on the Bonds is exempt from California personal income taxes. Owners of the Bonds should also be aware that the ownership or disposition of, or the accrual or receipt of interest on, the Bonds may have federal or state tax consequences other than as described above. Bond Counsel expresses no opinion regarding any federal or state tax consequences arising with respect to the Bonds other than as expressly described above. A copy of the proposed form of opinion of Bond Counsel is attached hereto as Appendix C. -22- CONTINUING DISCLOSURE The City will covenant for the benefit of owners of the Bonds to provide certain financial information and operating data relating to the City by not later than nine months after the end of the City’s fiscal year (which date would be the March 31 following the current end of the City’s fiscal year on June 30), commencing March 31, 2014, with the report for the 2012-13 fiscal year (the “Annual Report”), and to provide notices of the occurrence of certain enumerated events, if material. The specific nature of the information to be contained in the Annual Report or the notices of material events is summarized in APPENDIX D—FORM OF CONTINUING DISCLOSURE CERTIFICATE, attached to this Official Statement. These covenants have been made in order to assist the Underwriter (as defined below) in complying with Securities Exchange Commission Rule 15c2-12(b)(5) (the “Rule”). The City has had no instance in the previous five years in which it failed to comply in all material respects with any previous continuing disclosure obligation under the Rule. RATINGS Moody’s Investor’s Service (“Moody’s) and Standard & Poor’s Ratings Services, a Standard & Poor’s Financial Services LLC business (“S&P”), have assigned the ratings of ”___” and “___,” respectively, to the Bonds. Such ratings reflect only the views of Moody’s and S&P and any desired explanation of the significance of such rating should be obtained from Moody’s at 7 World Trade Center, 250 Greenwich Street, New York, NY 10007, and from S&P at 55 Water Street, New York, NY 10041. Generally, a rating agency bases it rating on the information and materials furnished to it and on investigations, studies and assumptions of its own. There is no assurance such ratings will continue for any given period of time or that such ratings will not be revised downward or withdrawn entirely by Moody’s and/or S&P, if in the judgment of Moody’s and/or S&P, circumstances so warrant. Any such downward revision or withdrawal of such ratings may have an adverse effect on the market price for the Bonds. FINANCIAL ADVISOR The City has retained Public Financial Management, Inc., of San Francisco, California, as financial advisor (the “Financial Advisor”) in connection with the issuance of the Bonds. The Financial Advisor is not obligated to undertake, and has not undertaken to make, an independent verification or assume responsibility for the accuracy, completeness, or fairness of the information contained in this Official Statement. UNDERWRITING Under the terms of a competitive bid held on June 12, 2013, ___________ (the “Underwriter”) has agreed to purchase the Bonds at a price of $_______ (which is equal to the aggregate principal amount of the Bonds of $________, plus a net original issue premium of $_________, less an Underwriter’s discount of $__________). The Underwriter will purchase all of the Bonds if any are purchased, the obligation to make such purchase being subject to certain terms and conditions set forth in the “Official Notice of Sale,” including the approval of certain legal matters by counsel and certain other conditions. The Underwriter intends to offer the Bonds to the public at the offering prices set forth on the cover page of this Official Statement. The Underwriter may offer and sell to certain -23- dealers and others at a price lower than the offering prices stated on the cover page hereof. The offering price may be changed from time to time by the Underwriter. EXECUTION The execution of this Official Statement and its delivery have been approved by the City Council. CITY OF PALO ALTO By City Manager THIS PAGE INTENTIONALLY LEFT BLANK Appendix A Page 1 APPENDIX A GENERAL DEMOGRAPHIC INFORMATION REGARDING THE CITY OF PALO ALTO AND SANTA CLARA COUNTY The City The City is located in northern Santa Clara County (the “County”), approximately 35 miles south of the City of San Francisco. The City has a current population of approximately 65,544. It is part of the San Francisco Bay metropolitan area. Partly due to the presence of Stanford University, which is adjacent to the City, the City is considered the birthplace of the high technology industry that has made the County famous worldwide as Silicon Valley. The Stanford Research Park covers 700-acre and includes prestigious and innovative high-tech leaders such as Hewlett-Packard, SAP America, Varian Medical Systems, VMware, Tibco Software, the Electric Power Research Institute and Communications and Power Industries and Skype. The City is also a major employment center, including U.S. Department of Veteran Affairs’ Palo Alto Health Care System, Stanford Hospitals and Clinics, Lockheed Martin Missiles and Space, Palo Alto Medical Foundation, Stanford Shopping Center, the law offices of Wilson Sonsini Goodrich and Rosati, and the Xerox Palo Alto Research Center. The City was incorporated in 1894. Its first Charter was granted by the State of California in 1909, and the City continues to operate as a charter city. Municipal operations are conducted under the Council- Manager form of government. The nine City Council Members are elected at large for four-year, staggered terms. The Mayor and Vice Mayor are elected annually at the first City Council meeting in January. The Mayor presides over all City Council meetings. The City Manager is responsible for the operation of all municipal functions, except the offices of the City Attorney, City Clerk, and City Auditor. These officials are appointed by, and report directly to, the City Council. Appendix A Page 2 Population The following table shows a historical comparison of the respective populations of the City, the County and the State of California since 1970. CITY OF PALO ALTO, SANTA CLARA COUNTY, AND STATE OF CALIFORNIA Population Comparison Year City of Palo Alto Percent Change Santa Clara County Percent Change State of California Percent Change 1970 56,040 - 1,064,714 - 19,953,134 - 1980 55,225 -1.4% 1,295,071 2.2% 23,667,902 18.6% 1990 55,900 1.2 1,497,577 15.6 29,758,213 25.7 2000 58,598 4.8 1,682,585 12.3 33,873,086 13.8 2001 60,069 2.5 1,690,366 0.4 34,256,789 1.1 2002 59,987 -0.1 1,693,230 0.1 34,725,516 1.3 2003 59,873 -0.1 1,693,752 — 35,163,609 1.2 2004 59,915 — 1,695,602 0.1 35,570,847 1.1 2005 60,723 1.3 1,698,234 0.1 35,869,173 0.8 2006 61,260 0.8 1,706,676 0.4 36,116,202 0.6 2007 61,385 0.2 1,725,066 1.0 36,399,676 0.7 2008 62,173 1.2 1,747,912 1.3 36,704,375 0.8 2009 63,496 2.1 1,767,204 1.1 36,966,713 0.7 2010 65,417 3.0 1,781,427 0.8 37,223,900 0.6 2011 64,853 -0.8 1,794,337 0.7 37,427,946 0.5 2012 65,544 1.0 1,816,486 1.2 37,678,563 0.6 Sources: U.S. Department of Commerce, Bureau of the Census (1980, 1990 and 2000); State of California, Department of Finance, E-4 Population Estimates for Cities, Counties and the State, 2001-2010, with 2000 & 2010 Census Counts (as of January 1). Benchmark. Sacramento, California, November 2012. State of California, Department of Finance, E-1 Population Estimates for Cities, Counties and the State, 2011 and 2012. Benchmark, Sacramento, California, May 1, 2012. History The earliest record of settlement in Palo Alto was dated 1769. The City is named for the tree by the banks of the San Francisquito Creek bordering Menlo Park. Many of the Spanish names in the Palo Alto area represent the local heritage and descriptive terms and former residents. In 1895, Leland Stanford came to the town of Mayfield (in what is now south Palo Alto), interested in founding his university there, and creating a train stop near his school. However, he had one condition: alcohol be banned from the town. Mayfield rejected his requests for reform. This prompted Stanford to drive the formation of Palo Alto in 1895. Stanford set up his university, Stanford University, and train stop. On July 2, 1925, Palo Alto voters approved the annexation of Mayfield and the two communities were officially consolidated on July 6, 1925. Budgetary Policies and Processes 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. Public hearings are conducted to obtain public comments. The adopted budget is legally enacted through passage of a budget ordinance for all funds except for agency funds. 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. Expenditures may not legally exceed budgeted appropriations at the department level for the General Fund, and at the fund level for special revenue and debt service funds. Formal budgetary integration is employed as a management control device during the year in all funds except agency funds and certain debt service funds. Budgets for governmental funds are adopted on a basis consistent with generally accepted accounting principles for all funds, except that General Fund Appendix A Page 3 encumbrances are treated as budgetary expenditures when incurred and stores (materials, parts and supplies) transactions included in the General Fund are not budgeted. Expenditures for the City’s Capital Projects Fund are budgeted and managed on a project length basis and budget to actual comparisons for these expenditures have been excluded from the accompanying financial statements. Employment The City is home to a strong mix of large, medium and small firms. The City employment opportunities are much sought after and include: education at Stanford University, high technology at the Stanford Research Park, and health care at two medical facilities of national stature. Numerous institutions that have more than 1,000 employees include: the University, the Veterans Affairs Palo Health Care facility, the Medical Foundation, Hewlett Packard Company, the Palo Alto Unified School District, and the City. The largest employers in the City of Palo Alto as of June 30, 2012 are as follows: CITY OF PALO ALTO TEN LARGEST EMPLOYERS 2011-12 Employer Number of Employees Stanford University 10,680 Stanford University Medical Center/Hospital 5,059 Lucile Packard Children’s Hospital 4,750 Veteran’s Affairs Palo Alto Health Care System 3,500 Hewlett-Packard Company 2,201 Palo Alto Medical Foundation 2,200 Space Systems/Loral 1,870 Wilson Sonsini Goodrich Rosati 1,650 Palo Alto Unified School District 1,362 City of Palo Alto 1,017 Source: 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 Books of Lists. Due to the nature of local industry, with its heavy emphasis on electronics, aerospace and research, the County has attracted many professional people and industrial workers possessing skills well above the average. Santa Clara County is a highly developed industrial, research, and educational center of employment for a labor force that ranks well above the average in educational attainment and income. The following table presents the annual average wage and salary employment figures by industry classification for the Santa Clara County for the years 2007 through 2011. Appendix A Page 4 SANTA CLARA COUNTY Industry Employment & Labor Force - by Annual Average March 2011 Benchmark 2007 2008 2009 2010 2011(1) Civilian Labor Force 844,700 870,300 875,200 880,800 896,200 Civilian Employment 805,100 818,300 780,500 784,100 809,300 Civilian Unemployment 39,600 52,000 94,600 96,700 86,900 Unemployment Rate 4.7% 6.0% 10.8% 11.0% 9.7% Agricultural 3,900 3,700 3,500 3,500 3,400 Natural Resources and Mining 300 300 200 200 200 Construction 45,500 42,800 33,400 31,400 30,600 Manufacturing 163,800 165,200 153,300 151,000 155,500 Trade, Transportation and Utilities 137,300 135,300 124,200 123,200 125,000 Information 39,500 42,200 41,500 43,800 48,900 Financial Activities 36,800 34,200 31,200 30,600 31,400 Professional and Business Services 176,600 178,000 160,700 161,300 168,800 Educational and Health Services 102,500 107,200 108,400 112,000 116,600 Leisure and Hospitality 75,300 76,600 73,500 73,800 75,200 Other Services 24,600 25,000 24,100 23,900 23,900 Government 94,300 94,900 93,400 91,500 89,500 Total All Industries 900,300 905,200 847,500 846,200 869,000 Source: California Employment Development Department, Labor Market Information Division. Note: Totals may not add due to independent rounding. (1) Latest available full-year data. The following table sets forth certain information regarding employment in the City from calendar year 2005 through 2011. CITY OF PALO ALTO Average Annual Civilian Labor Force Employment and Unemployment Calendar Years 2005-2012 Year Labor Force Employment Unemployment Number Rate 2005 29,800 28,900 800 2.8% 2006 30,200 29,400 700 2.3% 2007 30,900 30,100 800 2.5% 2008 31,600 30,600 1,000 3.1% 2009 31,000 29,200 1,800 5.8% 2010 31,200 29,300 1,900 5.9% 2011(1) 32,000 30,300 1,700 5.2% Source: California Employment Development Department (1) Latest available full-year data. Construction Activity “Single Family Housing” includes detached, semi-detached, rowhouse and townhouse units. Rowhouses and townhouses are included when each unit is separated from the adjacent unit by an unbroken ground-to-roof party or fire wall. Condominiums are included in single-family when they are of zero-lot-line or zero-property-line construction; when units are separated by an air space; or, when units are separated by an unbroken ground-to-roof party or fire wall. “Multi-Family Housing” includes duplexes, 3- 4-unit structures and apartment-type structures with five units or more. Multi-family housing also includes Appendix A Page 5 condominium units in structures of more than one living unit that do not meet the above single-family housing definition. “Residential Alterations and Additions” means alterations, additions, and conversions to residential structures, excluding special installation permits for electrical, plumbing, heating, air- conditioning, or similar mechanical work, or installation of fire escapes, elevators, signs, etc. “New Commercial” includes new hotels and motels, office and bank buildings, stores and other mercantile buildings, parking garages, service stations, and amusement and recreational buildings. “New Industrial” includes manufacturing plants and affiliated buildings. “Other New Nonresidential” includes churches and religious buildings, hospitals and institutional buildings, schools and educational buildings, residential garages, public works and utilities buildings, and miscellaneous nonresidential structures. “Nonresidential Alterations and Additions” means alterations, additions, and conversions to nonresidential structures, excluding special installation permits for electrical, plumbing, heating, air conditioning, or similar mechanical work, or installation of fire escapes, elevators and signs, etc. CITY OF PALO ALTO Building Permits and Valuation (Dollars in Thousands) 2007 2008 2009 2010 2011 Permit Valuation: New Single-family $ 82,769 $ 50,213 $ 30,683 $ 50,946 $ 37,534 New Multi-family 81,679 27,827 7,306 5,000 14,278 Res. Alterations/Additions 34,756 33,897 26,902 33,336 25,170 Total Residential 199,204 111,937 64,891 89,282 76,982 Total Nonresidential 133,547 90,019 83,922 83,394 95,430 Total All Building $332,751 $201,956 $148,814 $172,676 $172,412 New Dwelling Units: Single Family 195 102 58 144 78 Multiple Family 294 125 27 35 54 Total 489 227 85 179 132 Sources: Construction Industry Research Board: “Building Permit Summary.” Note: Totals may not add due to independent rounding. Appendix A Page 6 Income The following table summarizes the median household effective buying income for the City, the County of Santa Clara, the State of California and the nation for the years 2006 through 2012. CITY, COUNTY, STATE AND UNITED STATES Effective Buying Income Year Area Total Effective Buying Income (000’s Omitted) Median Household Effective Buying Income 2006 City of Palo Alto $ 2,839,023 $77,184 County of Santa Clara 49,261,000 65,458 California 764,120,962 46,275 United States 6,107,092,244 41,255 2007 City of Palo Alto $ 3,000,778 $79,273 County of Santa Clara 52,377,985 67,498 California 814,894,438 48,203 United States 6,300,794,040 41,792 2008 City of Palo Alto $ 3,088,305 $80,515 County of Santa Clara 53,987,635 68,929 California 832,531,445 48,952 United States 6,443,994,426 42,303 2009 City of Palo Alto 3,002,677 81,855 County of Santa Clara 55,561,405 71,077 California 844,823,318 49,736 United States 6,571,536,767 43,252 2010 City of Palo Alto 3,142,000 82,448 County of Santa Clara 53,692,142 68,047 California 801,393,027 47,177 United States 6,365,020,076 41,368 2011 City of Palo Alto 3,220,632 82,199 County of Santa Clara 54,491,135 67,801 California 814,578,457 47,062 United States 6,438,704,663 41,253 2012 City of Palo Alto 4,233,385 89,668 County of Santa Clara 61,464,867 68,852 California 864,088,827 47,307 United States 6,737,867,730 41,358 Source: Nielsen, Inc. Commercial Activity Taxable sales in the City of Palo Alto exceed $1.6 billion annually. The County Planning Department reports that taxable sales per capita in Santa Clara are the highest of any city in Santa Clara County. In early 2007 the Board of Equalization began a process of converting business codes of sales and use tax permit holders to North American Industry Classification System (NAICS) codes. This process is now complete; over one million permit holders were converted from the previous business coding system to the NAICS codes. Beginning in 2009, reports summarize taxable sales and permits using the NAICS codes. As a result of the coding change, however, industry-level data for 2009 are not comparable to that of prior years. The latest full-year data available from the State is for calendar year 2010. Appendix A Page 7 The following summary shows the annual volume of taxable sales within the City since 2006. CITY OF PALO ALTO Taxable Transactions (Dollars in Thousands) 2006 2007 2008 Apparel stores $129,903 $134,920 $173,360 General merchandise 289,288 301,192 230,521 Foods stores 33,495 31,781 28,328 Eating and drinking places 224,276 234,084 239,517 Home furnishings and appliances 68,273 75,510 103,878 Building materials 26,258 24,437 24,143 Automotive Group 202,441 187,342 149,857 Service stations 60,078 63,418 66,214 All other retail stores 250,153 224,463 197,029 Total Retail Outlets 128,465 1,277,147 1,212,847 All other outlets 551,068 629,859 587,667 Total All Outlets $1,835,233 $1,907,006 $1,800,514 2009 (1) 2010 (2) Retail Store and Food Services Motor Vehicle and Parts Dealers $ 128,399 $ 143,835 Home Furnishings and Appliance Stores 145,348 156,708 Bldg. Matrl. and Garden Equip. and Supplies 24,317 21,497 Food and Beverage Stores 31,489 34,648 Gasoline Stations 52,025 62,232 Clothing and Clothing Accessories Stores 224,507 246,447 General Merchandise Stores 147,243 152,591 Food Service and Drinking Places 224,651 240,320 Other Retail Group 97,064 102,576 Total Retail and Food Services 1,075,044 1,160,855 All Other Outlets 546,220 514,938 Total All Outlets (3) $1,321,264 $1,675,793 Source: California Board of Equalization, Taxable Sales in California (Sales & Use Tax). (1) Starting in 2009, categories were revised from prior years. (2) Most recent annual data available. (3) Totals may not add up due to independent rounding. Education The Palo Alto Unified School District provides public schooling from kindergarten through high school. The Stanford University is the second largest university campus in the world. The University comprises the Schools of Engineering, Law, Medicine, Education, Business, Earth Sciences and Humanities and Science. Stanford University’s teaching hospital and clinics are known for excellence. Community Facilities The City has some of the most outstanding healthcare facilities in California. Most prominent in the community is Stanford Hospital & Clinics, which is part of Stanford University Medical Center. With 613 beds for in-patient treatment, emergency care and major surgeries, Stanford Hospital is well known for its cancer treatment, oncology and transplant services. Appendix A Page 8 Medical groups affiliated with Stanford Hospital & Clinics are Stanford Family Practice, Stanford Medical Group and Menlo Medical Clinic, and also includes the Stanford University School of Medicine and the Lucile Packard Children’s Hospital. The Veterans Affairs Palo Alto Health Care System provides the main campus in Palo Alto, a second campus in Menlo Park and a third campus in Livermore plus seven outpatient clinics in San Jose, Fremont, Capitola, Monterey, Stockton, Modesto and Sonora. The Palo Alto Health Care System has 900 operating beds including three nursing homes, a domiciliary for homeless and/or substance-dependent veterans in Palo Alto and a 100-bed homeless domiciliary in Menlo Park. The Health Care System is affiliated with the Stanford University School of Medicine. The Palo Alto Medical Foundation is a full-service health-care clinic and research institute. Nearly 1,400 physicians provide a range of diagnostic and treatment services in primary care and most medical specialties. The City’s Parks and Recreation Department oversees 36 parks and playgrounds covering more than 4,500 acres of park land within the 26 square miles of the City. Palo Alto’s location on San Francisco Bay and surrounding natural environment offers the opportunity to enjoy bird and aquatic life in a natural habitat. There is one municipal golf course located in the City, which is an 18-hole championship length course. Transportation The City is served by the Bayshore Freeway (U.S. Highway 101), which runs southeast from San Francisco to Los Angeles and is the major freeway connecting San Francisco and San Jose; Highway 84 - the Dumbarton Bridge and Highway 92, the Hayward-San Mateo Bridge; and Interstate 280, which runs north/south to San Francisco and State Highway 82. These freeways link the City to all parts of northern California. Air transportation is available at both the San Francisco International Airport, approximately 40 miles to the north, and the San Jose Airport, approximately 20 miles to the south. Rail service is provided by Union Pacific Railroad, on a north/south track linking San Jose and San Francisco, and Cal Train commuter service to Gilroy and San Francisco. Within the City, commuter rail transportation is conveniently located and the Palo Alto— University Avenue stop is one of the most used in the CalTrain system. Alternative transportation options include numerous bike paths throughout the City and an internal shuttle service is also available. Utilities and Water Supply The City is the only municipal utility in California that operates city-owned utility services that include electric, fiber optic, natural gas, water and wastewater services. Since 1896, the City has been providing quality services to the citizens and businesses of the City. Agriculture The City still supports a thriving agriculture industry, ranging from crops and wine to Leland Stanford’s horse farm and training facilities, the Dixon Stables, Portola Valley Training Center, and Webb Ranch are just a few of the equestrian facilities that live up to the area’s rich history. Just a few miles away off Highway 280, traditional ranches such as Hidden Villa continue to grow and distribute quality products. Organic grocery stores, such as Whole Foods Market, Piazza’s Market and Trader Joe’s share the market place with traditional grocery outlets and fresh fruit and vegetable stands. Local greenhouses and florists provide a diverse selection to help residents and business beautify their yards and homes. The area also features a number of machinery and equipment outlets to make agriculture related job feasible. Appendix A Page 9 Services The City provides a full range of municipal services and maintains municipal electric, water, gas, wastewater collection, wastewater treatment, storm drainage, and refuse utilities for the benefit of City residents and businesses. The City’s parks, recreation and cultural facilities are numerous, and include 36 parks, a golf course, four community centers, a Cultural Center, a Community Theater, a Children’s Theater, and a Junior Museum. The City offers a wide array of social, recreational and cultural events, including human services for seniors and youth, subsidized child care, classes, concerts, exhibits, team sports and special events. The City and the Palo Alto Unified School District have an agreement to jointly fund the costs of maintaining and rehabilitating school athletic fields, recognizing the significant recreational use of these facilities by the community. In addition, the City offers a high level of library and public safety services. The City has five libraries and seven fire stations providing services throughout the community. THIS PAGE INTENTIONALLY LEFT BLANK Appendix B Page 1 APPENDIX B CITY OF PALO ALTO COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2012 THIS PAGE INTENTIONALLY LEFT BLANK Appendix C Page 1 APPENDIX C PROPOSED FORM OF OPINION OF BOND COUNSEL [Letterhead of Jones Hall, A Professional Law Corporation] [Closing Date] City Council City of Palo Alto 250 Hamilton Avenue Palo Alto, California 94301 OPINION: $20,695,000* City of Palo Alto General Obligation Bonds, Election of 2008, Series 2013A Members of the City Council: We have acted as bond counsel in connection with the issuance by the City of Palo Alto (the “City”) of its general obligation bonds captioned above, dated June 26, 2013 (the “Bonds”). The Bonds have been issued by the City pursuant to the Constitution and laws of the State of California, a resolution adopted by the City Council of the City on May 6, 2013 (the “Resolution”) and a Paying Agent Agreement dated as of June 1, 2013 (the “Paying Agent Agreement”) between the City and U.S. Bank National Association, as paying agent. We have examined the law and such certified proceedings and other papers as we deem necessary to render this opinion. As to questions of fact material to our opinion, we have relied upon representations of the City contained in the Paying Agent Agreement and in the certified proceedings and certifications of public officials and others furnished to us, without undertaking to verify the same by independent investigation. Based upon the foregoing, we are of the opinion, under existing law, as follows: 1. The City is duly organized and validly existing as a charter city and municipal corporation under the Constitution and laws of the State of California, with the power to adopt the Resolution, to execute and deliver the Paying Agent Agreement and to perform the agreements on its part contained therein, and to issue the Bonds. 2. The Paying Agent Agreement constitutes a valid and binding obligation of the City, enforceable against the City in accordance with its terms. 3. The Bonds have been duly authorized, executed and delivered by the City, and are valid and binding general obligations of the City. 4. The City has the power, is obligated, and in the Paying Agent Agreement has covenanted, to levy ad valorem taxes upon all property within the City which is subject to taxation by the City, without limitation of rate or amount (except with respect to certain personal property which is taxed at limited rates), for the payment of the Bonds and the interest thereon. * Preliminary, subject to change. Appendix C Page 2 5. The interest on the Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations; although for the purpose of computing the alternative minimum tax imposed on certain corporations, interest on the Bonds is taken into account in determining certain income and earnings. The opinions set forth in the preceding sentence are subject to the condition that the City comply with all requirements of the Internal Revenue Code of 1986 that must be satisfied subsequent to the issuance of the Bonds in order that interest thereon be, or continue to be, excluded from gross income for federal tax purposes. The City has covenanted to comply with each such requirement. Failure to comply with certain of such requirements may cause the inclusion of interest on the Bonds in gross income for federal income tax purposes to be retroactive to the date of issuance of the Bonds. We express no opinion regarding other federal tax consequences arising with respect to the Bonds. 6. The interest on the Bonds is exempt from personal income taxation imposed by the State of California. The rights of the owners of the Bonds and the enforceability of the Bonds are limited by bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors’ rights generally, and by equitable principles, whether considered at law or in equity. This opinion is given as of the date hereof, and we assume no obligation to revise or supplement this opinion to reflect any facts or circumstances that may hereafter come to our attention, or any changes in law that may hereafter occur. Our engagement with respect to this matter has terminated as of the date hereof. Respectfully submitted, A Professional Law Corporation Appendix D Page 1 APPENDIX D FORM OF CONTINUING DISCLOSURE CERTIFICATE This CONTINUING DISCLOSURE CERTIFICATE (the “Disclosure Certificate”) is executed and delivered by the CITY OF PALO ALTO (the “City”) in connection with the issuance by the City of its $20,695,000* aggregate principal amount of City of Palo Alto General Obligation Bonds, Election of 2008, Series 2013A (the “Bonds”). The Bonds are being issued under Chapter 4 (commencing with section 43600) of Division 4 of Title 4 of the California Government Code; under a Resolution adopted by the City Council of the City (the “City Council”) on May 6, 2013 (the “Bond Resolution”), and under a Paying Agent Agreement (the “Paying Agent Agreement”) dated as of June 1, 2013, by and between the City and U.S. Bank National Association, as paying agent. The City covenants and agrees as follows: Section 1. Definitions. In addition to the definitions set forth in the Resolution, which apply to any capitalized term used in this Disclosure Certificate, unless otherwise defined in this Section 1, the following capitalized terms shall have the following meanings when used in this Disclosure Certificate: “Annual Report” shall mean any Annual Report provided by the City pursuant to, and as described in, Sections 3 and 4 of this Disclosure Certificate. “Beneficial Owner” shall mean any person who (a) has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any Bonds (including persons holding Bonds through nominees, depositories or other intermediaries), or (b) is treated as the owner of any Bonds for federal income tax purposes. “Dissemination Agent” shall mean the City or any successor Dissemination Agent designated in writing by the City and which has filed with the City a written acceptance of such designation. In the absence of such a designation, the City shall act as the Dissemination Agent. “EMMA” or “Electronic Municipal Market Access” means the centralized on-line repository for documents to be filed with the MSRB, such as official statements and disclosure information relating to municipal bonds, notes and other securities as issued by state and local governments. “Listed Events” shall mean any of the events listed in Section 5(a) or 5(b) of this Disclosure Certificate. “MSRB” means the Municipal Securities Rulemaking Board, which has been designated by the Securities and Exchange Commission as the sole repository of disclosure information for purposes of the Rule, or any other repository of disclosure information which may be designated by the Securities and Exchange Commission as such for purposes of the Rule in the future. “Participating Underwriter” shall mean the original underwriter of the Bonds, required to comply with the Rule in connection with offering of the Bonds. “Rule” shall mean Rule 15c2-12 adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time. Section 2. Purpose of the Disclosure Certificate. This Disclosure Certificate is being executed and delivered by the City for the benefit of the owners and Beneficial Owners of the Bonds and in order to assist the Participating Underwriter in complying with Securities and Exchange Commission Rule 15c2-12(b)(5). * Preliminary, subject to change. Appendix D Page 2 Section 3. Provision of Annual Reports. (a) Delivery of Annual Report. The City shall, or shall cause the Dissemination Agent to, not later than eight months after the end of the City’s fiscal year (which currently ends on June 30), commencing with the report for the 2012-13 Fiscal Year, which is due not later than March 1, 2014, file with EMMA, in a readable PDF or other electronic format as prescribed by the MSRB, an Annual Report that is consistent with the requirements of Section 4 of this Disclosure Certificate. The filing of the official statement for the Bonds with EMMA shall satisfy the filing requirement for 2013. The Annual Report may be submitted as a single document or as separate documents comprising a package and may cross-reference other information as provided in Section 4 of this Disclosure Certificate; provided that the audited financial statements of the City may be submitted separately from the balance of the Annual Report and later than the date required above for the filing of the Annual Report if they are not available by that date. (b) Change of Fiscal Year. If the City’s fiscal year changes, it shall give notice of such change in the same manner as for a Listed Event under Section 5(c), and subsequent Annual Report filings shall be made no later than nine months after the end of such new fiscal year end. (c) Delivery of Annual Report to Dissemination Agent. Not later than fifteen (15) Business Days prior to the date specified in subsection (a) (or, if applicable, subsection (b)) of this Section 3 for providing the Annual Report to EMMA, the City shall provide the Annual Report to the Dissemination Agent (if other than the City). If by such date the Dissemination Agent has not received a copy of the Annual Report the Dissemination Agent shall notify the City. (d) Report of Non-Compliance. If the City is the Dissemination Agent and is unable to file an Annual Report by the date required in subsection (a) (or, if applicable, subsection (b)) of this Section 3, the City shall send a notice to EMMA substantially in the form attached hereto as Exhibit A. If the City is not the Dissemination Agent and is unable to provide an Annual Report to the Dissemination Agent by the date required in subsection (c) of this Section 3, the Dissemination Agent shall send a notice to EMMA in substantially the form attached hereto as Exhibit A. (e) Annual Compliance Certification. The Dissemination Agent shall, if the Dissemination Agent is other than the City, file a report with the City certifying that the Annual Report has been filed with EMMA pursuant to Section 3 of this Disclosure Certificate, stating the date it was so provided and filed. Section 4. Content of Annual Reports. The Annual Report shall contain or incorporate by reference the following: (a) Financial Statements. Audited financial statements of the City for the preceding fiscal year, prepared in accordance generally accepted accounting principles. If the City’s audited financial statements are not available by the time the Annual Report is required to be filed pursuant to Section 3(a), the Annual Report shall contain unaudited financial statements in a format similar to the financial statements contained in the final Official Statement, and the audited financial statements shall be filed in the same manner as the Annual Report when they become available. (b) Other Annual Information. To the extent not included in the audited final statement or the Comprehensive Annual Financial Report (CAFR) of the City, the Annual Report shall also include operating data with respect to the City for preceding fiscal year, substantially similar to that provided in the corresponding tables and charts in the official statement for the Bonds, as follows: (i) Assessed Valuations of Taxable Property; (ii) Assessed Valuation and Parcels by Land Use; (iii) Per Parcel Assessed valuation of Single Family Homes; (iv) Summary of Ad Valorem Tax Rates; (v) Tax Levies and Collections; and (vi) Largest Local Secured Taxpayers. (c) Cross References. Any or all of the items listed above may be included by specific reference to other documents, including official statements of debt issues of the City or related public entities, which are Appendix D Page 3 available to the public on EMMA. The City shall clearly identify each such other document so included by reference. If the document included by reference is a final official statement, it must be available from EMMA. (d) Further Information. In addition to any of the information expressly required to be provided under paragraph (b) of this Section 4, the City shall provide such further information, if any, as may be necessary to make the specifically required statements, in the light of the circumstances under which they are made, not misleading. Section 5. Reporting of Listed Events. (a) Reportable Events. The City shall, or shall cause the Dissemination Agent (if not the City) to, give notice of the occurrence of any of the following events with respect to the Bonds: (1) Principal and interest payment delinquencies. (2) Unscheduled draws on debt service reserves reflecting financial difficulties. (3) Unscheduled draws on credit enhancements reflecting financial difficulties. (4) Substitution of credit or liquidity providers, or their failure to perform. (5) Defeasances. (6) Rating changes. (7) Tender offers. (8) Bankruptcy, insolvency, receivership or similar event of the obligated person. (9) Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices or determinations with respect to the tax status of the security, or other material events affecting the tax status of the security. (b) Material Reportable Events. The City shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the Bonds, if material: (1) Non-payment related defaults. (2) Modifications to rights of security holders. (3) Bond calls. (4) The release, substitution, or sale of property securing repayment of the securities. (5) The consummation of a merger, consolidation, or acquisition involving an obligated person or the sale of all or substantially all of the assets of the obligated person, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms. (6) Appointment of a successor or additional trustee, or the change of name of a trustee. (c) Time to Disclose. Whenever the City obtains knowledge of the occurrence of a Listed Event, the City shall, or shall cause the Dissemination Agent (if not the City) to, file a notice of such occurrence with EMMA, in an electronic format as prescribed by the MSRB, in a timely manner not in excess of 10 business Appendix D Page 4 days after the occurrence of the Listed Event. Notwithstanding the foregoing, notice of Listed Events described in subsections (a)(5) and (b)(3) above need not be given under this subsection any earlier than the notice (if any) of the underlying event is given to owners of affected Bonds under the Resolution. Section 6. Identifying Information for Filings with EMMA. All documents provided to EMMA under this Disclosure Certificate shall be accompanied by identifying information as prescribed by the MSRB. Section 7. Termination of Reporting Obligation. The City’s obligations under this Disclosure Certificate shall terminate upon the defeasance, prior redemption or payment in full of all of the Bonds. If such termination occurs prior to the final maturity of the Bonds, the City shall give notice of such termination in the same manner as for a Listed Event under Section 5(c). Section 8. Dissemination Agent. (a) Appointment of Dissemination Agent. The City may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Certificate and may discharge any such agent, with or without appointing a successor Dissemination Agent. If the Dissemination Agent is not the City, the Dissemination Agent shall not be responsible in any manner for the content of any notice or report prepared by the City pursuant to this Disclosure Certificate. It is understood and agreed that any information that the Dissemination Agent may be instructed to file with EMMA shall be prepared and provided to it by the City. The Dissemination Agent has undertaken no responsibility with respect to the content of any reports, notices or disclosures provided to it under this Disclosure Certificate and has no liability to any person, including any Bondholder, with respect to any such reports, notices or disclosures. The fact that the Dissemination Agent or any affiliate thereof may have any fiduciary or banking relationship with the City shall not be construed to mean that the Dissemination Agent has actual knowledge of any event or condition, except as may be provided by written notice from the City. (b) Compensation of Dissemination Agent. The Dissemination Agent shall be paid compensation by the City for its services provided hereunder in accordance with its schedule of fees as agreed to between the Dissemination Agent and the City from time to time and all expenses, legal fees and expenses and advances made or incurred by the Dissemination Agent in the performance of its duties hereunder. The Dissemination Agent shall not be deemed to be acting in any fiduciary capacity for the City, owners or Beneficial Owners, or any other party. The Dissemination Agent may rely, and shall be protected in acting or refraining from acting, upon any direction from the City or an opinion of nationally recognized bond counsel. The Dissemination Agent may at any time resign by giving written notice of such resignation to the City. The Dissemination Agent shall not be liable hereunder except for its negligence or willful misconduct. (c) Responsibilities of Dissemination Agent. In addition of the filing obligations of the Dissemination Agent set forth in Sections 3(e) and 5, the Dissemination Agent shall be obligated, and hereby agrees, to provide a request to the City to compile the information required for its Annual Report at least 30 days prior to the date such information is to be provided to the Dissemination Agent pursuant to subsection (c) of Section 3. The failure to provide or receive any such request shall not affect the obligations of the City under Section 3. Section 9. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Certificate, the City may amend this Disclosure Certificate (and the Dissemination Agent shall agree to any amendment so requested by the City that does not impose any greater duties or risk of liability on the Dissemination Agent), and any provision of this Disclosure Certificate may be waived, provided that all of the following conditions are satisfied: (a) Change in Circumstances. If the amendment or waiver relates to the provisions of Sections 3(a), 4 or 5(a) or (b), it may only be made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in the identity, nature, or status of an obligated person with respect to the Bonds, or the type of business conducted. Appendix D Page 5 (b) Compliance as of Issue Date. The undertaking, as amended or taking into account such waiver, would, in the opinion of a nationally recognized bond counsel, have complied with the requirements of the Rule at the time of the original issuance of the Bonds, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances. (c) Consent of Holders; Non-impairment Opinion. The amendment or waiver either (i) is approved by the Bondholders in the same manner as provided in the Resolution for amendments to the Resolution with the consent of Bondholders, or (ii) does not, in the opinion of nationally recognized bond counsel, materially impair the interests of the Bondholders or Beneficial Owners. If this Disclosure Certificate is amended or any provision of this Disclosure Certificate is waived, the City shall describe such amendment or waiver in the next following Annual Report and shall include, as applicable, a narrative explanation of the reason for the amendment or waiver and its impact on the type (or in the case of a change of accounting principles, on the presentation) of financial information or operating data being presented by the City. In addition, if the amendment relates to the accounting principles to be followed in preparing financial statements, (i) notice of such change shall be given in the same manner as for a Listed Event under Section 5(c), and (ii) the Annual Report for the year in which the change is made should present a comparison (in narrative form and also, if feasible, in quantitative form) between the financial statements as prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. Section 10. Additional Information. Nothing in this Disclosure Certificate shall be deemed to prevent the City from disseminating any other information, using the means of dissemination set forth in this Disclosure Certificate or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Certificate. If the City chooses to include any information in any Annual Report or notice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Certificate, the City shall have no obligation under this Disclosure Certificate to update such information or include it in any future Annual Report or notice of occurrence of a Listed Event. Section 11. Default. In the event of a failure of the City to comply with any provision of this Disclosure Certificate, any Bondholder or Beneficial Owner may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the City to comply with its obligations under this Disclosure Certificate. The sole remedy under this Disclosure Certificate in the event of any failure of the City to comply with this Disclosure Certificate shall be an action to compel performance. Section 12. Duties, Immunities and Liabilities of Dissemination Agent. The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Certificate, and no implied covenants or obligations shall be read into this Disclosure Certificate against the Dissemination Agent, and the City agrees to indemnify and save the Dissemination Agent, its officers, directors, employees and agents, harmless against any loss, expense and liabilities which it may incur arising out of or in the exercise or performance of its powers and duties hereunder, including the costs and expenses (including attorneys fees and expenses) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent’s negligence or willful misconduct. The Dissemination Agent shall have the same rights, privileges and immunities hereunder as are afforded to the Paying Agent under the Resolution. The obligations of the City under this Section 12 shall survive resignation or removal of the Dissemination Agent and payment of the Bonds. Appendix D Page 6 Section 13. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the City, the Dissemination Agent, the Participating Underwriter and the owners and Beneficial Owners from time to time of the Bonds, and shall create no rights in any other person or entity. Date: [Closing Date] CITY OF PALO ALTO By Authorized Officer Appendix D Page 7 EXHIBIT A NOTICE TO MUNICIPAL SECURITIES RULEMAKING BOARD OF FAILURE TO FILE ANNUAL REPORT Name of Obligor: City of Palo Alto, California Name of Issue: General Obligation Bonds, Election of 2008, Series 2013A Date of Issuance: [Closing Date] NOTICE IS HEREBY GIVEN that the City of Palo Alto has not provided an Annual Report with respect to the above-named Bonds as required by the Continuing Disclosure Certificate dated [Closing Date], furnished by the City in connection with the Bond Issue. The City anticipates that the Annual Report will be filed by _____________. Dated: __________________ CITY OF PALO ALTO, CALIFORNIA, as Dissemination Agent By Name Title cc: Paying Agent THIS PAGE INTENTIONALLY LEFT BLANK Appendix E Page 1 APPENDIX E DTC AND THE BOOK-ENTRY ONLY SYSTEM The following description of the procedures and record keeping with respect to beneficial ownership interests in the Bonds, payment of principal, redemption premium, if any, and interest with respect to the Bonds to DTC, its Participants or Beneficial Owners, confirmation and transfers of beneficial ownership interests in the Bonds and other related transactions by and between DTC, its Participants and the Beneficial Owners is based solely on the understanding of the City of such procedures and record keeping from information provided by DTC. Accordingly, no representations can be made concerning these matters and neither DTC, its Participants nor the Beneficial Owners should rely on the foregoing information with respect to such matters, but should instead confirm the same with DTC or its Participants, as the case may be. The City, the Paying Agent and the Underwriter understand that the current “Rules” applicable to DTC are on file with the Securities and Exchange Commission and that the current “Procedures” of DTC to be followed in dealing with Participants are on file with DTC. The Depository Trust Company (“DTC”), New York, NY, will act as securities depository for the Bonds. The Bonds will be issued as fully-registered securities registered in the name of Cede & Co. (DTC’s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered Bond certificate will be issued for each maturity of the Bonds, each in the aggregate principal amount of such maturity, and will be deposited with DTC. DTC, the world’s largest depository, is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTTC is owned by users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (“Indirect Participants”). DTC has a Standard & Poor’s rating AA+. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com and www.dtc.org. Purchases of the Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Bonds on DTC’s records. The ownership interest of each actual purchaser of each Bond (“Beneficial Owner”) is in turn to be recorded on the Direct and Indirect Participants’ records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in the Bonds, except in the event that use of the book-entry system for the Bonds is discontinued. To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are registered in the name of DTC’s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of the Bonds with DTC and their registration in the Appendix E Page 2 name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC’s records reflect only the identity of the Direct Participants to whose accounts such Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of the Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Bonds, such as redemptions, tenders, defaults, and proposed amendments to the Trust Agreement. For example, Beneficial Owners of the Bonds may wish to ascertain that the nominee holding the Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them. Redemption notices shall be sent to DTC, if less than all of the Bonds within a maturity are being redeemed. DTC’s practice is to determine by lot the amount of the interest of each Direct Participant in each issue to be redeemed. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to the Bonds unless authorized by a Direct Participant in accordance with DTC’s MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the Issuer as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants to whose accounts the Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). Payments of principal of, premium, if any, and interest on the Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to credit Direct Participants’ accounts upon DTC’s receipt of funds and corresponding detail information from the City or the Paying Agent, on payable date in accordance with their respective holdings shown on DTC’s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street name,” and will be the responsibility of such Participant and not of DTC, the Paying Agent or the City, subject to any statutory or regulatory requirements as may be in effect from time to time. Payments of principal of, premium, if any, and interest on the Bonds by Cede & Co (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the City or the Paying Agent, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. DTC may discontinue providing its services as depository with respect to the Bonds at any time by giving reasonable notice to the City or the Paying Agent. Under such circumstances, in the event that a successor depository is not obtained, Bond certificates are required to be printed and delivered. The City may decide to discontinue use of the system of book-entry transfers through DTC (or a successor securities depository). In that event, Bond certificates will be printed and delivered. The foregoing information concerning DTC and DTC’s book-entry system has been provided by DTC, and neither the City nor the Paying Agent takes any responsibility for the accuracy thereof. NEITHER THE AUTHORITY NOR THE PAYING AGENT WILL HAVE ANY RESPONSIBILITY OR OBLIGATION TO DTC PARTICIPANTS, INDIRECT PARTICIPANTS OR BENEFICIAL OWNERS WITH RESPECT TO THE PAYMENTS OR THE PROVIDING OF NOTICE TO DTC PARTICIPANTS, INDIRECT PARTICIPANTS OR BENEFICIAL OWNERS OR THE SELECTION OF BONDS FOR REDEMPTION. Appendix E Page 3 Neither the City nor the Paying Agent can give any assurances that DTC, DTC Participants, Indirect Participants or others will distribute payments of principal of, premium, if any, and interest on the Bonds paid to DTC or its nominee, as the registered Owner, or any redemption or other notice, to the Beneficial Owners or that they will do so on a timely basis or that DTC will serve and act in a manner described in this Official Statement. In the event that the book-entry system is discontinued as described above, the requirements of the Trust Agreement will apply. The City and the Paying Agent cannot and do not give any assurances that DTC, the Participants or others will distribute payments of principal, interest or premium, if any, evidenced by the Bonds paid to DTC or its nominee as the registered owner, or will distribute any redemption notices or other notices, to the Beneficial Owners, or that they will do so on a timely basis or will serve and act in the manner described in this Official Statement. Neither the City nor the Paying Agent are responsible or liable for the failure of DTC or any Participant to make any payment or give any notice to a Beneficial Owner with respect to the Bonds or an error or delay relating thereto. THIS PAGE INTENTIONALLY LEFT BLANK City of Palo Alto (ID # 3600) City Council Staff Report Report Type: Action Items Meeting Date: 5/6/2013 City of Palo Alto Page 1 Summary Title: 2013 Management and Professional Compensation Plan Title: Request Council Adopt Resolution Amending the 2013 Management and Professional Compensation Plan From: City Manager Lead Department: Human Resources Recommendation Staff recommends that the Council adopt the attached resolutions amending the 2011-2013 Compensation Plan for Management and Professional Personnel and Council Appointees to implement the 2013 Salary Study, extend the term and make other changes required by law, effective the pay period beginning May 18, 2013, and amending the Merit Rules to incorporate these changes. Motion I move that Council: (a) adopt a resolution amending the 2011-2013 Compensation Plan for Management and Professional Personnel and Council Appointees to implement the 2013 Salary Study, extend the term and make other changes required by law, effective the pay period beginning May 18, 2013, and (b) Adopt a resolution amending the Merit Rules to incorporate these changes. Executive Summary The City of Palo Alto seeks to attract and engage employees with the expertise and experience we need, who are passionate about their work for the City and feel valued for it. To attract and retain skilled staff, the City should adopt a total compensation plan that brings current salary City of Palo Alto Page 2 ranges and benefits to the market median of our benchmark cities. Staff has formulated a new salary structure for management and professional staff based on market research (the 2013 Salary Study). The proposed salary structure establishes a mid-point for each job classification. The minimum salary for any position in that classification is 20% below the mid-point and the maximum salary is 20% above the mid-point. The City Manager (or other CAO within their office) determines an individual employee’s actual salary within the range based on experience, performance, and merit. Beginning FY 2014, budgeting for Management and Professional positions will change. Currently, Management and Professional positions are budgeted at the mid-point of the range (formerly called the control point). Beginning this year, the budget will reflect the actual salaries of all employees. The proposed salary structure does not include police, fire or utility managers, as they are represented classifications, except that the following unrepresented classifications in the Management and Professional group are included in the new structure: Public Safety Director, Chief of Police, Assistant Chief of Police, Fire Chief, Assistant Fire Chief, Deputy Fire Chief, and Director of Utilities.) Background Staff proposes that Palo Alto implement the 2013 Salary Study in order to offer competitive pay and benefits at the median of the current market, as determined by 14 benchmark cities. Subject to financial considerations, staff proposes that it be the City’s goal to compensate Management and Professional employees according to the level of expertise, scope of work performed, and managerial accountability of each job, as reflected by the market. Additional goals include promoting internal equity across departments and providing that employees move up the salary range based on merit and performance. To implement these goals, the staff periodically reviews market compensation for management, and professional staff. Human Resource staff subscribes to the Bay Area Employer Research Service (ERS), which contains market data for a comprehensive list of jobs in the Bay Area. A more individualized study (the 2013 Salary Study), conducted by Koff & Associates (“Koff”), is the basis for staff’s request to update the Management and Professional Compensation Plan. The study is described as follows. Benchmarking positions. Koff collected data for 82 classifications out of 114 total classifications that make up the Management and Professional group. For each of the 82 “benchmarked” City of Palo Alto Page 3 classifications, Koff analyzed job descriptions to identify matches with similar classifications in comparator public agencies. Koff’s methodology required a 70% degree of similarity between Palo Alto and comparator city job descriptions for a job to be a benchmark “match.” The factors analyzed include education, experience and skills required; work scope and complexity; decision-making authority; responsibility for the work of others, programs and budget; problem solving and ingenuity; relationships inside and outside of the City; consequences of action and decisions; and working conditions. Benchmark Cities. Koff reviewed the cities that Palo Alto used in the past to determine the appropriate agencies for comparison, adding to the list those cities suggested by the Executive Leadership Team (ELT) and the Management Compensation Committee, which is a group of representatives from each City department. Koff considered the following factors in making the choices:  Cities of a similar size, budget, and population as Palo Alto  Cities surrounding Palo Alto that compete for labor within the geographic vicinity  Scope of services provided, including police, fire, parks, arts and utilities. In order to find comparisons for the positions in Utilities, Koff added the following cities outside of the immediate geographic labor market area that have one or more utilities: Anaheim, Burbank, Long Beach, and Roseville. Thus, fourteen (14) cities are benchmarks, as presented below. Alameda Anaheim Berkeley Burbank Fremont Hayward Long Beach Mountain View Redwood City Roseville San Jose San Mateo Santa Clara Sunnyvale Benefits. Koff collected information about health and pension benefits for each comparator city utilizing a formula to determine an average value that comparable agencies pay for the health and pension benefits. Methodology. In collecting salary and benefit data, Koff conducted reviews of comparator city documentation, including classification descriptions, memoranda of understanding, pay practices, organization charts, and other documents, then conducted interviews with human resources, accounting, and/or finance personnel at each comparator agency to understand their organizational structure and classification matches. Koff collected data between 2009 and 2012. City of Palo Alto Page 4 Discussion Survey Results. Koff analyzed market salary and health (including retiree medical) and pension benefits for each classification surveyed to find the percentile difference between Palo Alto’s salary and benefits against the median total compensation (salary and benefits) of the comparator cities. (See Attachment C) Considering the Management and Professional group as a whole, Koff found that Palo Alto’s total compensation is generally at or above market median. Palo Alto’s benefit package value is greater (about 10%) than that of the comparator group taken as a whole. Since total compensation is the relevant comparison, the City of Palo Alto’s generally higher benefits offset somewhat lower salaries in some comparisons. More specifically, the 2013 Salary Study showed that many classifications have a total compensation mid-point that is at or near the market median. Some classifications job classifications have a mid-point that is over market compared to the benchmark cities. Other classifications have a mid-point that is under market. The largest cluster of under-market classifications are in Utilities. There are under-market positions though scattered throughout the Management and Professional group. Note that the utility managers (below the Department Director) are not included in the Management and Professional Salary Schedule, as they are currently represented by Utility Management Professional Association of Palo Alto (UMPAPA). Internal Salary Relationships. Internal relationships are another factor to consider when making salary decisions. Compensation of classifications within a job family should be reasonably related. Related jobs in different departments should be compensated in a manner that makes sense. The proposed new structure was established by slotting job classifications that were not benchmarked into the salary scale to maintain internal relationships with benchmarked jobs above and below. The City follows common professional guidelines for percentages applied to the difference between job levels:  10% to 15% difference from a trainee to experienced classification and from a lead or advanced journey-level position to the lower experienced level  15% to 25% from supervisor to the highest level supervised, depending upon the breadth and scope of supervision.  Market adjustments granted to one class in a series normally include other classes in the series being adjusted to maintain internal equity. In addition, Department Directors were invited to review and consider the organizational value of each classification’s body of work. As a result, some key placements for salary City of Palo Alto Page 5 recommendations were updated to reflect departmental recommendations based on both market results and organizational value. New Ranges. Staff proposes to implement the new salary structure by adjusting the mid-point of all classifications in the Management and Professional group to bring the mid-point of the range to the market median, adjusted as described above. Individual Employee Salaries When Classification is Under Market. Staff proposes to adjust the mid-point of classifications found to be under market higher in the new Salary Schedule, to bring the mid-point of the range to market median. With Council approval, the City will adjust individual employees’ salaries by moving employees who are at or below the mid-point of the current range to the same relative place at or below mid-point of the new range, provided the employees are meeting or exceeding performance expectations. Individual Employee Salaries When Classification is Over Market. Staff proposes to adjust the mid-point of classifications found to be over market – but not individual employee salaries – lower in the new Salary Schedule to bring the mid-point of the range to the market median. Pay will not be reduced for employees in the downward-adjusted classifications; however these employees may find their salary is over the mid-point of the new range. In some cases, the current salary will exceed the maximum of the new range. Staff proposes to “Y-rate” the salaries of employees whose salary is above the maximum. “Y-rate” means the employee does not immediately lose income, but will not be eligible for merit increases and general increases until the incumbent’s salary is within its market salary range. Proposed Monthly Salary Schedule The compensation for management and professional employees will fall within a range of 20% below and 20% above the mid-point. The Department Director and the Chief People Officer will approve limited movement over mid-point. The City Manager (or other CAO) retains discretion to approve salaries over 10% above mid-point. The City will adjust management and professional salaries to align with the new salary ranges upon adoption of the new salary schedule. There are funds designated in the fiscal year 2013 General Fund budget to provide salary adjustments to market. The Public Works Enterprise Funds and Other Funds will have sufficient funds to cover the adjustments as a result of vacancy savings. In FY 2014 and future budgets, staff proposes to allocate funds that allow for base salary increases. The proposed FY 2014 budget includes a recommended 2% increase to all classifications in the Management and Professional Compensation Plan. Attached is Attachment City of Palo Alto Page 6 D, the proposed 2013 Management & Professional Compensation Plan with the attached Salary Schedule. Resource Impact The fiscal year 2013 budget includes $310,000 in the General Fund or this purpose to fund the recommended adjustments. The Public Works Enterprise Funds and Other Funds will have sufficient funds to cover the adjustments as a result of vacancy savings. Attachments:  Attachment A RESO Amending Merit System Rules-Regulations Mgmt (PDF)  Attachment B RESO Amending Comp Plan for Mgmt Professional (PDF)  Attachment C Information Collected for Compensation Study (PDF)  Attachment D Management Professional & Confidential Comp Plan (PDF) Attachment A * NOT YET APPROVED * 130501 sh 0140089 1 Resolution No. ____  Resolution of the Council of the City of Palo Alto Amending Section 1701  of the Merit System Rules and Regulations to Incorporate the 2011‐ 2013 Compensation Plan for Management and Professional Personnel  and Council Appointees        The Council of the City of Palo Alto RESOLVES as follows:     SECTION 1. Section 1701 of the Merit System Rules and Regulations is hereby  amended to read as follows:    “1701. Compensation Plan for Management and Professional  Personnel and Council Appointees incorporated by reference.  The  currently applicable Compensation Plan entitled “City of Palo Alto  Compensation Plan‐‐Management and Professional Personnel and  Council Appointees,” is hereby incorporated into these Merit System  Rules and Regulations by reference as though fully set forth herein. Said  Compensation Plan shall apply to all Management and Professional  employees and Council Appointees, except where specifically provided  otherwise herein.    In the case of conflict with this chapter and any other provisions of the  Merit System Rules and Regulations, this chapter will prevail over such  other provisions as to employees in classifications covered by said  Compensation Plan.”     SECTION 2. The changes to the Merit System Rules and Regulations provided  for in this resolution shall not affect any right established or accrued, or any offense or act  committed, or any penalty of forfeiture incurred, or any prosecution, suit, or proceeding  pending or any judgment rendered prior to the effective date of this resolution.    //    //    //    //    //    //  Attachment A * NOT YET APPROVED * 110322 sh 8261553 2  SECTION 3. The Council 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:    ABSENT:     ABSTENTIONS:    ATTEST:           __________________________    _____________________________  City Clerk       Mayor    APPROVED AS TO FORM:    APPROVED:    __________________________    _____________________________  City Attorney      City Manager            _____________________________          Chief People Officer            _____________________________          Director of Administrative Services  Attachment B  *NOT YET APPROVED*  130501 sh 0140088 1 Resolution No. ____  Resolution of the Council of the City of Palo Alto Amending the 2011‐ 2013 Compensation Plan for Management and Professional Personnel  Adopted by Resolution No. 9282 to Implement the 2013 Salary Study,  Extend the Term and Make Other Changes Required by Law      The Council of the City of Palo Alto RESOLVES as follows:    SECTION 1.      Pursuant to the provisions of Section 12 of Article III of the  Charter of the City of Palo Alto, the 2011‐2013 Compensation Plan for Management and  Professional Personnel, adopted by Resolution No. 9282 is hereby amended to implement the  2013 Salary Study, extend the term and make other changes required by law, as set forth in  Exhibit “A”, attached hereto and incorporated herein by reference, effective with the pay  period including May 18, 2013.    SECTION 2. The Director of Administrative Services is authorized to  implement the amended Compensation Plan as set forth in Section 1.    SECTION 3. The Council 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:     ABSENT:     ABSTENTIONS:    ATTEST:        ___________________________  ______________________________  City Clerk     Mayor    APPROVED AS TO FORM:    APPROVED:    ___________________________  ______________________________  City Attorney     City Manager          _____________________________        Director of Administrative Services           ____________________________        Chief People Officer  Attachment B  *NOT YET APPROVED*  130501 sh 0140088 2 CITY OF PALO ALTO COMPENSATION PLAN Management and Professional Personnel And Council Appointees Effective: Pay period includingCompensation plan effective July 1, 2012 through June 30, 2013 2014, except where specifically noted. 2 1 COMPENSATION PLAN FOR THE CITY OF PALO ALTO Management and Professional Personnel As used in this Plan, the term “Management and Professional” refers to all employees, including Confidential employees, previously classified as “Management and Confidential” by the City. This group will hereafter be identified as “Management and Professional” personnel. SECTION I. COMPENSATION This section applies to all management and professional employees and does not include Council Members or Council-appointed officers. Each Council-appointed officer shall be the responsible decision-maker under this Plan for those employees in departments under his/her control. A. MANAGEMENT AND PROFESSIONAL COMPENSATION POLICY The City's policy for management and professional compensation is to establish and maintain a general structure based on marketplace norms and internal job alignment with broad compensation grades and ranges. Structures and ranges will be reviewed and updated as necessary based on marketplace survey data, internal relationships, and City financial conditions. Individual compensation adjustments will be considered by the Council-appointed officer based on (1) performance factors including achievement of predetermined objectives; (2) pay structure adjustments; and (3) City financial conditions. B. BASIC PLAN ELEMENTS 1. 1. Structure. The compensation plan includes separate multi-grade structures for both management and professional employees. Each grade will have a salary range with a mid- point which is 20% above the minimum, and 20% below the maximum of the range.control pointmid-point which is used for budgetary purposes. All management and professional positions will be assigned an appropriate pay grade based on salary survey data and internal relationships. Actual salary within the range is determined by experience and performance. The normal working range where most actual salaries will fall will be within + 10% of the control pointmid-point. Competitive marketplace studies will be conducted as needed by surveying a maximum of 14 organizations similar to Palo Alto in number of employees, funding mechanisms, population and services provided. These studies will focus on total compensation for management positions such as first line supervisors, administrative, confidential, professional and top management. Periodically, studies will include position-by-position comparisons using market research and internal equity data. The results of these studies may indicate that the entire pay grade structure be adjusted, that individual positions be reassigned to different pay grades, or that no change takes place. Such adjustments will only affect the salary administration framework. No individual salaries will be automatically changed because of structural adjustments. Formatted: Indent: Left: 0.5" 2 A department director may request that HR reevaluate a job or jobs in his or her department based on significant and permanent changes in job content. In doing so the director will supply needed information and will provide a position description questionnaire as requested. The Chief People Officer will respond to such requests within his or her discretion. 2. 2. Compensation Adjustment Authorization. In consultation with feedback received from the Management and Professional Compensation Committee, the City Manager may propose as part of the budget process for Council approval of a compensation adjustment based on (1) competitive market data, (2) changes in internal position relationships, (3) the City's ability to pay, and (4) a recommendation received from the Chief People Officer. For fiscal year 2013 the compensation adjustment to control pointmid-point shall be three percent (3%) effective the pay period including October 6, 2012. In addition, certain below-market positions will be subject to equity adjustments at a future date based on Management Compensation Study results and subject to Council approval. In years when there is an adjustment to control mid-point, this adjustment will be available for those management/professional employees who have received an overall rating of "meets" or "exceeds" expectations on their annual review and who have not been on a performance improvement plan during the preceding fiscal year. Nothing herein shall preclude an employee's manager from awarding a control pointmid-point adjustment increase to an employee on a performance plan at a later date should employee's performance improve. 3.1.Base Compensation. Compensation for management and professional employees includes bi-weekly base salary and is paid on a continuing basis. On a fiscal year basis, the bi-weekly base salary must fall within pay grade limits of no less than 20% below the control pointmid-point and no more than 20% above the control pointmid-point. Base salary increases are earned in accordance with administrative guidelines based upon growth within the position and performance, which must meet or exceed position standards, the salary structure and the City’s ability to pay. 4.2.Performance Planning and Appraisal. Performance appraisals will be conducted at the end of each fiscal year during the months of July through September 30 each year prior to determining individual employee fixed compensation. This process includes both review of previous performance plan and preparation of the performance plan for the next planning period (usually the fiscal year). Performance plans are jointly prepared by the employee and supervisor with the concurrence of the department head or Council-appointed officer. The performance plans shall contain measurable objectives which place special emphasis on position description duties or specific assignments. Progress toward meeting objectives shall be monitored periodically. The performance appraisals should be implemented in a manner that will achieve the following objectives:  Define the employee’s job duties and expected level of performance for the next review period to ensure that both the employee and supervisor have a clear understanding of the employee’s role and responsibilities; Formatted: Indent: Left: 0.25", No bullets ornumbering 3  Evaluate and document past performance to serve as a basis for establishing and obtaining future performance standards/objectives;  Facilitate two-way communication and understanding between the employee and his or her supervisor;  Counsel and encourage employees to work toward a learning development plan and realize their full potential;  Establish future work plan objectives. Work plans should include job related projects or special goals related to regular job duties when applicable. At the conclusion of the fiscal year (or review period), supervisors shall make a final determination of the overall performance rating. Recommendations shall be forwarded to department heads and to the Chief People Officer or appropriate Council appointed officer who will then determine individual fixed adjustments according to the provisions of the compensation plan. This process should be completed by September 30. C. MANAGEMENT AND PROFESSIONAL COMPENSATION ADJUSTMENT AUTHORIZATION 1. Council-appointed officers are authorized to pay salaries in accordance with this plan to non-Council-appointed management and professional employees in an amount not to exceed the aggregate of approved management and professional positions budgeted at the control points in the Table of Organization for the applicable fiscal year. 2. Individual management and professional compensation authorized by a Council-appointed officer under the Management and Professional Compensation Plan may not be less than 20% below nor more than 20% above the control pointmid-point for the individual position grades authorized in Table I of this plan.Salary Schedule attached. 3. The Council-appointed officers are authorized to establish such administrative rules as are necessary to implement the Management and Professional Salary Plan subject to the limitations of the approved compensation adjustment authorization and the approved grade and control pointmid-point structure. 4. Notwithstanding any other provision of this Compensation Plan, In in the event a downward adjustment of a position grade assignment indicates a reduction in the established salary of an individual employee, the Council-appointed officer may, if circumstances warrant, continue the salary for such employee in an amount in excess of the revised grade limit for a reasonable period of time. Such interim salary rates shall be defined as "Y-rates." SECTION II. SPECIAL COMPENSATION This section applies to all eligible regular management and professional positions including Council Appointed Officers as applicable and including Council Members where indicated. Eligibility shall be in conformance with the Merit Rules and Regulations and Administrative Directives issued by the City Manager for the purposes of clarification and interpretation. 4 A. OVERTIME Compensation for overtime work shall be in conformance with the Merit Rules and Regulations and Policies and Procedures. B. IN LIEU HOLIDAY PAY Employees who work a schedule where a regular day off falls on a holiday will be paid for the hours they would have normally worked on that day. If the holiday falls on a non-workday for an exempt employee, the employee may, with supervisory approval, take another day off within the pay period or the following pay period. C. WORKING OUT OF CLASSIFICATION PAY Where management and professional employees, on a temporary basis, are assigned to perform all significant duties of a higher classification, the City Manager may authorize payment within the range of the higher classification for the specified time frame. Working out of class pay is normally not to exceed 10% more than the employee’s current salary and shall be documented on a Personnel Action Form, with a description of the additional duties to be performed and an end date. D. STAND-BY PAY Employees eligible for overtime may be entitled to stand-by pay, approved by the City Manager on a case by case basis, in extreme circumstances involving unavailability of non-management staff. Compensation is as follows: Monday through Friday $40 per day Saturday, Sunday, Holidays $58 per day E. CALL OUT PAY Effective pay period beginning February 26, 2011, Exempt management and professional classifications will be compensated for Call Out as outlined below with Management approval (and will not be eligible for overtime pay). Call Out applies when: (1) an employee previously left City premises, (2) is called back to the work location outside of regularly scheduled working hours, and (3) the Call Back is for an emergency arising out of situations involving real or potential loss of service, property or personal danger. Employees called back will be expected to respond directly to the location of the problem. Compensation is per Call Out as reported on timecard and will be paid as follows: Monday through Friday: $140 per day Saturday and Sunday: $200 per day F. NIGHT SHIFT PREMIUM 5 Night shift differential shall be paid at the rate of five percent (5%) to regular full-time employees who are regularly assigned to shift work between 6:00 p.m. and 8:00 a.m., or to employees who are temporarily assigned to work a full shift between 6:00 p.m. and 8:00 a.m. G. UNIFORM PURCHASE PLAN - SWORN POLICE, FIRE PERSONNEL, and OPEN SPACE PERSONNEL Uniforms, including cleaning, will be provided with replacement provisions on an as-needed basis in conformance with department policy. H. GROUP INSURANCE 1. Effective Date of Coverage for New Employees For newly-hired regular employees coverage begins on the first day of the month following date of hire for the health plan, dental plan, vision care plan, long term disability and life insurance plans if these benefits are elected. 2. Active Employee Health Plan a) Based on an employee’s family status, the City shall pay up to the monthly medical premium for the second most expensive plan among the existing array of plans available during the term of this compensation plan on behalf of eligible employees (including Council Appointed Officers and Council Members) and dependents, except as provided in section b, below. Eligible dependents, under current law, include spouses, children under the age of 26 and never married (natural, adopted, or stepchildren), economically dependent children, and domestic partners registered with the Secretary of State. If PERS changes the plans it offers, the City will continue to provide an equivalent benefit at an equivalent cost. b) Effective in the pay period including October 6, 2012, participating employees will contribute 10% of the premium cost for the employee-selected plan, and the City shall contribute 90%, with a maximum City contribution of 90% of the second highest plan. . c) City medical premium contributions will be prorated for part-time employees based on the number of hours per week the part-time employee is assigned to work. d) Coverage for Domestic Partners: 1) Domestic Partnership Registered with the California Secretary of State: Employees may add their domestic partner as a dependent to their elected health plan coverage if the domestic partnership is registered with the Secretary of State. 2) Domestic Partnership Not Registered with the California Secretary of State: Domestic partners who meet the requirements of the City of Palo Alto Declaration of Domestic Partnership, and are registered with the Human Resources Department, will be eligible for reimbursement of the actual monthly premium cost of an 6 individual health plan, not to exceed the maximum monthly City employer contribution for one-party coverage under the CalPERS Health Benefits Program (or PORAC if a safety department employee) for an employee covered under this agreement. Evidence of premium payment will be required with request for reimbursement. e) PERS Choice Reimbursement Plan Will be eliminated effective January 1, 2013. Management and Professional personnel enrolled in the PERS Choice medical plan may submit a request for payment, as specified below, for non-covered medical expenses, incurred during the period of January 1, through December 31, of the plan year, that exceed $2,500. The maximum annual reimbursement amount provided under this program is:  $700 for employees enrolled in the Employee-Only category;  $900 for employees enrolled in the Employee and One Dependent category, and  $1,100 for employees enrolled in the Family category. Any amounts reimbursed to an individual under this program would be included in the employee’s gross income and is not PERSable. This program shall only reimburse employees for medical expenses that are not reimbursed through any other means and meet the definition in Section 213(d) of the Internal Revenue Code. (Examples of eligible expenses include medical plan deductibles and co-payments, prescription drugs, dental care, hearing care, and vision care.) However, in order to have any expenses reimbursed under this program, the employee must have allocated 100% ($2,500.00) of their 2010 calendar Excess Benefit funds into the Medical FSA option during the election that occurred in December 2009. In addition, all such reimbursements from the Excess Benefit Program must have been solely for medical expenses, as defined by Section 213(d) of the Internal Revenue Code. If the employee has designated his/her Excess Medical funds for any other qualifying expenses (i.e. dependent care, Professional Development, Deferred Compensation contributions), the employee would not be eligible for reimbursement under this program. Employees may submit a final claim for the 2012 plan year’s expenses during January. Any amounts remaining from the PERS Choice reimbursement plan after the claims for the plan year had been processed shall be forfeited. 3. Alternative Medical Benefit Program If a regular employee and/or the employee’s dependent(s) are eligible for medical insurance through another employer-sponsored or association medical plan, the employee may opt for alternative medical insurance coverage through the other employer-sponsored or association plan and waives his/her right to the City of Palo Alto’s medical insurance coverage for same individuals. Employees electing alternative coverage and no City coverage will receive cash 7 payments in the amount of 90% of the average monthly premium for one party, which is $284.00. 4. Retiree Health Plan a) Employees Hired Prior to January 1, 2004 Monthly City-paid premium contributions for a retiree-selected health plan through the CalPERS Health Benefits Program will be made as provided under the Public Employees” Medical and Hospital Care Act. The City’s monthly employer contribution for each employee retiring on or after January 1, 2007 and prior to March 31, 2011 shall be the amount necessary to pay for the cost of his or her enrollment in a health benefits plan up to the monthly premium for the second most expensive plan offered to management and professional personnel during the contract term (among the existing array of plans.) The City’s contribution for an employee hired before January 1, 2004 who retires on or after March 30, 2011 shall be the same contribution amount it makes from time to time for active City employees. b) Post – 1/1/04 Hires For those Management and professional employees hired after January 1, 2004, the PERS law vesting schedule set forth in Government Code section 22893 will apply. Under that law, an employee is eligible for 50% of the specified employer health premium contribution after ten (10) years of service credit, provided at least five (5) of those years were performed at the City of Palo Alto. After ten (10) years of service credit, each additional service credit year increases the employer contribution percentage by 5% until, at 20 years’ service credit, the employee will be eligible upon retirement for 100% of the specified employer contribution and 90% of their dependent coverage. The City of Palo Alto’s health premium contribution for eligible post – 1/1/04 hires shall be the minimum contribution set by PERS under section 22893 based on a weighted average of available health plan premiums. 5. Dental Plan a) The City shall pay covered plan charges on behalf of all eligible employees and dependents. (Domestic partners who are either registered with the Secretary of State or who meet the requirements of the City of Palo Alto Declaration of Domestic Partnership, and are registered with the Human Resources Department are considered dependents under the plan.) Benefits for regular part-time employees hired or assigned to a part-time schedule will be prorated in accordance with his/her percentage of a full- time work schedule. b) The City’s Dental Plan provides the following:  Maximum Benefits per Calendar Year- $2,000 per person  Lifetime Maximum for Orthodontics- The City will pay up to $2,000.00 for orthodontia coverage (not included in annual dental maximum)  Major Dental Services 50% UCR* 8  Orthodontics 50% UCR*  Basic Benefits (All other covered services) First Calendar Year of Eligibility 70% UCR* Subsequent Calendar Years 70%-100% *Usual, Customary, and Reasonable  Composite (tooth covered) fillings for posterior teeth For each dental plan member, the percentage of coverage for basic benefits will begin at 70% for the first calendar year of coverage and increase by 10% (up to a maximum of 100%) effective the first day of the next calendar year as long as the member utilizes the plan at least once during the current year. Per the Delta Dental contract effective October 1, 2005, if the member does not utilize the plan during the current year, the percentage of coverage for the next calendar year shall remain unchanged from the current year. If a dental plan member ever loses coverage under the plan, the applicable percentage of coverage for basic benefits provided during any future period of coverage will commence at 70% as if the dental plan member was a new enrollee. Examples of when a member might lose coverage under the plan would include:  Employee goes on an unpaid leave of absence and elects not to pay the required dental premiums for his/her family’s coverage during the leave.  Employee elects to drop one or more covered dependents from the plan during an open enrollment period so that they might be covered on a spouse’s non-City of Palo Alto dental plan. 6. Basic Life Insurance The City shall provide a basic group term life insurance with Accidental Death and Dismemberment (AD&D) coverage, in an amount equal to the employee's annual basic pay (rounded to the next highest $1,000) at no-cost to the employee. AD&D pays an additional amount equal to the employee’s annual basic pay (rounded to the next highest $1,000). 7. Supplemental Life And AD&D Insurance An employee may, at his/her cost, purchase additional life insurance and additional AD&D coverage equal to one- or two-times his or her annual salary. The maximum amount of life insurance available to the employee is up to $325,000 and the maximum amount of AD&D coverage available is up to $325,000. 8. Long Term Disability Insurance a) The City shall provide long term disability (LTD) insurance with a benefit of 2/3 monthly salary, up to a maximum benefit of $10,000 per month. The City shall pay the premium for the first $6,000 of base monthly salary. For employees whose base monthly salary exceeds $6,000, the employee shall pay the cost of the required premium based upon their monthly salary between $6,000 and $15,000. 9 b) For employees whose base monthly salary exceeds $6,000 and who have no eligible dependents covered under the City’s medical, dental or vision plans, the City will pay up to $17.50 per month towards the employee’s cost for LTD coverage. 9. Vision Care a) The City shall provide vision care coverage for employee and dependents. Coverage is administered by Vision Service Plan (VSP). The plan provides an exam every 12 months; lenses every 24 months; frames every 24 months, all subject to a $20 co- payment as defined in the Vision Services Benefits Plan A schedule. Benefits for regular part-time employees will be prorated as follows: Employees hired after January 1, 2004, who will work less than full time, will receive prorated premium costs for vision benefits in accordance with his/her percentage of a full-time work schedule. Vision benefits for regular part-time employees hired or assigned to a part-time schedule will be prorated in accordance with his/her percentage of a full- time work schedule. b) Effective July 1, 1996, dependents include eligible domestic partners who are either registered with the Secretary of State or who meet the requirements of the City of Palo Alto Declaration of Domestic Partnership, and are registered with the Human Resources Department. I. EMPLOYEE ASSISTANCE PLAN The Employee Assistance Plan (EAP) provides employees with confidential personal counseling, work and family related issues, eldercare, substance abuse, etc. In addition, EAP programs provide a valuable tool for supervisors to refer troubled employees to professional outside help. This service staffed by experienced clinicians is available to employees and their dependents by calling a toll-free phone line 24 hours a day, seven days a week. Guidance is also available online. J. SAFETY DIFFERENTIALS 1. Police Department - Personnel Development Program Pursuant to administrative rules governing eligibility and qualification, the following may be granted to sworn police personnel:  P.O.S.T. Intermediate Certificate: five percent (5%) above base salary  P.O.S.T. Advanced Certificate: seven and a half (7 ½%) above base salary 2. Fire Department - EMT Differential 10 Pursuant to administrative rules governing eligibility and qualification, the following may be granted to sworn Fire personnel:  EMT Differential: three percent (3%) above base salary K. MANAGEMENT and PROFESSIONAL BENEFIT PROGRAM Management and professional employees are eligible for Sections 1, 2, 3, and 4 of the Management Benefit Program. City Council Members are eligible for Section 3 only. 1. Professional Development - Reimbursement The purpose of this program is to provide employees with resources to improve and supplement their job and professional skills. Reimbursement for authorized self- improvement activities may be granted each management and professional employee up to a maximum of five hundred dollars ($500) per fiscal year. A departmental training fund of one thousand dollars per employee ($1,000) will be established for subject matter, leadership or other training that the Department Director identifies as a need for employees within that Department. The following items are eligible for reimbursement: a) Civic and professional association memberships b) Conference participation and travel expenses, which must occur within the compensation plan period. c) Educational programs, books and videos, and tuition reimbursement designed to maintain or improve the employee's skills in performing his or her job or future job opportunities, should support the City’s mission or be necessary to meet the educational requirements for qualification for employment. Permissible educational expenses are refresher courses, courses dealing with current developments, academic or vocational courses, as well as the travel expenses associated with the courses as defined by the City’s travel expense report from the Policy & Procedures Manual Section 1-02 ASD. d) Professional and trade journal subscriptions not to exceed 12 months. e) Approval will be at discretion of department head and signature is required on reimbursement form. Amounts under this professional development program will be pro-rated in the first year of employment or promotion into a position covered by this Compensation Plan 2. Physical Examinations 11 All management and professional employees are eligible to receive an annual physical examination as follows: a) Use the periodic health exam benefit as provided under the PERS Health Plan option you have selected. Each of the PERS Health Plans provides for a periodic physical examination. The examination must be performed by your primary care physician— unless he/she refers you to another physician. b) The types of tests and the frequency of the tests cannot exceed AMA guidelines. The guidelines are a suggested minimum based on research studies concerning preventative care. The judgment of your physician is the final determinant for your care. c) Any additional necessary asymptomatic tests that are required by your physician that are not covered by your health plan, will be reimbursed by the City. Any symptomatic tests will be covered under your PERS Health Plan. The Reimbursement for Periodic Physical Exam Form is available on the Human Resources Intranet site. This benefit will not be pro-rated. 3. Excess Benefit This benefit is designed to meet the requirements of Section 125 of the Internal Revenue Code, with exception of Gym or Health Club Membership. Every calendar year, each employee will be provided with $2,500 that they can designate among the following options: a) Medical Flexible Spending Account (Medical FSA). Provides reimbursement for excess medical/dental/vision, or expenses that are incurred by employees and their dependents which are not covered or reimbursed by any other source, including existing City-sponsored plans. This includes prescribed medications and copayments as well as over-the-counter drugs, including: antacids, allergy medicines, pain relievers and cold medicines. However, nonprescription dietary supplements (e.g. vitamins, etc.) toiletries (e.g. toothpaste), cosmetics (e.g. face cream), and items used for cosmetic purposes (e.g. Rogaine) are not acceptable. b) Dependent Care Flexible Spending Account (Dependent Care FSA). Provides reimbursement for qualified dependent care expenses under the City's Dependent Care Assistance Program (DCAP), subject to the following limits: Dependent care expenses will be reimbursed only to the extent that the amount of such expenses reimbursed under this Management Benefit Program, when added to the amount (if any) of annual dependent care expenses that the participant has elected under the City's Flexible Benefits Plan, do not exceed the maximum permitted under the DCAP. 1) The annual amount submitted for reimbursement cannot exceed the income of the lower-paid spouse. 12 2) The expenses must be employment-related expenses for the care of one or more dependents who are under 13 years of age and entitled to a dependent deduction under Internal Revenue Code section 151(e) or a dependent who is physically or mentally incapable of caring for himself or herself. 3) The payments cannot be made to a child under 19 years of age or to a person claimed as a dependent. 4) If the services are provided by a dependent care center, the center must comply with all state and local laws and must provide care for more than six (6) individuals (other than a resident of the facility). 5) Dependent care expenses not submitted under this section are eligible under the City Dependent Care Assistance Plan (DCAP). However, the maximum amount reimbursed under DCAP will be reduced by any amount reimbursed under the Excess Benefit Plan. c) Non-taxable Professional Development Spending Account. Provides reimbursement for Non-Taxable professional development expenses (e.g.,job-related training and education, seminars, training manuals, etc.) to the extent they are not paid or reimbursed under any other plan of the City. d) Gym or Health Club memberships. Provides reimbursement for annual or monthly memberships, including personal trainers. Reimbursement of this expense is taxable to the employee. e) Deferred Compensation. Provides a one-time contribution to the employee’s City- sponsored 457 Deferred Compensation plan with either ICMA-RC or the Hartford. Amounts designated by employees to either the Medical FSA, Dependent Care FSA, or Professional Development options are done so on a “use –it-or-lose-it” basis. This means that any amounts designated and not used by the end of the calendar year (or end of the extended grace period for the medical FSA) will be forfeited by the employee and returned to the plan. Specified amounts under this benefit will be applied on a pro-rata basis for employees who are part-time or who are in a management or professional pay status for less than the full fiscal year. Such benefits will be pro-rated in the first year of employment (based on hire date) but will not be pro-rated upon separation of employment. L. LEAVES 1. Sick Leave a) Sick leave shall be accrued bi-weekly provided the employee has been in a pay status for 50% or more of a bi-weekly pay period. Sick leave shall be accrued at the rate of 3.7 hours per bi-weekly pay period for those employees working a 40-hour duty 13 schedule. Those assigned work schedules which are greater or lesser than 40 hours will accrue sick leave at the ratio of their work schedule to 40 hours. b) Employees may use up to 20 hours of sick leave per calendar year for personal business. The scheduling of such leave is subject to the approval of the appropriate level of Management. c) Employees leaving the municipal service shall forfeit all accumulated sick leave, except as otherwise provided by law and by Section 609 of the Merit Rules and Regulations. In the event that notice of resignation is given, sick leave may be used only through the day which was designated as the final day of work by such notice. d) Employees that were hired before December 1, 1983 and who leave the municipal service in good standing, or who die while employed in good standing by the city, and who have 15 or more years of continuous service shall receive compensation for unused sick leave hours in a sum equal to two and one-half percent (2½%) of their unused sick leave hours multiplied by their years of continuous service and their basic hourly rate of pay at termination. Full sick leave accrual will be paid in the event of termination due to disability. See Merit System Rules and Regulations, Chapter 6, Section 609. e) Up to nine (9) days of sick leave per calendar year may be used for illness in the immediate family, including a registered domestic partner. f) Management and Professional employees eligible, as specified above if hired before December 1, 1983, to be compensated for sick leave may annually convert sick leave hours in excess of 600 to cash or deferred compensation, according to the formula set forth above, up to a maximum of $2,000 per fiscal year. g) In accordance with the City Merit Rules and Regulations, a new employee may, if necessary, use up to 48 hours or shift equivalent of sick leave at any time during the first six (6) months of employment. 2. Management Annual Leave a) Exempt Employees Regular management and professional employees will be credited with 80 hours of annual leave. This leave is granted in recognition of the extra hours Management and Professional employees work over their regular schedule. This leave may be taken as paid time off, added to vacation accrual (subject to vacation accrual limitations), taken as cash or taken as deferred compensation. When time off is taken under this provision, 10-hour shift workers will receive one shift off for each 8 hours charged; 24-hour shift workers will receive one-half (½) shift off for each 8 hours charged. In 2012, the City will be transitioning this benefit from a fiscal to calendar year basis for administrative purposes. Therefore, on July 1, 2012, employees will be credited with 40 hours of annual leave for the period of July 1 to December 31, 2012. 14 Beginning in 2013 and each calendar year thereafter, employees will be credited with 80 hours of management annual leave. Entitlement under this provision will be reduced on a prorated basis for part-time status, or according to the number of months in paid status during the year; employees who have used more than the pro-rated share at the time they leave City service shall be required to repay the balance or have it deducted from their final check. Unused balances as of the end of the year will be paid in cash unless a different option as indicated above is elected by the employee. b) Non-Exempt Employees Based on an audit recommendation to eliminate payment of overtime as well as management leave for non-exempt employees in the management group, the City is transitioning away from providing management leave to non-exempt employees. As part of the transition, and in order to minimize impacts to current employees, the City will phase-out elimination of the 80 hours of management leave for all current non-exempt Management and Professional employees (those eligible to earn overtime). Continuing through Fiscal year 2013-2014, there will be no change to management leave benefits for current employees; these employees will maintain their 80 hours of management leave and also receive pay for any overtime hours worked. Beginning on July 1, 2014 all employees in non-exempt positions will receive overtime pay for hours actually worked, but will no longer receive management leave. Employees hired into non-exempt management positions on or after February 26, 2011 will receive overtime only and will not be eligible for management leave. 3. Vacation Vacation will be accrued when an employee is in pay status and will be credited on a bi- weekly basis. Total vacation accrual at any one time may not exceed three (3) times the annual rate of accrual. Each eligible employee shall accrue vacation at the following rate for continuous service performed in pay status: a) Less than nine (9) years. For employees completing less than nine (9) years continuous service: 120 hours vacation leave per year; provided that: i. The City Manager is authorized to adjust department head annual vacation accrual to provide for a maximum of 160 hours for those hired between July 1, 1996 and June 30, 2001; and ii. The City manager is authorized to adjust the annual vacation accrual of employees hired on or after July 1, 2001, to provide up to 40 additional hours (i.e., to a maximum annual accrual of 160 hours) for service with a prior employer. 15 b) Nine (9), but less than fourteen (14) years. For employees completing nine (9), but not more than fourteen (14) years continuous service; 160 hours vacation per year. c) Fourteen (14), but less than nineteen (19) years. For employees completing fourteen (14), but not more than nineteen (19) years continuous service; 180 hours vacation leave per year. d) Nineteen (19) or more years. For employees completing nineteen (19) or more years continuous service; 200 hours vacation leave per year. e) Employees are eligible to cash out vacation accrual balances in excess of 80 hours. An employee may cash out a minimum of eight (8) hours to a maximum of 120 hours of accrued vacation provided the employee has taken 80 vacation hours in the previous 12 months and has followed the election procedures set forth in this section. Employees must elect the number of vacation hours they will cash-out during the next calendar year, up to the maximum of 120 hours. For the 2012 calendar vacation year, employees will make their election for vacation hours to cash out no later than November 1, 2012. The election will apply only to vacation hours that are accrued in the next calendar year and that are eligible for cash-out. The election to cash-out vacation hours in each designated year will be irrevocable. This means that employees who elect to cash-out vacation hours must cash-out the number of accrued hours pre-designates on the election form. Employees who do not elect a cash-out amount by November 1 of the prior calendar year will be deemed to have waived the right to cash out any leave in the following tax year and will not be eligible to cash-out vacation hours in the next tax year Employees who elect cash-out amounts may request a cash-out at any time in the designated tax year by submitting a cash-out form to payroll. Payroll will complete the cash-out upon request, provided the requested cash-out amount has accrued and is consistent with the amount the employee pre-designated. If the full amount of hours designated for cash-out is not available at the time of cash-out request, the maximum available will be paid. For employees who have not requested cash-out of the elected amount by November 1 of each year, Payroll will automatically cash-out the elected amount in a paycheck issued on or after the payroll date including November 1. 4. Bereavement Leave of absence with pay of three (3) days may be granted an employee by the head of his/her department in the event of death in the employee’s immediate family, which is defined for purposes of this section as wife, husband, son, son-in-law, step-son, daughter, daughter-in-law, step-daughter, mother, mother-in-law, father, father-in-law, brother, brother-in-law, sister, sister-in-law, grandmother, grandmother-in-law, grandfather, grandfather-in-law, grandchild, aunt, uncle, niece, nephew, registered domestic partner, or a close relative residing in the household of employee. Such leave shall be at full pay and shall Formatted: No underline 16 not be charged against the employee’s accrued vacation or sick leave. Requests for leave in excess of three days shall be subject to the approval of a Council-Appointed Officer for employees under his/her control. M. RETIREMENT PENSION 1. Effective pay period inclusive of 1/6/07, the City’s Public Employees’ Retirement System (PERS) benefits changed to the 2.7%@ 55 formula for non-safety members (from 2% @55). For miscellaneous employees hired on or after July 17, 2010, the City offers the CalPERS retirement formula two percent (2.0%) of final salary at age sixty (60). For Safety members, the City currently offers the CalPERS "3% at 50" full formula (Section 21362.2) benefit. Local Fire Safety members newly hired after 6/08/12 will be placed in the 3%@55 formula. As soon as administratively possible, the City intends to modify the Local Police Safety formula for new hires to 3%@55 formula. New employees hired on or after January 1, 2013 who are “new members” as defined by the California Public Employees’ Pension Reform Act (PEPRA), will be subject to the terms of that statute. 2. Employee PERS Share. The City currently payspreviously paid 6% of the employee’s CalPERS share for employees under the 2.7%@55, 5% for employees under the 2%@60 formula, and the full employee share for those with public safety formulas. a) Beginning with the pay period including October 6, 2012, employees under the 2.7%@55 retirement formula will pay the full eight percent (8%) employee contribution. b) Beginning with the pay period including October 6, 2012, employees subject to the 2%@60 retirement formula shall pay the full seven percent (7%) employee contribution. c) Beginning with the pay period including October 6, 2012, Public Safety employees will pay the full nine percent (9%) PERS employee contribution. c)d) Employees under the 2%@62 benefit shall pay at least 50 percent of the total normal cost or the same contribution rate as “similarly situated” employees, whichever is higher. 3. Final Compensation. Final compensation for purposes of retirement shall be as set forth in the City’s contract with CalPERS, including, when applicable, the Government Code Section 20692: Optional Benefit, except as may otherwise be required by PEPRA. Formatted: List Paragraph, Left, No bullets ornumbering 17 4. Employee PERS contributions shall be made on a tax deferred basis, in accordance with Section 414(h)(2) of the Internal Revenue Code. All provisions of this subsection are subject to and conditioned upon compliance with IRS regulations. 4.5.Final compensation for employees under the 2%@62 benefit shall be as set forth in PEPRA, including calculation based on the average of three highest consecutive years and a cap on pensionable compensation (currently $136,440) based on IRS limits for employers that do not participate in social security. N. COMMUTE INCENTIVES and PARKING 1. Civic Center Parking. Employees assigned to Civic Center and adjacent work locations. The City will provide a Civic Center Garage parking permit. Employees hired after June 30, 1994 may initially receive a parking permit for another downtown lot, subject to the availability of space at the Civic Center Garage. 2. Alternative Commute Incentives: Employees who qualify may voluntarily elect one of the following commute incentives for those using an eligible commute alternative on 60% or more of their scheduled work days per month: a) Public Transit and Vanpool. The City provides tax-free commute incentives up to the current IRS limit, as may be amended from time to time, (currently $125/month) are available through the Commuter Check Direct (CCD) website for employees using Bay Area public transportation or riding in a registered vanpool at least 60% of their scheduled work days. Administration of the Commuter Check benefit shall be subject to the rules and regulations of the third- party administrator. b) Bicycle. The City will provide employees with a tax-free incentive of $20 per month to eligible employees who ride a bicycle to work. c) Carpool. The City will provide with a taxable incentive of $30 per month to each eligible employee in a carpool with two or more licensed drivers. d) Walk. The City will provide employees with a taxable incentive of $20 per month to eligible employees who walk to work. O. AT-WILL STATUS Certain Management and Professional Positions are designated as having “at-will” employment status. “At-will” positions are intended to be of a limited duration and employees hired to fill these positions shall have no constitutionally protected property or other interest in their employment with the City. Notwithstanding any provision in the Merit System Rules and Regulations or any other City rule, policy or procedure, at-will employees have no right to continued employment or pre-or post-disciplinary due process and work at the will and pleasure of the hiring authority (City Council, City Manager or Council-Appointed Officer). Work for an at-will employee may be eliminated and/or the employee may be terminated, or asked to resign, at any time, with or without cause, upon notice to that employee, and the employee may resign at any time upon written notice to the hiring authority. 18 1. At-will Management & Professional positions. Department heads hired after July 1, 2004 and prior to the date of adoption of this plan were hired as at-will employees whose terms of employment are specified by an employment contract that includes a severance package. Effective on the date of adoption of this plan, new employees hired or promoted to department head, assistant department director, and all other positions listed on Attachment B shall be at-will employees. At-will employees will be eligible for, and shall receive, all regular benefits (i.e., health insurance, PERS contribution to the extent paid by City, etc.) and vacation, sick leave, and management leave as are generally provided to management employees and described in this compensation plan, as amended from time to time. At-will employees who are terminated or asked to resign shall, upon execution of a release of all claims against the City, be eligible for a severance payment equivalent to four (4) weeks of salary and benefits, increasing after completion of the first full year of service by one (1) week for every completed year of service, up to a maximum of 12 weeks. For example, an at-will employee who has completed six (6) years of service would be eligible to receive ten (10) weeks of severance (4 weeks plus 1 week for each year of service). No severance shall be paid if the employee is terminated for serious misconduct involving abuse of his or her office or position, including but not limited to waste, fraud, violation of the law under color of authority, misappropriation of public resources, violence, harassment or discrimination. If the employee is later convicted of a crime involving such abuse of his or her position the employee shall fully reimburse the City as set forth in Government Code section 53243.3. 2. Provisional employees. The City has created a program for Provisional employment when funding is available. The program’s purpose is to create limited duration senior management level work for the City Manager’s Office or as designated by the City Manager. A Provisional Employee will be an “at will” employee whose term of employment shall be no more than two (2) years. A Provisional Employee shall be exempt and not eligible to earn overtime. A Provisional Employee will receive limited benefits as specified in an Employment Agreement. Sections I and II of this Compensation Plan shall not apply to Provisional Employees, except as specified by the City Manager. 3. Management fellows. The City has created a program for Management Fellows when funding is available. The program’s purpose is to create limited duration entry level positions for graduate students. A management fellow will be an “at will” employee whose term of employment shall be no more than one (1) year. A Management Fellow shall be PERS exempt, but may receive limited vacation, limited sick leave, limited health care benefits and other limited benefits, as determined by the City Manager. Sections I and II of this Plan shall not apply to Management Fellows, except as specified by the City Manager. P. ADDITIONAL COMPENSATION FOR MAYOR AND VICE MAYOR 19 The Mayor shall receive $150 monthly, and the Vice Mayor $100 monthly to defray additional expenses of these offices. Q. REIMBURSEMENT FOR RELOCATION EXPENSE Policy Statement The City of Palo Alto, in rare instances, may provide a Basic Relocation Benefits Package for new management and professional employees, upon the approval of the City Manager or designated subordinate. In addition, the provision of “Optional Benefits” or portions thereof, may be extended for exceptional circumstances and only the approval of the City Manager or designee, or for Council-appointed officers, the City Council. The details of the Relocation Expense program are specified in the City’s Relocation Expense policy. R. MEAL ALLOWANCE Management and professional employees assigned to attend night meetings are eligible to receive reimbursement for up to $20.00 per dinner. This provision covers only receipted meals actually taken and submitted for reimbursement. S. GRIEVANCES REGARDING COUNCIL APPOINTED OFFICERS Notwithstanding the grievance procedures provided in Chapter 11 of the City of Palo Alto’s Merit System Rules and Regulations, any Management and Professional employee who is supervised by a Council Appointed Officer and has a grievance against that Council Appointed Officer or regarding the conduct of that Council Appointed Officer shall, following an attempt to resolve the grievance pursuant to Step One (informal discussion), summarize the grievance regarding the Council Appointed Officer in writing and submit it to the Director of Human Resources for review and resolution using the methods he/she considers appropriate. T. MERIT RULES The City will include members of the Management/Professional Compensation Committee in discussions regarding revision of the Merit Rules and Regulations. 20 Attachment B At-Will Positions Management and Professional Unit The intent of this provision under the Management/Professional Compensation Plan is to designate classifications at the department head, assistant director, deputy director, and division manager levels as at-will. The applicable Council Appointed Officer may designate newly created positions at those levels not included on this list as at-will. Existing classifications that shall be at-will include but are not limited to: Department Heads- All departments Assistant Directors- All departments Deputy Directors- All departments Division Managers Administrative Services Director, Administrative Services/Chief Financial Officer Director, Office of Management & Budget Assistant Director, Administrative Services Chief Budget Officer Manager, Accounting Manager, Purchasing & Contract Administration Manager, Real Property City Attorney Senior Assistant City Attorney Assistant City Attorney Sr. Deputy City Attorney Deputy City Attorney City Auditor Deputy City Auditor Sr. Performance Auditor City Clerk Assistant City Clerk Deputy City Clerk City Manager Assistant City Manager/Chief Operating Officer Deputy City Manager Assistant to City Manager Chief Communications Officer Communications Manager Manager, Economic Development 21 Community Services Director, Community Services Assistant Director, Community Services Manager, Recreation & Golf Manager, Open Space & Parks Human Resources Director of Human Resources/Chief People Officer Assistant Director, Human Resources Human Resources Manager IT Director, IT/Chief Information Officer Information Technology Governance Manager Information Technology Manager Library Director, Libraries Assistant Director, Library Services Division Head, Collection & Technical Services Manager, Library Services Planning & Community Environment Director, Planning & Community Environment Assistant Director, Planning & Community Environment Division Manager, Advance Planning Division Manager, Chief Building Official Division Manager, Chief Planning Official Division Manager, Chief Transportation Official Division Manager, Development Services Director Public Safety Chief of Police/Director of Public Safety Fire Chief /Assistant Public Safety Director Assistant Police Chief Emergency Services Director Deputy Director – Technical Services Division (police department) Deputy Fire Chief Public Works Director, Public Works/City Engineer Assistant Director, Public Works – Environmental Services Assistant Director, Public Works – Public Services Assistant Director, Public Works – Engineering Airport Manager 22 Water Quality Control Plant Manager Utilities Director, Utilities Assistant Director Utilities Engineering* Assistant Director Utilities Operations* Assistant Director Utilities Customer Support Services* Assistant Director Utilities/Resources Management* Communications Manager* Engineering Manager – Electric* Engineering Manager –WGW* Manager Customer Service & Meter Reading* Manager Electric Operations* Manager Utilities Mkt Services* Manager Utilities Operations WGW* Utilities Compliance Manager* *Management positions up to and including Assistant Director in Utilities are represented by UMPAPA and currently under negotiations   Attachment C  Information Collected for Compensation Study    Koff collected the total compensation information including active and retiree health and  pension benefits for each of the benchmarked classifications.  The City uses Total  Compensation as the comparison factor for measuring competitiveness and setting the salary  structure.      1. Monthly Base Salary.  The top of the salary range and the mid‐point.      2. Retirement.  The amount of the employee’s State retirement (PERS) contribution, the  amount of Social Security contribution, and any alternative retirement plan where the  employee’s contribution is made by the agency on behalf of the employee (Employer Paid  Member Contribution).      3. Retiree Health.  In order to be able to compare to other agencies, the normal cost, which is  the cost for active employees for the current year, was used    4. Active Health and Insurances.  This is the maximum amount paid by the agency for  employees and dependents for a cafeteria or flexible benefit plan and/or health, dental,  vision, life, long‐term disability, and employee assistance insurance.    5. Administrative and Personal Leave.  The number of days available to management to  reward for extraordinary effort in lieu of overtime.  Personal leave may be available to other  groups of employees to augment vacation or other time off.    6. Automobile.  This category includes either the provision of an auto allowance or the  provision of an auto for personal use.  If a car is provided to any classification for  commuting and other personal use, the average monthly rate is estimated at $450.  For  Palo Alto this benefit was primarily limited to executive staff.    7. Deferred Compensation. Deferred compensation provided to all members of a classification  with or without the requirement for a matching or minimum contribution.  Palo Alto does  not match contributions by employees.    8. Other.  All other benefits, including sick leave, tuition reimbursement, and mileage, many of  which are usage‐based and cannot be quantified individual employee basis.      In addition to the above list of benefits, information was gathered on cost‐cutting strategies  implemented by agencies to reduce employment budgets, and on performance incentive  programs or other performance‐based compensation programs for management classifications.    Attachment D CITY OF PALO ALTO COMPENSATION PLAN Management and Professional Personnel And Council Appointees Compensation plan effective July 1, 2012 through June 30, 2014, except where specifically noted. 1 COMPENSATION PLAN FOR THE CITY OF PALO ALTO Management and Professional Personnel As used in this Plan, the term “Management and Professional” refers to all employees, including Confidential employees, previously classified as “Management and Confidential” by the City. This group will hereafter be identified as “Management and Professional” personnel. SECTION I. COMPENSATION This section applies to all management and professional employees and does not include Council Members or Council-appointed officers. Each Council-appointed officer shall be the responsible decision-maker under this Plan for those employees in departments under his/her control. A. MANAGEMENT AND PROFESSIONAL COMPENSATION POLICY The City's policy for management and professional compensation is to establish and maintain a general structure based on marketplace norms and internal job alignment with broad compensation grades and ranges. Structures and ranges will be reviewed and updated as necessary based on marketplace survey data, internal relationships, and City financial conditions. Individual compensation adjustments will be considered by the Council-appointed officer based on (1) performance factors including achievement of predetermined objectives; (2) pay structure adjustments; and (3) City financial conditions. B. BASIC PLAN ELEMENTS 1. Structure. The compensation plan includes separate multi-grade structures for both management and professional employees. Each grade will have a salary range with a mid-point which is 20% above the minimum, and 20% below the maximum of the range.. All management and professional positions will be assigned an appropriate pay grade based on salary survey data and internal relationships. Actual salary within the range is determined by experience and performance. Competitive marketplace studies will be conducted as needed by surveying a maximum of 14 organizations similar to Palo Alto in number of employees, funding mechanisms, population and services provided. These studies will focus on total compensation for management positions such as first line supervisors, administrative, confidential, professional and top management. Periodically, studies will include position-by-position comparisons using market research and internal equity data. The results of these studies may indicate that the entire pay grade structure be adjusted, that individual positions be reassigned to different pay grades, or that no change takes place. Such adjustments will only affect the salary administration framework. No individual salaries will be automatically changed because of structural adjustments. A department director may request that HR reevaluate a job or jobs in his or her department based on significant and permanent changes in job content. In doing so the director will supply 2 needed information and will provide a position description questionnaire as requested. The Chief People Officer will respond to such requests within his or her discretion. 2. Compensation Adjustment Authorization. In consultation with feedback received from the Management and Professional Compensation Committee, the City Manager may propose as part of the budget process for Council approval of a compensation adjustment based on (1) competitive market data, (2) changes in internal position relationships, (3) the City's ability to pay, and (4) a recommendation received from the Chief People Officer. For fiscal year 2013 the compensation adjustment to mid-point shall be three percent (3%) effective the pay period including October 6, 2012 In years when there is an adjustment to mid-point, this adjustment will be available for those management/professional employees who have received an overall rating of "meets" or "exceeds" expectations on their annual review and who have not been on a performance improvement plan during the preceding fiscal year. Nothing herein shall preclude an employee's manager from awarding a mid-point adjustment increase to an employee on a performance plan at a later date should employee's performance improve. a) Base Compensation. Compensation for management and professional employees includes bi-weekly base salary and is paid on a continuing basis. On a fiscal year basis, the bi-weekly base salary must fall within pay grade limits of no less than 20% below the mid-point and no more than 20% above the mid-point. Base salary increases are earned in accordance with administrative guidelines based upon growth within the position and performance, which must meet or exceed position standards, the salary structure and the City’s ability to pay. b) Performance Planning and Appraisal. Performance appraisals will be conducted at the end of each fiscal year during the months of July through September 30 each year prior to determining individual employee fixed compensation. This process includes both review of previous performance plan and preparation of the performance plan for the next planning period (usually the fiscal year). Performance plans are jointly prepared by the employee and supervisor with the concurrence of the department head or Council-appointed officer. The performance plans shall contain measurable objectives which place special emphasis on position description duties or specific assignments. Progress toward meeting objectives shall be monitored periodically. The performance appraisals should be implemented in a manner that will achieve the following objectives:  Define the employee’s job duties and expected level of performance for the next review period to ensure that both the employee and supervisor have a clear understanding of the employee’s role and responsibilities;  Evaluate and document past performance to serve as a basis for establishing and obtaining future performance standards/objectives;  Facilitate two-way communication and understanding between the employee and his or her supervisor;  Counsel and encourage employees to work toward a learning development plan and realize their full potential;  Establish future work plan objectives. 3 Work plans should include job related projects or special goals related to regular job duties when applicable. At the conclusion of the fiscal year (or review period), supervisors shall make a final determination of the overall performance rating. Recommendations shall be forwarded to department heads and to the Chief People Officer or appropriate Council appointed officer who will then determine individual fixed adjustments according to the provisions of the compensation plan. This process should be completed by September 30. C. MANAGEMENT AND PROFESSIONAL COMPENSATION ADJUSTMENT AUTHORIZATION 1. Council-appointed officers are authorized to pay salaries in accordance with this plan to non-Council-appointed management and professional employees in an amount not to exceed the aggregate of approved management and professional positions in the Table of Organization for the applicable fiscal year. 2. Individual management and professional compensation authorized by a Council-appointed officer under the Management and Professional Compensation Plan may not be less than 20% below nor more than 20% above the mid-point for the individual position grades authorized in Salary Schedule attached. 3. The Council-appointed officers are authorized to establish such administrative rules as are necessary to implement the Management and Professional Salary Plan subject to the limitations of the approved compensation adjustment authorization and the approved grade and mid-point structure. 4. Notwithstanding any other provision of this Compensation Plan, in the event a downward adjustment of a position grade assignment indicates a reduction in the established salary of an individual employee, the Council-appointed officer may, if circumstances warrant, continue the salary for such employee in an amount in excess of the revised grade limit for a reasonable period of time. Such interim salary rates shall be defined as "Y-rates." SECTION II. SPECIAL COMPENSATION This section applies to all eligible regular management and professional positions including Council Appointed Officers as applicable and including Council Members where indicated. Eligibility shall be in conformance with the Merit Rules and Regulations and Administrative Directives issued by the City Manager for the purposes of clarification and interpretation. A. OVERTIME Compensation for overtime work shall be in conformance with the Merit Rules and Regulations and Policies and Procedures. B. IN LIEU HOLIDAY PAY 4 Employees who work a schedule where a regular day off falls on a holiday will be paid for the hours they would have normally worked on that day. If the holiday falls on a non-workday for an exempt employee, the employee may, with supervisory approval, take another day off within the pay period or the following pay period. C. WORKING OUT OF CLASSIFICATION PAY Where management and professional employees, on a temporary basis, are assigned to perform all significant duties of a higher classification, the City Manager may authorize payment within the range of the higher classification for the specified time frame. Working out of class pay is normally not to exceed 10% more than the employee’s current salary and shall be documented on a Personnel Action Form, with a description of the additional duties to be performed and an end date. D. STAND-BY PAY Employees eligible for overtime may be entitled to stand-by pay, approved by the City Manager on a case by case basis, in extreme circumstances involving unavailability of non-management staff. Compensation is as follows: Monday through Friday $40 per day Saturday, Sunday, Holidays $58 per day E. CALL OUT PAY Effective pay period beginning February 26, 2011, Exempt management and professional classifications will be compensated for Call Out as outlined below with Management approval (and will not be eligible for overtime pay). Call Out applies when: (1) an employee previously left City premises, (2) is called back to the work location outside of regularly scheduled working hours, and (3) the Call Back is for an emergency arising out of situations involving real or potential loss of service, property or personal danger. Employees called back will be expected to respond directly to the location of the problem. Compensation is per Call Out as reported on timecard and will be paid as follows: Monday through Friday: $140 per day Saturday and Sunday: $200 per day F. NIGHT SHIFT PREMIUM Night shift differential shall be paid at the rate of five percent (5%) to regular full-time employees who are regularly assigned to shift work between 6:00 p.m. and 8:00 a.m., or to employees who are temporarily assigned to work a full shift between 6:00 p.m. and 8:00 a.m. G. UNIFORM PURCHASE PLAN - SWORN POLICE, FIRE PERSONNEL, and OPEN SPACE PERSONNEL 5 Uniforms, including cleaning, will be provided with replacement provisions on an as-needed basis in conformance with department policy. H. GROUP INSURANCE 1. Effective Date of Coverage for New Employees For newly-hired regular employees coverage begins on the first day of the month following date of hire for the health plan, dental plan, vision care plan, long term disability and life insurance plans if these benefits are elected. 2. Active Employee Health Plan a) Based on an employee’s family status, the City shall pay up to the monthly medical premium for the second most expensive plan among the existing array of plans available during the term of this compensation plan on behalf of eligible employees (including Council Appointed Officers and Council Members) and dependents, except as provided in section b, below. Eligible dependents, under current law, include spouses, children under the age of 26 and never married (natural, adopted, or stepchildren), economically dependent children, and domestic partners registered with the Secretary of State. If PERS changes the plans it offers, the City will continue to provide an equivalent benefit at an equivalent cost. b) Effective in the pay period including October 6, 2012, participating employees will contribute 10% of the premium cost for the employee-selected plan, and the City shall contribute 90%, with a maximum City contribution of 90% of the second highest plan. . c) City medical premium contributions will be prorated for part-time employees based on the number of hours per week the part-time employee is assigned to work. d) Coverage for Domestic Partners: 1) Domestic Partnership Registered with the California Secretary of State: Employees may add their domestic partner as a dependent to their elected health plan coverage if the domestic partnership is registered with the Secretary of State. 2) Domestic Partnership Not Registered with the California Secretary of State: Domestic partners who meet the requirements of the City of Palo Alto Declaration of Domestic Partnership, and are registered with the Human Resources Department, will be eligible for reimbursement of the actual monthly premium cost of an individual health plan, not to exceed the maximum monthly City employer contribution for one-party coverage under the CalPERS Health Benefits Program (or PORAC if a safety department employee) for an employee covered under this agreement. Evidence of premium payment will be required with request for reimbursement. e) PERS Choice Reimbursement Plan 6 Will be eliminated effective January 1, 2013. Management and Professional personnel enrolled in the PERS Choice medical plan may submit a request for payment, as specified below, for non-covered medical expenses, incurred during the period of January 1, through December 31, of the plan year, that exceed $2,500. The maximum annual reimbursement amount provided under this program is:  $700 for employees enrolled in the Employee-Only category;  $900 for employees enrolled in the Employee and One Dependent category, and  $1,100 for employees enrolled in the Family category. Any amounts reimbursed to an individual under this program would be included in the employee’s gross income and is not PERSable. This program shall only reimburse employees for medical expenses that are not reimbursed through any other means and meet the definition in Section 213(d) of the Internal Revenue Code. (Examples of eligible expenses include medical plan deductibles and co-payments, prescription drugs, dental care, hearing care, and vision care.) However, in order to have any expenses reimbursed under this program, the employee must have allocated 100% ($2,500.00) of their 2010 calendar Excess Benefit funds into the Medical FSA option during the election that occurred in December 2009. In addition, all such reimbursements from the Excess Benefit Program must have been solely for medical expenses, as defined by Section 213(d) of the Internal Revenue Code. If the employee has designated his/her Excess Medical funds for any other qualifying expenses (i.e. dependent care, Professional Development, Deferred Compensation contributions), the employee would not be eligible for reimbursement under this program. Employees may submit a final claim for the 2012 plan year’s expenses during January. Any amounts remaining from the PERS Choice reimbursement plan after the claims for the plan year had been processed shall be forfeited. 3. Alternative Medical Benefit Program If a regular employee and/or the employee’s dependent(s) are eligible for medical insurance through another employer-sponsored or association medical plan, the employee may opt for alternative medical insurance coverage through the other employer-sponsored or association plan and waives his/her right to the City of Palo Alto’s medical insurance coverage for same individuals. Employees electing alternative coverage and no City coverage will receive cash payments in the amount of 90% of the average monthly premium for one party, which is $284.00. 4. Retiree Health Plan a) Employees Hired Prior to January 1, 2004 Monthly City-paid premium contributions for a retiree-selected health plan through the CalPERS Health Benefits Program will be made as provided under the Public 7 Employees” Medical and Hospital Care Act. The City’s monthly employer contribution for each employee retiring on or after January 1, 2007 and prior to March 31, 2011 shall be the amount necessary to pay for the cost of his or her enrollment in a health benefits plan up to the monthly premium for the second most expensive plan offered to management and professional personnel during the contract term (among the existing array of plans.) The City’s contribution for an employee hired before January 1, 2004 who retires on or after March 30, 2011 shall be the same contribution amount it makes from time to time for active City employees. b) Post – 1/1/04 Hires For those Management and professional employees hired after January 1, 2004, the PERS law vesting schedule set forth in Government Code section 22893 will apply. Under that law, an employee is eligible for 50% of the specified employer health premium contribution after ten (10) years of service credit, provided at least five (5) of those years were performed at the City of Palo Alto. After ten (10) years of service credit, each additional service credit year increases the employer contribution percentage by 5% until, at 20 years’ service credit, the employee will be eligible upon retirement for 100% of the specified employer contribution and 90% of their dependent coverage. The City of Palo Alto’s health premium contribution for eligible post – 1/1/04 hires shall be the minimum contribution set by PERS under section 22893 based on a weighted average of available health plan premiums. 5. Dental Plan a) The City shall pay covered plan charges on behalf of all eligible employees and dependents. (Domestic partners who are either registered with the Secretary of State or who meet the requirements of the City of Palo Alto Declaration of Domestic Partnership, and are registered with the Human Resources Department are considered dependents under the plan.) Benefits for regular part-time employees hired or assigned to a part-time schedule will be prorated in accordance with his/her percentage of a full- time work schedule. b) The City’s Dental Plan provides the following:  Maximum Benefits per Calendar Year- $2,000 per person  Lifetime Maximum for Orthodontics- The City will pay up to $2,000.00 for orthodontia coverage (not included in annual dental maximum)  Major Dental Services 50% UCR*  Orthodontics 50% UCR*  Basic Benefits (All other covered services) First Calendar Year of Eligibility 70% UCR* Subsequent Calendar Years 70%-100% *Usual, Customary, and Reasonable  Composite (tooth covered) fillings for posterior teeth For each dental plan member, the percentage of coverage for basic benefits will begin at 70% for the first calendar year of coverage and increase by 10% (up to a maximum of 8 100%) effective the first day of the next calendar year as long as the member utilizes the plan at least once during the current year. Per the Delta Dental contract effective October 1, 2005, if the member does not utilize the plan during the current year, the percentage of coverage for the next calendar year shall remain unchanged from the current year. If a dental plan member ever loses coverage under the plan, the applicable percentage of coverage for basic benefits provided during any future period of coverage will commence at 70% as if the dental plan member was a new enrollee. Examples of when a member might lose coverage under the plan would include:  Employee goes on an unpaid leave of absence and elects not to pay the required dental premiums for his/her family’s coverage during the leave.  Employee elects to drop one or more covered dependents from the plan during an open enrollment period so that they might be covered on a spouse’s non-City of Palo Alto dental plan. 6. Basic Life Insurance The City shall provide a basic group term life insurance with Accidental Death and Dismemberment (AD&D) coverage, in an amount equal to the employee's annual basic pay (rounded to the next highest $1,000) at no-cost to the employee. AD&D pays an additional amount equal to the employee’s annual basic pay (rounded to the next highest $1,000). 7. Supplemental Life And AD&D Insurance An employee may, at his/her cost, purchase additional life insurance and additional AD&D coverage equal to one- or two-times his or her annual salary. The maximum amount of life insurance available to the employee is up to $325,000 and the maximum amount of AD&D coverage available is up to $325,000. 8. Long Term Disability Insurance a) The City shall provide long term disability (LTD) insurance with a benefit of 2/3 monthly salary, up to a maximum benefit of $10,000 per month. The City shall pay the premium for the first $6,000 of base monthly salary. For employees whose base monthly salary exceeds $6,000, the employee shall pay the cost of the required premium based upon their monthly salary between $6,000 and $15,000. b) For employees whose base monthly salary exceeds $6,000 and who have no eligible dependents covered under the City’s medical, dental or vision plans, the City will pay up to $17.50 per month towards the employee’s cost for LTD coverage. 9. Vision Care a) The City shall provide vision care coverage for employee and dependents. Coverage is administered by Vision Service Plan (VSP). The plan provides an exam every 12 months; lenses every 24 months; frames every 24 months, all subject to a $20 co- 9 payment as defined in the Vision Services Benefits Plan A schedule. Benefits for regular part-time employees will be prorated as follows: Employees hired after January 1, 2004, who will work less than full time, will receive prorated premium costs for vision benefits in accordance with his/her percentage of a full-time work schedule. Vision benefits for regular part-time employees hired or assigned to a part-time schedule will be prorated in accordance with his/her percentage of a full- time work schedule. b) Effective July 1, 1996, dependents include eligible domestic partners who are either registered with the Secretary of State or who meet the requirements of the City of Palo Alto Declaration of Domestic Partnership, and are registered with the Human Resources Department. I. EMPLOYEE ASSISTANCE PLAN The Employee Assistance Plan (EAP) provides employees with confidential personal counseling, work and family related issues, eldercare, substance abuse, etc. In addition, EAP programs provide a valuable tool for supervisors to refer troubled employees to professional outside help. This service staffed by experienced clinicians is available to employees and their dependents by calling a toll-free phone line 24 hours a day, seven days a week. Guidance is also available online. J. SAFETY DIFFERENTIALS 1. Police Department - Personnel Development Program Pursuant to administrative rules governing eligibility and qualification, the following may be granted to sworn police personnel:  P.O.S.T. Intermediate Certificate: five percent (5%) above base salary  P.O.S.T. Advanced Certificate: seven and a half (7 ½%) above base salary 2. Fire Department - EMT Differential Pursuant to administrative rules governing eligibility and qualification, the following may be granted to sworn Fire personnel:  EMT Differential: three percent (3%) above base salary K. MANAGEMENT and PROFESSIONAL BENEFIT PROGRAM Management and professional employees are eligible for Sections 1, 2, 3, and 4 of the Management Benefit Program. City Council Members are eligible for Section 3 only. 10 1. Professional Development - Reimbursement The purpose of this program is to provide employees with resources to improve and supplement their job and professional skills. Reimbursement for authorized self- improvement activities may be granted each management and professional employee up to a maximum of five hundred dollars ($500) per fiscal year. A departmental training fund of one thousand dollars per employee ($1,000) will be established for subject matter, leadership or other training that the Department Director identifies as a need for employees within that Department. The following items are eligible for reimbursement: a) Civic and professional association memberships b) Conference participation and travel expenses, which must occur within the compensation plan period. c) Educational programs, books and videos, and tuition reimbursement designed to maintain or improve the employee's skills in performing his or her job or future job opportunities, should support the City’s mission or be necessary to meet the educational requirements for qualification for employment. Permissible educational expenses are refresher courses, courses dealing with current developments, academic or vocational courses, as well as the travel expenses associated with the courses as defined by the City’s travel expense report from the Policy & Procedures Manual Section 1-02 ASD. d) Professional and trade journal subscriptions not to exceed 12 months. e) Approval will be at discretion of department head and signature is required on reimbursement form. Amounts under this professional development program will be pro-rated in the first year of employment or promotion into a position covered by this Compensation Plan 2. Physical Examinations All management and professional employees are eligible to receive an annual physical examination as follows: a) Use the periodic health exam benefit as provided under the PERS Health Plan option you have selected. Each of the PERS Health Plans provides for a periodic physical examination. The examination must be performed by your primary care physician— unless he/she refers you to another physician. b) The types of tests and the frequency of the tests cannot exceed AMA guidelines. The guidelines are a suggested minimum based on research studies concerning preventative care. The judgment of your physician is the final determinant for your care. 11 c) Any additional necessary asymptomatic tests that are required by your physician that are not covered by your health plan, will be reimbursed by the City. Any symptomatic tests will be covered under your PERS Health Plan. The Reimbursement for Periodic Physical Exam Form is available on the Human Resources Intranet site. This benefit will not be pro-rated. 3. Excess Benefit This benefit is designed to meet the requirements of Section 125 of the Internal Revenue Code, with exception of Gym or Health Club Membership. Every calendar year, each employee will be provided with $2,500 that they can designate among the following options: a) Medical Flexible Spending Account (Medical FSA). Provides reimbursement for excess medical/dental/vision, or expenses that are incurred by employees and their dependents which are not covered or reimbursed by any other source, including existing City-sponsored plans. This includes prescribed medications and copayments as well as over-the-counter drugs, including: antacids, allergy medicines, pain relievers and cold medicines. However, nonprescription dietary supplements (e.g. vitamins, etc.) toiletries (e.g. toothpaste), cosmetics (e.g. face cream), and items used for cosmetic purposes (e.g. Rogaine) are not acceptable. b) Dependent Care Flexible Spending Account (Dependent Care FSA). Provides reimbursement for qualified dependent care expenses under the City's Dependent Care Assistance Program (DCAP), subject to the following limits: Dependent care expenses will be reimbursed only to the extent that the amount of such expenses reimbursed under this Management Benefit Program, when added to the amount (if any) of annual dependent care expenses that the participant has elected under the City's Flexible Benefits Plan, do not exceed the maximum permitted under the DCAP. 1) The annual amount submitted for reimbursement cannot exceed the income of the lower-paid spouse. 2) The expenses must be employment-related expenses for the care of one or more dependents who are under 13 years of age and entitled to a dependent deduction under Internal Revenue Code section 151(e) or a dependent who is physically or mentally incapable of caring for himself or herself. 3) The payments cannot be made to a child under 19 years of age or to a person claimed as a dependent. 4) If the services are provided by a dependent care center, the center must comply with all state and local laws and must provide care for more than six (6) individuals (other than a resident of the facility). 12 5) Dependent care expenses not submitted under this section are eligible under the City Dependent Care Assistance Plan (DCAP). However, the maximum amount reimbursed under DCAP will be reduced by any amount reimbursed under the Excess Benefit Plan. c) Non-taxable Professional Development Spending Account. Provides reimbursement for Non-Taxable professional development expenses (e.g.,job-related training and education, seminars, training manuals, etc.) to the extent they are not paid or reimbursed under any other plan of the City. d) Gym or Health Club memberships. Provides reimbursement for annual or monthly memberships, including personal trainers. Reimbursement of this expense is taxable to the employee. e) Deferred Compensation. Provides a one-time contribution to the employee’s City- sponsored 457 Deferred Compensation plan with either ICMA-RC or the Hartford. Amounts designated by employees to either the Medical FSA, Dependent Care FSA, or Professional Development options are done so on a “use –it-or-lose-it” basis. This means that any amounts designated and not used by the end of the calendar year (or end of the extended grace period for the medical FSA) will be forfeited by the employee and returned to the plan. Specified amounts under this benefit will be applied on a pro-rata basis for employees who are part-time or who are in a management or professional pay status for less than the full fiscal year. Such benefits will be pro-rated in the first year of employment (based on hire date) but will not be pro-rated upon separation of employment. L. LEAVES 1. Sick Leave a) Sick leave shall be accrued bi-weekly provided the employee has been in a pay status for 50% or more of a bi-weekly pay period. Sick leave shall be accrued at the rate of 3.7 hours per bi-weekly pay period for those employees working a 40-hour duty schedule. Those assigned work schedules which are greater or lesser than 40 hours will accrue sick leave at the ratio of their work schedule to 40 hours. b) Employees may use up to 20 hours of sick leave per calendar year for personal business. The scheduling of such leave is subject to the approval of the appropriate level of Management. c) Employees leaving the municipal service shall forfeit all accumulated sick leave, except as otherwise provided by law and by Section 609 of the Merit Rules and Regulations. In the event that notice of resignation is given, sick leave may be used only through the day which was designated as the final day of work by such notice. 13 d) Employees that were hired before December 1, 1983 and who leave the municipal service in good standing, or who die while employed in good standing by the city, and who have 15 or more years of continuous service shall receive compensation for unused sick leave hours in a sum equal to two and one-half percent (2½%) of their unused sick leave hours multiplied by their years of continuous service and their basic hourly rate of pay at termination. Full sick leave accrual will be paid in the event of termination due to disability. See Merit System Rules and Regulations, Chapter 6, Section 609. e) Up to nine (9) days of sick leave per calendar year may be used for illness in the immediate family, including a registered domestic partner. f) Management and Professional employees eligible, as specified above if hired before December 1, 1983, to be compensated for sick leave may annually convert sick leave hours in excess of 600 to cash or deferred compensation, according to the formula set forth above, up to a maximum of $2,000 per fiscal year. g) In accordance with the City Merit Rules and Regulations, a new employee may, if necessary, use up to 48 hours or shift equivalent of sick leave at any time during the first six (6) months of employment. 2. Management Annual Leave a) Exempt Employees Regular management and professional employees will be credited with 80 hours of annual leave. This leave is granted in recognition of the extra hours Management and Professional employees work over their regular schedule. This leave may be taken as paid time off, added to vacation accrual (subject to vacation accrual limitations), taken as cash or taken as deferred compensation. When time off is taken under this provision, 10-hour shift workers will receive one shift off for each 8 hours charged; 24-hour shift workers will receive one-half (½) shift off for each 8 hours charged. In 2012, the City will be transitioning this benefit from a fiscal to calendar year basis for administrative purposes. Therefore, on July 1, 2012, employees will be credited with 40 hours of annual leave for the period of July 1 to December 31, 2012. Beginning in 2013 and each calendar year thereafter, employees will be credited with 80 hours of management annual leave. Entitlement under this provision will be reduced on a prorated basis for part-time status, or according to the number of months in paid status during the year; employees who have used more than the pro-rated share at the time they leave City service shall be required to repay the balance or have it deducted from their final check. Unused balances as of the end of the year will be paid in cash unless a different option as indicated above is elected by the employee. b) Non-Exempt Employees 14 Based on an audit recommendation to eliminate payment of overtime as well as management leave for non-exempt employees in the management group, the City is transitioning away from providing management leave to non-exempt employees. As part of the transition, and in order to minimize impacts to current employees, the City will phase-out elimination of the 80 hours of management leave for all current non-exempt Management and Professional employees (those eligible to earn overtime). Continuing through Fiscal year 2013-2014, there will be no change to management leave benefits for current employees; these employees will maintain their 80 hours of management leave and also receive pay for any overtime hours worked. Beginning on July 1, 2014 all employees in non-exempt positions will receive overtime pay for hours actually worked, but will no longer receive management leave. Employees hired into non-exempt management positions on or after February 26, 2011 will receive overtime only and will not be eligible for management leave. 3. Vacation Vacation will be accrued when an employee is in pay status and will be credited on a bi- weekly basis. Total vacation accrual at any one time may not exceed three (3) times the annual rate of accrual. Each eligible employee shall accrue vacation at the following rate for continuous service performed in pay status: a) Less than nine (9) years. For employees completing less than nine (9) years continuous service: 120 hours vacation leave per year; provided that: i. The City Manager is authorized to adjust department head annual vacation accrual to provide for a maximum of 160 hours for those hired between July 1, 1996 and June 30, 2001; and ii. The City manager is authorized to adjust the annual vacation accrual of employees hired on or after July 1, 2001, to provide up to 40 additional hours (i.e., to a maximum annual accrual of 160 hours) for service with a prior employer. b) Nine (9), but less than fourteen (14) years. For employees completing nine (9), but not more than fourteen (14) years continuous service; 160 hours vacation per year. c) Fourteen (14), but less than nineteen (19) years. For employees completing fourteen (14), but not more than nineteen (19) years continuous service; 180 hours vacation leave per year. d) Nineteen (19) or more years. For employees completing nineteen (19) or more years continuous service; 200 hours vacation leave per year. e) Employees are eligible to cash out vacation accrual balances in excess of 80 hours. An employee may cash out a minimum of eight (8) hours to a maximum of 120 15 hours of accrued vacation provided the employee has taken 80 vacation hours in the previous 12 months and has followed the election procedures set forth in this section. Employees must elect the number of vacation hours they will cash-out during the next calendar year, up to the maximum of 120 hours. For the 2012 calendar vacation year, employees will make their election for vacation hours to cash out no later than November 1, 2012. The election will apply only to vacation hours that are accrued in the next calendar year and that are eligible for cash-out. The election to cash-out vacation hours in each designated year will be irrevocable. This means that employees who elect to cash-out vacation hours must cash-out the number of accrued hours pre-designates on the election form. Employees who do not elect a cash-out amount by November 1 of the prior calendar year will be deemed to have waived the right to cash out any leave in the following tax year and will not be eligible to cash-out vacation hours in the next tax year Employees who elect cash-out amounts may request a cash-out at any time in the designated tax year by submitting a cash-out form to payroll. Payroll will complete the cash-out upon request, provided the requested cash-out amount has accrued and is consistent with the amount the employee pre-designated. If the full amount of hours designated for cash-out is not available at the time of cash-out request, the maximum available will be paid. For employees who have not requested cash-out of the elected amount by November 1 of each year, Payroll will automatically cash-out the elected amount in a paycheck issued on or after the payroll date including November 1. 4. Bereavement Leave of absence with pay of three (3) days may be granted an employee by the head of his/her department in the event of death in the employee’s immediate family, which is defined for purposes of this section as wife, husband, son, son-in-law, step-son, daughter, daughter-in-law, step-daughter, mother, mother-in-law, father, father-in-law, brother, brother-in-law, sister, sister-in-law, grandmother, grandmother-in-law, grandfather, grandfather-in-law, grandchild, aunt, uncle, niece, nephew, registered domestic partner, or a close relative residing in the household of employee. Such leave shall be at full pay and shall not be charged against the employee’s accrued vacation or sick leave. Requests for leave in excess of three days shall be subject to the approval of a Council-Appointed Officer for employees under his/her control. M. RETIREMENT PENSION 1. Effective pay period inclusive of 1/6/07, the City’s Public Employees’ Retirement System (PERS) benefits changed to the 2.7%@ 55 formula for non-safety members (from 2% @55). For miscellaneous employees hired on or after July 17, 2010, the City offers the CalPERS retirement formula two percent (2.0%) of final salary at age sixty (60). 16 For Safety members, the City currently offers the CalPERS "3% at 50" full formula (Section 21362.2) benefit. Local Fire Safety members newly hired after 6/08/12 will be placed in the 3%@55 formula. As soon as administratively possible, the City intends to modify the Local Police Safety formula for new hires to 3%@55 formula. New employees hired on or after January 1, 2013 who are “new members” as defined by the California Public Employees’ Pension Reform Act (PEPRA), will be subject to the terms of that statute. 2. Employee PERS Share. The City previously paid 6% of the employee’s CalPERS share for employees under the 2.7%@55, 5% for employees under the 2%@60 formula, and the full employee share for those with public safety formulas. a) Beginning with the pay period including October 6, 2012, employees under the 2.7%@55 retirement formula will pay the full eight percent (8%) employee contribution. b) Beginning with the pay period including October 6, 2012, employees subject to the 2%@60 retirement formula shall pay the full seven percent (7%) employee contribution. c) Beginning with the pay period including October 6, 2012, Public Safety employees will pay the full nine percent (9%) PERS employee contribution. d) Employees under the 2%@62 benefit shall pay at least 50 percent of the total normal cost or the same contribution rate as “similarly situated” employees, whichever is higher. 3. Final Compensation. Final compensation for purposes of retirement shall be as set forth in the City’s contract with CalPERS, including, when applicable, the Government Code Section 20692: Optional Benefit, except as may otherwise be required by PEPRA. 4. Employee PERS contributions shall be made on a tax deferred basis, in accordance with Section 414(h)(2) of the Internal Revenue Code. All provisions of this subsection are subject to and conditioned upon compliance with IRS regulations. 5. Final compensation for employees under the 2%@62 benefit shall be as set forth in PEPRA, including calculation based on the average of three highest consecutive years and a cap on pensionable compensation (currently $136,440) based on IRS limits for employers that do not participate in social security. N. COMMUTE INCENTIVES and PARKING 1. Civic Center Parking. Employees assigned to Civic Center and adjacent work locations. The City will provide a Civic Center Garage parking permit. Employees hired after June 30, 17 1994 may initially receive a parking permit for another downtown lot, subject to the availability of space at the Civic Center Garage. 2. Alternative Commute Incentives: Employees who qualify may voluntarily elect one of the following commute incentives for those using an eligible commute alternative on 60% or more of their scheduled work days per month: a) Public Transit and Vanpool. The City provides tax-free commute incentives up to the current IRS limit, as may be amended from time to time, (currently $125/month) are available through the Commuter Check Direct (CCD) website for employees using Bay Area public transportation or riding in a registered vanpool at least 60% of their scheduled work days. Administration of the Commuter Check benefit shall be subject to the rules and regulations of the third- party administrator. b) Bicycle. The City will provide employees with a tax-free incentive of $20 per month to eligible employees who ride a bicycle to work. c) Carpool. The City will provide with a taxable incentive of $30 per month to each eligible employee in a carpool with two or more licensed drivers. d) Walk. The City will provide employees with a taxable incentive of $20 per month to eligible employees who walk to work. O. AT-WILL STATUS Certain Management and Professional Positions are designated as having “at-will” employment status. “At-will” positions are intended to be of a limited duration and employees hired to fill these positions shall have no constitutionally protected property or other interest in their employment with the City. Notwithstanding any provision in the Merit System Rules and Regulations or any other City rule, policy or procedure, at-will employees have no right to continued employment or pre-or post-disciplinary due process and work at the will and pleasure of the hiring authority (City Council, City Manager or Council-Appointed Officer). Work for an at-will employee may be eliminated and/or the employee may be terminated, or asked to resign, at any time, with or without cause, upon notice to that employee, and the employee may resign at any time upon written notice to the hiring authority. 1. At-will Management & Professional positions. Department heads hired after July 1, 2004 and prior to the date of adoption of this plan were hired as at-will employees whose terms of employment are specified by an employment contract that includes a severance package. Effective on the date of adoption of this plan, new employees hired or promoted to department head, assistant department director, and all other positions listed on Attachment B shall be at-will employees. At-will employees will be eligible for, and shall receive, all regular benefits (i.e., health insurance, PERS contribution to the extent paid by City, etc.) and vacation, sick leave, and 18 management leave as are generally provided to management employees and described in this compensation plan, as amended from time to time. At-will employees who are terminated or asked to resign shall, upon execution of a release of all claims against the City, be eligible for a severance payment equivalent to four (4) weeks of salary and benefits, increasing after completion of the first full year of service by one (1) week for every completed year of service, up to a maximum of 12 weeks. For example, an at-will employee who has completed six (6) years of service would be eligible to receive ten (10) weeks of severance (4 weeks plus 1 week for each year of service). No severance shall be paid if the employee is terminated for serious misconduct involving abuse of his or her office or position, including but not limited to waste, fraud, violation of the law under color of authority, misappropriation of public resources, violence, harassment or discrimination. If the employee is later convicted of a crime involving such abuse of his or her position the employee shall fully reimburse the City as set forth in Government Code section 53243.3. 2. Provisional employees. The City has created a program for Provisional employment when funding is available. The program’s purpose is to create limited duration senior management level work for the City Manager’s Office or as designated by the City Manager. A Provisional Employee will be an “at will” employee whose term of employment shall be no more than two (2) years. A Provisional Employee shall be exempt and not eligible to earn overtime. A Provisional Employee will receive limited benefits as specified in an Employment Agreement. Sections I and II of this Compensation Plan shall not apply to Provisional Employees, except as specified by the City Manager. 3. Management fellows. The City has created a program for Management Fellows when funding is available. The program’s purpose is to create limited duration entry level positions for graduate students. A management fellow will be an “at will” employee whose term of employment shall be no more than one (1) year. A Management Fellow shall be PERS exempt, but may receive limited vacation, limited sick leave, limited health care benefits and other limited benefits, as determined by the City Manager. Sections I and II of this Plan shall not apply to Management Fellows, except as specified by the City Manager. P. ADDITIONAL COMPENSATION FOR MAYOR AND VICE MAYOR The Mayor shall receive $150 monthly, and the Vice Mayor $100 monthly to defray additional expenses of these offices. Q. REIMBURSEMENT FOR RELOCATION EXPENSE Policy Statement The City of Palo Alto, in rare instances, may provide a Basic Relocation Benefits Package for new management and professional employees, upon the approval of the City Manager or designated subordinate. In addition, the provision of “Optional Benefits” or portions thereof, 19 may be extended for exceptional circumstances and only the approval of the City Manager or designee, or for Council-appointed officers, the City Council. The details of the Relocation Expense program are specified in the City’s Relocation Expense policy. R. MEAL ALLOWANCE Management and professional employees assigned to attend night meetings are eligible to receive reimbursement for up to $20.00 per dinner. This provision covers only receipted meals actually taken and submitted for reimbursement. S. GRIEVANCES REGARDING COUNCIL APPOINTED OFFICERS Notwithstanding the grievance procedures provided in Chapter 11 of the City of Palo Alto’s Merit System Rules and Regulations, any Management and Professional employee who is supervised by a Council Appointed Officer and has a grievance against that Council Appointed Officer or regarding the conduct of that Council Appointed Officer shall, following an attempt to resolve the grievance pursuant to Step One (informal discussion), summarize the grievance regarding the Council Appointed Officer in writing and submit it to the Director of Human Resources for review and resolution using the methods he/she considers appropriate. T. MERIT RULES The City will include members of the Management/Professional Compensation Committee in discussions regarding revision of the Merit Rules and Regulations. 20 Attachment B At-Will Positions Management and Professional Unit The intent of this provision under the Management/Professional Compensation Plan is to designate classifications at the department head, assistant director, deputy director, and division manager levels as at-will. The applicable Council Appointed Officer may designate newly created positions at those levels not included on this list as at-will. Existing classifications that shall be at-will include but are not limited to: Department Heads- All departments Assistant Directors- All departments Deputy Directors- All departments Division Managers Administrative Services Director, Administrative Services/Chief Financial Officer Director, Office of Management & Budget Assistant Director, Administrative Services Chief Budget Officer Manager, Accounting Manager, Purchasing & Contract Administration Manager, Real Property City Attorney Senior Assistant City Attorney Assistant City Attorney Sr. Deputy City Attorney Deputy City Attorney City Auditor Deputy City Auditor Sr. Performance Auditor City Clerk Assistant City Clerk Deputy City Clerk City Manager Assistant City Manager/Chief Operating Officer Deputy City Manager Assistant to City Manager Chief Communications Officer Communications Manager Manager, Economic Development 21 Community Services Director, Community Services Assistant Director, Community Services Manager, Recreation & Golf Manager, Open Space & Parks Human Resources Director of Human Resources/Chief People Officer Assistant Director, Human Resources Human Resources Manager IT Director, IT/Chief Information Officer Information Technology Governance Manager Information Technology Manager Library Director, Libraries Assistant Director, Library Services Division Head, Collection & Technical Services Manager, Library Services Planning & Community Environment Director, Planning & Community Environment Assistant Director, Planning & Community Environment Division Manager, Advance Planning Division Manager, Chief Building Official Division Manager, Chief Planning Official Division Manager, Chief Transportation Official Division Manager, Development Services Director Public Safety Chief of Police/Director of Public Safety Fire Chief /Assistant Public Safety Director Assistant Police Chief Emergency Services Director Deputy Director – Technical Services Division (police department) Deputy Fire Chief Public Works Director, Public Works/City Engineer Assistant Director, Public Works – Environmental Services Assistant Director, Public Works – Public Services Assistant Director, Public Works – Engineering Airport Manager 22 Water Quality Control Plant Manager Utilities Director, Utilities Assistant Director Utilities Engineering* Assistant Director Utilities Operations* Assistant Director Utilities Customer Support Services* Assistant Director Utilities/Resources Management* Communications Manager* Engineering Manager – Electric* Engineering Manager –WGW* Manager Customer Service & Meter Reading* Manager Electric Operations* Manager Utilities Mkt Services* Manager Utilities Operations WGW* Utilities Compliance Manager* *Management positions up to and including Assistant Director in Utilities are represented by UMPAPA and currently under negotiations