HomeMy WebLinkAbout2015-03-17 Finance Committee Agenda Packet Finance Committee
Tuesday, March 17, 2015
Special Meeting
Council Chambers
6:00 PM
Agenda posted according to PAMC Section 2.04.070. Supporting materials are available in
the Council Chambers on the Thursday preceding the meeting.
PUBLIC COMMENT Members of the public may speak to agendized items. If you wish to address the 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/Council Conference Room, and deliver it to the 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 Committee, but it is very helpful.
Call to Order
Oral Communications
Action Items
1. Proposed Fiscal Year 2015/2016 Community Development Block Grant
Funding Allocation; Draft 2015-2020 Consolidated Plan and Draft
2015/2016 Action Plan
2. Utilities Advisory Commission Recommendation that Council Continue the Palo Alto Clean Local Energy Accessible Now (CLEAN) Program at
the Rate of 16.5 Cents per Kilowatt-hour for Solar Resources for a 20-
Year Contract and a Program Cap of 3 Megawatts, and Add a 25-Year
Contract Term Option; Staff Recommendation that Council Expand
CLEAN Program Eligibility to Non-Solar Renewable Energy Resources
with a Rate Equal to their Avoided Cost for 20- and 25-year Contracts
and Program Cap of 3 Megawatts; and Approval of Amended CLEAN
Program Power Purchase Agreement
3. Review of the Assessment Results of the Enterprise Resource Planning
(ERP) Needs and Consideration of the Staff Recommendation to Plan
for the Acquisition of a New Integrated Government-oriented ERP
System and Separate Provisioning of Billing Systems.
1
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.
Future Meetings and Agendas
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. of Items Requested by the
Finance Committee
Status of Items Requested by the Finance Committee
Referral Date Item Title Status
2011 Debt Service Policy Update (ASD) In Process Staff to return with an updated policy
2013 Police Services Utilization and Resources Study (PD) Pending
2014
Utilities Department Organizational Assessment (ASD/UTL)
Pending Return with an update on the status of organizational assessment
recommendations
Finance Committee Items Tentatively Scheduled
Meeting Date Item Title
4/7/2015
Council adoption of a Resolution Approving the Fiscal Year 2016 Water Utility Financial Plan
and Amending the Water Utility Reserve Management Practices and a Resolution Amending
Rate Schedules W-1 (General Residential Water Service), W-2 (Water Service from Fire
Hydrants), W-3 (Fire Service Connections), W-4 (Residential Master-Metered and General
Non-Residential Water Service), and W-7 (Non-Residential Irrigation Water Service) (Utilities)
The Finance Committee Recommend that the City Adopt a Resolution Approving the Fiscal
Year 2016 Wastewater Collection Financial Plan and Amending the Wastewater Collection
Utility Reserve Management Practices, and a Resolution Amending Rate Schedules S-1
(Domestic Wastewater Collection and Disposal), S-2 (Commercial Wastewater Collection and
Disposal), S-6 (Restaurant Wastewater Collection and Disposal) and S-7 (Commercial
Wastewater Collection and Disposal – Special Discharge) (Utilities)
Overview of July 1, 2016 Rate Proposals (this is a joint UTL/PW report)
Adoption of a Resolution Amending Utility Rate Schedule D-1 (Storm and Surface Water
Drainage) Reflecting a 2.7% CPI Rate Increase to $12.63 Per Month Per Equivalent
Residential Unit for Fiscal Year 2016 (Public Works)
Council Adoption of a Resolution Amending the R-1 Residential Refuse Rates for Fiscal Year
2016 (Public Works)
4/21/2015
HSRAP (CSD)
Animal Shelter Follow-up (CM/Aud)
Gas Financial Plans (Utilities)
Electric Financial Plans (Utilities)
FY 2016-2025 General Fund Long Range Financial Forecast and FY 2014 CAFR Review (ASD)
2 March 17, 2015
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.
City of Palo Alto (ID # 5511)
Finance Committee Staff Report
Report Type: Action Items Meeting Date: 3/17/2015
City of Palo Alto Page 1
Summary Title: CDBG Program
Title: Proposed Fiscal Year 2015/2016 Community Development Block Grant
Funding Allocation; Draft 2015-2020 Consolidated Plan and Draft 2015/2016
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 in the draft 2015/2016 Action Plan and as
described in this report;
2. Authorize the City Manager to execute the 2015/2016 CDBG application and 2015/2016
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;
3. Authorize staff to submit the 2015/2016 Action Plan to HUD by the May 15, 2015
deadline; and
4. Authorize staff to submit the 2015-2020 Consolidated Plan to HUD by the May 15, 2015
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. The CDBG program 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
goals for attaining identified objectives. An Action Plan is prepared annually to identify specific
projects to be funded in that year that implement the strategies identified in the Consolidated
City of Palo Alto Page 2
Plan. Currently the CDBG program is guided by the 2010-2015 Consolidated Plan adopted by
Council May 9, 2010 and a new five-year plan is required.
For the 2015-2020 Consolidated Plan process, Planning staff coordinated with the County of
Santa Clara and other entitlement jurisdictions in the County, referred to in this report as the
“Consortium,” to identify and prioritize housing and community development needs across the
region, and strategies to meet those needs. The Consolidated Plan includes a needs
assessment and market analysis and serves as the strategic plan that identifies priority needs of
the City to help guide the distribution of CDBG funding. The Action Plan outlines the proposed
projects to be funded for Fiscal Year 2015/2016. Seven programs are recommended for
funding that provides supportive services for targeted low-income groups including persons
who are homeless, persons with disabilities, the elderly, and other special needs groups. In
addition, the funding recommendations include one multi-family housing rehabilitation project
and funding to cover the cost of administering the City’s CDBG program.
The draft 2015-2020 Consolidated Plan and the draft 2015/2016 Action Plan (Attachment B)
have been made available for public review from February 17, 2015 through March 18, 2015.
The Finance Committee is being asked to review the draft 2015-2020 Consolidated Plan and the
draft 2015/2016 Action Plan with funding recommendations. Upon review of the draft plan and
funding recommendations, it is requested the Finance Committee make recommendations to
the City Council. The City Council will review the recommendations of the Finance Committee
at a public hearing scheduled for May 4, 2015. Staff will then submit the Consolidated Plan and
the Action Plan to HUD in order to meet the May 15, 2015 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.
All of the funded projects in Palo Alto meet the first objective of benefiting low-and very-low-
income persons. 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.
The allocations for administrative activities and public services are both proposed to be at the
maximum spending cap in Fiscal Year 2015/2016. 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 $115,072 will be available for this category for Fiscal Year
2015/2016.
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
City of Palo Alto Page 3
is estimated that $82,910 will be available for Public Service activities for Fiscal Year 2015/2016.
Public service activities include services for homeless persons, housing and emergency services
to low income individuals with disabilities, and services to victims of domestic violence.
On February 11, 2015, HUD notified the City of its Fiscal Year 2015/2016 CDBG Entitlement.
The final CDBG Entitlement amount is $442,460.
Consolidated Plan
The Draft 2015-2020 Consolidated Plan is a 5-year strategic plan of action that addresses
priority housing and community development needs. It also sets specific goals for attaining
identified objectives. Each year, an Annual Action Plan is prepared to identify specific projects
to be funded to implement the Consolidated Plan. The Consolidated Plan and the Annual
Action Plan updates are required by HUD in order for the City to receive federal funding from
programs such as the CDBG. Currently the CDBG program is guided by the 2010-2015
Consolidated Plan adopted by Council May 9, 2010. A new 5-year strategic plan is now required
for the 2015-2020 Consolidated Plan process.
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.
CDBG Applications
Currently, the CDBG program operates under a two-year funding request cycle. Applications
for Fiscal Years 2015/2016 and 2016/2017 were made available in November 2014. A notice of
CDBG funding availability was published in the Palo Alto Weekly on November 21, 2014 with
completed applications due January 9, 2015. Mandatory Pre-Proposal Conferences were
conducted on December 10, 2014 and January 5, 2015 to assist applicants with program
regulations and project eligibility questions. The CDBG applications considered for funding for
Fiscal Year 2015/2016 are identified on the attached chart (Attachment A). During this funding
cycle the City did not receive any funding applications for 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 three members of the HRC was established to review both the CDBG and
HSRAP funding applications and to provide recommendations to the full commission.
While both CDBG and HSRAP are operating on a two-year funding cycle, final CDBG funding
recommendations need to be reviewed annually since the budget is contingent upon funding
allocations received from HUD. The sub-committee met on January 29, 2015 at City Hall to
City of Palo Alto Page 4
discuss the Fiscal Year 2015/2016 CDBG budget, reviewed the applications received, and
recommended 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. Since the
City had not received its final allocation amounts from HUD, the Selection Committee also
outlined a general contingency strategy that would allow staff to make adjustments to the
funding recommendations based on the final CDBG Entitlement allocation.
On February 11, 2015 the City received notification of its final CDBG Entitlement amount of
$442,460, representing an additional $43,242 available for allocation for Fiscal Year 2015/2016.
Staff applied the following contingency strategy, as agreed to by the Selection Committee, to
allocate the additional funds:
In the Public Services category, each applicant was recommended to receive an
additional amount which represents the applicant's proportional share of funds
originally recommended for allocation within the category, up to the amount requested.
In the Planning & Administration category, Project Sentinel was recommended to
receive an additional amount up to the total amount requested, with the remainder
applied to CDBG Administration.
In the remaining categories, Housing and Economic Development, the two remaining
applicants were recommended to receive the remainder of the additional funds split
evenly.
On February 12, 2015 the HRC considered the funding recommendations of the subcommittee,
as adjusted, at a public hearing. These recommendations are appended to this report as
Attachment A.
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 ensure 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, 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 2015/2016, as
presented in the draft 2015/2016 Action Plan, address the priority housing and community
development needs identified in the draft Consolidated Plan.
Draft 2015-2020 Consolidated Plan
Per HUD requirements, the City is required to prepare a Consolidated Plan every five years.
Currently the CDBG program is guided by the 2010-2015 Consolidated Plan adopted by Council
May 9, 2010. This year the City is required to prepare a new 5-year strategic plan that will
City of Palo Alto Page 5
guide the investment of approximately $400,000 annually from HUD for the CDBG formula
grant. The resulting Consolidated Plan will be effective July 1, 2015 through June 30, 2020.
The Consolidated Plan is designed to help entitlement grantees assess affordable housing and
community development needs. Public participation plays a central role in the development of
the Consolidated Plan. In August 2014, the Consortium launched an in-depth, collaborative
regional effort to consult with community stakeholders to identify housing and community
development needs. This comprehensive outreach process was undertaken to enhance
coordination and discuss new approaches to working with social service providers that utilize
funding for eligible activities, projects, and programs. Comments received through this
outreach effort combined with Palo Alto’s specifically identified needs, have been used to
inform the 5-year strategic plan. The draft Consolidated Plan for 2015-2020, provided as
Attachment B, outlines the following five specific goals:
Affordable Housing: Assist in the creation and preservation of affordable housing for
low income and special needs households.
Homelessness: Support activities to end homelessness.
Strengthen Neighborhoods: Support activities that strengthen neighborhoods through
the provision of community services and public improvements to benefit low income
and special needs households.
Fair Housing: Promote fair housing choice.
Economic Development: Expand economic opportunities for low income households.
Palo Alto's CDBG program continues to be directed toward: expanding and maintaining the
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. All of the proposed projects for CDBG funding for Fiscal Year 2015/2016,
as presented in the draft 2015/16 Action Plan, address the priority housing and supportive
service needs identified in the draft Consolidated Plan.
Fiscal Year 2015/2016 Funds Available for Allocation
Prior to the City receiving notification of the final entitlement amount from HUD, staff
estimated the Fiscal Year 2015/2016 CDBG Entitlement to be approximately $399,218. This was
based on HUD’s appropriation request for a 7.8% reduction in funds for formula application
grants from the previous year. On February 11, 2015, HUD notified the City of its Fiscal Year
2015/2016 CDBG Entitlement allocation of $442,460, which is $43,242 more than anticipated.
Based on the foregoing, the total amount available for allocation in Fiscal Year 2015/2016 is
estimated to be $881,673 as summarized below:
$442,460 Fiscal Year 2015/2016 Entitlement Grant
$303,164
Reallocated Funds from Previous Years:
$ 46,998 – Palo Alto Housing Corp. California Park Rehab (FY2013)
$ 25,788 – Community Working Group Alma Garden Rehab (FY2012)
$ 17,099 – Downtown Streets Inc. (FY 2014)
$213,279 – Unprogrammed Excess Program Income (FY 2014)
$136,049 Estimated Program Income from Palo Alto Housing Corporation that is
generated from loan repayments and rental income in excess of expenses
City of Palo Alto Page 6
on specific properties acquired or rehabilitated with CDBG funds
$881,673 ESTIMATED TOTAL AVAILABLE FOR ALLOCATION
Of the $881,673 of CDBG funds anticipated to be available, the total amount is proposed to be
used during Fiscal Year 2015/2016.
The following summarizes the calculations for funding limitations that are placed on two
funding categories:
Maximum Available for Public Services
Estimated Fiscal Year 2015/2016 CDBG Entitlement Grant $442,460
Fiscal Year 2014/2015 Actual Program Income Received1 $110,273
Public Service Cap (15% of $552,733) $ 82,910
Maximum Available for Planning/Administration
Estimated Fiscal Year 2015/2016 CDBG Entitlement Grant $442,460
Estimated Fiscal Year 2015/2016 Program Income $136,049
Planning/Admin Cap (20% of $578,509) $115,702
The difference between the funding caps and the amount proposed to be allocated during
Fiscal Year 2015/2016, or $683,061, 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 2015/2016 – Funding Requests and Recommendations
Palo Alto’s CDBG program is operating under a two-year funding cycle. A notice of funding
availability was released in November 2014 and a total of nine applications for funding were
received. A list of the submitted applications and the funding recommendations for Fiscal Year
2015/16 is included in Attachment A. All of the applications submitted for CDBG funding in
Fiscal Year 2015/2016 are HUD “eligible activities” and meet HUD’s National Objectives. In
addition, all of the submitted applications meet the City’s CDBG program goals and objectives.
The HRC, in conjunction with staff, is recommending funding for eight of the nine applications.
Unfortunately, the program proposed by the Day Workers Center of Mountain is not fully
developed. Specifically, more information is needed about how many Palo Alto residents will
be served, where local activities will take place, and which potential partnership agencies will
be involved. HUD also requires that a project or program is ready to receive the funds before
the City considers committing its federal funds. The applicant is encouraged to further develop
the program and will be considered for funding during the second year of the two-year funding
cycle.
On February 12, 2015, the HRC recommended approval of the Selection Committee’s funding
recommendations including the adjustments described in the background section of this report.
1 Actual Program Income received in Fiscal Year 2014/2015 includes $100,390 from Palo Alto Housing Corporation
and $9,883 in HIP loan repayments.
City of Palo Alto Page 7
Table 1, Fiscal Year 2015/2016 Funding Recommendations, identifies the applications received
and the funding allocation amounts recommended by the HRC.
Table 1: Fiscal Year 2015/2016 Funding Recommendations
Planning staff has actively taken measures to introduce efficiency in program administration
that will result in a less staff intensive program. These include streamlining the administrative
procedures to reduce staffing needs, operating under a two-year funding cycle, and revised
monitoring guidelines to improve efficiency and reduce on-site monitoring visits. Moreover,
staff has identified ways to recover certain personnel costs associated with individual projects
Applicant Agency FY 2015/2016
Funding Request
HRC
Recommendations
Public Services
Catholic Charities of Santa Clara County –
Long Term Care Ombudsman $ 6,500 $ 5,422
Day Workers Center of Mountain View –
Service to Palo Alto $ 10,000 $ -0-
InnVision Shelter Network –
Opportunity Services Center $ 50,000 $ 38,499
Palo Alto Housing Corporation –
SRO Support Services $ 42,874 $ 24,861
Silicon Valley Independent Living Center –
Housing and Emergency Services for Persons with
Disabilities
$ 10,000 $ 5,422
YWCA of Silicon Valley –
Domestic Violence Services $ 10,000 $ 8,676
Sub-total $ 129,374 $ 82,880
Planning & Administration
Project Sentinel –
Fair Housing $ 32,016 $ 32,016
City of Palo Alto –
CDBG Administration $ 80,000 $ 83,686
Sub-total $ 112,016 $ 115,702
Housing
MidPen Housing –
Palo Alto Gardens Rehab Project $ 500,000 $ 392,368
Sub-total $ 500,000 $ 392,368
Economic Development
Downtown Streets –
Workforce Development Program $ 314,100 $ 290,273
Sub-total $ 314,100 $ 290,273
Grand Total $ 1,055,490 $ 881,673
City of Palo Alto Page 8
that require administration beyond the basic CDBG program administration 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 requirements.
For Fiscal Year 2015/2016 this includes reducing CDBG staffing level to a .40 full time
equivalency position for basic CDBG administration related activities. Staff is requesting
additional funding in the Administration budget to cover the potential cost associated with
consultant contracts which may be used to support CDBG Program administration.
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 4, 2015. Subsequently,
the adopted Action Plan will be submitted to HUD by May 15, 2015.
Resource Impact
As mentioned above, several measures have been taken to ensure there is no direct 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. Staff recovery in Fiscal Year 2014/15 from the CDBG entitlement grant is $65,000.
For Fiscal Year 2015/2016, staff is requesting a total of $83,686 in the Administration budget.
The total staff recovery from the CDBG entitlement grant proposed for Fiscal Year 2015/2016 is
approximately .40 full time equivalency, or $65,596 The balance, $18,090, will be used for
publication costs, office supplies, and to cover potential costs associated with consultant
contracts which may be used to support CDBG Program Administration. While the Fiscal Year
2015/2016 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, thus not further
substantially impacting the General Fund with the balance of staff time going towards non-
CDBG eligible activities. It should be noted that the General Fund does not recover any
overhead from the CDBG program and supports the program with cost for departmental
managerial oversight and internal support functions.
Policy Implications
All of the applications recommended for funding in Fiscal Year 2015/2016 are consistent with
the priorities established in the City’s draft 2015-2020 Consolidated Plan. Moreover, they are
consistent with the housing programs and policies in the adopted Comprehensive Plan.
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: Fiscal Year 2015/2016 Funding Recommendations (DOCX)
Attachment B: Draft 2015-2020 Consolidated Plan (includes the Draft FY 2015/2016
Action Plan) (PDF)
ATTACHMENT A
CITY OF PALO ALTO CDBG APPLICATIONS
FISCAL YEAR 2015/2016
Total Estimated Funds Available $ 881,673
Available for Public Service (15% Cap) $ 82,910
Available for Planning/Admin (20% Cap) $ 115,072
Available for Economic Development & Housing $ 683,691
USES:
AGENCY PROGRAM NAME FY 2016/2015
REQUEST
HRC
RECOMMENDED
ALLOCATIONS
Public Services (15% CAP = $82,910)
Catholic Charities of Santa Clara County Ombudsman Program $ 6,500 $ 5,422
Day Worker Center of Mountain View Service to Palo Alto $ 10,000 $ -
InnVision Shelter Network Opportunity Services Center $ 50,000 $ 38,499
Palo Alto Housing Corporation SRO Resident Support $ 42,874 $ 24,861
Silicon Valley Independent Living Center Housing and Emergency Services $ 10,000 $ 5,422
YWCA of Silicon Valley Domestic Violence Services $ 10,000 $ 8,676
Public Service Total $ 129,374 $ 82,880
Planning & Administration (20% CAP = $115,702)
Project Sentinel1 Fair Housing Services $ 32,016 $ 32,016
City of Palo Alto CDBG Administration $ 80,000 $ 83,686
Planning & Administration Total $ 112,016 $ 115,702
Economic Development
Downtown Streets Workforce Development Program $ 314,100 $ 290,723
Economic Development Total $ 314,100 $ 290,723
Housing
MidPen Housing Palo Alto Garden Rehabilitation $ 500,000 $ 392,368
Housing Total $ 500,000 $ 392,368
GRAND TOTAL $ 1,055,490 $ 881,673
1 Project Sentinel’s application for funding is being considered under the Planning and Administration funding category.
CITY OF PALO ALTO
DRAFT 2015-2020 CONSOLIDATED PLAN
AND DRAFT 2015-2016 ACTION PLAN
Public Review and Comment Period: February 17, 2015 – March 25, 2015
Updated February 24, 2015
Prepared by the Department of Planning & Community Environment
250 Hamilton Avenue
Palo Alto, CA 94301
Director Hillary Gitelman
Consuelo Hernandez, Senior Planner
T: 650-329-2428 E: Consuelo.hernandez@cityofpaloalto.org
ATTACHMENT B
Consolidated Plan PALO ALTO 2
OMB Control No: 2506-0117 (exp. 07/31/2015)
CITY OF PALO ALTO
DRAFT 2015-2020 CONSOLIDATED PLAN
AND 2015-2016 ACTION PLAN
Prepared by:
LeSar Development Consultants
www.LeSarDevelopment.com
Prepared by:
MIG
www.migcom.com
Jennifer LeSar
President and CEO
619-236-0612 X102
jennifer@lesardevelopment.com
Laura Stetson
Principal
626-744-9872
lstetson@migcom.com
Vicky Joes
Principal
619-236-0612 x102
vicky@lesardevelopment.com
Jamillah Jordan
Outreach Specialist
510-845-7549
jamillahj@migcom.com
Keryna Johnson
Senior Associate
619-236-0612 x107
keryna@lesardevelopment.com
Prepared for:
City of Palo Alto
Planning and Community Environment Department
www.cityofpaloalto.org
285 Hamilton Avenue
Palo Alto, CA 94301
650-329-2496
Duns NO. 050520782 February 2015
Consolidated Plan PALO ALTO 3
OMB Control No: 2506-0117 (exp. 07/31/2015)
Table of Contents
Executive Summary ..................................................................................................................................... 9
ES-05 Executive Summary ....................................................................................................................... 9
The Process .................................................................................................................................................14
PR-05 Lead & Responsible Agencies 24 CFR 91.200(b) ........................................................................ 14
PR-10 Consultation - 91.100, 91.200(b), 91.215(l) .................................................................................... 15
PR-15 Citizen Participation ...................................................................................................................... 31
Needs Assessment ..................................................................................................................................... 39
NA-05 Overview ..................................................................................................................................... 39
NA-10 Housing Needs Assessment - 24 CFR 91.205 (a, b, c) ................................................................. 43
NA-15 Disproportionately Greater Need: Housing Problems – 91.205 (b)(2) ....................................... 51
NA-20 Disproportionately Greater Need: Severe Housing Problems – 91.205 (b)(2)......................... 54
NA-25 Disproportionately Greater Need: Housing Cost Burdens – 91.205 (b)(2) ............................... 57
NA-30 Disproportionately Greater Need: Discussion – 91.205(b)(2) ................................................... 59
NA-35 Public Housing – 91.205(b) ......................................................................................................... 61
NA-40 Homeless Needs Assessment – 91.205(c) ................................................................................. 64
NA-45 Non-Homeless Special Needs Assessment - 91.205 (b, d) ......................................................... 71
NA-50 Non-Housing Community Development Needs – 91.215 (f) ..................................................... 75
Housing Market Analysis .......................................................................................................................... 79
MA-05 Overview..................................................................................................................................... 79
MA-10 Number of Housing Units – 91.210(a)&(b)(2) ............................................................................ 82
MA-15 Housing Market Analysis: Cost of Housing - 91.210(a) .............................................................. 86
MA-20 Housing Market Analysis: Condition of Housing – 91.210(a) .................................................... 89
MA-25 Public and Assisted Housing – 91.210(b) ................................................................................... 91
MA-30 Homeless Facilities and Services – 91.210(c) ............................................................................. 94
MA-35 Special Needs Facilities and Services – 91.210(d) ..................................................................... 102
Duns NO. 050520782 February 2015
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MA-40 Barriers to Affordable Housing – 91.210(e)............................................................................. 105
MA-45 Non-Housing Community Development Assets – 91.215 (f)................................................... 106
MA-50 Needs and Market Analysis Discussion .................................................................................... 112
Strategic Plan ............................................................................................................................................ 116
SP-05 Overview ..................................................................................................................................... 116
SP-10 Geographic Priorities – 91.215 (a)(1) ........................................................................................... 117
SP-25 Priority Needs - 91.215(a)(2) ........................................................................................................ 118
SP-30 Influence of Market Conditions – 91.215 (b) .............................................................................. 123
SP-35 Anticipated Resources - 91.215(a)(4), 91.220(c)(1,2).................................................................. 124
SP-40 Institutional Delivery Structure – 91.215(k) ............................................................................... 129
SP- 45 Goals Summary – 91.215(a)(4) ................................................................................................... 134
SP-50 Public Housing Accessibility and Involvement – 91.215(c) ....................................................... 136
SP-55 Barriers to Affordable Housing – 91.215(h) ................................................................................ 137
SP-60 Homelessness Strategy – 91.215(d) ........................................................................................... 141
SP-65 Lead based paint Hazards – 91.215(i) .........................................................................................145
SP-70 Anti-Poverty Strategy – 91.215(j) ............................................................................................... 146
SP-80 Monitoring – 91.230 .................................................................................................................... 147
First Year Action Plan .............................................................................................................................. 149
AP-15 Expected Resources – 91.220(c)(1,2) ......................................................................................... 149
AP-20 Annual Goals and Objectives .....................................................................................................154
AP-35 Projects – 91.220(d) ................................................................................................................... 156
AP-38 Project Summary ........................................................................................................................ 157
AP-50 Geographic Distribution – 91.220(f) ......................................................................................... 159
AP-55 Affordable Housing – 91.220(g) ................................................................................................ 160
AP-60 Public Housing – 91.220(h) ......................................................................................................... 161
AP-65 Homeless and Other Special Needs Activities – 91.220(i) ....................................................... 163
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AP-75 Barriers to Affordable Housing – 91.220(j) ............................................................................... 166
AP-85 Other Actions – 91.220(k)...........................................................................................................170
AP-90 Program Specific Requirements – 91.220(l)(1,2,4) ................................................................... 174
Citizen Participation Plan ......................................................................................................................... 175
Table of Acronyms.................................................................................................................................... 183
Appendix A: Citizen Participation Summary ......................................................................................... 184
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List of Tables
Table 1 - Responsible Agencies .................................................................................................................. 14
Table 2 - Agencies, Groups, and Organizations that Attended Regional and Community Forums ....... 18
Table 3 - Other Local / Regional / Federal Planning Efforts ...................................................................... 28
Table 4 - Citizen Participation Outreach ................................................................................................... 34
Table 5 - Housing Needs Assessment Demographics (City) .................................................................... 43
Table 6 - Total Households (City) .............................................................................................................. 43
Table 7 - Housing Problems (City) ............................................................................................................. 44
Table 8 - Severe Housing Problems (City) ................................................................................................ 44
Table 9 - Cost Burden > 30% (City) ............................................................................................................. 45
Table 10 - Cost Burden > 50% (City)............................................................................................................ 45
Table 11 - Crowding Information (City) ...................................................................................................... 45
Table 12 - Households with Children Present (City) .................................................................................. 46
Table 13 - Section 8 Participants at 0-30% AMI (County) .......................................................................... 47
Table 14 - Disproportionately Greater Need 0 - 30% AMI (City) ................................................................ 51
Table 15 - Disproportionately Greater Need 30 - 50% AMI (City) .............................................................. 51
Table 16 - Disproportionately Greater Need 50 - 80% AMI (City) ............................................................. 52
Table 17 - Disproportionately Greater Need 80 - 100% AMI (City) ............................................................ 52
Table 18 - Disproportionately Greater Need – Housing Problems (County) ........................................... 52
Table 19 - Severe Housing Problems 0 - 30% AMI (City) ........................................................................... 54
Table 20 - Severe Housing Problems 30 - 50% AMI (City) ......................................................................... 54
Table 21 - Severe Housing Problems 50 - 80% AMI (City) ......................................................................... 55
Table 22 - Severe Housing Problems 80 - 100% AMI (City) ....................................................................... 55
Table 23 - Disproportionately Greater Need – Severe Housing Problems (City) .................................... 55
Table 24 - Greater Need: Housing Cost Burden (City) .............................................................................. 57
Table 25 - Disproportionately Greater Cost Burden (City) ....................................................................... 57
Table 26 - Public Housing by Program Type (City) ................................................................................... 61
Table 27 - Characteristics of Public Housing Residents by Program Type (City) .................................... 62
Table 28 - Race of Public Housing Residents by Program Type (City) .................................................... 63
Table 29 - Ethnicity of Public Housing Residents by Program Type (City) .............................................. 63
Table 30 - Resources Requested by Section 8 Participants (County) ..................................................... 64
Table 31 - Homeless Needs Assessment (City/County) ............................................................................ 67
Table 32 - Exited Homelessness (City) ...................................................................................................... 69
Table 33 - Days to Housing (County) ......................................................................................................... 69
Table 34 - Race and Ethnic Group of Homeless (City) .............................................................................. 69
Table 35 - Elderly Population (City) ........................................................................................................... 72
Table 36 - Disability Status of Population (City) ....................................................................................... 72
Table 37 - Household Size (City) ................................................................................................................ 73
Table 38 - Residential Properties by Unit Number (City) ......................................................................... 82
Table 39 - Unit Size by Tenure (City) ......................................................................................................... 82
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Table 40 - HASC Housing Properties (County) ......................................................................................... 83
Table 41 - HACSC Special Needs Populations ............................................................................................ 85
Table 42 - Cost of Housing (City) ............................................................................................................... 86
Table 43 - Rent Paid (City) ......................................................................................................................... 86
Table 44 - Housing Affordability (City) ...................................................................................................... 87
Table 45 - Monthly Rent (City)................................................................................................................... 87
Table 46 - Affordable Housing Supply Versus Need (City) ...................................................................... 87
Table 47 - Condition of Units (City) ........................................................................................................... 89
Table 48 - Year Unit Built (City) ................................................................................................................. 89
Table 49 - Risk of Lead-Based Paint (City) ................................................................................................ 90
Table 50 - Vacant Units (City) .................................................................................................................... 90
Table 51 - Total Number of Units by Program Type (County) .................................................................. 91
Table 52 - Public Housing Condition .......................................................................................................... 92
Table 53 - HACSC Family Self Sufficiency Report (County) ...................................................................... 93
Table 54 - Facilities and Housing Targeted to Homeless Households (County) ..................................... 94
Table 55 - Homeless Housing Inventory Chart (County) .......................................................................... 96
Table 56 - Licensed Community Care Facilities (City) .............................................................................. 102
Table 57 - Independent Living Facilities for Elderly Residents in Palo Alto, 2014 (City) ....................... 103
Table 58 -Jobs / Employed Residents Ratio (County) ............................................................................ 106
Table 59 - Jobs by Business Activity (City) ...............................................................................................107
Table 60 - Labor Force (City) ....................................................................................................................107
Table 61 - Occupations by Sector (City) ...................................................................................................107
Table 62 - Travel Time (City) .................................................................................................................... 108
Table 63 - Educational Attainment by Employment Status - Population Age 16 and Older (City) ....... 108
Table 64 - Educational Attainment by Age (City) ................................................................................... 108
Table 65 - Educational Attainment by Age - 25 and Older (City) ........................................................... 109
Table 66 - Median Earnings in the Past 12 Months (City) ....................................................................... 109
Table 67 - Priority Needs Summary .......................................................................................................... 118
Table 68 - Influence of Market Conditions .............................................................................................. 123
Table 69 - City Entitlement Funding Received FY 2010 – FY 2014 ........................................................... 124
Table 70 - Anticipated Resources ............................................................................................................. 125
Table 71 - Institutional Delivery Structure ................................................................................................ 129
Table 72 - Homeless Prevention Services Summary ................................................................................ 131
Table 73 - Goals Summary ......................................................................................................................... 134
Table 74 - CDBG Fiscal Year 2015-2016 Annual Budgetary Priorities ...................................................... 149
Table 75 - Expected Resources – Priority Table ...................................................................................... 150
Table 76 - Goals Summary .........................................................................................................................154
Table 77 - Project Information ................................................................................................................. 156
Table 78 - Project Summary ...................................................................................................................... 157
Table 79 - Geographic Distribution .......................................................................................................... 159
Table 80 - One Year Goals for Affordable Housing by Support Requirement ...................................... 160
Table 81 - One Year Goals for Affordable Housing by Support Type ..................................................... 160
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Executive Summary
ES-05 Executive Summary
Introduction
The City of Palo Alto (City) is an entitlement jurisdiction that receives federal funding from the
Department of Housing and Urban Development (HUD) through the Community Development Block
Grant (CDBG) Program.
The purpose of CDBG funding is to help jurisdictions address their community development needs.
CDBG grantees are eligible to use the resources they receive for Public Services, Community and
Economic Development, Capital Improvement Projects (CIP) Public Facilities/Infrastructure, and CIP
Housing Rehabilitation. Public Service projects provide social services and/or other direct support to
individuals and households in need of assistance. Community and Economic Development projects
are focused on assisting businesses and organizations with small business loans, façade
improvements, and other initiatives. CIP Public Facilities/Infrastructure projects are those which aim
to improve public facilities and infrastructure. CIP Housing Rehabilitation projects are for housing
rehabilitation improvements of single and multi-unit housing. The City anticipates approximately
$2,546,054 in CDBG funding from 2015-2020.
HUD requires that entitlement jurisdictions complete a Consolidated Plan every five years. The
Consolidated Plan includes an analysis of the jurisdiction’s market, affordable housing, and
community development conditions. Additionally, entitlement jurisdictions must also submit an
Annual Action Plan to report the distribution of federal entitlement program funding over the
Consolidated Plan’s five year period that identifies how funding allocations help meet the goals
covered in the Consolidated Plan and a Consolidated Annual Performance Evaluation Report (CAPER)
to report the City’s performance.
Five Year Goals
1. Assist in the creation and preservation of affordable housing for low income and special
needs households.
2. Support activities to end homelessness.
3. Support activities that strengthen neighborhoods through the provision of community
services and public improvements to benefit low income and special needs households.
4. Promote fair housing choice.
5. Expand economic opportunities for low income households.
Methodology
The City’s Consolidated Plan for Fiscal Year 2015-2020 includes a Needs Assessment and Market
Analysis and serves as the strategic plan that identifies priority needs of the City to help guide the
distribution of CDBG funding. The majority of data utilized is provided by HUD for the purpose of
preparing the Consolidated Plan. HUD periodically receives custom tabulations of data from the U.S.
Census Bureau that are largely not available through standard Census products. Known as the
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Comprehensive Housing Affordability Strategy (CHAS) data, it demonstrates the extent of housing
problems and housing needs, particularly for low income households. The CHAS data is used by local
governments to plan how to spend HUD funds, and may also be used by HUD to distribute grant
funds.1
When CHAS data is not available or appropriate, other data is utilized, including the 2000 and 2010
U.S. Census data and the American Community Survey (ACS) 2008-2012 five-year estimates. While
ACS one-year estimates provide the most current data, this report utilizes five-year estimates as they
reflect a larger sample size and are considered more reliable and precise.2
Federal funds provided under the CDBG entitlement program are primarily concerned with activities
that benefit low-and moderate-income (LMI) households whose incomes do not exceed 80 percent
of the area median family income (AMI), as established by HUD, with adjustments for smaller or
larger families.3 HUD utilizes three income levels to define LMI households:
Extremely low income: Households earning 30 percent or less than the AMI (subject to
specified adjustments for areas with unusually high or low incomes)
Very low income: Households earning 50 percent or less than the AMI (subject to specified
adjustments for areas with unusually high or low incomes)
Low and moderate income: Households earning 80 percent or less than the AMI (subject to
adjustments for areas with unusually high or low incomes or housing costs)
Summary of the objectives and outcomes identified in the Needs Assessment Overview
The City is part of the San Francisco Metropolitan Bay Area, located 35 miles south of San Francisco
and 14 miles north of San José. The City is located within the County of Santa Clara, borders San
Mateo County, and encompasses an area of approximately 26 square miles, one-third of which
consists of open space. According to 2008-2012 American Community Survey (ACS) 5-Year Estimates,
the City's total resident population is 63,475. The City has the most educated residents in the country
and is one of the most expensive cities to live in.4 In Silicon Valley, the City is considered a central
economic focal point and is home to over 7,000 businesses while providing jobs to more than 98,000
people.5
The following provides a brief overview of the results of the Needs Assessment:
1 U.S. Department of Housing and Urban Development. “Consolidated Planning/CHAS Data.”
http://www.huduser.org/portal/datasets/cp.html
2 United States Census Bureau. “American Community Survey: When to Use 1-year, 3-year, or 5-year
Estimates.” http://www.census.gov/acs/www/guidance_for_data_users/estimates/
3 U.S. Department of Housing and Urban Development. “Glossary of CPD Terms.”
http://portal.hud.gov/hudportal/HUD?src=/program_offices/comm_planning/library/glossary
4 Huffington Post. “California’s Most Educated Cities: Palo Alto, Los Altos Top the List.” January 2012.
http://www.huffingtonpost.com/news/california-most-educated-towns/
5 Bedbury Realtors. “Palo Alto.” http://www.bedburyrealtors.com/Communities/Palo-Alto
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NA -10 Housing Needs
• Twenty-nine percent of households in the City are paying more than 30 percent of their
income toward housing costs.
• Thirteen percent of households are severely cost burdened and paying more than 50 percent
of their income toward housing.
NA-15 Disproportionately Greater Need: Housing Problems
Eighty-nine percent of Asian households in the 30-50% AMI category experience housing
problems, compared to 71 percent of the jurisdiction as a whole.
Ninety-three percent of Asian households in the 50-80% AMI category experience housing
problems, compared to 71 percent of the jurisdiction as a whole.
More than three-quarters of Hispanic households (78 percent) in the 80-100% AMI category
experience housing problems, compared to a nearly half (54 percent) of the jurisdiction as a
whole.
NA-20 Disproportionately Greater Need: Severe Housing Problems
More than half of Asian households in the 30-50% AMI income category experience severe
housing problems in the City, compared to 43 percent of the jurisdiction as a whole.
More than three-quarters of Asian households (77 percent) in the 50-80% AMI category
experience a disproportionate amount of severe housing problems, compared to 40 percent
of the jurisdiction as a whole.
Forty-five percent of Hispanic households in the 80-100% AMI category experience a
disproportionate amount of severe housing problems, compared to 23 percent of the
jurisdiction as a whole.
NA-25 Disproportionately Greater Need: Housing Cost Burdens
Hispanic households experience a disproportionate cost burden, with 27 percent of
households experiencing cost burden, compared to 16 percent of the City as a whole.
American Indian, Alaska Native households experience a disproportionate severe cost
burden, with 33 percent of households experiencing cost burden, compared to 13 percent of
the City as a whole.
NA-35 Public Housing
The Housing Authority of the County of Santa Clara (HACSC) assists approximately 17,000
households through the federal Section 8 Housing Choice Voucher program (Section 8).
The Section 8 waiting list contains 21,256 households – this is estimated to be a 10-year wait.
NA-40 Homeless Needs
The Santa Clara region is home to the fourth-largest population of homeless individuals and
the highest percentage of unsheltered homeless of any major city.
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As of the 2013 Point in Time Homeless Survey, Palo Alto had 157 homeless residents, with
over 90 percent unsheltered and living in a place not fit for human habitation.
Palo Alto clients – those who report that their last permanent zip code was in Palo Alto –
represent approximately one percent of the County’s homeless clients.
NA-45 Non-Homeless Special Needs
Individuals 65 years of age and older represent 17 percent of the total population of the City.
Thirty-three percent of households in the City contain at least one person 62 years or older.
More than one-quarter of individuals (27 percent) age 65 or older have a disability compared
to four percent of the population age 18 to 64, or seven percent of the population as a
whole.
NA-50 Non-Housing Community Development Needs
• Residents and stakeholders who participated in the community outreach for the
Consolidated Plan identified the following community development needs as high priorities
within these three categories:
o Public Facilities: increased homeless facilities, youth centers, rehabilitation of senior
centers, and recreational facilities throughout the County
o Public Improvements: complete streets that accommodate multiple transportation
modes, pedestrian safety, ADA curb improvements, and increased access to parks
and open space amenities
o Public Services: food assistance and nutrition programs for vulnerable populations,
year-round activities for youth, health care services for seniors and low income
families, and services for homeless persons
Evaluation of past performance
The City is responsible for ensuring compliance with all rules and regulations associated with the
CDBG entitlement grant program. The City’s Annual Action Plans and CAPERs have provided many
details about the goals, projects and programs completed by the City over the past five years. A
review of past consolidated annual performance and evaluation reports reveals a strong record of
performance in the use of CDBG funds. Palo Alto has been strategic about leveraging these federal
dollars and identifying partnerships in the community to maximize their use. For instance, 140 new
affordable rental housing have been created during the 2010-2015 Consolidated Planning period,
approximately 50 previously unemployed extremely low income individuals have reentered the
workforce, and public services have been provided to over 1,000 unduplicated individuals.
The City recognizes that the evaluation of past performance is critical to ensure the City and its
subrecipients are implementing activities effectively and that those activities align with the City’s
overall strategies and goals. The performance of programs and systems are evaluated to ensure the
goals and projects are addressing critical needs in the community. Palo Alto has historically allocated
CDBG funds to activities that benefit LMI persons, with a top priority to increase affordable housing
opportunities in the City. However, due to Palo Alto’s expensive housing market coupled with a
decrease in CDBG entitlement funds, it is becoming more difficult to create opportunities for
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affordable housing. As such, during this Consolidated Planning period the City will be focusing on
rehabilitating existing affordable housing stock that is in need of repair.
Planning Staff will also work closely with subrecipients to leverage resources and create
opportunities for partnership and collaboration. The City’s subrecipients are challenged to think
creatively about working together to address the needs in our community.
Summary of citizen participation process and consultation process
The City launched a comprehensive outreach strategy to enhance and broaden citizen participation
in the preparation of the Consolidated Plan. The City informed the public that it was in the process of
creating the 2015-2019 Consolidated Plan and encouraged public participation in the process by
conducting a Regional Needs Survey and hosting regional and community forums.
Approximately 4,847 entities, organizations, agencies, and persons were directly engaged via
outreach efforts and asked to share materials with their beneficiaries, partners, and contacts. These
stakeholders were also encouraged to promote attendance at the public forums and to solicit
responses to the Regional Needs Survey. Stakeholder engagement included phone calls, targeted
emails, newsletter announcements, social media posts, and personalized requests from City staff.
The City provided public notice of the Regional Needs Survey and regional and community forums
through various outreach methods, including newspaper postings, the internet, social media, and
hard copy fliers distributed to various organizations and at local community centers.
Two hundred and nine (209) individuals participated in the regional and community forums, including
residents, service providers, community advocates, and interested stakeholders. A total of 11 regional
and community forums were held in the following locations: Gilroy, Los Gatos, Morgan Hill, San José,
Saratoga, and Mountain View, from September 2014 to November 2014. One thousand four hundred
seventy-two (1,472) individuals completed the Regional Needs Survey.
Summary of comments or views not accepted and reasons for not accepting them
Comments received during the public review period will be included in the final draft of the plan.
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The Process
PR-05 Lead & Responsible Agencies 24 CFR 91.200(b)
Describe agency/entity responsible for preparing the Consolidated Plan and those responsible for
administration of each grant program and funding source.
The agency/entity responsible for preparing the Consolidated Plan and those responsible for
administration of the grant program and funding source is shown in Table 1.
Table 1 - Responsible Agencies
Agency Role Name Department/Agency
CDBG Administrator / Lead Agency City of Palo Alto Planning and Community Environment
Department
Lead and Responsible Agencies
The City of Palo Alto (City) is the Lead Agency for the United States Department of Housing and
Urban Development (HUD) entitlement programs. The City’s CDBG Coordinator is responsible for
the administration of HUD entitlements, which include the Community Development Block Grant
Program (CDBG). By federal law, each jurisdiction is required to submit to HUD a five-year
Consolidated Plan and Annual Action Plans listing priorities and strategies for the use of federal
funds.
The Consolidated Plan is a guide for how the City will use its federal funds to meet the housing and
community development needs of its populations. For the 2015-2020 Consolidated Plan process, the
City worked collaboratively with the County of Santa Clara (County) and other entitlement
jurisdictions in the County to identify and prioritize housing and housing-related needs across the
region, and strategies to meet those needs.
Consolidated Plan Public Contact Information
City of Palo Alto
Planning and Community Environment Department
Consuelo Hernandez
250 Hamilton Avenue
Palo Alto, CA 94301
(650) 329-2428
Consuelo.Hernandez@cityofpaloalto.org
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PR-10 Consultation - 91.100, 91.200(b), 91.215(l)
Introduction
Provide a concise summary of the jurisdiction’s activities to enhance coordination between public
and assisted housing providers and private and governmental health, mental health and service
agencies (91.215[I]).
Throughout the County, eight entitlement jurisdictions are collaborating on preparation of their 2015-
2020 Consolidated Plans. This group of jurisdictions, referred to within this document as the “Santa
Clara County Entitlement Jurisdictions” or simply “Entitlement Jurisdictions,” includes:
City of Cupertino
City of Gilroy
City of Mountain View
City of Palo Alto
City of Sunnyvale
City of San José
City of Santa Clara
Santa Clara Urban County
Public participation plays a central role in the development of the Consolidated Plan. The
participating Entitlement Jurisdictions within the County launched an in-depth, collaborative regional
effort to consult with community stakeholders, elected offices, City and County departments, and
beneficiaries of entitlement programs to inform and develop the priorities and strategies contained
within this five-year plan.
The participating jurisdictions, in partnership with LeSar Development Consultants (LDC) and MIG,
Inc. (MIG), facilitated a comprehensive outreach process to enhance coordination and discuss new
approaches to working with public and assisted housing providers, legal advocates, private and
governmental health agencies, mental health service providers, and other stakeholders that utilize
funding for eligible activities, projects, and programs.
A Regional Needs Survey was conducted to solicit input from residents and workers in the region.
Respondents were informed that participating jurisdictions were updating their respective
Consolidated Plans for federal funds that primarily serve low- and moderate-income (LMI) residents
and areas. The Regional Needs Survey polled respondents about the level of need in their respective
neighborhoods for various types of improvements that could be addressed by entitlement funds.
A total of 1,472 survey responses were obtained from September 19, 2014 to November 15, 2014,
including 1,078 surveys collected electronically and 394 collected via print surveys.
Regional Forums
The Entitlement Jurisdictions held three regional public forums to identify housing and community
development needs and priorities for the next five years. The public forums were conducted as part
of a collaborative regional approach to help the participating jurisdictions make data-driven, place-
based investment decisions for federal funds. Seventy-six (76) people attended the regional forums,
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including community members, service providers, nonprofit representatives, and interested
stakeholders.
Community Forums in Local Jurisdictions
In addition to the regional forums, several Entitlement Jurisdictions conducted public outreach
independent of the regional collaborative. The cities of San Jose and Mountain View, and the Santa
Clara Urban County, each held multiple community forums to solicit public input on local issues,
needs and priorities. The community forums were held in tandem with the regional public forums to
expand the outreach process and gather specific place-based input. One hundred and thirty-three
(133) individuals attended the community forums, including residents, service providers, nonprofit
representatives, and interested stakeholders.
Outreach
Approximately 4,847 entities, organizations, agencies, and persons were directly engaged via
outreach efforts and asked to share materials with their beneficiaries, partners, and contacts. These
stakeholders were also encouraged to promote attendance at the public forums and to solicit
responses to the Regional Needs Survey. Stakeholder engagement included phone calls, targeted
emails, newsletter announcements, social media posts, and personalized requests from staff of the
Entitlement Jurisdictions. Each participating jurisdiction also promoted the regional forums and
regional survey links on their respective websites and announced the Consolidated Plan process
through electronic mailing lists. Outreach materials and the survey links (including materials in
Spanish) were emailed to over 4,000 entities, organizations, and persons.
Approximately 1,225 printed flyers providing public notice about the regional forums were
distributed throughout the County at libraries, recreation centers, community meeting locations, and
organizations benefiting LMI residents and areas. These flyers were available in English and Spanish.
Print newspaper display ads also were posted in the Gilroy Dispatch (English), Mountain View Voice
(English), El Observador (Spanish), La Oferta (Spanish), Thoi Bao (Vietnamese), Philippine News
(Tagalog), World Journal (Chinese) and San Jose Mercury News (English). In addition, an online display
ad was placed in the San Jose Mercury News to reach readers electronically.
Describe coordination with the Continuum of Care and efforts to address the needs of homeless
persons (particularly chronically homeless individuals and families, families with children, veterans,
and unaccompanied youth) and persons at risk of homelessness.
The Santa Clara County Continuum of Care (CoC) is a multi-sector group of stakeholders dedicated to
ending and preventing homelessness in the County. The CoC’s primary responsibilities are to
coordinate large-scale implementation of efforts to prevent and end homelessness in the County.
The CoC is governed by the Santa Clara CoC Board (CoC Board), which stands as the driving force
committed to supporting and promoting a systems change approach to preventing and ending
homelessness in the County.
The CoC Board is comprised of the same individuals who serve on the Destination: Home Leadership
Board. Destination: Home is a public-private partnership committed to collective impact strategies to
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end chronic homelessness, and leads the development of community-wide strategy related to the
CoC’s work.
The County’s Office of Supportive Housing serves as the Collaborative Applicant for the CoC, and is
responsible for implementing by-laws and protocols that govern the operations of the CoC. The Office of
Supportive Housing is also responsible for ensuring that the CoC meets the requirements outlined under
the Homeless Emergency Assistance and Rapid Transition to Housing Act of 2009 (HEARTH).6
In winter 2015, Destination: Home and the CoC released a Community Plan to End Homelessness in
Santa Clara County (the Plan), which outlines a roadmap for community-wide efforts to end
homelessness in the County by 2020. The strategies and action steps included in the plan were
informed by members who participated in a series of community summits designed to address the
needs of homeless populations from April to August 2014. The Plan identifies strategies to address
the needs of homeless persons in the County, including chronically homeless individuals and families,
families with children, veterans, and unaccompanied youth. Additionally, it also intended to address
the needs of persons at risk of homelessness.
To address the needs of homeless individuals and individuals at risk of homelessness, the Plan aims
to implement the following strategies:7
1. Disrupt systems: Develop disruptive strategies and innovative prototypes that transform the
systems related to housing homeless people.
2. Build the solution: Secure the right amount of funding needed to provide housing and
services to those who are homeless and those at risk of homelessness.
3. Serve the person: Adopt an approach that recognizes the need for client-centered strategies
with different responses for different levels of need and different groups, targeting
resources to the specific individual or household.
Over the next five years, the Plan seeks to identify approximately 6,000 new housing opportunities
for the homeless, intending to house 2,518 homeless individuals, 718 homeless veterans, and more
than 2,333 children, unaccompanied youth, and homeless individuals living in families.
The City is represented on the CoC by Minka Van Der Zwaag, Human Services Manager. Members of the
CoC meet on a monthly basis in various work groups to ensure successful implementation components
of the Plan’s action steps. A Community Plan Implementation Team, which includes members of the CoC
and other community stakeholders, meets quarterly to evaluate progress toward the Plan’s goals,
identify gaps in homeless services, establish funding priorities, and pursue an overall systematic
approach to address homelessness.8
6 County of Santa Clara. “Housing Element 2015-2022.” 2014.
http://www.sccgov.org/sites/planning/PlansPrograms/GeneralPlan/Housing/Documents/HE_2015_Adopted_Final.pdf
7 Santa Clara County CoC. “Community Plan to End Homelessness in Santa Clara County 2015-2020.” 2014.
8 Ibid.
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Describe consultation with the Continuum(s) of Care that serves the jurisdiction's area in
determining how to allocate ESG funds, develop performance standards and evaluate outcomes,
and develop funding, policies, and procedures for the administration of HMIS.
Allocating Funds, Setting Performance Standards and Evaluating Outcomes
The City is not an ESG entitlement jurisdiction.
Operating and Administrating Homeless Management Information System Santa Clara County (HMIS
SCC)
The HMIS SCC project is administered by Community Technology Alliance (CTA) and has served the
community since 2004. The project meets and exceeds HUD’s requirements for the implementation
and compliance of HMIS Standards. The project has a rich array of service provider participation and
is utilized to capture information and report on special programming, such as Housing 1000, the
County VTA free bus pass program, and prevention service delivery.9
Describe Agencies, groups, organizations, and others who participated in the process, and describe
the jurisdictions consultations with housing, social service agencies, and other entities.
In August 2014, the Entitlement Jurisdictions contracted with LDC and MIG to develop the
Consolidated Plan for fiscal years 2015-2020. In partnership with the participating jurisdictions, LDC
and MIG launched an in-depth, collaborative effort to consult with elected officials, City/County
departments, community stakeholders, and beneficiaries of entitlement programs to inform and
develop the priorities and strategies contained within the five-year plan.
Table 2 provides a list of all agencies, groups and organizations that attended the regional and
community forums. Several of the agencies, groups and organizations identified in the table
attended multiple forums. A comprehensive list of all stakeholders and local service providers
contacted to provide input into the planning process at the Consolidated Plan regional and
community forums is included in Appendix A.
Table 2 - Agencies, Groups, and Organizations that Attended Regional and Community Forums
Agency / Group
/Organization
Agency / Group /
Organization Type
What Section of
the Plan Was
Addressed by the
Consultation?
How Was the
Agency/Group/Organization Consulted
and What are the Anticipated Outcomes
of the Consultation or Areas for
Improved Coordination?
Abilities United Disabled Services
Services – Children
Needs
Assessment and
Strategic Plan
Agency attended Community Forum(s)
on:
September 25, 2014
9 County of Santa Clara. Consolidated Annual Performance and Evaluation Report (CAPER). 2014
http://www.sccgov.org/sites/oah/Housing%20%20Community%20Development%20(HCD)/Documents/Draft%20CAPER%20FY1
4%20vs%201.pdf
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Agency / Group
/Organization
Agency / Group /
Organization Type
What Section of
the Plan Was
Addressed by the
Consultation?
How Was the
Agency/Group/Organization Consulted
and What are the Anticipated Outcomes
of the Consultation or Areas for
Improved Coordination?
Afghan Center Cultural Organizations Needs
Assessment and
Strategic Plan
Agency attended Community Forum(s)
on:
October 7, 2014
Aging Services
Collaborative
Senior Services Needs
Assessment and
Strategic Plan
Agency attended Community Forum(s)
on:
September 27, 2014
Bill Wilson Center Children and Youth
Services
Needs
Assessment and
Strategic Plan
Agency attended Community Forum(s)
on:
September 25, 2014
September 27, 2014
September 30, 2014
October 1, 2014
October 2, 2014
October 7, 2014
October 23, 2014
November 20, 2014
California Housing
Odd Fellows
Foundation
Housing
Children and Youth
Services
Community/Family
Services and
Organizations
Needs
Assessment and
Strategic Plan
Agency attended Community Forum(s)
on:
November 5, 2014
Casa De Clara -
Catholic Worker
Health Services
Homeless Services –
Single Women/ Women
and Children Only
Needs
Assessment and
Strategic Plan
Agency attended Community Forum(s)
on:
November 20, 2014
Catholic Charities
of Santa Clara
County
Senior Services
Needs
Assessment and
Strategic Plan
Agency attended Community Forum(s)
on:
October 2, 2014
Challenge Team
Mountain View
Dreamers
Immigration Services
Community/Family
Services and
Organizations
Needs
Assessment and
Strategic Plan
Agency attended Community Forum(s)
on:
September 25, 2014
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Agency / Group
/Organization
Agency / Group /
Organization Type
What Section of
the Plan Was
Addressed by the
Consultation?
How Was the
Agency/Group/Organization Consulted
and What are the Anticipated Outcomes
of the Consultation or Areas for
Improved Coordination?
City of Campbell Government Agencies:
Local, County, State and
Federal
Needs
Assessment and
Strategic Plan
Agency attended Community Forum(s)
on:
September 25, 2014
City of Cupertino Government Agencies:
Local, County, State and
Federal
Needs
Assessment and
Strategic Plan
Agency attended Community Forum(s)
on:
November 20, 2014
City of Gilroy Government Agencies:
Local, County, State and
Federal
Needs
Assessment and
Strategic Plan
Agency attended Community Forum(s)
on:
September 25, 2014
City of Mountain
View
Government Agencies:
Local, County, State and
Federal
Needs
Assessment and
Strategic Plan
Agency attended Community Forum(s)
on:
October 22, 2014
City of Palo Alto Government Agencies:
Local, County, State and
Federal
Needs
Assessment and
Strategic Plan
Agency attended Community Forum (s)
on:
September 25, 2014
City of San Jose Government Agencies:
Local, County, State and
Federal
Needs
Assessment and
Strategic Plan
Agency attended Community Forum (s)
on:
September 27, 2014
September 30, 2014
October 1, 2014
October 2, 2014
October 7, 2014
City of San Jose
Environmental
Services
Department
Government Agencies:
Local, County, State and
Federal
Needs
Assessment and
Strategic Plan
Agency attended Community Forum (s)
on the following dates:
October 7, 2014
City of Santa Cruz Government Agencies:
Local, County, State and
Federal
Needs
Assessment and
Strategic Plan
Agency attended Community Forum (s)
on:
September 25, 2014
City of Sunnyvale Government Agencies:
Local, County, State and
Federal
Needs
Assessment and
Strategic Plan
Agency attended Community Forum (s)
on:
November 5, 2014
Coldwell Banker Business (Major
Employers, Chambers of
Commerce,
Associations, Real
Needs
Assessment and
Strategic Plan
Agency attended Community Forum (s)
on:
September 25, 2014
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Agency / Group
/Organization
Agency / Group /
Organization Type
What Section of
the Plan Was
Addressed by the
Consultation?
How Was the
Agency/Group/Organization Consulted
and What are the Anticipated Outcomes
of the Consultation or Areas for
Improved Coordination?
Estate)
Community
School Of Music
And Arts
Community/ Family
Services and
Organizations
Needs
Assessment and
Strategic Plan
Agency attended Community Forum (s)
on:
November 20, 2014
Community
Services Agency
Senior Services Needs
Assessment and
Strategic Plan
Agency attended Community Forum(s)
on the following dates:
September 25, 2014
Compassion
Center
Homeless Services Needs
Assessment and
Strategic Plan
Agency attended Community Forum(s)
on:
September 25, 2014
October 23, 2014
November 5, 2014
County of Santa
Clara
Government Agencies:
Local, County, State and
Federal
Needs
Assessment and
Strategic Plan
Agency attended Community Forum(s)
on:
October 22, 2014
November 1, 2014
Destination:
Home
Homeless Services Needs
Assessment and
Strategic Plan
Agency attended Community Forum(s)
on:
September 25, 2014
November 1, 2014
November 5, 2014
Five Wounds/
Brookwood
Terrace
Neighborhood
Association
Needs
Assessment and
Strategic Plan
Agency attended Community Forum(s)
on:
September 25, 2014
Franklin McKinley
Children's
Initiative
Education Services Needs
Assessment and
Strategic Plan
Agency attended Community Forum(s)
on:
October 7, 2014
Fresh Lifelines For
Youth (FLY)
Children & Youth
Services
Needs
Assessment and
Strategic Plan
Agency attended Community Forum(s)
on:
October 7, 2014
Gilroy Compassion
Center
Homeless Services Needs
Assessment and
Agency attended Community Forum(s)
on:
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Agency / Group
/Organization
Agency / Group /
Organization Type
What Section of
the Plan Was
Addressed by the
Consultation?
How Was the
Agency/Group/Organization Consulted
and What are the Anticipated Outcomes
of the Consultation or Areas for
Improved Coordination?
Strategic Plan October 23, 2014
Health Trust /
Aging Services
Collaborative
Homeless Services Needs
Assessment and
Strategic Plan
Agency attended Community Forum(s)
on:
September 25, 2014
Hope’s Corner Homeless Services
Community/ Family
Services and
Organizations
Needs
Assessment and
Strategic Plan
Agency attended Community Forum(s)
on:
September 25, 2014
In Home Services Disabled Services Needs
Assessment and
Strategic Plan
Agency attended Community Forum (s)
on:
October 23, 2014
Institute on Aging Senior Services
Health Services
Needs
Assessment and
Strategic Plan
Agency attended Community Forum(s)
on:
October 1, 2014
InnVision Shelter
Network (IVSN)
Homeless Services Needs
Assessment and
Strategic Plan
Agency attended Community Forum(s)
on:
October 22, 2014
Junior
Achievement
Children and Youth
Services
Needs
Assessment and
Strategic Plan
Agency attended Community Forum(s)
on:
September 25, 2014
Law Foundation
Of Silicon Valley
Fair Housing and Legal Needs
Assessment and
Strategic Plan
Agency attended Community Forum(s)
on:
October 23, 2014
LeSar
Development
Corporation
Affordable Housing
Developers
Business (Major
Employers, Chambers of
Commerce,
Associations, Real
Estate)
Needs
Assessment and
Strategic Plan
Agency attended Community Forum(s)
on:
October 7, 2014
Legal Aid Society
Santa Clara
County
Fair Housing and Legal Needs
Assessment and
Strategic Plan
Agency attended Community Forum(s)
on:
September 25, 2014
Los Altos Community/Family Needs Agency attended Community Forum(s)
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Agency / Group
/Organization
Agency / Group /
Organization Type
What Section of
the Plan Was
Addressed by the
Consultation?
How Was the
Agency/Group/Organization Consulted
and What are the Anticipated Outcomes
of the Consultation or Areas for
Improved Coordination?
Community
Foundation
Services and
Organizations
Assessment and
Strategic Plan
on:
September 30, 2014
October 1, 2014
Live Oak Adult
Day Services
Senior Services Needs
Assessment and
Strategic Plan
Agency attended Community Forum(s)
on:
October 23, 2014
Mayfair NAC Neighborhood
Association
Needs
Assessment and
Strategic Plan
Agency attended Community Forum(s)
on the following dates:
September 27, 2014
Mckinly Bonita
Neighborhood
Association
Neighborhood
Association
Needs
Assessment and
Strategic Plan
Agency attended Community Forum(s)
on:
October 2, 2014
MidPen Housing Affordable Housing
Developers
Needs
Assessment and
Strategic Plan
Agency attended Community Forum(s)
on:
September 30, 2014
Migrant
Education, Santa
Clara Unified
School District
Education Services
Employment and Job
Training Services
Needs
Assessment and
Strategic Plan
Agency attended Community Forum(s)
on the following dates:
September 25, 2014
October 23, 2014
Mountain View
Dreamers
Immigration Services
Community/Family
Services and
Organizations
Needs
Assessment and
Strategic Plan
Agency attended Community Forum(s)
on:
September 25, 2014
September 27, 2014
September 30, 2014
October 1, 2014
October 2, 2014
October 7, 2014
October 22, 2014
October 23, 2014
November 1, 2014
November 5, 2014
November 20, 2014
Mountain View Government Agencies: Needs Agency attended Community Forum(s)
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Agency / Group
/Organization
Agency / Group /
Organization Type
What Section of
the Plan Was
Addressed by the
Consultation?
How Was the
Agency/Group/Organization Consulted
and What are the Anticipated Outcomes
of the Consultation or Areas for
Improved Coordination?
Human Relations
Commission (HRC)
Local, County, State and
Federal
Community/ Family
Services and
Organizations
Senior Services
Children and Youth
Services
Assessment and
Strategic Plan
on:
September 25, 2014
Palo Alto Human
Relations
Commission
Government Agencies:
Local, County, State and
Federal
Community/ Family
Services and
Organizations
Senior Services
Children and Youth
Services
Needs
Assessment and
Strategic Plan
Agency attended Community Forum(s)
on:
September 25, 2014
Project Access Employment and Job
Training Services
Community/ Family
Services and
Organizations
Senior Services
Children and Youth
Services
Needs
Assessment and
Strategic Plan
Agency attended Community Forum(s)
on:
October 23, 2014
Project Sentinel Fair Housing and Legal Needs
Assessment and
Strategic Plan
Agency attended Community Forum (s):
September 25, 2014
Rebuilding
Together
Peninsula
Housing Needs
Assessment and
Strategic Plan
Agency attended Community Forum (s):
October 1, 2014
Rebuilding
Together Silicon
Housing Needs
Assessment and
Agency attended Community Forum (s)
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Agency / Group
/Organization
Agency / Group /
Organization Type
What Section of
the Plan Was
Addressed by the
Consultation?
How Was the
Agency/Group/Organization Consulted
and What are the Anticipated Outcomes
of the Consultation or Areas for
Improved Coordination?
Valley Strategic Plan on:
October 1, 2014
November 20, 2014
Sacred Heart -
Housing Action
Committee
Fair Housing and Legal Needs
Assessment and
Strategic Plan
Agency attended Community Forum (s)
on:
September 25, 2014
October 1, 2014
October 23, 2014
Sacred Heart
Community
Service
Fair Housing and Legal Needs
Assessment and
Strategic Plan
Agency attended Community Forum (s)
on:
September 27, 2014
September 30, 2014
October 1, 2014
October 2, 2014
October 7, 2014
Senior Adults
Legal Assistance
(SALA)
Fair Housing and Legal
Senior Services
Needs
Assessment and
Strategic Plan
Agency attended Community Forum (s)
on:
September 27, 2014
Santa Clara
County
Government Agencies:
Local, County, State and
Federal
Needs
Assessment and
Strategic Plan
Agency attended Community Forum (s)
on:
October 1, 2014
Secondary
Fuente/ Walnut
Creek
Homeowner Ass.
Housing
Business (Major
Employers, Chambers of
Commerce,
Associations, Real
Estate)
Needs
Assessment and
Strategic Plan
Agency attended Community Forum (s)
on:
September 25, 2014
September 27, 2014
October 22, 2014
October 23, 2014
November 1, 2014
November 5, 2014
Servant Partners Cultural Organization Needs
Assessment and
Strategic Plan
Agency attended Community Forum (s)
on:
September 27, 2014
Silicon Valley
Community
Foundation
Education Services Needs
Assessment and
Strategic Plan
Agency attended Community Forum (s)
on:
September 27, 2014
Silicon Valley
Independent
Senior Services Needs
Assessment and
Agency attended Community Forum (s)
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Agency / Group
/Organization
Agency / Group /
Organization Type
What Section of
the Plan Was
Addressed by the
Consultation?
How Was the
Agency/Group/Organization Consulted
and What are the Anticipated Outcomes
of the Consultation or Areas for
Improved Coordination?
Living Center Strategic Plan on:
October 2, 2014
Somos Mayfair Community/ Family
Services and
Organizations
Children and Youth
Services
Needs
Assessment and
Strategic Plan
Agency attended Community Forum (s)
on:
September 25, 2014
South County
Collaborative
Housing Services
Homeless Services
Needs
Assessment and
Strategic Plan
Agency attended Community Forum (s)
on:
September 25, 2014
September 30, 2014
October 2, 2014
St. Joseph's
Family Center
Continuum of Care Needs
Assessment and
Strategic Plan
Agency attended Community Forum (s)
on:
September 27, 2014
October 1, 2014
October 2, 2014
Sunnyvale
Community
Services
Community/ Family
Services and
Organizations
Needs
Assessment and
Strategic Plan
Agency attended Community Forum (s)
on:
October 22, 2014
Silicon Valley
Council of
Nonprofits
Community/ Family
Services and
Organizations
Needs
Assessment and
Strategic Plan
Agency attended Community Forum (s)
on:
October 22, 2014
West Valley
Community
Services
Senior Services Needs
Assessment and
Strategic Plan
Agency attended Community Forum (s)
on:
September 25, 2014
YMCA Children & Youth
Services
Needs
Assessment and
Strategic Plan
Agency attended Community Forum (s)
on:
October 1, 2014
Yu Chi Kai Senior
Center
Senior Services Needs
Assessment and
Strategic Plan
Agency attended Community Forum(s)
on:
November 20, 2014
Identify any Agency Types not consulted and provide rationale for not consulting.
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Not applicable. See PR-10 Table 2.
Other Local/Regional/State/Federal Planning Efforts Considered When Preparing the Plan
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Table 3 - Other Local / Regional / Federal Planning Efforts
Name of Plan Lead Organization
How Do the Goals of Your
Strategic Plan Overlap With the
Goals of Each Plan?
City of Palo Alto Housing Element
(2015-2023)
City of Palo Alto The Housing Element serves as a
policy guide to help the City meet
its existing and future housing
needs. This effort aligns with the
Strategic Plan's goal to assist in the
creation and preservation of
affordable housing.
Continuum of Care Regional Continuum of Care
Council
The CoC works to alleviate the
impact of homelessness in the
community through the
cooperation and collaboration of
social service providers. This effort
aligns with the Strategic Plan's
goal to support activities to end
homelessness.
2012-2014 Comprehensive HIV
Prevention & Care Plan for San
José
Santa Clara County HIV Planning
Council for Prevention and Care
This plan provides a roadmap for
the Santa Clara County HIV
Planning Council for Prevention
and Care to provide a
comprehensive and
compassionate system of HIV
prevention and care services for
the County. This effort aligns with
the Strategic Plan's goal to support
activities that strengthen
neighborhoods through the
provision of community services
and public improvements.
Affordable Housing Funding
Landscape & Local Best Practices
(2013)
Cities Association of Santa Clara
County and Housing Trust Silicon
Valley
This report provides a comparison
of the different funding strategies
available for affordable housing in
the County, and the best practices
for funding new affordable
housing. This effort aligns with the
Strategic Plan's goal to assist in the
creation and preservation of
affordable housing.
Regional Housing Need Plan for
the San Francisco Bay Area: 2014-
2022
Association of Bay Area
Governments
This plan analyzes the total
regional housing need for the
County and all of the Bay Area. This
effort aligns with the Strategic
Plan's goal to assist in the creation
and preservation of affordable
housing.
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Name of Plan Lead Organization
How Do the Goals of Your
Strategic Plan Overlap With the
Goals of Each Plan?
Community Plan to End
Homelessness in Santa Clara
County 2015-2020
Destination: Home The Community Plan to End
Homelessness in the County is a
five-year plan to guide
governmental actors, nonprofits,
and other community members as
they make decisions about
funding, programs, priorities and
needs. This effort aligns with the
Strategic Plan's goal to support
activities to end homelessness.
Palo Alto's Infrastructure: Catching
Up, Keeping Up, and Moving
Ahead (2011)
City of Palo Alto’s Infrastructure
Blue Ribbon Commission
This plan details recommendations
for infrastructure maintenance and
replace, as well as identifies
potential sources of funding. This
effort aligns with the Strategic
Plan's goal to support activities
that strengthen neighborhoods
through the provision of
community services and public
improvements.
City of Palo Alto Comprehensive
Plan (1998)
City of Palo Alto This plan is the City’s primary tool
for guiding future development. It
provides a guide for long-term
choices and goals for the City’s
future. This effort aligns with the
Strategic Plan's goal to support
activities that strengthen
neighborhoods through the
provision of community services
and public improvements.
Describe cooperation and coordination with other public entities, including the State and any
adjacent units of general local government, in the implementation of the Consolidated Plan.
(91.215[l])
As mentioned previously, the Entitlement Jurisdictions are collaborating on preparation of their 2015-
2020 Consolidated Plans. The outreach and the regional needs assessment for these jurisdictions was
a coordinated effort. The CoC and the County were involved in the formation of the Consolidated
Plan and will be integral in its implementation.
As standard practice, CDBG entitlement jurisdictions from throughout the County hold quarterly
meetings known as the CDBG Coordinators Group. These meetings are often attended by HUD
representatives and their purpose is to share information, best practices, new developments, and
federal policy and appropriations updates among the local grantee staff, as well as to offer a
convenient forum for HUD to provide ad-hoc technical assistance related to federal grant
management. Meeting agendas cover such topics as projects receiving multi-jurisdictional funding,
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performance levels and costs for contracted public services, proposed annual funding plans, HUD
program administration requirements, and other topics of mutual concern.
These quarterly meetings provide the opportunity for the City to consult with other jurisdictions on
its proposed use of federal funds for the upcoming Program Year. The CDBG Coordinators Group
meetings are often followed by a Regional Housing Working Group meeting, which is open to staff of
entitlement and non-entitlement jurisdictions. The Working Group provides a forum for jurisdictions
to develop coordinated responses to regional housing challenges.
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PR-15 Citizen Participation
Summary of citizen participation process/Efforts made to broaden citizen participation
Summarize citizen participation process and how it impacted goal-setting
The following is an overview of the efforts made to enhance and broaden citizen participation. A
comprehensive summary of the citizen participation process and how it impacted goal-setting is
provided in Appendix A: Citizen Participation Summary.
Regional and Community Forums
Results: 209 individuals participated in the forums including residents, service providers,
community advocates and interested stakeholders.
Hardcopy Engagement: 1,225 hardcopy surveys distributed to: libraries, and community
meetings, organizations benefiting LMI residents and area.
Location: A total of 11 regional and community forums were held in the following locations:
Gilroy, Los Gatos, Morgan Hill, San José, Saratoga, and Mountain View from September 2014
to November 2014.
Newspaper Advertisements: Eight multi-lingual display ads were posted in local news media
outlets in the County reaching a joint circulation across the County of over 1,575,000.
Regional Needs Survey
Results: 1,472 responses
Outreach: 4,847 entities, organizations, persons directly engaged via email; outreach flyer
and survey links posted on websites of the Entitlement Jurisdictions of the County.
Social Media: Approximately 25,000 persons on Facebook and 11,000 persons on Twitter
were engaged.
Overall Community Needs
Need for Affordable Rental Housing
The majority of community forum participants and survey respondents identified increasing
affordable rental housing inventory as the highest priority need within the County. More
than 63 percent of survey respondents indicated affordable rental housing as a “high level”
of need. Several community forum participants noted that LMI households cannot afford
average rental rates in the County.
Need to Increase Services for the Homeless
Emergency and transitional housing, comprehensive services at homeless encampments
(e.g., basic shelter facilities, health care referrals), and rental assistance programs for the
homeless were frequently identified by participants as critical needs.
Need for Senior Housing
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The need to address the housing crisis facing seniors in the County was a common discussion
topic. Forum participants noted that elderly renter households experience numerous housing
issues, including cost burden and rental units in disrepair.
Need for Increase in Community Services
Survey respondents and forum participants called attention to the need for expanded
support of a wide range of community services to meet the basic needs of vulnerable
populations. Programs to meet basic needs such as food, clothing, health, and shelter of low
income and special needs populations were frequently highlighted during community
forums. Due to the increased demand for these basic assistance programs, service providers
noted that they were struggling to meet clients’ needs with limited resources and staff
capacity.
Need for Support Services for Seniors
Local service providers who attended the community forums stressed the importance of
increasing safety net programs for seniors. Nutrition and food assistance programs,
transportation services, recreational programs to reduce senior isolation, and general case
management services are needed to address challenges faced by the County’s growing
senior population.
Need for Transportation Services
Local service providers at each of the Consolidated Plan forums highlighted the lack of
affordable and accessible transportation services in the County. Programs to augment public
transit, paratransit, and senior transit services were cited as necessities.
Need for Fair Housing Education and Legal Services
Several service providers noted the need to expand the provision of free or low-cost legal
services to protect fair housing rights and to mediate tenant / landlord issues. Education for
tenants and landlords was identified as a vital need to prevent illegal evictions and address
housing discrimination.
Need for Economic Development and Job Training Programs
Many forum participants emphasized the need for job training programs for youth, low-
skilled workers, homeless individuals and undocumented workers. Small business assistance,
including micro-enterprise loans and services to support minority-owned businesses, were
also highlighted as important tools to spur job creation and to retain small business owners
in the County.
Need for Infrastructure and Neighborhood Improvement Services
The need to create pedestrian-friendly neighborhoods and cities that support “Complete
Streets” guidance was frequently noted by forum participants. Addressing bicycle/pedestrian
conflicts with vehicular traffic was a key issue of concern for vulnerable populations,
including school-age children and seniors. Other participants expressed the need to expand
ADA improvements such as curb cuts, sidewalk repairs and crosswalk enhancements.
Expanding access to open space and recreational amenities was also noted by several service
providers as a pressing need to encourage healthy lifestyles and active living among the
County’s residents.
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Consolidated Plan Public Comment Period
The Consolidated Plan was released February 17, 2015 for a 30 day public review and comment
period. An updated version of the Plan was released on February 24, 2015 and the comment period
was extended an additional seven days. The Plan was available electronically on the City’s CDBG
website at http://www.cityofpaloalto.org/gov/depts/pln/cdbg.asp. Hardcopies were made available
at City Hall and at the Development Services Center located at 285 Hamilton Avenue, Palo Alto, CA
94301. The electronic version was sent to distribution lists totaling approximately nine entities,
organizations, agencies and citizens or groups. In addition, public comment was encouraged at the
hearings listed below, or could be submitted in writing to: City of Palo Alto Department of Planning
and Community Environment 250 Hamilton Avenue, Palo Alto, CA 94301 Attn: Consuelo Hernandez,
Senior Planner. A summary of all public comments is included in the final Consolidated Plan, along
with the City’s response to the comments, if any.
Public Hearings
Locations and dates:
o Human Relations Commission Public Hearing
City Council Chambers
250 Hamilton Avenue
Palo Alto, CA 94301
February 12, 2015 – 7:00PM
o Human Relations Commission Public Hearing
City Council Conference Room
250 Hamilton Avenue
Palo alto, CA 94301
March 12, 2015 – 7:00PM
o Palo Alto City Council Finance Committee Public Hearing
Council Conference Room
250 Hamilton Avenue
Palo Alto, CA 94301
March 17, 2015 – 6:00PM
o City Council Public Hearing
City Council Chambers
250 Hamilton Avenue
Palo Alto, Ca 94301
May 4, 2015 – 7:00PM
In addition to the mass distribution of the draft Plan and notice of the public comment period
described above, notice of the public hearings was published in advance in the Palo Alto Weekly.
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Table 4 - Citizen Participation Outreach
Mode of
Outreach
Target of Outreach Summary of
Response/Attendance
Summary of
Comments
Received
Summary of
comments not
accepted and reasons
URL (If applicable)
Public Forums Broad community outreach
to all members of the public
and targeted outreach to
service providers,
beneficiaries and grant
recipients
A total of 209
individuals attended
the 11
regional/community
forums held in the fall
of 2014.
See PR-15 All comments were
accepted.
Online Survey Broad community outreach
to members of the public
and interested stakeholders
A total of 1,078
Regional Needs Surveys
were collected during
the open period from
September 19, 2014
through November 15,
2014.
The online survey was
available in Spanish and
English.
The online survey link
was distributed to over
4,847 entities,
organizations,
agencies, and persons.
See PR-15 All comments were
accepted.
English:
https://www.surveymonkey.com/s/SCC_Regional_S
urvey
Spanish:
https://es.surveymonkey.com/s/SCC_Regional_Surv
ey_Spanish
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Mode of
Outreach
Target of Outreach Summary of
Response/Attendance
Summary of
Comments
Received
Summary of
comments not
accepted and reasons
URL (If applicable)
Print Survey Targeted non-English
Speaking communities
through surveys in English,
Spanish, simplified Chinese,
Tagalog and Vietnamese.
Over 3,160 print surveys
were distributed at
community centers,
libraries, City Halls, senior
centers and other high-
traffic community hubs.
A total of 394 Regional
Needs Surveys were
collected during the
open period from
September 19, 2014
through November 15,
2014.
The print survey was
available in five
languages.
See PR-15 All comments were
accepted.
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Mode of
Outreach
Target of Outreach Summary of
Response/Attendance
Summary of
Comments
Received
Summary of
comments not
accepted and reasons
URL (If applicable)
Website Broad outreach to Santa
Clara County stakeholders
with computer and internet
access
Announcements
posted to the websites
of the Entitlement
Jurisdictions to
promote regional
survey links (English
and Spanish) and
regional/ community
forums
See PR-15 Not Applicable County of Santa Clara/ Urban County:
http://www.sccgov.org/sites/oah/Pages/Office-of-
Affordable-Housing.aspx
City of Palo Alto:
http://www.cityofpaloalto.org/gov/depts/pln/cdbg.
asp
City of Sunnyvale:
http://sunnyvale.ca.gov/Departments/CommunityD
evelopment/HousingandCommunityAssistance.asp
x
City of Mountain View:
http://www.mountainview.gov/depts/comdev/pres
ervation/details.asp?NewsID=899&TargetID=35
http://www.mountainview.gov/events/default.asp
City of San Jose:
http://www.sanjoseca.gov/HousingConPlan
City of Cupertino:
http://www.cupertino.org/index.aspx?page=976
City of Santa Clara:
http://santaclaraca.gov/index.aspx?page=41&recor
did=13579
City of Gilroy:
http://www.cityofgilroy.org/cityofgilroy/
http://www.cityofgilroy.org/cityofgilroy/city_hall/co
mmunity_development/planning/housing/default.a
spx
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Mode of
Outreach
Target of Outreach Summary of
Response/Attendance
Summary of
Comments
Received
Summary of
comments not
accepted and reasons
URL (If applicable)
Advertisements
in News Media
Outlets
Multi-lingual
advertisements printed in
the following media outlets:
El Observador (Spanish,
)Mountain View Voice
(English), San Jose Mercury
News (English),
Gilroy Dispatch (English), La
Oferta (Spanish), Thoi Bao
(Vietnamese), Philippine
News (Tagalog) and World
Journal (Chinese)
Eight, multi-lingual
display ads were
posted in local news
media outlets in the
County; One online
advertisement was
placed in the San Jose
Mercury News.
Joint circulation (e.g.
number of copies
distributed on
an average day) of over
1,575,000.
See PR-15 Not Applicable
Social Media Broad outreach to Santa
Clara County residents and
stakeholders with
computer access
Announcements
posted to Facebook
and Twitter accounts of
Entitlement
Jurisdictions and
community partners.
A potential of 25,000
persons on Facebook
and 11,000 persons on
Twitter were engaged
in this process.
See PR-15 All comments were
accepted.
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Mode of
Outreach
Target of Outreach Summary of
Response/Attendance
Summary of
Comments
Received
Summary of
comments not
accepted and reasons
URL (If applicable)
E-blasts Mass emails to new and
established distribution lists
of Entitlement Jurisdictions
and community partners
Approximately 4,847
entities, organizations,
agencies, and persons
have been engaged
through e-blasts
outreach efforts.
E-blasts included links
to an electronic
outreach flyer.
See PR-15 All comments were
accepted.
Personalized
emails from
staff of
Entitlement
Jurisdictions
Service providers,
beneficiaries and grant
recipients across the
County.
Targeted emails
promoting regional
survey links (English
and Spanish) sent to
over 560 stakeholders.
See PR-15 All comments were
accepted.
Print Outreach
Flyers
Print surveys were
distributed at community
centers, libraries, City Halls,
senior centers and other
high-traffic community
hubs.
Over 1,225 print flyers
were printed and
distributed at
community hubs across
the County.
See PR-15 All comments were
accepted.
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Needs Assessment
NA-05 Overview
The County of Santa Clara (County) encompasses Silicon Valley, an area known for its technological
enterprise, wealth and proximity to the San Francisco Bay Area. It is a region of distinct socio-
economic stratification, containing many of the wealthiest households in the nation. It is also one of
the least affordable places to live, with 42 percent of residents experiencing housing cost burden.10
The region boasts the highest national median household income at $90,73711. It is also the third-
most expensive rental market in the U.S,12 the seventh-least affordable for-sale market of any
metropolitan area13, and home to the fourth-largest population of homeless individuals14 with the
highest percentage of unsheltered homeless of any major city. 15
These statistics point to a widening gap between the highest earners and the middle and lower
income population. Over 45 percent of households earn $100,000 or more yearly, but only 13 percent
earn between $50,000 and $75,000 and 15 percent earn between $25,000 and $49,99916, making the
region the second-least equitable metropolitan area in the nation.17 Many lower income residents
struggle with severe housing costs driven by a tight and competitive housing market that responds
to the demands of the highest earning households, driving up the cost of for-sale and rental housing.
In order to maintain housing affordability and meet the needs of a diverse and growing population,
the jurisdictions within the County must work to preserve and expand the supply of housing for all
income levels. This will be critical to maintaining the wellbeing and economic prosperity of the
region.
The City of Palo Alto (City) is part of the San Francisco Metropolitan Bay Area, located 35 miles south
of San Francisco and 14 miles north of San Jose. The City is located within the County, borders San
Mateo County, and encompasses an area of approximately 26 square miles, one-third of which
consists of open space. According to 2008-2012 American Community Survey (ACS) 5-Year Estimates,
the City's total resident population is 63,475. The City has the most educated residents in the country
and is one of the most expensive cities to live in.18 In Silicon Valley, the City is considered a central
economic focal point and is home to over 7,000 businesses while providing jobs to more than 98,000
people.19
10 2007-2011 CHAS
11 The United States Conference of Mayors and The Council on Metro Economies and the New American City. “U.S. Metro
Economies: Income and Wage Gaps Across the US.” August 2014. http://usmayors.org/metroeconomies/2014/08/report.pdf
12 National Low Income Housing Coalition. “Out of Reach.” 2014. http://nlihc.org/sites/default/files/oor/2014OOR.pdf
13 Trulia. “Where is Homeownership Within Reach of the Middle Class and Millennials.” November 2014.
http://www.trulia.com/trends/2014/11/middle-class-millennials-report/
14 The U.S. Department of Housing and Urban Development. “2014 Annual Homeless Assessment Report (AHAR) to
Congress.” October 2014. https://www.hudexchange.info/resources/documents/AHAR-2014-Part1.pdf
15 Ibid
16 The United States Conference of Mayors and The Council on Metro Economies and the New American City. “U.S. Metro
Economies: Income and Wage Gaps Across the US.” August 2014. http://usmayors.org/metroeconomies/2014/08/report.pdf
17 Ibid
18 Huffington Post. “California’s Most Educated Cities: Palo Alto, Los Altos Top the List.” January 2012.
http://www.huffingtonpost.com/news/california-most-educated-towns/
19 Bedbury Realtors. “Palo Alto.” http://www.bedburyrealtors.com/Communities/Palo-Alto
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Methodology
The majority of data utilized is provided by HUD for the purpose of preparing the Consolidated Plan.
HUD periodically receives custom tabulations of data from the U.S. Census Bureau that are largely
not available through standard Census products. Known as the Comprehensive Housing Affordability
Strategy (CHAS) data, it demonstrates the extent of housing problems and housing needs,
particularly for low income households. The CHAS data is used by local governments to plan how to
spend HUD funds, and may also be used by HUD to distribute grant funds.20
When CHAS data is not available or appropriate, other data is utilized, including 2000 and 2010 U.S.
Census data and American Community Survey (ACS) 2008-2012 five-year estimates. While ACS one-
year estimates provide the most current data, this report utilizes five-year estimates as they reflect a
larger sample size and are considered more reliable and precise.21
Federal funds provided under the Community Development Block Grant (CDBG) entitlement
program are primarily concerned with activities that benefit low-and moderate-income (LMI)
households whose incomes do not exceed 80 percent of the area median family income (AMI), as
established by HUD, with adjustments for smaller or larger families.22 HUD utilizes three income
levels to define LMI households:
Extremely low income: Households earning 30 percent or less than the AMI (subject to
specified adjustments for areas with unusually high or low incomes)
Very low income: Households earning 50 percent or less than the AMI (subject to specified
adjustments for areas with unusually high or low incomes)
Low and moderate income: Households earning 80 percent or less than the AMI (subject to
adjustments for areas with unusually high or low incomes or housing costs)
Overview
Within Palo Alto, almost one-quarter (23 percent) of City households (5,845 households) are LMI,
with incomes ranging from 0-80% AMI:
10 percent (2,560 households) at 0-30% AMI
6 percent (1,675 households) at 30-50% AMI
6 percent (1,610 households) at 50-80% AMI
The following provides a brief summary of the results of the Needs Assessment, which will be
discussed in more detail in each corresponding section of this chapter.
20 U.S. Department of Housing and Urban Development. “Consolidated Planning/CHAS Data.”
http://www.huduser.org/portal/datasets/cp.html
21 United States Census Bureau. “American Community Survey: When to Use 1-year, 3-year, or 5-year
Estimates.” http://www.census.gov/acs/www/guidance_for_data_users/estimates/
22 U.S. Department of Housing and Urban Development. “Glossary of CPD Terms.”
http://portal.hud.gov/hudportal/HUD?src=/program_offices/comm_planning/library/glossary
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NA -10 Housing Needs
• Twenty-nine percent of households in the City are paying more than 30 percent of their
income toward housing costs.
• Thirteen percent of households are severely cost burdened and paying more than 50 percent
of their income toward housing.
NA-15 Disproportionately Greater Need: Housing Problems
Eighty-nine percent of Asian households in the 30-50% AMI category experience housing
problems, compared to 71 percent of the jurisdiction as a whole.
Ninety-three percent of Asian households in the 50-80% AMI category experience housing
problems, compared to 71 percent of the jurisdiction as a whole.
More than three-quarters of Hispanic households (78 percent) in the 80-100% AMI category
experience housing problems, compared to a nearly half (54 percent) of the jurisdiction as a
whole.
NA-20 Disproportionately Greater Need: Severe Housing Problems
More than half of Asian households in the 30-50% AMI income category experience severe
housing problems in the City, compared to 43 percent of the jurisdiction as a whole.
More than three-quarters of Asian households (77 percent) in the 50-80% AMI category
experience a disproportionate amount of severe housing problems, compared to 40 percent
of the jurisdiction as a whole.
Forty-five percent of Hispanic households in the 80-100% AMI category experience a
disproportionate amount of severe housing problems, compared to 23 percent of the
jurisdiction as a whole.
NA-25 Disproportionately Greater Need: Housing Cost Burdens
Hispanic households experience a disproportionate cost burden, with 27 percent of
households experiencing cost burden, compared to 16 percent of the City as a whole.
American Indian, Alaska Native households experience a disproportionate severe cost
burden, with 33 percent of households experiencing cost burden, compared to 13 percent of
the City as a whole.
NA-35 Public Housing
The Housing Authority of the County of Santa Clara (HACSC) assists approximately 17,000
households through the federal Section 8 Housing Choice Voucher program (Section 8).
The Section 8 waiting list contains 21,256 households – this is estimated to be a 10-year wait.
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NA-40 Homeless Needs
The Santa Clara region is home to the fourth-largest population of homeless individuals and
the highest percentage of unsheltered homeless of any major city.
As of the 2013 Point in Time Homeless Survey, Palo Alto had 157 homeless residents, and over
90 percent were unsheltered and living in a place not fit for human habitation.
Palo Alto clients – those who report that their last permanent zip code was in Palo Alto –
represent approximately one percent of the County’s homeless clients.
NA-45 Non-Homeless Special Needs
Individuals 65 years of age and older represent 17 percent of the total population of the City.
Thirty-three percent of households in the City contain at least one person 62 years or older.
More than one-quarter of individuals (27 percent) age 65 or older have a disability compared
to four percent of the population age 18 to 64, or seven percent of the population as a
whole.
NA-50 Non-Housing Community Development Needs
• Residents and stakeholders who participated in the community outreach for the
Consolidated Plan identified the following community development needs as high priorities
within these three categories:
o Public Facilities: increased homeless facilities, youth centers, rehabilitation of senior
centers, and recreational facilities throughout the County
o Public Improvements: complete streets that accommodate multiple transportation
modes, pedestrian safety, ADA curb improvements, and increased access to parks
and open space amenities
o Public Services: food assistance and nutrition programs for vulnerable populations,
year-round activities for youth, health care services for seniors and low income
families, and services for homeless persons
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NA-10 Housing Needs Assessment - 24 CFR 91.205 (a, b, c)
Introduction
This section provides an overview of the housing needs present in the City, including the degree and
distribution of housing problems within multiple income brackets. Within the Comprehensive
Housing Affordability Strategy (CHAS) data, HUD identifies four housing problems:
1) Housing unit lacking complete kitchen facilities
2) Housing unit lacking complete plumbing facilities
3) Household being overcrowded
4) Housing being cost burdened
In addition, HUD defines severe housing problems as:
Severely overcrowded, with more than 1.5 persons per room
Severely cost burdened families paying more than 50 percent of income toward housing
costs (including utilities)
A household is considered to be overcrowded if there is more than one person per room and
severely overcrowded if there are more than 1.5 people per room.
A household is considered to be cost burdened if the household is spending more than 30 percent of
its monthly income on housing costs (including utilities) and severely cost burdened if the household
is spending more than 50 percent of its monthly income on housing costs (including utilities).
Table 5 - Housing Needs Assessment Demographics (City)
Demographics Base Year: 2000 Most Recent Year: 2012 % Change
Population 58,598 64,514 10%
Households 25,216 26,244 <1%
Median Income $90,377 $122,482 36%
Data Source: 2000 Census (Base Year), 2008-2012 ACS (Most Recent Year)
Table 6 - Total Households (City)
0-30% AMI >30-50%
AMI
>50-80%
AMI
>80-100%
AMI
>100% AMI
Total Households * 2,565 1,674 1,610 1,495 18,460
Small Family Households * 395 390 580 525 9,150
Large Family Households * 95 70 30 10 1,345
Household Contains at Least One Person
62-74 Years of Age
550 405 360 320 3,035
Household Contains at Least One Person
Age 75 or Older
860 449 325 285 1,875
Households With One or More Children 6
Years Old or Younger *
90 165 200 120 2,150
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0-30% AMI >30-50%
AMI
>50-80%
AMI
>80-100%
AMI
>100% AMI
* The highest income category for these family types is >80% AMI
Data Source: 2007-2011 CHAS
Table 7 - Housing Problems (City)
Renter Households Owner Households
0-30%
AMI
>30-
50%
AMI
>50-
80%
AMI
>80-
100%
AMI
Total 0-30%
AMI
>30-
50%
AMI
>50-
80%
AMI
>80-
100%
AMI
Total
NUMBER OF HOUSEHOLDS
Substandard
Housing - Lacking
Complete
Plumbing or
Kitchen Facilities
130 50 0 35 215 45 10 0 0 55
Severely
Overcrowded -
With >1.51 People
Per Room (and
Complete
Kitchen and
Plumbing)
55 0 35 25 115 0 0 0 0 0
Overcrowded -
With 1.01---1.5
People Per Room
(and None of the
Above Problems)
30 15 40 20 105 0 50 0 0 50
Housing Cost
Burden Greater
Than 50 Percent
of Income (and
None of the
Above Problems)
715 395 225 145 1,480 625 154 265 125 1,169
Housing Cost
Burden Greater
Than 30 Percent
of Income (and
None of the
Above Problems)
175 415 450 330 1,370 65 105 85 70 325
Zero/Negative
Income (and
None of the
Above Problems)
115 0 0 0 115 80 0 0 0 80
Data Source: 2007-2011 CHAS
Table 8 - Severe Housing Problems (City)
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Renter Households Owner Households
0-
30%
AMI
>30-
50%
AMI
>50-
80%
AMI
>80-
100%
AMI
Total 0-
30%
AMI
>30-
50%
AMI
>50-
80%
AMI
>80-
100%
AMI
Total
NUMBER OF HOUSEHOLDS
Having One or More of Four Housing
Problems
925 460 300 230 1,915 670 219 265 125 1,279
Having None of Four Housing
Problems
610 520 540 600 2,270 165 475 505 540 1,685
Household Has Negative Income, but
None of the Other Housing Problems
115 0 0 0 115 80 0 0 0 80
Data Source: 2007-2011 CHAS
Table 9 - Cost Burden > 30% (City)
Renter Households Owner Households
0-30%
AMI
>30-50%
AMI
>50-
80%
AMI
Total 0-30%
AMI
>30-50%
AMI
>50-
80%
AMI
Total
NUMBER OF HOUSEHOLDS
Small Related 145 320 250 715 150 55 150 355
Large Related 50 10 20 80 45 0 0 45
Elderly 500 200 140 840 370 159 160 689
Other 340 340 300 980 175 40 35 250
Total Need by Income 1,035 870 710 2,615 740 254 345 1,339
Data Source: 2007-2011 CHAS
Table 10 - Cost Burden > 50% (City)
Renter Households Owner Households
0-30%
AMI
>30-50%
AMI
>50-
80%
AMI
Total 0-30%
AMI
>30-50%
AMI
>50-
80%
AMI
Total
NUMBER OF HOUSEHOLDS
Small Related 105 195 60 360 140 35 120 295
Large Related 50 0 0 50 45 0 0 45
Elderly 345 120 50 515 315 89 120 524
Other 310 105 120 535 175 30 20 225
Total Need by Income 810 420 230 1,460 675 154 260 1,089
Data Source: 2007-2011 CHAS
Table 11 - Crowding Information (City)
Renter Households Owner Households
0-
30%
AMI
>30-
50%
AMI
>50-
80%
AMI
>80-
100%
AMI
Total 0-
30%
AMI
>30-
50%
AMI
>50-
80%
AMI
>80-
100%
AMI
Total
NUMBER OF HOUSEHOLDS
Single-Family Households 100 15 75 55 245 0 0 0 0 0
Multiple, Unrelated Family
Households
0 0 0 0 0 0 50 0 0 50
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Renter Households Owner Households
0-
30%
AMI
>30-
50%
AMI
>50-
80%
AMI
>80-
100%
AMI
Total 0-
30%
AMI
>30-
50%
AMI
>50-
80%
AMI
>80-
100%
AMI
Total
Other, Non-Family Households 0 0 0 10 10 0 0 0 0 0
Total Need by Income 100 15 75 65 255 0 50 0 0 50
Data Source: 2007-2011 CHAS
Table 12 - Households with Children Present (City)
Renter Households Owner Households
0-30%
AMI
>30-
50%
AMI
>50-80%
AMI
Total 0-30%
AMI
>30-50%
AMI
>50-80%
AMI
Total
Households with
Children Present
75 115 165 355 15 50 35 100
Data Source: 2007-2011 CHAS
What are the most common housing problems?
One-third (33 percent) of City households report at least one housing problem, while 17 percent
report at least one severe housing problem.
Cost Burden
Cost burden is the most common housing problem:
Twenty-nine percent of households (6,870 households) in the City are paying more than 30
percent of their income toward housing costs.
Severe Cost Burden
Severe housing cost burden is the second most common housing problem:
Thirteen percent of households (3,095 households) are severely cost burdened and paying
more than 50 percent of their income toward housing.
Overcrowding
The third most common housing problem is overcrowding:
One percent of households (305 households) are overcrowded, with more than one person
per room.
Seventy-nine percent of overcrowded households (190 households) are LMI.
Are any populations/household types more affected than others by these problems?
LMI renter households are much more likely to experience cost burden, with 47 percent of LMI
renter households (2,375) paying more than 30 percent of their income toward housing costs,
compared to 26 percent of LMI owner households (1,299). Additionally, 26 percent of renter
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households (1,335) are paying more than 50 percent of their income toward housing costs are LMI,
compared to 21 percent of owner households (1,044).
Renter households are more likely to be overcrowded than owner households, with two percent of
renter households experiencing overcrowding compared to a negligible amount of owner
households (.3 percent or 50 households). Additionally, 75 percent of renter households
experiencing overcrowding are LMI.
Describe the characteristics and needs of Low income individuals and families with children
(especially extremely low income) who are currently housed but are at imminent risk of either
residing in shelters or becoming unsheltered 91.205(c)/91.305(c)). Also discuss the needs of
formerly homeless families and individuals who are receiving rapid re-housing assistance and are
nearing the termination of that assistance.
Rapid-rehousing
The County is home to several agencies providing rapid-rehousing assistance to households in need.
One example is the California Work Opportunity and Responsibility to Kids (CalWORKs) program,
which serves over 12,000 families annually in the region (nearly 30,000 men, women, and children).
According to the Santa Clara County Social Services Agency, “Twenty‐nine percent of CalWORKs
families included adults with earned wages, with the median earnings for CalWORKs families at
$2,013 for three months. Taking into account the earned wages, the maximum monthly CalWORKs
benefit for a family of four, and other government assistance income (CalFresh, Earned Income Tax
Credit, and other unearned income), a CalWORKs family in Santa Clara County would have a monthly
income of approximately $1,928. To afford the area FMR, a CalWORKs family would have to expend
86% of their monthly income on rent.” 23
Additionally, Help Management Information System (HMIS) data indicates that in the last year,
homeless and housing service providers assisted 52,805 individuals in families—15,024 of whom were
homeless at the time of service (40 percent were under the age of 18).24 Forty-six percent of the
families receiving assistance were unemployed and 31 percent were receiving CalWORKs assistance.
In Fiscal Year 2013-2014, the number of CalWORKs households receiving HUD services increased by
nearly 70 percent since 2011.25
Currently Housed and At Imminent Risk
The numbers below do not reflect any formerly homeless families or individuals who are receiving
rapid re-housing assistance and are nearing the termination of that assistance.
Table 13 lists the number of extremely low income Section 8 participants at 30% AMI or below.
HACSC does not collect information on the specific characteristics of this population.
Table 13 - Section 8 Participants at 0-30% AMI (County)
Income Limit Category At 30% or Below
23 Santa Clara County Social Services Agency, 2014
24 Ibid
25 Ibid
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Income Limit Category At 30% or Below
1 Person
6,292
2 Persons 3,580
3 Persons 1,813
4 Persons 1,378
5 Persons 829
6 Persons 399
7 Persons 166
8 Persons 50
Total 14,507
Data Source: HACSC
If a jurisdiction provides estimates of the at-risk population(s), it should also include a description
of the operational definition of the at-risk group and the methodology used to generate the
estimates.
At-risk of homelessness is defined as households receiving Section 8 assistance whose gross annual
income equals 30% or less than the current Area Median Incomes per family size.
Specify particular housing characteristics that have been linked with instability and an increased
risk of homelessness.
Severe cost burden is the greatest predictor of homelessness risk, with populations paying more
than 50 percent of their income on housing costs or having incomes at or below 50% AMI are at
greatest risk of becoming homeless.
Thirteen percent of households (3,505) in the City are severely cost burdened.
Ten percent (2,565 households) are severely cost burdened and earning below 30% AMI.
Sixteen percent (4,240 households) are severely cost burdened and earning below 50% AMI.
Figure 1 displays the primary causes of homelessness cited by respondents to the 2013 homeless
census. From the census: “Forty percent (40%) reported job loss, up from 27 percent in 2011.
Seventeen percent (17%) reported alcohol and drug use as the primary cause, followed by eviction at
12 percent (up from 5% in 2011). While it was not one of the top five responses, 8 percent of survey
respondents reported family/domestic violence as the primary cause of their homelessness.”26
This data suggests that inability to find affordable housing and the need for supportive services, such
as drug and alcohol rehabilitation, might be the main indicators of increased risk of homelessness.
Figure 1 – Top Five Causes of Homelessness (County)
26 Applied Survey Research. “Santa Clara County Homeless Census & Survey.” 2013.
http://www.appliedsurveyresearch.org/storage/database/homelessness/santaclara_sanjose/2013%20Homeless%20Census%2
0and%20Survey%20Santa%20Clara%206%2028%2013.pdf
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Data Source: 2013 Santa Clara County Homeless Census & Survey
Data Source
Comments:
2013 N=818, 2011 N=997
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Discussion
Please see discussion above.
Describe the number and type of single person households in need of housing assistance.
There are 1,769 single person households in the County on the Section 8 waiting list. The waiting list
has been closed since 2006, and is not expected to reopen in the near future.
Within the City, there are approximately 19 single person sheltered homeless on a given night.27
Jurisdiction-specific data is not available for unsheltered homeless in this subpopulation.
Estimate the number and type of families in need of housing assistance who are disabled or victims
of domestic violence, dating violence, sexual assault and stalking.
There are 1,241 disabled Head of Households on Section 8 waiting list. HACSC does not keep records
of assisted/non-assisted families that are victims of domestic violence, dating violence, sexual
assault, or stalking.
Within the City, there is one sheltered homeless individual who is in need of housing assistance on a
given night and are victims of domestic violence. Jurisdiction-specific data is not available for
unsheltered homeless in this subpopulation.
27 Community Technology Alliance (CTA). Data includes individuals and households who are “Literally Homeless” or
“Category 1 Homeless” – those staying in Emergency Shelter, Transitional Housing and Safe Haven. CTA also collects data
from agencies that primarily serve people who are at-risk of homelessness.
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NA-15 Disproportionately Greater Need: Housing Problems – 91.205 (b) (2)
Assess the need of any racial or ethnic group that has disproportionately greater need in comparison
to the needs of that category of need as a whole.
Introduction
Per HUD definitions, a disproportionate need exists when any group has a housing need that is 10
percent or higher than the jurisdiction as a whole. This section presents the extent of housing
problems and identifies populations that have a disproportionately greater need.
Table 14 - Disproportionately Greater Need 0 - 30% AMI (City)
Housing Problems Has One or More of
Four Housing
Problems
Has None of the
Four Housing
Problems
Household has
No/Negative
Income, but None of
the Other Housing
Problems
Jurisdiction as a Whole 1,670 550 115
White 935 380 45
Black / African American 55 35 10
Asian 445 85 55
American Indian, Alaska Native 20 0 0
Pacific Islander 0 0 0
Hispanic 210 50 0
Data Source: 2007-2011 CHAS
* The four housing problems are: 1. Lacks complete kitchen facilities, 2. Lacks complete plumbing facilities, 3. More than one person per
room, 4.Cost Burden greater than 30%
Table 15 - Disproportionately Greater Need 30 - 50% AMI (City)
Housing Problems Has One or More of
Four Housing
Problems
Has None of the
Four Housing
Problems
Household has
No/Negative
Income, but None of
the Other Housing
Problems
Jurisdiction as a Whole 1,140 475 0
White 680 410 0
Black / African American 130 40 0
Asian 195 25 0
American Indian, Alaska Native 0 0 0
Pacific Islander 0 0 0
Hispanic 90 0 0
Data Source: 2007-2011 CHAS
* The four housing problems are: 1. Lacks complete kitchen facilities, 2. Lacks complete plumbing facilities, 3. More than one person per
room, 4.Cost Burden greater than 30%
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Table 16 - Disproportionately Greater Need 50 - 80% AMI (City)
Housing Problems Has One or More of
Four Housing
Problems
Has None of the
Four Housing
Problems
Household has
No/Negative
Income, but None of
the Other Housing
Problems
Jurisdiction as a Whole 590 245 0
White 295 205 0
Black / African American 0 0 0
Asian 200 15 0
American Indian, Alaska Native 0 10 0
Pacific Islander 0 0 0
Hispanic 40 15 0
Data Source: 2007-2011 CHAS
* The four housing problems are: 1. Lacks complete kitchen facilities, 2. Lacks complete plumbing facilities, 3. More than one person per
room, 4.Cost Burden greater than 30%
Table 17 - Disproportionately Greater Need 80 - 100% AMI (City)
Housing Problems Has One or More of
Four Housing
Problems
Has None of the Four
Housing Problems
Household has
No/Negative
Income, but None of
the Other Housing
Problems
Jurisdiction as a Whole 750 635 0
White 515 435 0
Black / African American 10 55 0
Asian 175 120 0
American Indian, Alaska Native 0 10 0
Pacific Islander 0 0 0
Hispanic 49 14 0
Data Source: 2007-2011 CHAS
* The four housing problems are: 1. Lacks complete kitchen facilities, 2. Lacks complete plumbing facilities, 3. More than one person per
room, 4.Cost Burden greater than 30%
Table 18 - Disproportionately Greater Need – Housing Problems (County)
Housing Problems 0-30% AMI 30-50% AMI 50-80% AMI 80-100% AMI
# % # % # % # %
Jurisdiction as a Whole 1,670 75% 1,140 71% 590 71% 750 54%
White 935 71% 680 62% 295 59% 515 54%
Black / African American 55 61% 130 76% 0 0% 10 15%
Asian 445 84% 195 89% 200 93% 175 59%
American Indian, Alaska Native 20 100% 0 0% 0 0% 0 0%
Pacific Islander 0 0% 0 0% 0 0% 0 0%
Hispanic 210 81% 90 100% 40 73% 49 78%
Data Source: 2007-2011 CHAS
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Discussion
The 0-30% AMI income bracket is the only category that does not include a racial/ethnic group that is
disproportionately affected by one or more of the four housing problems (although Hispanic
households were only one percent away from the 10 percent threshold). The following provides a
summary of the racial/ethnic groups disproportionately affected by housing problems in all other
income groups:
Eighty-nine percent of Asian households (195 households) in the 30-50% AMI category
experience housing problems, compared to 71 percent of the jurisdiction as a whole.
Ninety-three percent of Asian households (200 households) in the 50-80% AMI category
experience housing problems, compared to 71 percent of the jurisdiction as a whole.
More than three-quarters of Hispanic households (78 percent or 49 households) in the 80-
100% AMI category experience housing problems, compared to a nearly half (54 percent) of
the jurisdiction as a whole.
Note: Due to insufficient data, the analysis for the 0-30% AMI income category does not include
American Indian, Alaska Native or Pacific Islander households. For households in the 30-50% AMI
income category, the analysis does not include American Indian, Alaska Native, Pacific Islander, or
Hispanic households. For households in the 50-80% AMI income category, the analysis does not
include Black/African American, American Indian, Alaska Native, or Pacific Islander households.
Additionally, households with no/negative income are not counted in the analysis, as they cannot by
definition have a cost burden, although they still may require housing assistance.
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NA-20 Disproportionately Greater Need: Severe Housing Problems – 91.205 (b)
(2)
Assess the need of any racial or ethnic group that has disproportionately greater need in comparison
to the needs of that category of need as a whole.
Introduction:
Per HUD definitions, a disproportionate need exists when any group has a housing need that is 10
percent or higher than the jurisdiction as a whole. A household is considered severely overcrowded
when there are more than 1.5 persons per room and is severely cost-burdened when paying more
than 50 percent of its income toward housing costs, including utilities. This section analyzes the
extent of severe housing problems and identifies populations that have a disproportionately greater
need.
Table 19 - Severe Housing Problems 0 - 30% AMI (City)
Severe Housing Problems* Has One or More of
Four Housing
Problems
Has None of the
Four Housing
Problems
Household has
No/Negative
Income, but None of
the Other Housing
Problems
Jurisdiction as a Whole 1,410 810 115
White 805 500 45
Black / African American 45 40 10
Asian 355 175 55
American Indian, Alaska Native 20 0 0
Pacific Islander 0 0 0
Hispanic 165 90 0
Data Source: 2007-2011 CHAS
* The four severe housing problems are: 1. Lacks complete kitchen facilities, 2. Lacks complete plumbing facilities, 3. More than 1.5 persons
per room, 4.Cost Burden over 50%
Table 20 - Severe Housing Problems 30 - 50% AMI (City)
Severe Housing Problems* Has One or More of
Four Housing
Problems
Has None of the
Four Housing
Problems
Household has
No/Negative
Income, but None of
the Other Housing
Problems
Jurisdiction as a Whole 700 910 0
White 440 650 0
Black / African American 80 90 0
Asian 125 90 0
American Indian, Alaska Native 0 0 0
Pacific Islander 0 0 0
Hispanic 30 60 0
*The four severe housing problems are: 1. Lacks complete kitchen facilities, 2. Lacks complete plumbing facilities, 3. More than 1.5 persons
per room, 4.Cost Burden over 50%
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Table 21 - Severe Housing Problems 50 - 80% AMI (City)
Severe Housing Problems* Has One or More of
Four Housing
Problems
Has None of the
Four Housing
Problems
Household has
No/Negative
Income, but None of
the Other Housing
Problems
Jurisdiction as a Whole 335 500 0
White 120 380 0
Black / African American 0 0 0
Asian 165 50 0
American Indian, Alaska Native 0 10 0
Pacific Islander 0 0 0
Hispanic 25 30 0
Data Source: 2007-2011 CHAS
* The four severe housing problems are: 1. Lacks complete kitchen facilities, 2. Lacks complete plumbing facilities, 3. More than 1.5 persons
per room, 4.Cost Burden over 50%
Table 22 - Severe Housing Problems 80 - 100% AMI (City)
Severe Housing Problems* Has One or More of
Four Housing
Problems
Has None of the
Four Housing
Problems
Household has
No/Negative
Income, but None of
the Other Housing
Problems
Jurisdiction as a Whole 315 1,070 0
White 205 735 0
Black / African American 0 65 0
Asian 85 210 0
American Indian, Alaska Native 0 10 0
Pacific Islander 0 0 0
Hispanic 29 35 0
Data Source: 2007-2011 CHAS
* The four severe housing problems are: 1. Lacks complete kitchen facilities, 2. Lacks complete plumbing facilities, 3. More than 1.5 persons
per room, 4.Cost Burden over 50%
Table 23 - Disproportionately Greater Need – Severe Housing Problems (City)
Severe Housing Problems 0-30% AMI 30-50% AMI 50-80% AMI 80-100% AMI
# % # % # % # %
Jurisdiction as a Whole 1,410 64% 700 43% 335 40% 315 23%
White 805 62% 440 40% 120 24% 205 22%
Black / African American 45 53% 80 47% 0 0% 0 0%
Asian 355 67% 125 58% 165 77% 85 29%
American Indian, Alaska Native 20 100% 0 0% 0 0% 0% 0%
Pacific Islander 0 0% 0 0% 0 0% 0% 0%
Hispanic 165 65% 30 33% 25 45% 29 45%
Data Source: 2007-2011 CHAS
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Discussion:
The 0-30% AMI income bracket does not include any racial/ethnic groups that are disproportionately
affected by one or more of the four severe housing problems. The following provides a summary of
the racial/ethnic groups that experience disproportionate need in the 30-50% AMI, 50-80% AMI, and
80-100% income categories:
More than half of Asian households (58 percent) in the 30-50% AMI income category
experience severe housing problems in the City, compared to 43 percent of the jurisdiction as
a whole.
More than three-quarters of Asian households (77 percent or 165 households) in the 50-80%
AMI category experience a disproportionate amount of severe housing problems, compared
to 40 percent of the jurisdiction as a whole.
Forty-five percent of Hispanic households (29 households) in the 80-100% AMI category
experience a disproportionate amount of severe housing problems, compared to 23 percent
of the jurisdiction as a whole.
Note: Due to insufficient data, the analysis for the 0-30% AMI and 30-50% AMI income categories does
not include American Indian, Alaska Native or Pacific Islander households. For households in the 50-
80% and 80-100% AMI income categories, the analysis does not include Black/African American,
American Indian, Alaska Native, or Pacific Islander households. Additionally, households with
no/negative income are not counted in the analysis, as they cannot by definition have a cost burden,
although they still may require housing assistance.
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NA-25 Disproportionately Greater Need: Housing Cost Burdens – 91.205 (b) (2)
Assess the need of any racial or ethnic group that has disproportionately greater need in comparison
to the needs of that category of need as a whole.
Introduction:
Per HUD definitions, a disproportionate need exists when any group has a housing need that is 10
percent or higher than the jurisdiction as a whole. A household is considered cost burdened when
paying more than 30 percent of its income toward housing costs, including utilities, and is severely
cost burdened when paying more than 50 percent of its income toward housing costs. This section
analyzes the extent of cost burden and identifies populations that have a disproportionately greater
cost burden.
Table 24 - Greater Need: Housing Cost Burden (City)
Housing Cost Burden <30% 30-50% >50% No / Negative
Income (Not
Computed)
Jurisdiction as a Whole 16,170 3,775 3,095 130
White 12,000 2,395 1,865 60
Black / African American 405 105 125 10
Asian 2,965 895 815 55
American Indian, Alaska
Native
40 0 20 0
Pacific Islander 20 0 0 0
Hispanic 580 295 205 0
Data Source: 2007-2011 CHAS
Table 25 - Disproportionately Greater Cost Burden (City)
Housing Cost Burden <30% 30-50% >50%
# % # % # %
Jurisdiction as a Whole 16,170 70% 3,775 16% 3,095 13%
White 12,000 74% 2,395 15% 1,865 11%
Black / African American 405 64% 105 17% 125 20%
Asian 2,965 63% 895 19% 815 17%
American Indian, Alaska Native 40 67% 0 0% 20 33%
Pacific Islander 20 100% 0 0% 0 0%
Hispanic 580 54% 295 27% 205 19%
Data Source: 2007-2011 CHAS
Discussion
The data indicates that, as a whole, 29 percent of households in the City are cost burdened and
paying greater than 30 percent of their income toward housing costs, while 13 percent are severely
cost burdened and paying more than 50 percent of their income on housing costs.
Among cost burdened households paying more than 30 to 50 percent of their income toward
housing costs, Hispanic households experience a disproportionate need, with 27 percent (297
households) experiencing cost burden, compared to 16 percent of the City as a whole.
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Among severely cost burdened households paying more than 50 percent of their income toward
housing costs, American Indian, Alaska Native households experience a disproportionate need, with
33 percent (20 households) experiencing cost burden, compared to 13 percent of the City as a whole.
Note: Due to insufficient data, the analysis for households paying more than 30 to 50 percent of their
income toward housing costs does not include Pacific Islander or American Indian, Alaska Native
households. For households paying more than 50 percent of their income toward housing costs, the
analysis does not include Pacific Islander households. Additionally, households with no/negative
income are not counted in the analysis, as they cannot by definition have a cost burden, although
they still may require housing assistance.
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NA-30 Disproportionately Greater Need: Discussion – 91.205(b) (2)
Are there any Income categories in which a racial or ethnic group has disproportionately greater
need than the needs of that income category as a whole?
Please see the discussion for NA-15, NA-20, and NA-25. In summary;
For 50-80% AMI households: 60 percent of Asian households experience severe housing
problems, compared to 32 percent of the jurisdiction as a whole.
If they have needs not identified above, what are those needs?
Needs have been previously identified.
Are any of those racial or ethnic groups located in specific areas or neighborhoods in your
community?
Map 1 illustrates the areas of the City that have minority concentration.
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Map 1 - Areas of Minority Concentration (City)
Data Source: ACS 2007-2011
Data Source
Comment:
Minority concentration is defined as census tracts where the percentage of individuals of a particular racial or ethnic
minority group is at least 20 percentage points higher than the citywide average. Minority refers to all ethnic groups
other than non-Hispanic white.
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NA-35 Public Housing – 91.205(b)
Introduction
HACSC assists approximately 17,000 households through the federal Section 8 Housing Choice
Voucher program. The Section 8 waiting list contains 21,256 households, estimated to be a 10-year
wait. HACSC also develops, controls, and manages more than 2,600 affordable rental housing
properties throughout the County. HACSC’s programs are targeted toward LMI households, and
more than 80 percent of its client households are extremely low income families, seniors, veterans,
persons with disabilities, and formerly homeless individuals.28
In 2008 HACSC entered into a ten-year agreement with HUD to become a Moving to Work (MTW)
agency. The MTW program is a federal demonstration program that allows greater flexibility to
design and implement more innovative approaches for providing housing assistance.29 Additionally,
HACSC has used Low Income Housing Tax Credit financing to transform and rehabilitate 535 units of
public housing into HACSC-controlled properties. The agency is an active developer of affordable
housing and has either constructed, rehabilitated, or assisted with the development of more than 30
housing developments that service a variety of households, including special needs households.30
The following tables display the public housing inventory and housing vouchers maintained by
HACSC. HACSC has four two-bedroom family public housing units in its portfolio; they are located in
the City of Santa Clara. Approximately 16,387 housing vouchers are in use countywide.
Table 26 - Public Housing by Program Type (City)
Program Type
Certificate Mod-
Rehab
Public
Housing
Vouchers
Total Project
-based
Tenant
-based
Special Purpose Voucher
Veterans
Affairs
Supportive
Housing
Family
Unification
Program
Disabled
*
# of Units
Vouchers
in Use
0 38 0 252 54 179 18 0 1
* Includes Non-Elderly Disabled, Mainstream One-Year, Mainstream Five-Year, and Nursing Home Transition
Data Source: HACSC
28 Housing Authority of the County of Santa Clara. “Welcome to HACSC.” http://www.hacsc.org/
29 HACSC. “Moving to Work (MTW) 2014 Annual Report.” September 2014.
30 Housing Authority of the County of Santa Clara. “HACSC.” http://www.hacsc.org/
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Table 27 - Characteristics of Public Housing Residents by Program Type (City)
Program Type
Palo Alto
Certificate Mod-
Rehab
Public
Housing
Vouchers
Total Project
-based
Tenant
-based
Special Purpose Voucher
Veterans
Affairs
Supportive
Housing
Family
Unification
Program
Average Annual
Income
0 $23,491 0 $14,092 $11,738 $14,703 $15,272 0
Average Length
of Stay (Years)
0 9 0 9 6 11 2 0
Average
Household Size
0 2 0 2 1 2 2 0
# Homeless at
Admission
0 0 0 44 14 12 18 0
# of Elderly
Program
Participants (>62)
0 12 0 158 37 114 7 0
# of Disabled
Families
0 13 0 166 28 130 8 0
# of Families
Requesting
Accessibility
Features
- - - - - - - -
# of HIV/AIDS
Program
Participants
- - - - - - - -
# of DV Victims - - - - - - - -
Data Source: HACSC
Data Source
Comment:
HACSC does not collect information on HIV/AIDs or Domestic Violence households or the number of families
requesting accessibility features.
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Table 28 - Race of Public Housing Residents by Program Type (City)
Program Type
Race Certificate Mod-
Rehab
Public
Housing
Vouchers
Total Project
-based
Tenant
-based
Special Purpose Voucher
Veterans
Affairs
Supportive
Housing
Family
Unification
Program
Disabled
*
White 0 0 0 167 28 126 12 0 1
Black/African
American
0 0 0 40 9 26 5 0 0
Asian 0 0 0 46 21 24 1 0 0
American
Indian/Alaska
Native
0 0 0 0 0 0 0 0 0
Native
Hawaiian/Other
Pacific Islander
0 0 0 1 0 0 1 0 0
Other 0 0 0 0 0 0 0 0 0
* Includes Non-Elderly Disabled, Mainstream One-Year, Mainstream Five-year, and Nursing Home Transition
Data Source: HACSC
Table 29 - Ethnicity of Public Housing Residents by Program Type (City)
Program Type
Ethnicity Certificate Mod-
Rehab
Public
Housing
Vouchers
Total Project
-based
Tenant
-based
Special Purpose Voucher
Veterans
Affairs
Supportive
Housing
Family
Unification
Program
Disabled
*
Hispanic 0 8 0 33 6 17 5 0 5
Not
Hispanic
0 31 0 220 49 142 14 0 15
* Includes Non-Elderly Disabled, Mainstream One-Year, Mainstream Five-year, and Nursing Home Transition
Data Source: HACSC
Section 504 Needs Assessment: Describe the needs of public housing tenants and applicants on the
waiting list for accessible units.
None of the four public housing units owned and managed by HACSC are accessible, and information
about the need for accessible units is not collected for waiting list applicants.
Most immediate needs of residents of Public Housing and Housing Choice voucher holders
In January 2013, HACSC randomly sampled 1,500 of its Section 8 participants to better understand
the types of services and/or resources needed to increase their self-sufficiency. Approximately 400
participants responded. Table 30 below identified the services requested and the number of
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participants that requested that service. Affordable healthcare, job training, basic computer skills,
English as a second language, and job placement resources were among the top most-identified
services. The majority of these services are related to workforce training, showing the need for
economic development among Section 8 participants. The selection of affordable healthcare as the
highest need indicates the need for additional health-related services.
Table 30 - Resources Requested by Section 8 Participants (County)
Rank Services/Resources # Participants Requesting
Service
% Participants Requesting
Service
1 Affordable Healthcare 122 11%
2 Job Training 114 10%
3 Basic Computer Skills 113 10%
4 Nothing 102 9%
5 English as a Second
Language
96 8%
6 Job Placement 94 8%
7 Post-Secondary Education 79 7%
8 Transportation Assistance 79 7%
9 Job Search Skills 68 6%
10 Legal Assistance 61 5%
11 HS Diploma/GED 53 5%
12 Affordable Childcare 53 5%
13 Financial Planning 53 5%
14 Credit Repair/Credit
History
50 4%
15 Substance Abuse/Mental
Health Counseling
21 2%
Total 1,137 100%
Data Source: HACSC
Data Source
Comment: Totals may not add to 100% due to rounding. N= 400, multiple resources could be selected by each respondent.
Discussion
Please see discussions above.
NA-40 Homeless Needs Assessment – 91.205(c)
Introduction
As was previously discussed, the Santa Clara region is home to the fourth-largest population of
homeless individuals (6,681 single individuals),31 and the highest percentage of unsheltered homeless
of any major city (75 percent of homeless people sleep in places unfit for human habitation). The
homeless assistance program planning network is governed by the Santa Clara Continuum of Care
(CoC), governed by the Destination: Home Leadership Board, who serves as the Continuum of Care
(CoC) Board of Directors. The membership of the CoC is a collaboration of representatives from local
jurisdictions comprised of community-based organizations, the Housing Authority of Santa Clara,
governmental departments, health service agencies, homeless advocates, consumers, the faith
31 The U.S. Department of Housing and Urban Development. “2014 Annual Homeless Assessment Report (AHAR) to
Congress.” October 2014. https://www.hudexchange.info/resources/documents/AHAR-2014-Part1.pdf
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community, and research, policy and planning groups. The homeless services system utilized by the
CoC is referred to as the Homeless Management Information System (HMIS). The HMIS monitors
outcomes and performance measures for all the homeless services agencies funded by the County.
HMIS Methodology
Data provided in this section is for Fiscal Year 2014 (July 1, 2013 – June 30, 2014). CTA reports
jurisdictional data based on clients’ self-reported last permanent zip codes. The last permanent zip
code is the zip code area that the client lived in when s/he last lived in permanent housing (e.g. rental
house/apartment, own home, living with friends/relatives with permanent tenure). This reporting
method was adopted by CDBG program coordinators from the various jurisdictions within the
County and was preferred over reporting the clients served by service providers within each
jurisdiction, as shelter and transitional housing services are largely centralized within San Jose and
not equitably distributed throughout the County. Numbers reported are based on actual HMIS data
yet are still considered estimates as they are averages and/or include proportional representations of
clients for whom no last permanent zip code was recorded (15% of all clients served 7/1/2013 –
6/30/2014 report no last permanent zip code). Palo Alto clients – those who report that their last
permanent zip code was in Palo Alto – represent approximately one percent of the County’s
homeless clients.
Homeless Point-in-Time Census and Survey32
The Santa Clara County CoC’s Homeless Census and Survey is conducted every two years and consists of
data collected on the sheltered and unsheltered homeless population. Sheltered homeless include those
occupying shelter beds on the night of the count. Data describing the number of sheltered homeless
persons are obtained from HMIS where possible, and collected directly from providers not using HMIS
as needed. Unsheltered homeless are counted by direct observation, and community volunteers
partnered with homeless guides canvas the regions by car and on foot during the early morning hours of
the chosen nights. A large subset of the sheltered and unsheltered population is subsequently surveyed,
providing data that is then used to estimate demographic details of the homeless population as a whole
at a single point-in-time.
32 Applied Survey Research. “Santa Clara County Homeless Census & Survey.” 2013.
http://www.appliedsurveyresearch.org/storage/database/homelessness/santaclara_sanjose/2013%20Homeless%20Census%2
0and%20Survey%20Santa%20Clara%206%2028%2013.pdf
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Figure 2 – Homeless by Jurisdiction
Data Source: 2013 Santa Clara County Homeless Census & Survey
Data Source Comments: Jurisdiction determined geographic distribution, not last permanent zip code.
The Santa Clara 2013 Homeless Point-in-Time Census and Survey was performed using HUD
recommended practices for counting and surveying homeless individuals. This study included a field
enumeration of homeless individuals residing in Santa Clara County on January 29 and January 30,
2013. On January 29, the cities of Gilroy and Organ Hill, portions of the cities of Campbell, Los Gatos,
Milpitas, San Jose, and the unincorporated areas in the eastern and southwestern parts of the
county were enumerated. The following morning, January 30, remaining portions of the cities of
Campbell, Milpitas, Los Gatos, and San Jose; the cities of Cupertino, Monte Sereno, Mountain View,
Los Gatos Hills, Palo Alto, Saratoga, Sunnyvale, Santa Clara, and the unincorporated areas in the
northwestern part of the county were enumerated. Figure 2 shows the geographic distribution of
sheltered and unsheltered homeless persons in Santa Clara County.33
33 Applied Survey Research. “Santa Clara County Homeless Census & Survey.” 2013.
http://www.appliedsurveyresearch.org/storage/database/homelessness/santaclara_sanjose/2013%20Homeless%20Census%2
0and%20Survey%20Santa%20Clara%206%2028%2013.pdf
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The following definitions below provide the methodology for Table 31:
Definitions
# Experiencing Homelessness Each Year – unduplicated count of all persons enrolled during
the program year
# Becoming Homeless Each Year – unduplicated count of persons appearing in HMIS for the
first time during the year
# Exiting Homelessness Each Year – unduplicated count of persons exiting programs to a
permanent destination as defined by HUD
# of Days Persons Experience Homelessness – average of the sums of the lengths of stay for
each person
Table 31 - Homeless Needs Assessment (City/County)
Population
Estimate the # of persons
experiencing homelessness
on a given night
Estimate the
#
experiencing
homelessness
each year
Estimate
the #
becoming
homeless
each year
Estimate the
# exiting
homelessness
each year
Estimate the
# of days
persons
experience
homelessness Sheltered
(Palo Alto)
*Unsheltered
(Countywide)
Persons in
Households with
Adult(s) and
Child(ren)
1 956 9 3 * *
Persons in
Households with
Only Children
0 183 2 1 * *
Persons in
Households with
Only Adults
19 5,435 85 20 * *
Chronically
Homeless
Individuals
(Persons)
4 2,250 20 2 * *
Chronically 0 9 1 1 * *
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Population
Estimate the # of persons
experiencing homelessness
on a given night
Estimate the
#
experiencing
homelessness
each year
Estimate
the #
becoming
homeless
each year
Estimate the
# exiting
homelessness
each year
Estimate the
# of days
persons
experience
homelessness Sheltered
(Palo Alto)
*Unsheltered
(Countywide)
Homeless Families
(Households)
Veterans 6 579 20 5 * *
Unaccompanied
Child
0 203 2 1 * *
Persons with HIV 0 93 2 0 * *
Severely Mentally
Ill
4 2,872 30 7 * *
Chronically
Substance Abuse
1 1,010 12 2 * *
Victims of
Domestic Violence
1 431 7 1 * *
Data Source: HMIS Santa Clara County
Data Source
Comment:
This data reflects reports for all HMIS clients who self-declared that their last permanent zip code was in Palo Alto, and
a proportional inclusion of clients who did not declare a last permanent zip code. “Given Night” estimates derived by
taking average from four points in time. *For unsheltered populations, the data presented is aggregate for the County
– current methodologies do not break down subpopulation data by jurisdiction.
**Data is not available on “Estimate the # exiting homelessness each year” and “Estimate the # of days persons
experience homelessness” is not available for multiple populations, please refer to Table 32 and Table 33.
If data is not available for the categories "number of persons becoming and exiting homelessness
each year," and "number of days that persons experience homelessness," describe these
categories for each homeless population type (including chronically homeless individuals and
families, families with children, veterans and their families, and unaccompanied youth).
While data for each specific homeless subpopulation is not available, as shown in Table 32 and Table
33, there is data for the number exiting homelessness and the average days to obtain housing.
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Table 32 - Exited Homelessness (City)
Project Type # Of Clients Who Obtained Permanent Housing
Emergency Shelter 5
Transitional Housing 2
Rapid Re-Housing 1
Data
Source:
HMIS Santa Clara County
Table 33 - Days to Housing (County)
Project Type Average Days to Housing
Emergency Shelter 61.6
Transitional Housing 319.9
Rapid Re-Housing 84
Data
Source:
HMIS Santa Clara County
Nature and Extent of Homelessness: (Optional)
Table 34 - Race and Ethnic Group of Homeless (City)
Race Sheltered
White 33
Black or African American 28
Asian 4
American Indian or Alaska Native 2
Native Hawaii or Pacific Islander 0
Multiple Races 0
Ethnicity Sheltered
Hispanic 19
Non-Hispanic 65
Data Source: HMIS Santa Clara County
Data Source
Comment:
HMIS data filtered for clients reporting a Palo Alto zip code as their last permanent zip code. Race/Ethnicity for four
points in time were averaged. Ethnicity data includes clients for whom race data is not known.
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Estimate the number and type of families in need of housing assistance for families with children
and the families of veterans.
Between 2013 and 2014 one veteran household with children were served by Santa Clara County
HMIS Partner Agencies.34 A total of four households with children (including the one veteran
household) were served.
Discussion
Please see discussions above.
34 CTA 2013-2014. Includes households who reported their last permanent zip code as Palo Alto.
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NA-45 Non-Homeless Special Needs Assessment - 91.205 (b, d)
Introduction
The following section addresses the needs of special populations and the special housing and service
needs they might require. The special needs populations considered in this section include:
Elderly households
Persons with disabilities
Large households
Female-headed households
Persons living with AIDS/HIV and their families
Describe the characteristics of special needs populations in your community:
Elderly Households
HUD defines elderly as age 62 and older, and frail elderly as persons who require assistance with
three or more activities of daily living such as eating, bathing, walking, and performing light
housework. The U.S. Census commonly defines older adults as those aged 65 and older. For the
purposes of this analysis, the term elderly refers to those over the age of 62.
Elderly residents generally face a unique set of housing needs, largely due to physical limitations,
lower household incomes, and the rising costs of health care. Unit sizes and access to transit, health
care, and other services are important housing concerns for this population. Housing affordability
represents a key issue for seniors, many of whom are living on fixed incomes. The demand for senior
housing serving various income levels is expected to increase as the baby boom generation ages.35
Seventeen percent of City residents (10,794 individuals) are over the age of 65,36 and 33 percent of
households (8,464) in the City contain at least one person 62 years or older.37 These households are
more likely to be LMI, with 35 percent of households containing at least one person age 62 or older
(2,949households) having incomes below 80% AMI, compared to 23 percent for the City.
Additionally, 43 percent of elderly households in the City are cost burdened and paying more than 30
percent of their income on housing costs, while 29 percent are severely cost burdened and paying
more than 50 percent of their income on housing costs.38
35 Joint Center for Housing Studies. “Housing America’s Older Adults: Meeting the Needs of an Aging Population.” 2014.
http://www.jchs.harvard.edu/sites/jchs.harvard.edu/files/jchs-housing_americas_older_adults_2014.pdf
36 2008-2012 ACS
37 2007-2011 CHAS
38 Ibid
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Table 35 - Elderly Population (City)
Income 0-30%
AMI
>30-50%
AMI
>50-80%
AMI
>80-100%
AMI
>100%
AMI
Total Households 2,565 1,674 1,610 1,495 18,460
Household Contains at Least One
Person 62-74 Years of Age
550 405 360 320 3,035
Household Contains at Least One
Person Age 75 or Older
860 449 325 285 1,875
Data Source: 2007-2011 CHAS
Persons with Disabilities
HUD defines disability as a physical or mental impairment that substantially limits one or more of the
major life activities for an individual.
Persons with disabilities can face unique barriers to securing affordable housing that provides them
with the accommodations they need. Persons with disabilities may require units equipped with
wheelchair accessibility or other special features that accommodate physical or sensory limitations.
Access to transit, health care, services, and shopping also are important factors for this population.39
As shown in Table 36 below, more than one-quarter of individuals (27 percent) age 65 or older have a
disability compared to four percent of the population age 18 to 64, or seven percent of the
population as a whole. Of the disabled population 65 years and older, eight percent (803 individuals)
have a self-care difficulty and 16 percent (1,685 individuals) have an independent living difficulty,
resulting in over 2,400 elderly individuals who may require supportive housing accommodations.
Table 36 - Disability Status of Population (City)
Number Percent
Population 18 To 64 Years 38,748
With a Hearing Difficulty 319 1%
With a Vision Difficulty 193 1%
With a Cognitive Difficulty 514 1%
With an Ambulatory Difficulty 518 1%
With a Self-Care Difficulty 338 1%
With an Independent Living Difficulty 524 1%
Total with a Disability (18 to 64 Years Old) 1,441 4%
Population 65 Years and Over 10,505
With a Hearing Difficulty 1,085 10%
With a Vision Difficulty 504 5%
With a Cognitive Difficulty 826 8%
With an Ambulatory Difficulty 1,700 16%
39 National Council on Disability. “The State of Housing in America in the 21st Century: A Disability Perspective.” January
2010. http://www.ncd.gov/publications/2010/Jan192010
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Number Percent
With a Self-Care Difficulty 803 8%
With an Independent Living Difficulty 1,685 16%
Total with a Disability (65+ Years Old) 2,789 27%
Total Population 4,525 7%
Large Households
The U.S. Census Bureau defines large households as those with five or more persons. Large
households may face challenges finding adequately-sized affordable housing. This may cause larger
families to live in overcrowded conditions and/or overpay for housing. Census data for 2010 shows
that the average household size in the City is 2.44 people. Table 37 below demonstrates that five
percent of all households are large households.
Table 37 - Household Size (City)
Number Percent
1 Person 7982 30%
2 Persons 8386 32%
3 Persons 4091 15%
4 Persons 4106 15%
5 or More Persons 1392 5%
Total Households 26,493 100%
Data Source: 2007-2011 CHAS
Female-Headed Families
Single mothers may have a greater risk of poverty than single fathers due to factors such as the
wage gap between men and women, insufficient training and education for higher earning jobs, and
inadequate or expensive child support services.40 Female-headed families with children may have
unique housing needs such as ease of access to child care, health care, and other supportive services.
Single parent, female-headed households with children under the age of 18 account for
approximately seven percent of all City households. This equates to roughly 1,762 single-mother
families.41
Persons Living with AIDS/HIV and their Families
Stable and affordable housing that is available to persons living with HIV/AIDS and their families
helps assure they have consistent access to the level of medical care and supportive services that are
essential to their health and welfare. Stable and affordable housing can also result in fewer
40 U.C. Berkeley. “Serving Low income Families in Poverty Neighborhoods Using Promising Programs and Practices.”
September 2004. http://cssr.berkeley.edu/pdfs/lowIncomeFam.pdf
41 2008-2012 ACS
Data Source: 2013 ACS
Data Source
Comment:
Totals may not add to 100% due to rounding
Data Source
Comment:
Totals may not add to 100% due to rounding
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hospitalizations and decreased emergency room care. In addition, housing assistance, such as short-
term help with rent or mortgage payments, may prevent homelessness among persons with
HIV/AIDS and their families.42
In Santa Clara County, from April 2006 through June 2014, a total of 1,119 cases of HIV were reported;
of these, 1,080 individuals are still living (3% deceased). During the same time period, a total of 4,655
cases of AIDS was reported; 2,327 are still living (50% deceased).43 According to a 2011 Santa Clara
County HIV/AIDS needs assessment survey, the majority of respondents living with HIV/AIDS
represented renters households (71 percent), and 30 percent reported experiencing difficulty getting
housing in the six months prior to the survey.44
What are the housing and supportive service needs of these populations and how are these needs
determined?
Please see discussions above.
Discuss the size and characteristics of the population with HIV/AIDS and their families within the
Eligible Metropolitan Statistical Area.
HIV
Countywide, males represent 85 percent of reported HIV cases. This includes White (45 percent),
Hispanic/Latino (32 percent), African American (12 percent), and Asian/Pacific Islander (9 percent)
males. Thirty-five percent of the 75 newly reported cases in 2010 were of individuals between 20 and
29 years of age, compared with only 14 percent of existing (total living) cases in that age group.45
AIDS
Overall, those living with AIDS are older, with 43 percent age 50 and older, compared to 28 percent
age 50 and older for those with HIV. Additionally, AIDS incidence is most likely seen among
Hispanic/Latino persons (42 percent), followed by Whites (36 percent), Asian Pacific Islanders (11
percent), and African Americans (10 percent). 46
Discussion:
Please see discussions above.
42 National AIDS Housing Coalition. “HOPWA.” http://nationalaidshousing.org/legisadvocacy/hopwa/
43 California Office of AIDS. “HIV/AIDS Surveillance in California.” June 2014.
44 Santa Clara County HIV Planning Council for Prevention and Care. “2012-2014 Comprehensive HIV Prevention & Care Plan
for San José.” 2011.
45 Ibid.
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NA-50 Non-Housing Community Development Needs – 91.215 (f)
Describe the jurisdiction’s need for Public Facilities.
The City’s Infrastructure Blue Ribbon Commission’s Final Report makes the following findings: 47
1. The current Public Safety Building (PSB) is not designed to facilitate the efficient flow of
police activities. It is overcrowded and lacks the capacity to accommodate increased use of
technology or future service demands. Additionally, it falls short of Occupational Safety and
Health Administration and other legal specifications.
2. Fire Stations 3 and 4 were built near the midpoint of the last century and are poorly designed
and too small for their current uses.
3. The current PSB and Fire Stations 3 and 4 are vulnerable to damage in a severe earthquake
that could render them inoperable for an extended period.
In order to close the gap between the Palo Alto Police Department’s operating budget and its total
revenues and to aid in the construction of a new public safety building, a ballot measure was
approved in November 2014 to increase taxes to provide for these resources.48
Regional and Community Forums
Regional and community forums were conducted in order to engage the community and highlight
what participants felt were areas that were in need of funding. Participants in these engagement
activities identified the following needs for public facilities:
• Increase the number of homeless facilities across the County.
• Build youth centers and recreational facilities in different locations throughout the County.
• Support modernization and rehabilitation of senior centers.
• Coordinate information services to promote and leverage access to community facilities.
Regional Needs Survey
To gain additional insight on high-priority needs a regional survey was conducted. Respondents rated
the level of need for 14 public facility types in their neighborhoods. The six highest priorities in this
category were:
1. Homeless facilities
2. Facilities for abused, abandoned and/or neglected children
3. Educational facilities
4. Mental health care facilities
5. Youth centers
47 “Palo Alto’s Infrastructure: Catching Up, Keeping Up, and Moving Ahead.” December 2011.
48 City of Palo Alto. “City of Palo Alto Comprehensive Plan Update Public Services Draft Existing Conditions Report.” August
2014.
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6. Drop-in day center for the homeless
How were these needs determined?
In October 2010, the Palo Alto City Council appointed a 17-member Infrastructure Blue Ribbon
Commission (IBRC) to look out 25 years and tackle a four-part challenge. Their conclusions and
findings are included in their final report.
Additionally, the City has reviewed and profiled existing public services (such as police protection,
fire protection, schools, libraries, and parks and recreation services) in its Comprehensive Plan
Update Public Services Draft Existing Conditions Report,49 which was released in August 2014. This
report discusses the regulatory framework and existing conditions related to public services in the
City in order to provide context for its upcoming Comprehensive Plan Update and Environmental
Impact Report (EIR).
Feedback was gathered from the community needs survey and community forums, where residents
and stakeholders of the City provided input community needs. Please see Appendix A: Citizen
Participation Summary for more detail.
Describe the jurisdiction’s need for Public Improvements:
For a number of years the City has needed to underfund maintenance costs, causing a considerable
backlog of deferred maintenance to accumulate. Among the facilities earmarked for significant
maintenance are the Cubberley Community Center: $7.0 million, streets: $6.1 million, parks: $5.6
million, sidewalks: $3.7 million, and the Baylands Nature Preserve: $3.0 million. The total cost of
maintenance accrued over time is $41.5 million.50
Specifically for parks, residents prioritized the addition or improvement of loop trails, off-leash dog
parks and community gardens. Other improvements, such as enhanced wildlife habitat, restored
waterways, and improved trails received lower prioritization.51
Regional and Community Forums
Stakeholders at each of the Consolidated Plan forums highlighted the lack of affordable and
accessible transportation services in the County. Programs to augment public transit were cited as
necessities. Participants in the forums also emphasized the need for the jurisdictions to:
• Promote complete streets to accommodate multiple transportation modes.
• Focus on pedestrian safety by improving crosswalk visibility and enhancing sidewalks.
• Expand ADA curb improvements.
• Increase access to parks and open space amenities in low income neighborhoods.
49 City of Palo Alto. “Comprehensive Plan Update PUBLIC SERVICES Draft Existing Conditions Report.” August 2014.
50 Ibid
51 City of Palo Alto. “Parks, Trails, Open Space & Recreation Intercept Survey Summer Draft.” 2014.
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Regional Needs Survey
Survey respondents rated the level of need for 15 infrastructure and neighborhood improvements
within their neighborhoods. The five highest priorities in this area that they identified were:
1. Cleanup of contaminated sites
2. Street improvements
3. Lighting improvement
4. Sidewalk improvements
5. Water/sewer improvements
How were these needs determined?
Overall public improvements needs were examined by the same IBRC discussed above. Park
priorities were assessed during an intercept survey of park visitors in the summer of 2014. The
purpose of the surveys was to identify community needs and issues as they relate to parks.
Feedback was gathered from the community needs survey and community forums, where residents
and stakeholders of the City provided input community needs. Please see Appendix A: Citizen
Participation Summary for more detail.
Describe the jurisdiction’s need for Public Services:
Regional and Community Forums
During the forums, participants emphasized the need to support a broad range of community
services. The need to increase services for the homeless was a key concern identified by community
members. Emergency and transitional housing, comprehensive services at homeless encampments
(e.g., basic shelter facilities, health care referrals), and rental assistance programs for the homeless
were frequently identified by participants as critical needs. Another common topic was the need to
address the housing crisis facing seniors in the County. Forum participants noted that elderly renters
experience numerous housing issues, including cost burden. The primary needs that were identified
include:
• Address the needs for accessible and affordable transportation services throughout Santa
Clara County
• Support food assistance and nutrition programs for low income families, seniors and disabled
individuals
• Provide health care services to seniors and low income families
• Develop free, year-round programs and activities for youth (e.g., recreation programming,
sports)
• Offer comprehensive services at homeless encampments (e.g., outreach, health, referrals)
• Provide mental health care services for homeless and veterans
• Support services to reduce senior isolation
• Assist service providers in meeting the needs of vulnerable populations through increased
funding and information sharing
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Regional Needs Survey
Survey respondents rated the level of need for 23 public service improvements in their
neighborhoods. The five highest priorities in this area were:
1. Emergency housing assistance to prevent homelessness
2. Access to fresh and nutritious foods
3. Homeless services
4. Abused, abandoned and/or neglected children services
5. Transportation services
How were these needs determined?
Feedback was gathered from the community needs survey and community forums, where residents
and stakeholders of the City provided input community needs. Please see Appendix A: Citizen
Participation Summary for more detail.
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Housing Market Analysis
MA-05 Overview
Housing Market Analysis Overview
As was discussed in the Needs Assessment, in the San José-Sunnyvale-Santa Clara, CA HUD Metro
Fair Market Rent Area (HMFA), the 3rd most expensive rental market in the nation, renters must
earn at least $31.70 an hour to afford the average two-bedroom apartment.52 Rental housing
throughout Santa Clara County (County) is becoming increasingly more expensive and the
affordability gap is widening. According to the Cities Association of Santa Clara County and Housing
Trust Silicon Valley, “the Association of Bay Area Governments (ABAG) projects that over the next 25
years 57 percent of all household growth in the Bay Area will consist of very-low and low income
households. The State’s Employment Development Department projects that more than half of the
jobs created in the next five years in Santa Clara County will pay $11.00 per hour or less. In addition,
much of the growth is expected to be with senior households”.53
Rising home prices are a response to an imbalance between supply and demand. An adequate
housing supply is critical to keeping housing affordable, and affordable housing is among the most
important contributors to household welfare. When considering the large difference between
income and housing costs, the need for more affordable housing, not just for the lowest income
residents, but also for a large number of low and moderate income working families, becomes clear.
Overall, there is a strong need for a diverse mixture of new housing stock to serve the needs of the
region’s current and future population.
The large percentage of single-family units reflects a more suburban land development pattern.
From 2000-2012, median home values increased 222 percent and rents increased 313 percent. Median
household income increased only 36 percent.
With wages not keeping pace with the housing market and the increasing cost of living in Palo Alto,
future investments in affordable housing development and workforce development, are more
important than ever to maintain a self-sufficient population.
The following gives a brief overview of the market analysis results, with more detail included in each
corresponding section:
MA-10 Number of Housing Units
The City contains 27,268 housing units – 57 percent of which are owner-occupied households,
while 43 percent are renter-occupied households.
The majority of housing units (57 percent) in the City are single-family units (1-unit detached
structures) and 38 percent are multi-family attached units.
Two housing developments totaling 168 units are at risk of conversion during the term of this
Consolidated Plan (2015-2019).
52 National Low Income Housing Coalition. “Out of Reach.” 2014. http://nlihc.org/sites/default/files/oor/2014OOR.pdf
53 Cities Association of Santa Clara County and Housing Trust Silicon Valley. “Affordable Housing Landscape & Local Best
Practices.” December 2013.
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MA-15 Housing Market Analysis: Cost of Housing
Cost burden is the most common housing problem within the City of Palo Alto, 30 percent of
households in the City paying more than 30 percent of their income toward housing costs,
and 14 percent of households paying more than 50 percent of their income toward housing
costs.
The greatest need for affordable units is for the extremely low income households (0-30%
AMI), with a gap of 1,780 units.
MA-20 Housing Market Analysis: Condition of Housing
Seventy-nine percent of housing units were constructed before 1980 and are at risk of a lead
based paint hazard. It is estimated that 23 percent of units at risk of a LBP hazard are
occupied by LMI households.
MA-25 Public and Assisted Housing
The Housing Authority of the County of Santa Clara (HASCS) develops, controls, and
manages more than 2,600 affordable rental housing properties throughout the County.
HACSC has been a Moving to Work (MTW) agency since 2008. In this time the agency has
developed 31 MTW activities. The vast majority of their successful initiatives have been aimed
at reducing administrative inefficiencies, which in turn opens up more resources for
programs aimed at LMI families.
MA-30 Homeless Facilities
As per the 2014 Housing Inventory Count (HIC) 6,320 beds are available for homeless
individuals and families in the County. 358 beds are under development.
Housing facilities for homeless individuals and families include emergency shelters,
transitional housing, permanent supportive housing, and safe havens.
MA-35 Special Needs Facilities
The City has a total of 420 licensed community care facility beds available for persons with
health-related conditions.
MA-40 Barriers to Affordable Housing
The City identified multiple barriers to affordable housing, including income and wages that
are consistent with the rising cost of housing, a competitive rental and home market, and
diminishing public funds.
MA-45 Non-Housing Community Development Assets
Overall, 98 percent of Palo Also residents have at least a high school diploma or higher, and
more than half (57 percent).have a bachelor’s degree or higher.
Holders of bachelor’s degrees have approximately 75 percent higher median income than
those with only an associate’s, and those with a graduate degree or professional degree have
a 140 percent higher median income.
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Between September 2013 and September 2014, total employment in the San José- Sunnyvale-
Santa Clara Metropolitan Statistical Area (MSA) expanded by 34,400 jobs.
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MA-10 Number of Housing Units – 91.210(a) & (b) (2)
Introduction
The City is primarily comprised of single-family owner-occupied units. The City contains 27,268
housing units, 57 percent of which are owner-occupied households, while 43 percent are renter
households. Additionally, 62 percent of housing units (16,857 units) are single-family detached and
attached housing. Multi-family dwelling units represent 39 percent (10,333 units) of the City’s total
housing stock.
Table 38 - Residential Properties by Unit Number (City)
Property Type Number %
1-Unit Detached Structure 15,506 57%
1-Unit, Attached Structure 1,351 5%
2-4 Units 1,784 7%
5-19 Units 3,430 13%
20 or More Units 5,119 19%
Mobile Home, Boat, RV, Van, etc. 78 0%
Total 27,268 100%
Data Source: 2007-2011 ACS
Data source
Comment:
Totals may not add to 100% due to rounding
Table 39 - Unit Size by Tenure (City)
Owner Households Renter Households
Number % Number %
No Bedroom 29 0% 947 9%
1 Bedroom 333 2% 4,060 37%
2 Bedrooms 2,465 17% 3,987 36%
3 or More Bedrooms 11,989 81% 1,987 18%
Total 14,816 100% 10,981 100%
Data Source: 2007-2011 ACS
Data source
Comment:
Totals may not add to 100% due to rounding
Describe the number and targeting (income level/type of family served) of units assisted with
federal, state, and local programs.
In 2014, 17 affordable rental housing projects were located in the City, providing 1,332 affordable
housing units to LMI households.54
The Housing Authority of the County of Santa Clara (HASCS) Section 8 Housing Choice Voucher
program and other voucher programs target assistance as follows: 75 percent entering the program
must be at 0-30% AMI and the remaining 25 percent must be no higher than 50% AMI.
HASCS’s housing properties have income limits as follows:
54 City of Palo Alto. “2015-2023 Housing Element.” 2014.
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Table 40 - HASC Housing Properties (County)
Project Name City Income Limit Number of
Units Housing Type
El Parador Campbell 50% AMI 125 Senior Tax Credit
Housing
Rincon Gardens*† Campbell 50% AMI 200 Family Tax Credit
Housing
Sunset Gardens*† Gilroy 50% AMI 75 Senior Tax Credit
Housing
San Pedro Gardens Morgan
Hill
50% or 60% AMI 20 Family Tax Credit
Housing
Opportunity Center† Palo Alto 50% AMI 89 Senior Tax Credit
Housing
Avenida Espana
Gardens
San José 50% AMI 84 Public and Other
HUD Assisted
Housing
Blossom River Apts. San José 50% or 60% AMI 144 Senior Tax Credit
Housing
Clarendon Street San José 50% or 60% AMI 80 Family Tax Credit
Housing
Cypress Gardens*† San José 50% or 60% AMI 125 Family Tax Credit
Housing
DeRose Gardens San José 60% AMI 76 Senior Tax Credit
Housing
Helzer Courts San José 30%, 50% or 60% AMI 155 Family Tax Credit
Housing
Huff Gardens San José 60% AMI 72 Family Tax Credit
Housing
Julian Gardens† San José 50% AMI 9 Senior Tax Credit
Housing
Lenzen Gardens*† San José 50% AMI 94 Family Tax Credit
Housing
Lucretia Gardens† San José 50% AMI 16 Family Tax Credit
Housing
Morrone Gardens San José 50% AMI 102 Senior Tax Credit
Housing
Pinmore Gardens San José 60% AMI 51 Family Tax Credit
Housing
Poco Way
Apartments†
San José 50% or 60% AMI 129 Family Tax Credit
Housing
Seifert House† San José 50% AMI 3 Senior Tax Credit
Housing
The Willows San José 30% or 60% AMI 47 Family Tax Credit
Housing
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Project Name City Income Limit Number of
Units Housing Type
Villa Hermosa San José 40% AMI 100 Family Tax Credit
Housing
Villa San Pedro San José 50% or 60% AMI 100 Family Tax Credit
Housing
Bracher Senior
Apartments
Santa
Clara
50% AMI 72 Senior Tax Credit
Housing
Deborah Drive** Santa
Clara
40% of new admissions must have
income below 30% AMI, the
remaining 60% are below 80% AMI
4 Family Tax Credit
Housing
Eklund I
Apartments†
Santa
Clara
50% AMI 10 Family Tax Credit
Housing
Eklund II
Apartments†
Santa
Clara
50% AMI 6 Public and Other
HUD Assisted
Housing
John Burns Gardens Santa
Clara
50% AMI 100 Senior Tax Credit
Housing
Klamath Gardens Santa
Clara
50% AMI 17 Family Tax Credit
Housing
Miramar† Santa
Clara
50% AMI 16 Senior Tax Credit
Housing
RiverTown
Apartments
Santa
Clara
20%, 35% or 60% AMI 100 Public and Other
HUD Assisted
Housing
Data Source: HACSC
Data Source
Comments:
*These properties also include non-elderly disabled. **Theses properties are Public Housing units until final disposition and will
then have Project-Based Vouchers. †These properties include Project-Based Vouchers or Project Based Assistance.
Provide an assessment of units expected to be lost from the affordable housing inventory for any
reason, such as expiration of Section 8 contracts.
The Palo Alto Housing Corporation (PAHC) owns and manages three Section 8 Moderate
Rehabilitation projects in Palo Alto: the Curtner Apartments, Emerson South Apartments, and Oak
Manor Townhouses. The original Housing Assistance Payments (HAP) contracts of these properties
have expired, but they are renewed annually.55
Two housing developments, totaling 168 units, are at risk of conversion during the term of this
Consolidated Plan (2015-2019).
55 Ibid.
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Describe the need for specific types of housing:
As discussed in the Needs Assessment, several special needs populations require affordable housing,
including the homeless or at-risk of homelessness; large households; female-headed households with
children; seniors; and disabled individuals. As shown in Table 41, the vast majority of HACSC clients
fall into one of these special needs categories.56 HACSC reports that smaller unit sizes and
accessibility to transit, health care, and other services are housing needs for the senior population.
The same often holds true for disabled individuals.
Table 41 - HACSC Special Needs Populations
Data Source: HACSC
Discussion
Please see discussions above.
56 Housing authority of the County of Santa Clara, Housing Needs Assessment, 2013
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MA-15 Housing Market Analysis: Cost of Housing - 91.210(a)
Introduction
Housing affordability is an important factor for evaluating the housing market, as well as quality of
life, as many housing problems relate directly to the cost of housing. HUD standards measure
affordability by the number of households paying no more than 30 percent of their gross income
toward housing costs, including utilities. This section provides an overview of the overall cost of
housing in the City.
Among owner households, over one-fourth (26 percent) are cost burdened and 12 percent are
severely cost burdened. For renter households, over one-third (35 percent) are cost burdened and 15
percent are severely cost burdened. Taken together, nearly one-third (29 percent) of owner and
renter households (7,690 households) in the City are paying more than 30 percent of their income
toward housing costs, and 13 percent of owner and renter households (3,505 households) are paying
more than 50 percent of their gross income toward housing costs.
As was discussed in MA-05, the San José-Sunnyvale-Santa Clara, CA HUD Metro Fair Market Rent
Area (HMFA), which includes the City, renter households must earn at least $31.70 an hour to afford a
market-rate two bedroom apartment; this causes the area to be the third most expensive rental
market in the nation.57
Table 42 - Cost of Housing (City)
Base Year: 2000 Most Recent Year: 2013 % Change
Median Home Value 776,000 $1,720,000 222%
Median Contract Rent 1,308 $4,096 313%
Data Source: 2000 Census (Base Year), DQNews 2013/ City of Palo Alto Housing Element 2015-2023 (Most Recent Year)
Table 43 - Rent Paid (City)
Rent Paid Number %
Less than $500 1,066 9.7%
$500-999 1,027 9.4%
$1,000-1,499 2,359 21.5%
$1,500-1,999 2,673 24.3%
$2,000 or More 3,856 35.1%
Total 10,981 100.0%
Data Source: 2007-2011 ACS
57 National Low Income Housing Coalition. “Out of Reach.” 2014. http://nlihc.org/sites/default/files/oor/2014OOR.pdf
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Table 44 - Housing Affordability (City)
Percentage of Units Affordable to
Households Earning:
Renter Households Owner Households
30% AMI 780 No Data
50% AMI 1,260 89
80% AMI 2,015 124
100% AMI No Data 218
Total 4,055 431
Data Source: 2007-2011 CHAS
Table 45 - Monthly Rent (City)
Monthly Rent ($) Efficiency (No
Bedroom)
1 Bedroom 2 Bedrooms 3 Bedrooms 4 Bedrooms
Fair Market Rent 1,079 1,262 1,610 2,270 2,574
High HOME Rent 1,079 1,199 1,441 1,656 1,828
Low HOME Rent 918 985 1,183 1,369 1,528
Data Source: HUD FMR and HOME Rents
Table 46 - Affordable Housing Supply Versus Need (City)
Household Income Range Total Units Available Total Households Gap (Renter and Owner Units)
30% AMI 780 2560 -1,780
50% AMI 1,349 1675 -326
80% AMI 2,139 1610 529
Total 4,268 5,845 -1,577
Data Source: 2007-2011 CHAS
Is there sufficient housing for households at all income levels?
There is a disparity between need and availability of affordable housing in the City. The greatest
disparity is seen with 0-30% AMI renter households. Approximately 2,560 households earn between
0-30% AMI, yet there are only 780 rental units available that are affordable to these households.
Overall, there are 5,845 LMI households in the City and 4,268 units available that are affordable to
that income range.
How is affordability of housing likely to change considering changes to home values and/or rents?
Overall, income in the City is not keeping pace with the rising housing costs and high cost of living.
Table 42 shows the median home value and contract rent for housing units. This data demonstrates
that from 2000 to 2013 there has been a 222 percent increase in median home values and a 313
percent change in median contract rent. Within the same time period there was a 36 percent
increase in the household median income ($90,377 to $122,482).58 With 2013 median rent prices at
almost three times 2000 rates, families seeking rental units might experience a greater difficulty
58 2013 ACS.
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affording housing. This is a conservative estimate, as multiple 2014 studies have indicated Silicon
Valley is currently the most expensive housing market in the country. 59 60 61
How do HOME rents / Fair Market Rent compare to Area Median Rent? How might this impact your
strategy to produce or preserve affordable housing?
The HOME and Fair Market Rent (FMR) limits are considerably lower than the overall median rent of
households in the City. At $4,096, the average rent is higher than the HOME and FMR limits for all
unit sizes.
Within high-priced markets, strategies which produce affordable housing do more to preserve long-
term affordability for low income households. In contrast, programs that provide tenant-based
rental assistance, such as Section 8 vouchers, might not be feasible due to market economics,
especially in the areas with higher rents. Strategies that work to produce housing multiply the impact
of available funds by increasing the number of households that can be served over a time period,
especially when HOME rents are considerably lower than those found throughout most of the City.
Discussion
Please see discussions above.
59 Silicon Valley Business Journal. “When the Median Home Price is $4.6 million: Silicon Valley Claims 3 of Nation’s 10 most
Expensive Housing Markets.” http://www.bizjournals.com/sanjose/news/2014/07/07/when-the-median-home-price-is-4-6-
million-silicon.html
60 Forbes. “Silicon Valley Dominates 2013 List of America’s Most Expensive ZIP Codes.”
http://www.forbes.com/sites/morganbrennan/2013/10/16/silicon-valley-tech-enclaves-top-our-list-of-americas-most-
expensive-zip-codes/
61 Huffington Post. “10 Most Affordable Housing Markets in America.” http://www.huffingtonpost.com/2014/11/15/most-
affordable-homes-in-the-us_n_6147890.html
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MA-20 Housing Market Analysis: Condition of Housing – 91.210(a)
Introduction
HUD defines housing “conditions” similarly to the definition of housing problems previously
discussed in the Needs Assessment. These conditions are:
1. More than one person per room
2. Cost burden greater than 30 percent
3. Lack of complete plumbing
4. Lack of complete kitchen facilities
Definitions
Within the City, a "substandard residential building" is defined as any residential building in which
any of the following conditions exist to an extent that it endangers the life, limb, health, property,
safety or welfare of the public or the occupants thereof.62
Table 47 - Condition of Units (City)
Condition of Units Owner-Occupied Renter-Occupied
Number % Number %
With One Selected Condition 3,951 27% 3,983 36%
With Two Selected Conditions 45 0% 344 3%
With Three Selected Conditions 43 0% 23 0%
With Four Selected Conditions 0 0% 0 0%
No Selected Conditions 10,777 73% 6,631 60%
Total 14,816 100% 10,981 99%
Data Source: 2007-2011 ACS
Data
Comment:
Totals may not add to 100% due to rounding
Table 48 - Year Unit Built (City)
Year Unit Built Owner-Occupied Renter-Occupied
Number % Number %
2000 or Later 1,327 9% 938 9%
1980-1999 1,292 9% 1,975 18%
1950-1979 7,499 51% 6,526 59%
Before 1950 4,698 32% 1,542 14%
Total 14,816 101% 10,981 100%
Data Source: 2007-2011 CHAS
Data Source
Comment:
Totals may not add to 100% due to rounding
62 City of Palo Alto Municipal Code. 16.40. Unsafe Buildings
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Table 49 - Risk of Lead-Based Paint (City)
Risk of Lead-Based Paint Hazard Owner-Occupied Renter-Occupied
Number % Number %
Total Number of Units Built Before 1980 12,197 82% 8,068 73%
Housing Units build before 1980 with children present 615 4% 525 5%
Data Source: 2007-2011 ACS (Total Units) 2007-2011 CHAS (Units with Children present)
Table 50 - Vacant Units (City)
Suitable for
Rehabilitation
Not Suitable for
Rehabilitation
Total
Vacant Units - - -
Abandoned Vacant Units - - -
REO Properties - - -
Abandoned REO Properties - - -
Data
Source
Comments:
Data on vacant units or suitability for rehabilitation is not collected by the City
Estimated Number of Housing Units Occupied by Low or Moderate Income Families with LBP
Hazards
Building age is used to estimate the number of homes with lead-based paint (LBP), which was
prohibited on residential units after 1978. For the purposes of this plan, units built before 1980 are
used as a baseline for units that contain LBP. Seventy-seven percent of all units (21,455 units) in the
City were built before 1980 and provide potential exposure to LBP. As discussed in the Needs
Assessment, 23 percent of households within the City have incomes ranging from 0-80% AMI. Using
this percentage as a baseline, we can estimate that 4,934 LBP units are occupied by LMI families.
Discussion
Please see discussions above.
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MA-25 Public and Assisted Housing – 91.210(b)
Introduction
As was discussed in the Needs Assessment, HACSC assists approximately 17,000 households through
Section 8. The Section 8 waiting list contains 21,256 households – this is estimated to be a 10-year
wait. HACSC also develops, controls, and manages more than 2,600 affordable rental housing
properties throughout the County. HACSC’s programs are targeted toward LMI households, and
more than 80 percent of their client households are extremely low income families, seniors,
veterans, persons with disabilities, and formerly homeless individuals.63
As referenced in the Need Assessment, in 2008 HACSC entered into a ten-year agreement with HUD
to become a Moving to Work agency. The MTW program is a federal demonstration program that
allows greater flexibility to design and implement more innovative approaches for providing housing
assistance.64 Additionally, HACSC has used Low Income Housing Tax Credit financing to transform
and rehabilitate 535 units of public housing into HACSC-controlled properties. The agency is an active
developer of affordable housing and has either constructed, rehabilitated, or assisted with the
development of more than 30 housing developments that service a variety of households, including
special needs households.65
The tables below display the public housing inventory and housing vouchers maintained by HACSC.
HACSC has four two-bedroom family public housing units in its portfolio; they are located in the City
of Santa Clara. Approximately 16,387 housing vouchers are in use countywide.
Specific HACSC data on the number of units or vouchers available is only available for the City of San
Jose (through the Housing Authority of the City of San José, administered by HACSC) and the County
as a whole.
Table 51 - Total Number of Units by Program Type (County)
Program Type
Certificate Mod-
Rehab
Public
Housing
Vouchers
Total Project
-based
Tenant
-based
Special Purpose Voucher
Veterans
Affairs
Supportive
Housing
Family
Unification
Program
Disabled
*
# of
Units/Vouchers
Available
0 42 0 10,931 666 9,362 740 100 63
# of Accessible
Units
- - - - - - - - -
*Includes Non-Elderly Disabled, Mainstream One-Year, Mainstream Five-year, and Nursing Home Transition
Data Source: HACSC
Data Source
Comment:
HACSC does not collect data on whether or not households use a voucher for an accessible unit.
63 Housing Authority of the County of Santa Clara. “Welcome to HACSC.” http://www.hacsc.org/
64 HACSC. “Moving to Work (MTW) 2014 Annual Report.” September 2014.
65 Housing Authority of the County of Santa Clara. “Welcome to HACSC.” http://www.hacsc.org/
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Describe the supply of public housing developments.
Not applicable. There are no public housing developments located in the jurisdiction.
Describe the number and physical condition of public housing units in the jurisdiction, including
those that are participating in an approved Public Housing Agency Plan.
Not applicable.
Table 52 - Public Housing Condition
Public Housing Development Average Inspection Score
N/A N/A
Describe the restoration and revitalization needs of public housing units in the jurisdiction.
Not applicable.
Describe the public housing agency's strategy for improving the living environment of low- and
moderate-income families residing in public housing.
As referenced in the Needs Assessment, HACSC has been a Moving to Work agency since 2008. In
this time the agency has developed 31 MTW activities. The vast majority of their successful initiatives
have been aimed at reducing administrative inefficiencies, which in turn opens up more resources for
programs aimed at LMI families.66 The following is excerpted from HACSC’s August 2014 Board of
Commissioner’s report:
“HACSC’s Family Self Sufficiency (FSS) Program is designed to provide assistance to current HACSC
Section 8 families to achieve self-sufficiency. When a family enrolls in the five-year program, HPD’s
FSS Coordinator and LIFESteps service provider helps the family develop self-sufficiency goals and a
training plan, and coordinates access to job training and other services, including childcare and
transportation. Program participants are required to seek and maintain employment or attend
school or job training. As participants increase their earned income and pay a larger share of the rent,
HACSC holds the amount of the tenant’s rent increases in an escrow account, which is then awarded
to participants who successfully complete the program. HACSC is currently in the initial stages of
creating a pilot successor program to FSS under the auspices of its MTW flexibility called Focus
Forward.”
Every year, HACSC provides a report to HUD on the previous year’s activities in its FSS program. The
following chart represents a summary of what was reported to HUD for the County of Santa Clara’s
and the City of San Jose’s FSS programs.” 67
66 HACSC. “Moving to Work (MTW) 2014 Annual Report.” September 2014.
67 HACSC. “Housing Programs Department (HPD) Monthly Board Report.” August 2014.
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Table 53 - HACSC Family Self Sufficiency Report (County)
CY2013 Family Self Sufficiency Report
How many households were actively case-managed? 266
How many individuals received services? 266
How many households successfully completed their Contract of Participation? 28
What is the cost per family to coordinate services? $1,899
How many FSS households increased their income? 80
What was the average dollar increase in annual household income? $12,431
How many households experienced a reduction in cash welfare assistance? 19
How many households ceased receiving cash welfare assistance as a result of
increased household income?
11
How many new FSS escrow accounts were established with positive balances? 22
What was the total value of FSS escrow accounts disbursed to graduating
households?
$300,190
How many households were able to move to non-subsidized housing? 5
Data Source: HACSC Board Report August 2013
Discussion:
Please see discussions above.
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MA-30 Homeless Facilities and Services – 91.210(c)
Introduction
Various organizations within the County provide housing facilities and services for the homeless. Housing opportunities for homeless
individuals and families include emergency shelters, transitional housing, permanent supportive housing, rapid re-housing, and safe havens.
Housing opportunities are provided at facilities or through scattered-site housing models. Housing services available include outreach and
engagement, housing location assistance, medical services, employment assistance, substance abuse recovery, legal aid, mental health
care, veteran services, public assistance benefits advocacy and referrals, family crisis shelters and childcare, domestic violence support,
personal good storage, and personal care/hygiene services.
Table 54 - Facilities and Housing Targeted to Homeless Households (County)
Emergency Shelter Beds Transitional Housing
Beds
Permanent Supportive Housing Beds
Year Round Beds
(Current & New)
Voucher / Seasonal /
Overflow Beds
Current & New Current & New Under Development
Households with Adult(s)
and Child(ren)
257 70 619 1602 6
Households with Only
Adults
314 271 522 2081 309
Chronically Homeless
Households
0 0 0 979 310
Veterans 30 0 152 809 0
Unaccompanied Youth 22 0 0 0 0
Data Source: HMIS Santa Clara County
Data Source
Comment:
List includes DV Shelters. Numbers are duplicate for Unaccompanied Youth and Unaccompanied Children. Data includes entire continuum capacity and is aggregate for the
County.
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Describe mainstream services, such as health, mental health, and employment services to the
extent those services are used to complement services targeted to homeless persons.
Regional programs that highlight and demonstrate mainstream service connections for the homeless
population include:68
The Valley Homeless Healthcare Program (VHHP) is part of the Santa Clara Valley Health and
Hospital system and provides a variety of services for homeless people, including primary
care, urgent care, and backpack medicine for people in encampments, medically focused
outreach, and connection to an SSI advocate through the County’s Social Services Agency.
VHHP also connects people to the public behavioral health system and connects people with
or enrolls people in Affordable Care Act benefits. VHHP also manages a Medical Respite
program for homeless who are being discharged from hospitalizations, including from the
County hospital.
The Social Services Agency has an expedited review process for SNAP (food stamps)
applications for homeless people such that they can be approved for benefits within three
days.
The Social Services Agency and the Workforce Investment Board (work2future) in San Jose
are piloting an employment program for recipients of General Assistance who are homeless.
The County’s Behavioral Health Services Department (BHS) has several programs that
connect homeless people to housing or shelter assistance, as well as several programs in
which homeless people are connected to BHS for treatment.
BHS and the County’s Office of Reentry Services, as well as Social Services and VHHP, have
partnered on services through the County’s Reentry Resource Center (RRC) to provide
services to people who have a history of incarceration, including those who were recently
released and who are homeless. Through the RRC, clients can get expedited
connections/referrals to treatment services, housing, and other mainstream benefits.
BHS is dedicating a significant portion of its State Mental Health Services Act funds to
housing. Since 2007, $21 million has been dedicated to housing in the form of construction
assistance or operational subsidies. This investment will result in at least 150 new housing
units for mentally ill households who are homeless, chronically homeless or at risk of
homelessness (depending on the housing project). Of these units, 109 units are currently
occupied, five are under construction and 36 are in the planning stages.
The County’s Office of Supportive Housing's (OSH) mission is to increase the supply of
housing and supportive housing that is affordable and available to extremely low income
and/or special needs households. OSH supports the County’s mission of promoting a healthy,
safe, and prosperous community by ending and preventing homelessness.
68 County of Santa Clara Office of Supportive Housing
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List and describe services and facilities that meet the needs of homeless persons, particularly
chronically homeless individuals and families, families with children, veterans and their families,
and unaccompanied youth. If the services and facilities are listed on screen SP-40 Institutional
Delivery Structure or screen MA-35 Special Needs Facilities and Services, describe how these
facilities and services specifically address the needs of these populations.
The following is a list of facilities that provide a total of 6,320 beds (358 beds are under
development) for homeless individuals and families in the County. The number of beds provided to
Target Populations of individuals and families is:69
• Households with children (HC): 1,124
• Single females (SF): 85
• Single females and households with children (SFHC): 304
• Single males (SM): 346
• Single males and females (SMF): 1,052
• Single males and females and households with children (SMF+HC): 3,031
• Unaccompanied youth males and females (YMF): 20
• Domestic violence (DV): 50
• HIV/AIDs program (HIV): 167
Table 55 - Homeless Housing Inventory Chart (County)
Organization Name Project Name Target Pop. Total
Beds
Abode Services Abode Place-Based Rapid Re-Housing
Program
SMF+HC 100
Abode Services Encampments SMF+HC 20
Abode Services SCC Rental Assistance Program SMF+HC 90
Abode Services SCC Rental Assistance Program SMF+HC 70
Abode Services SJ Mental Health TH SMF+HC 24
Abode Services SJ Mental Health TH SMF+HC 13
Abode Services St. James Park (Dept. of Drug &
Alcohol Services)
SMF+HC 21
Abode Services Sunnyvale TH SMF+HC 9
Abode Services Sunnyvale TH SMF+HC 30
Abode Services Sunset Leasing SMF+HC 21
Asian Americans for Community
Involvement
Asian Women's Home SFHC 14
Bill Wilson Center 8th Street/Keyes (formerly Leigh) SMF 4
Bill Wilson Center Bill Wilson RRH SMF+HC 44
Bill Wilson Center High Glen (formerly Villa Street) HC 9
Bill Wilson Center Jackson St. HC 17
69 Santa Clara County Continuum of Care. “2014 SCC Housing Inventory Chart.”
http://www.sccgov.org/sites/oah/Pages/Office-of-Affordable-Housing.aspx
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Organization Name Project Name Target Pop. Total
Beds
Bill Wilson Center Lafayette Street SMF 6
Bill Wilson Center Norman Drive (North County) HC 11
Bill Wilson Center PeaCoCk Commons SMF+HC 34
Bill Wilson Center PeaCoCk Commons LI SMF+HC 11
Bill Wilson Center PeaCoCk Commons MHSA SMF+HC 11
Bill Wilson Center Rockefeller Drive (North County) SMF 8
Bill Wilson Center Runaway and Homeless Youth Shelter YMF 20
Bill Wilson Center Via Anacapa HC 8
Catholic Charities of Santa Clara County Family Housing HC 56
Catholic Charities of Santa Clara County Navigator Project SMF 29
Catholic Charities of Santa Clara County New Directions SMF 25
Catholic Charities of Santa Clara County New Directions Expansion - Medical
Respite
SMF 22
Charities Housing San Antonio Place and Scattered Sites SMF 10
City Team Ministries City Team Rescue Mission SM 48
City Team Ministries Heritage Home SF 23
City Team Ministries House of Grace SF 30
City Team Ministries Men's Recovery/Discipleship SM 56
City Team Ministries Rescue Mission TH SM 11
Community Solutions El Invierno TH Gilroy SM 12
Community Solutions Glenview Dr. SM 6
Community Solutions La Isla Pacifica HC DV 14
Community Solutions Maria Way SM 6
Community Solutions Walnut Lane SM 6
Community Working Group/Housing
Authority
Opportunity Center - HUD SMF 6
Community Working Group/Housing
Authority
Opportunity Center - NON-HUD SMF+HC 82
Downtown Streets Team Workforce Supportive Housing
Program
SMF 9
Family Supportive Housing Glen Art - Transitional Housing
Program #1
HC 21
Family Supportive Housing San Jose Family Shelter HC 123
Family Supportive Housing Transitional Housing Program #2 HC 23
Family Supportive Housing Transitional Housing Program #3 HC 13
Family Supportive Housing Transitional Housing Program #4 HC 8
Goodwill Institute for Career
Development
Goodwill SSVF SMF+HC 30
HomeFirst (formerly EHC Lifebuilders) Boccardo FLC San Martin 2 year
Transitional Program
HC 63
HomeFirst (formerly EHC Lifebuilders) Boccardo FLC San Martin Family
Wellness Court Units
HC 15
HomeFirst (formerly EHC Lifebuilders) Boccardo FLC San Martin
Farmworkers Housing
HC 0
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Organization Name Project Name Target Pop. Total
Beds
HomeFirst (formerly EHC Lifebuilders) Boccardo FLC San Martin Short Term
Transitional
HC 48
HomeFirst (formerly EHC Lifebuilders) BRC Nightly Shelter SMF 167
HomeFirst (formerly EHC Lifebuilders) BRC Supportive Transitional Housing
(Mental Health)
SMF 18
HomeFirst (formerly EHC Lifebuilders) EHC Lifebuilders - SSVF SMF+HC 20
HomeFirst (formerly EHC Lifebuilders) GPD BRC Veterans Per Diem SMF 20
HomeFirst (formerly EHC Lifebuilders) Housing 1000 Care Coordination
Project
SMF 14
HomeFirst (formerly EHC Lifebuilders) Housing for Homeless Addicted to
Alcohol
SMF 42
HomeFirst (formerly EHC Lifebuilders) Nightly CWSP Gilroy SMF+HC 101
HomeFirst (formerly EHC Lifebuilders) Nightly CWSP Sunnyvale SMF 125
HomeFirst (formerly EHC Lifebuilders) Scattered Site TH Program #1 HC 45
HomeFirst (formerly EHC Lifebuilders) Scattered Site TH Program #2 HC 15
HomeFirst (formerly EHC Lifebuilders) Sobrato Family Living Center ELI HC 40
HomeFirst (formerly EHC Lifebuilders) Sobrato Family Living Center PSH HC 32
HomeFirst (formerly EHC Lifebuilders) Sobrato Family Living Center VLI HC 99
HomeFirst (formerly EHC Lifebuilders) Sobrato House Youth Shelter SMF 10
Homeless Veterans Emergency Housing
Facility
HVEHF - Aging SMF 71
Homeless Veterans Emergency Housing
Facility
HVEHF - Men's SM 38
Homeless Veterans Emergency Housing
Facility
HVEHF - Women's SF 11
Housing Authority of the County of Santa
Clara
CHDR 2010 (formerly known as
Section 8 Vouchers - Housing First)
SMF+HC 267
Housing Authority of the County of Santa
Clara
CHDR 2013 SMF 75
Housing Authority of the County of Santa
Clara
CHDR 2013 SMF 25
Housing Authority of the County of Santa
Clara
King's Crossing SMF+HC 59
Housing Authority of the County of Santa
Clara
Section 8 Voucher - MTW SMF+HC 750
Housing Authority of the County of Santa
Clara
Shelter Plus Care 5022 SMF+HC 409
Housing Authority of the County of Santa
Clara
Shelter Plus Care 5320 SMF 24
Housing Authority of the County of Santa
Clara
Tully Gardens SMF 10
Housing Authority of the County of Santa
Clara
VASH - HUD-VASH SMF+HC 809
InnVision (with Community Services
Agency)
Graduate House SMF 5
InnVision Shelter Network Alexander House SF 6
InnVision Shelter Network Commercial Street Inn SFHC 51
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Organization Name Project Name Target Pop. Total
Beds
InnVision Shelter Network CSI Cold Weather Inn HC 3
InnVision Shelter Network Highlander Terrace (formerly known
as North Santa Clara County
Permanent Housing for Families)
HC 23
InnVision Shelter Network Hotel de Zink SMF 15
InnVision Shelter Network InnVision Villa SFHC 54
InnVision Shelter Network JSI 24-Hour Care SMF 12
InnVision Shelter Network JSI Cold Weather Inn SMF 5
InnVision Shelter Network JSI DADS SMF 8
InnVision Shelter Network JSI DADS/AB 109 THU SMF 2
InnVision Shelter Network JSI Full Service Provider (FSP) SMF 8
InnVision Shelter Network JSI Mental Health SMF 21
InnVision Shelter Network Julian Street Inn SMF 10
InnVision Shelter Network MSI AB 109/DADS THU SM 4
InnVision Shelter Network MSI Cold Weather Inn SF 5
InnVision Shelter Network MSI Emergency Shelter SM 46
InnVision Shelter Network MSI HUD THU SM 10
InnVision Shelter Network MSI THU AB 109 SM 5
InnVision Shelter Network MSI Transitional Housing Unit SM 8
InnVision Shelter Network MSI VA PD THU Beds SM 12
InnVision Shelter Network North County Inns SMF 18
InnVision Shelter Network Rolison Inns (formerly known as
North Santa Clara County Supportive
Housing Coalition)
SMF 8
InnVision Shelter Network Safe Haven Permanent Housing for
Women (Hester Project)
SF 10
InnVision Shelter Network Samaritan Inns SMF+HC 25
InnVision Shelter Network Stevens House SMF 7
InnVision Shelter Network Sunset Square HC 39
InnVision Shelter Network/Next Door
Solutions to Domestic Violence
Home Safe San Jose SFHC DV 70
InnVision Shelter Network/Next Door
Solutions to Domestic Violence
Home Safe Santa Clara SFHC DV 72
Next Door Solutions to Domestic Violence Residential Emergency Shelter SFHC DV 20
Salvation Army Emmanuel House (Overnighter) SM 22
Salvation Army Hospitality House-Working Man's
Program
SM 50
Salvation Army Volunteer Recovery SM 6
Santa Clara County Mental Health
Department
AB 109 SMF 30
Santa Clara County Mental Health
Department
Abode - Rental Assistance Project
(RAP) #1
SMF 55
Santa Clara County Mental Health
Department
Abode - Rental Assistance Project
(RAP) #2
SMF 8
Santa Clara County Mental Health Community Reintegration - Central SMF 10
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Organization Name Project Name Target Pop. Total
Beds
Department County
Santa Clara County Mental Health
Department
Community Reintegration - North
County
SMF 10
Santa Clara County Mental Health
Department
Community Reintegration - South
County
SMF 10
Santa Clara County Mental Health
Department
CSJ and MHD/CC - TBRA SMF+HC 13
Santa Clara County Mental Health
Department
CSJ and MHD/MMH - TBRA SMF+HC 2
Santa Clara County Mental Health
Department
Custody Health High Users SMF 15
Santa Clara County Mental Health
Department
Mental Health Permanent Supportive
Housing Project
SMF 20
Santa Clara County Mental Health
Department
MHSA 4th Street Apartments SMF 6
Santa Clara County Mental Health
Department
MHSA Archer Street Apartments SMF 6
Santa Clara County Mental Health
Department
MHSA Armory Family Housing SMF 10
Santa Clara County Mental Health
Department
MHSA Bella Terra Senior Apartments SMF 5
Santa Clara County Mental Health
Department
MHSA Belovida Santa Clara SMF 3
Santa Clara County Mental Health
Department
MHSA Curtner Studio SMF 27
Santa Clara County Mental Health
Department
MHSA Donner Lofts SMF 15
Santa Clara County Mental Health
Department
MHSA Fair Oak Plaza SMF 18
Santa Clara County Mental Health
Department
MHSA Ford and Monterey Family
Apartments
SMF 5
Santa Clara County Mental Health
Department
MHSA Gilroy Sobrato Apartments SMF 17
Santa Clara County Mental Health
Department
MHSA King's Crossing SMF+HC 10
Santa Clara County Mental Health
Department
MHSA Parkside Studio SMF 11
Santa Clara County Mental Health
Department
MHSA Paseo Senter I (1896 Senter) SMF+HC 17
Santa Clara County Mental Health
Department
MHSA Paseo Senter II (1900 Senter
Rd.)
SMF 5
Santa Clara County Mental Health
Department
Pay For Success SMF 120
Santa Clara County Mental Health
Department
Scattered Site Rental Assistance SMF 14
South County Housing Royal Court Apartments SMF+HC 34
South County Housing Sobrato Gilroy Permanent Housing HC 52
South County Housing Sobrato Transitional (HUD) HC 61
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Organization Name Project Name Target Pop. Total
Beds
South County Housing Sobrato Transitional (non-HUD) HC 83
St. Joseph's Family Center Gilroy Place SMF 12
St. Joseph's Family Center Gilroy Sobrato Apartments - HUD SMF 8
St. Joseph's Family Center Our New Place HC DV 36
The Health Trust Housing for Health Program HC HIV 167
Valley Homeless Health Care Program Valley Health Medical Respite Center SMF 18
West Valley Community Services Transitional Housing Program SMF+HC 18
YWCA of Silicon Valley Support Network for Battered
Women
SFHC DV 23
Total 6,320
Data Source: 2014 HIC
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MA-35 Special Needs Facilities and Services – 91.210(d)
Introduction
Table 56 - Licensed Community Care Facilities (City)
Facility Type Facilities Bed
Adult Residential - -
Residential Care for the Elderly 6 420
Group Homes - -
Small Family Home - -
Social Rehabilitation - -
Total 6 420
Data Source: California Community Care Licensing Division, 2014
Including the elderly, frail elderly, persons with disabilities (mental, physical, developmental),
persons with alcohol or other drug addictions, persons with HIV/AIDS and their families, public
housing residents and any other categories the jurisdiction may specify, describe their supportive
housing needs.
Describe programs for ensuring that persons returning from mental and physical health
institutions receive appropriate supportive housing.
The City has a total of 420 Residential Care facility beds available for elderly persons.
Residential Care Facilities for the Elderly (RCFE) provide care, supervision and assistance with
activities of daily living, such as bathing and grooming. They may also provide incidental medical
services under special care plans. The facilities provide services to persons 60 years of age and over
and persons under 60 with compatible needs. RCFEs may also be known as assisted living facilities,
nursing homes, and board and care homes. The facilities can range in size from fewer than six beds
to over 100 beds. The residents in these facilities require varying levels of personal care and
protective supervision.70
The City spends part of its CDBG funds and local funds toward a variety of public services to address
the supportive housing needs of homeless and very low income persons. For example, the City
provides funding to Momentum for Mental Health for their homeless outreach program. Momentum
provides a wide range of specialized and culturally competent services and programs that include:71
• Residential treatment programs that provide an alternative to admission to or continued
care in a hospital
70 Community Care Licensing Division. “Glossary.” http://www.ccld.ca.gov/res/html/glossary.htm
71 Momentum for Mental Health. “Momentum for Mental Health Home Page.”
http://www.momentumformentalhealth.org/
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• Supportive housing programs to assist individuals in achieving and maintaining independent
living
• Day rehabilitation programs
• Outpatient mental health and psychiatric treatment, case management and rehabilitation
services provided by multidisciplinary teams
• Employment preparation, search and support
• Services and support to family members
Specify the activities that the jurisdiction plans to undertake during the next year to address the
housing and supportive services needs identified in accordance with 91.215(e) with respect to
persons who are not homeless but have other special needs. Link to one-year goals. 91.315(e)
As shown in Table 57, there are 12 housing developments in Palo Alto that include 985 units
specifically designed for elderly households.72
Table 57 - Independent Living Facilities for Elderly Residents in Palo Alto, 2014 (City)
Development Total Units Senior Units Income Level Served
Alta Torre 56 55 Very Low Income
Arastradero Park 66 13 Low Income
Colorado Park 60 8 Low income
Fabian Way Senior Housing 56 56 Low income
Lytton I and II 268 268 Low income
Lytton Courtyard 51 51 Extremely Low- and Low income
Moldaw (Taube-Koret Campus 170 170 Low income
Palo Alto Gardens 156 128 Very Low income
Sheridan Apartments 57 57 Low income
Stevenson House 128 128 Low income
Terman Apartments 92 24 Very Low income
Webster Wood Apartments 68 4 Low income
Total 1251 985
Data Source: City of Palo Alto 2015-2023 Housing Element
In addition, there are other housing types, appropriate for people living with a developmental
disability: rent subsidized homes, licensed and unlicensed single-family homes, and residential care
facilities.73
The design of housing-accessibility modifications, the proximity to services and transit, and the
availability of group living opportunities represent some of the types of considerations that are
important in serving this need group. Incorporating barrier-free design in all new multi-family
housing (as required by California and Federal Fair Housing laws) is especially important to provide
the widest range of choices for disabled residents. Special consideration may also be given to the
affordability of housing, as people with disabilities may be living on a fixed income.
72 City of Palo Alto. “2015-2023 Housing Element.” 2014.
73 Ibid.
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For entitlement/consortia grantees: Specify the activities that the jurisdiction plans to undertake
during the next year to address the housing and supportive services needs identified in accordance
with 91.215(e) with respect to persons who are not homeless but have other special needs. Link to
one-year goals. (91.220(2))
The City will continue to provide funding to various non-profit agencies that provide supportive
services to people who are not homeless but have other special needs. Below is a sample list of
these services, which in total is budgeted at $1 million in General Fund dollars every year.
Figure 3 – Human Services Resource Allocation Process Budget
Data Source: City of Palo Alto
Through the CDBG program the City will continue to support activities for the special needs
population, which will be specified in the CDBG Notice of Funding Availability (NOFA) when it is
complete. A NOFA for the creation of new affordable housing will also be released in 2015.
Additionally, the City is one of three jurisdictions that has joined the County of Santa Clara in
establishing a HOME consortium.
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MA-40 Barriers to Affordable Housing – 91.210(e)
Describe any negative effects of public policies on affordable housing and residential investment.
The incorporated and unincorporated jurisdictions within the County face barriers to affordable
housing that are common throughout the Bay Area. High on the list is the lack of developable land,
which increases the cost of available lands and increases housing development costs. Local
opposition is another common obstacle as many neighbors have strong reactions to infill and
affordable housing developments. Their opposition is often based on misconceptions, such as a
foreseen increase in crime; erosion of property values; increase in parking and traffic congestion; and
overwhelmed schools.74 However, to ensure a healthy economy the region must focus on strategies
and investment that provide housing for much of the region’s workforce – for example, sales clerks,
secretaries, firefighters, police, teachers, and health service workers – whose incomes significantly
limit their housing choices.75
Even when developments produce relatively affordable housing, in a constrained housing supply
market, higher income buyers and renters generally outbid lower income households and a home’s
final sale or rental price will generally far exceed the projected sales or rental costs. Public subsidies
are often needed to guarantee affordable homes for LMI households.
The City identified several constraints to the maintenance, development and improvement of
housing and affordable housing in its 2015-2023 Housing Element update: 76
Local policies and regulations can impact the price and availability of housing and, in
particular, the provision of affordable housing
Land use controls
Site improvement requirements
Fees and exactions
Permit processing procedures
74 Association of Bay Area Governments. “Affordable Housing in the Bay Area.” 2014.
75 Association of Bay Area Governments. “Jobs-Housing Connection Strategy.” 2012.
76 City of Palo Alto. “2015-2023 Housing Element.” 2014.
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MA-45 Non-Housing Community Development Assets – 91.215 (f)
Introduction
Strategies for increasing the housing supply must take into account a jurisdiction’s job/housing
balance, which is defined as the ratio of number of jobs to number of housing units in a given area. A
more precise ratio is between the number of jobs and the number of employed residents, as some
households have no workers, while others have multiple workers). There should not only be a
sufficient amount of housing at a range of prices, but also a variety of housing types appropriate for
a range of needs and in locations that allow for access to transportation and employment
opportunities. If there is an imbalance of appropriate housing for the number of employees in an
area, the result can be longer commutes and greater traffic congestion as employees must then
commute to places of employment.
Jobs and housing are considered to be balanced when there are an equal number of employed
residents and jobs within a given area, with a ratio of approximately 1.0. A more balanced
jobs/housing ratio can ease traffic congestion and the burden it imposes on residents, businesses,
and local infrastructure. That burden is particularly evident in California. Researchers ranked four
California metropolitan areas among the nation’s ten most-congested areas in terms of time lost per
year: 1) Los Angeles/Long Beach/ Santa Ana, 2) San Francisco/Oakland, and tied for 8th) San Jose.77
The table below shows the Job/Housing ratios for the jurisdictions in the County as determined by
the ABAG.78
Table 58 -Jobs / Employed Residents Ratio (County)
Jurisdiction Jobs/Employed Residents Ratio
Campbell 1.3
Cupertino 1.0
Los Gatos 1.8
Milpitas 1.5
Mountain View 1.2
Palo Alto 2.9
San Jose 0.8
Santa Clara 1.9
Sunnyvale 1.0
Santa Clara County 1.1
Data Source: ABAG Projections 2013
The Bay Area region has taken a step to reduce the jobs/housing imbalance with the adoption of Plan
Bay Area, the region's implementation of the Sustainable Communities Strategy required by SB 375
of 2008.79 Plan Bay Area focuses growth in urban areas near transit and employment. This strategy
will allow for an increase in the housing supply that narrows the affordability gap. Higher density
77 California Planning Roundtable. “Deconstructing Jobs-Housing Balance.”
2008.http://www.cproundtable.org/media/uploads/pub_files/CPR-Jobs-Housing.pdf
78 Association of Bay Area Governments. “Jobs/Housing Balance.”
http://www.abag.ca.gov/planning/housingneeds/notes/10-19-06_Agenda_Item_2_-_Jobs-Housing_Balance.pdf
79 California Environmental Protection Agency. “Sustainable Communities.” http://www.arb.ca.gov/cc/sb375/sb375.htm
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housing located near transit can be more affordable than detached more suburban-style housing.
Lower housing costs and lower commuting costs can significantly reduce the overall cost of living for
households.
Table 59 - Jobs by Business Activity (City)
Business by Sector Number
of
Workers
Number
of Jobs
Share of
Workers
%
Share of
Jobs
%
Jobs less
workers
%
Agriculture, Mining, Oil & Gas Extraction 44 39 0 0 0
Arts, Entertainment, Accommodations 1,459 5,822 7 7 0
Construction 491 805 2 1 -1
Education and Health Care Services 4,112 29,352 19 34 15
Finance, Insurance, and Real Estate 1,266 3,631 6 4 -2
Information 1,550 6,719 7 8 1
Manufacturing 3,024 8,181 14 10 -5
Other Services 916 2,905 4 3 -1
Professional, Scientific, Management Services 5,326 18,807 25 22 -3
Public Administration 0 1 0 0 0
Retail Trade 1,110 5,153 5 6 1
Transportation and Warehousing 200 69 1 0 -1
Wholesale Trade 786 1,323 4 2 -2
Total 20,284 82,807 -- -- --
Data Source: 2007-2011 ACS (Workers), 2011 Longitudinal Employer-Household Dynamics (Jobs)
Data Source
Comment:
HUD data for Public Administration sector not available.
Table 60 - Labor Force (City)
Total Population in the Civilian Labor Force 32,360
Civilian Employed Population 16 years and Over 30,713
Unemployment Rate 5.09%
Unemployment Rate for Ages 16-24 16.08%
Unemployment Rate for Ages 25-65 3.47%
Data Source: 2007-2011 ACS
Table 61 - Occupations by Sector (City)
Occupations by Sector Number of People
Management, Business and Financial 17,137
Farming, Fisheries and Forestry Occupations 659
Service 1,238
Sales and Office 3,574
Construction, Extraction, Maintenance and Repair 507
Production, Transportation and Material Moving 502
Data Source: 2007-2011 ACS
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Table 62 - Travel Time (City)
Travel Time Number Percentage
< 30 Minutes 20,458 75%
30-59 Minutes 5,261 19%
60 or More Minutes 1,449 5%
Total 27,168 100%
Data Source: 2007-2011 ACS
Data Source
Comment:
Totals may not add to 100% due to rounding
Table 63 - Educational Attainment by Employment Status - Population Age 16 and Older (City)
Educational Attainment In Labor Force
Civilian Employed Unemployed Not in Labor
Force
Less Than High School Graduate 456 2 207
High School Graduate (Includes Equivalency) 804 108 379
Some College or Associate's Degree 2,503 248 1,166
Bachelor's Degree or Higher 22,924 847 5,086
Data Source: 2007-2011 ACS
Table 64 - Educational Attainment by Age (City)
Age
18–24
Years
25–34
Years
35–44
Years
45–65
Years
65+ Years
Less Than 9th Grade 7 54 115 241 194
9th to 12th Grade, No Diploma 175 59 65 131 258
High School Graduate, GED, or Alternative 624 419 121 751 998
Some College, No Degree 1,435 843 529 1,368 1,429
Associate's Degree 136 272 152 753 526
Bachelor's Degree 1,039 2,787 2,466 4,913 2,956
Graduate or Professional Degree 253 4,181 5,678 8,845 3,941
Data Source: 2007-2011 ACS
As shown in Table 64, the educational attainment for residents 25 years of age and older is as
follows:
Two percent have not graduated high school
Five percent have graduated high school (including equivalency), but no further education
Nine percent have some college but no degree
Four percent have an associate’s degree
Twenty-nine percent have a bachelor’s degree
Fifty percent have a graduate or professional degree
Overall, 98 percent of Palo Also residents have at least a high school diploma or higher, and more
than half have a bachelor’s degree or higher (57 percent). Meanwhile, less than one third of the
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entire population of California has a bachelor’s degree or higher and 11 percent have a graduate or
professional degree.80
Table 65 - Educational Attainment by Age - 25 and Older (City)
Age
Total % of
Total 25–34
Years
35–44
Years
45–65
Years
65+
Years
Less Than 9th Grade 54 115 241 194 604 1%
9th To 12th Grade, No Diploma 59 65 131 258 513 1%
High School Graduate, GED, or Alternative 419 121 751 998 2289 5%
Some College, No Degree 843 529 1,368 1,429 4169 9%
Associate's Degree 272 152 753 526 1703 4%
Bachelor's Degree 2,787 2,466 4,913 2,956 13122 29%
Graduate or Professional Degree 4,181 5,678 8,845 3,941 22645 50%
Total: 8615 9126 17002 10302 45045 100%
Data Source: 2007-2011 CHAS
Data Source
Comment:
Totals may not add up to 100% due to rounding
Table 65 shows that residents with advanced and professional degrees have significantly higher
median incomes, with holders of bachelor’s degrees having approximately 75 percent higher median
income than those with only an associate’s, and those with a graduate degree or professional degree
having a 140 percent higher median income.
Table 66 - Median Earnings in the Past 12 Months (City)
Educational Attainment Median Earnings in the Past 12 Months
Less Than High School Graduate 22,500
High School Graduate (Includes Equivalency) 28,889
Some College or Associate's Degree 43,145
Bachelor's Degree 75,709
Graduate or Professional Degree 103,860
Data Source: 2007-2011 ACS
Based on the Business Activity table above, what are the major employment sectors within your
jurisdiction?
The top employer in Palo Alto is Hewlett-Packard, with approximately 317,000 employees as of April,
2014. Other notable employers in the City include: VMware, Varian Medical Systems, Tesla Motors,
Tobxo Software, and Jive Software. Together, these five companies employ over 31,000 people.81
80 2008-2012 ACS
81 Silicon Valley. “Searchable database of Silicon Valley’s top 150 companies for 2014.” http://www.siliconvalley.com/
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Describe any major changes that may have an economic impact, such as planned local or regional
public or private sector investments or initiatives that have affected or may affect job and business
growth opportunities during the planning period. Describe any needs for workforce development,
business support or infrastructure these changes may create.
As of 2014, the City Council has adopted a new business registration program that monitors how
many people are working in the City and for what types of businesses. The purpose of this registry is
to maintain an accurate record of businesses in the City in order to develop recommendations on
land uses, better coordinate transportation programs, assist in zoning compliance, and gather
statistical information for other purposes. There is a fee included with the registration of a
business.82
In March 2014, the Palo Alto City Council approved a two percentage point increase in the transient
occupancy tax rate to raise $116.8 million, via debt financing in the form of Certificates of
Participation, for General Fund infrastructure and City services, such as earthquake safe fire stations;
pedestrian and bike improvements, including safe routes to school, streets, sidewalks, paths, and
bridges; and maintaining parks and recreation facilities.
Describe any current workforce training initiatives, including those supported by Workforce
Investment Boards, community colleges and other organizations. Describe how these efforts will
support the jurisdiction's Consolidated Plan.
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 is a nonprofit in Palo Alto that worked to reduce homelessness through a
“work first” model. Downtown Streets Team uses their community connections to provide training
and job opportunities to homeless people, specifically in the downtown area. The Downtown Streets
Team has helped 282 people find housing and 291 find jobs since its inception in 2005. The
Downtown Streets Team has initiatives in Palo Alto, Sunnyvale, San Jose, and San Rafael.83
NOVA is directed by the NOVA Workforce Board which works on behalf of Cupertino, Los Altos,
Milpitas, Mountain View, Palo Alto, Santa Clara, and Sunnyvale. To support workforce mobility,
NOVA provides:
Real-time labor market information about in-demand skills
Skill-building and enhancements to match market demand
Navigation tools for the ever-changing and entrepreneurial new labor market
Advocacy for necessary infrastructure to support workers between opportunities, such as
unemployment insurance for all and portable benefits
Interconnected support system for multiple career pathways for youth84
To prepare potential employees for the technology-driven industries in the Silicon Valley, NOVA
provides necessary digital literacy training along with its other services.
82 City of Palo Alto Economic Development Department.
83 Downtown Streets Team. “Our Impact.” http://streetsteam.org/thenumbers/
84 NOVA. “Purpose Statement.” http://www.novaworks.org/
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Does your jurisdiction participate in a Comprehensive Economic Development Strategy (CEDS)?
No.
If so, what economic development initiatives are you undertaking that may be coordinated with
the Consolidated Plan? If not, describe other local/regional plans or initiatives that impact economic
growth.
The City’s Economic Development Department (EDD) established a Council policy in 2013 that sets
the goals and principles for a more proactive economic strategy. The purpose of the policy is to
create an environment that attracts, retains, and encourages business growth in the City. The EDD is
supporting the attraction of new business to Palo Alto, while helping to retain and grow existing
enterprises. Department focus will be on understanding and striving to meet the needs of revenue-
generating companies (i.e., retail, hotel, business-to-business, etc.) that help to fund vital city
services. Also, by serving as an advocate with other City departments, such as the Development
Services, Planning, Fire, and Utilities, EDD staff will facilitate the appropriate growth of companies in
Palo Alto by making development and location processes as transparent and predictable as
possible.85
In May 2013 the Palo Alto City Council approved the allocation of $150,000 in CDBG funds toward a
Microenterprise Assistance Program (MAP). The purpose of the program is to provide access to new
opportunities to improve the economic self-sufficiency of LMI families and individuals. This program
builds on the foundation of entrepreneurship and empowers clients by increasing their economic
literacy, business skills, self-esteem, and personal behavior appropriate to the workplace. The MAP
program seeks to accomplish the following:86
Provide an innovative path out of poverty
Create self-sufficiency
Improve the survival rate of microenterprise businesses
Improve employment skills
Promote community economic development
Discussion
Please see discussion above.
85 City of Palo Alto. “Office of Economic Development Policy.” January 2013.
86 City of Palo Alto. “Pilot Microenterprise Assistance Program (MAP).
http://www.cityofpaloalto.org/news/displaynews.asp?NewsID=2480&TargetID=268
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MA-50 Needs and Market Analysis Discussion
Are there areas where households with multiple housing problems are concentrated? (Include a
definition of "concentration.")
Housing problems disproportionately affect low income and minority populations. For the
disproportionate needs by racial/ethnic group, please see the discussion for NA-15, NA-20, and NA-25.
In summary:
• For 0-30% AMI households: 89 percent of Black/African American households experience
severe housing problems, compared to 75 percent of the jurisdiction as a whole.
For 30-50 % AMI households: 88 percent of Black/African American Housing and 91 percent of
Hispanic households experience housing problems, compared to 77 percent of the
jurisdiction as a whole. Sixty-three percent of Hispanic households in the experience severe
housing problems, compared to 50 percent of the jurisdiction as a whole.
For 50-80 % AMI households: 75 percent of Black/African American households, 72 percent of
Asian households, and 86 percent of Hispanic households experience housing problems,
compared to 62 percent of the jurisdiction as a whole. Fifty-three percent of Hispanic
households experience severe housing problems, compared to 29 percent of the jurisdiction
as a whole.
Minority concentration is defined as census tracts where the percentage of individuals of a particular
racial or ethnic minority group is at least 20 percentage points higher than the citywide average.
Map 2 below illustrates areas of the jurisdiction that have a minority or LMI concentration.
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Map 2 – Areas of Minority and LMI Concentration
Data Source: ACS 2007-2011
Data Source
Comment:
Minority concentration is defined as census tracts where the percentage of individuals of a particular racial or ethnic
minority group is at least 20 percentage points higher than the citywide average. LMI concentration is defined as
census tracts where the median household income is below 80% AMI. Based on FY 14 median family income for
Santa Clara County, calculated by the Census Bureau for HUD’s Fair Market Rent and Income Limit areas.
Are there any areas in the jurisdiction where racial or ethnic minorities or low-income families are
concentrated? (include a definition of "concentration")
Please see discussion above.
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What are the characteristics of the market in these areas/neighborhoods?
The City’s housing costs are among the highest in the nation, with the median home value and
median contract rent increasing exponentially in the last decade. Home values increased by 222
percent and median rents grew by 313 percent. Currently, the City would need approximately 1,780
additional affordable housing units to match the housing needs of the population earning below 80%
AMI.
Are there any community assets in these areas/neighborhoods?
Map 3 displays a sample of community assets and amenities that may represent strategic investment
opportunities for these areas, including:
1. Transit Centers
2. Community Centers
3. Fire Stations
4. Health Care Centers
5. Police Stations
6. Public Libraries
7. Recreation Centers
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Map 3 – Minority Concentration, LMI, and Community Assets
Data Source: ACS 2007-2011
Data Source
Comment:
Minority concentration is defined as census tracts where the percentage of individuals of a particular racial or ethnic
minority group is at least 20 percentage points higher than the citywide average. LMI concentration is defined as
census tracts where the median household income is below 80% AMI. Based on FY 14 median family income for
Santa Clara County, calculated by the Census Bureau for HUD’s Fair Market Rent and Income Limit areas.
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Strategic Plan
SP-05 Overview
Strategic Plan Overview
The Consolidated Plan goals below represent high priority needs for the City of Palo Alto (City) and
serve as the basis for the strategic actions the City will use to meet these needs. The goals, listed in
no particular order, are:
1. Assist in the creation and preservation of affordable housing for low income and special
needs households.
2. Support activities to end homelessness.
3. Support activities that strengthen neighborhoods through the provision of community
services and public improvements to benefit low income and special needs households.
4. Promote fair housing choice.
5. Expand economic opportunities for low income households.
The City’s Consolidated Plan update coincides with the development of the first year Action Plan and
the biennial Request for Proposals (RFP) process. The City awards Community Development Block
Grant (CDBG) funding to non-profit agencies to provide public services and housing for low income
and special needs households. The City operates on a two-year grant funding cycle for CDBG grants.
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SP-10 Geographic Priorities – 91.215 (a)(1)
Geographic Area
Not applicable. The City has not established specific target areas to focus the investment of CDBG
funds. The City attempts to support affordable housing and services to low income and/or special
needs persons throughout the City.
General Allocation Priorities
The City allocates federal entitlement dollars to benefit low-and moderately-low income (LMI)
persons without target areas.
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SP-25 Priority Needs - 91.215(a)(2)
Priority Needs
Based on the Needs Assessment, Market Analysis, and community outreach conducted for the current Consolidated Plan cycle, the goals
were established to meet the priority needs. Projects will only be considered for funding within the Consolidated Plan period if they address
these high priority needs, summarized in the table below.
Table 67 - Priority Needs Summary
Sort
Order
Priority Need Priority
Level
Description Population Goal Basis for Relative
Priority
1 Affordable
Housing
High Almost a quarter of
households (23 percent or
5,845) in the City are LMI,
with incomes ranging from
0-80% area median income
(AMI).
As stated in the Needs
Assessment, burden is the
most common housing
problem within the City of
Palo Alto, 30 percent of
households in the City
paying more than 30
percent of their income
toward housing costs, and
14 percent of households
paying more than 50
percent of their income
toward housing costs.
The Housing Authority of
the County of Santa Clara
(HACSC) assists
approximately 17,000
households through the
federal Section 8 Housing
Income Level:
Extremely Low
Low
Moderate
Middle
Family Types:
Large Families
Families with Children
Elderly
Homeless:
Chronic Homelessness
Individuals
Families with Children
Mentally Ill
Chronic Substance Abuse
Veterans
Persons with HIV/Aids
Victims of Domestic Violence
Unaccompanied Youth
Non-homeless Special Needs:
Elderly
Frail Elderly
Persons with Mental Disabilities
Persons with Physical Disabilities
Assist in the
creation and
preservation of
affordable housing
for low income and
special needs
households
Qualitative feedback
collected through the
regional forums and
regional needs
survey, which were
substantiated by
quantitative data
reported in the
Needs Assessment
and Market Analysis,
served as the basis
for prioritization.
Energy efficiency,
water conservation,
and greenhouse gas
reduction are all
growing policy
concerns for the City.
The City will continue
to support
environmentally-
sustainable
residential
development,
particularly for
affordable housing
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Sort
Order
Priority Need Priority
Level
Description Population Goal Basis for Relative
Priority
Choice Voucher program
(Section 8). The Section 8
waiting list contains 21,256
households — an
estimated 10-year wait.
Persons with Alcohol or Other
Addictions
Persons with HIV/AIDS and their
Families
Victims of Domestic Violence
stock.
2 Homelessness High The Santa Clara region is
home to the fourth-largest
population of homeless
individuals (6,681 single
individuals),87 and the
highest percentage of
unsheltered homeless of
any major city (75 percent
of homeless people sleep in
places unfit for human
habitation).
Homeless:
Chronic Homelessness
Individuals
Families with Children
Mentally Ill
Chronic Substance Abuse
Veterans
Persons with HIV/Aids
Victims of Domestic Violence
Unaccompanied Youth
Support activities
to end
homelessness
Qualitative feedback
collected through the
regional forums and
regional needs
survey, which were
substantiated by
quantitative data
reported in the
Needs Assessment
and Market Analysis,
served as the basis
for prioritization.
3 Community
Services and
Public
Improvements
High Consolidated Plan forum
and survey participants
emphasized the need to
support a broad range of
community services. Low
income households and
special needs populations
require a multifaceted
network to address basic
needs such as food,
clothing, health, and
Income Level:
Extremely Low
Low
Moderate
Middle
Family Types:
Large Families
Families with Children
Elderly
Strengthen
neighborhoods
through the
provision of
community
services and public
improvements
Qualitative feedback
collected through the
regional forums and
regional needs
survey, which were
substantiated by
quantitative data
reported in the
Needs Assessment
and Market Analysis,
served as the basis
87 The U.S. Department of Housing and Urban Development. “2014 Annual Homeless Assessment Report (AHAR) to Congress.” October 2014.
https://www.hudexchange.info/resources/documents/AHAR-2014-Part1.pdf
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Sort
Order
Priority Need Priority
Level
Description Population Goal Basis for Relative
Priority
shelter, as well as other
services outlined in NA-50
Non-Housing Community
Development Needs.
Non-homeless Special Needs:
Elderly
Frail Elderly
Persons with Mental Disabilities
Persons with Physical Disabilities
Persons with Alcohol or Other
Addictions
Persons with HIV/AIDS and their
Families
Victims of Domestic Violence
Non-housing Community
Development
for prioritization.
4 Fair Housing High Fair housing represents an
ongoing concern in the
County. Of the 1,472 total
survey respondents, 192 (16
percent) said they have
experienced some form of
housing discrimination. The
majority of respondents (29
percent) who experienced
discrimination indicated
that race was the primary
factor for that
discrimination. Additionally,
66 percent indicated they
were discriminated against
by a landlord or property
manager. Interviews with
local service providers
indicate that many home
seekers and landlords are
unaware of federal and
Income Level:
Extremely Low
Low
Moderate
Family Types:
Large Families
Families with Children
Elderly
Public Housing Residents
Homeless:
Chronic Homelessness
Individuals
Families with Children
Mentally Ill
Chronic Substance Abuse
Veterans
Persons with HIV/Aids
Victims of Domestic Violence
Unaccompanied Youth
Promote fair
housing choice
Qualitative feedback
collected through the
regional forums and
regional needs
survey, which were
substantiated by
quantitative data
reported in the
Needs Assessment
and Market Analysis,
served as the basis
for prioritization.
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Sort
Order
Priority Need Priority
Level
Description Population Goal Basis for Relative
Priority
state fair housing laws.
Non-homeless Special Needs:
Elderly
Frail Elderly
Persons with Mental Disabilities
Persons with Physical Disabilities
Persons with Alcohol or Other
Addictions
Persons with HIV/AIDS and their
Families
Victims of Domestic Violence
5 Economic
Development
High LMI households with
elderly members are more
likely to experience cost
burden, with 54 percent
paying more than 30
percent of their income
towards housing costs,
compared to 34 percent of
the jurisdiction as a whole.
Almost one-third of
households (32 percent or
10,155) in the City are
extremely low income, low
income, or moderate
income, with incomes
ranging from 0-80% AMI.
As discussed in the Needs
Assessment and Market
Analysis, services that
benefit low income
households and special
needs populations are
Income Level:
Extremely Low
Low
Moderate
Family Types:
Large Families
Families with Children
Elderly
Homeless:
Chronic Homelessness
Individuals
Families with Children
Mentally Ill
Chronic Substance Abuse
Veterans
Persons with HIV/Aids
Victims of Domestic Violence
Unaccompanied Youth
Non-homeless Special Needs:
Elderly
Frail Elderly
Expand economic
opportunities for
low income
households
Qualitative feedback
collected through the
regional forums and
regional needs
survey, which were
substantiated by
quantitative data
reported in the
Needs Assessment
and Market Analysis,
served as the basis
for prioritization.
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Sort
Order
Priority Need Priority
Level
Description Population Goal Basis for Relative
Priority
necessary to help these
groups take advantage of
the overall economic
growth of the City. Greater
access to transit centers,
public services, job training
and workforce
development, are key.
Persons with Mental Disabilities
Persons with Physical Disabilities
Persons with Alcohol or Other
Addictions
Persons with HIV/AIDS and their
Families
Victims of Domestic Violence
Narrative
As previously discussed, the City is in one of the wealthiest regions of the nation and the income gap between the richest and the poorest
populations is growing significantly. The City is tasked with determining how to maintain economic growth while assisting the most
vulnerable populations.
The Needs Assessment and Market Analysis, in concert with the qualitative data collected through the community outreach, highlight the
City’s continued need for investment in economic development, affordable housing, and services for low income households, the homeless
and other special need groups.
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SP-30 Influence of Market Conditions – 91.215 (b)
Table 68 - Influence of Market Conditions
Affordable Housing Type Market Characteristics that Will Influence
the Use of Funds Available for Housing Type
Tenant Based Rental Assistance (TBRA) As per the Needs Assessment, 13 percent of households in the City
are severely cost burdened and paying more than 50 percent of
their income toward housing costs. Sixteen percent of households
in the City have incomes at or below 50% AMI.
TBRA for Non-Homeless Special Needs As discussed in the Needs Assessment and Market Analysis, special
needs populations generally face unique housing needs, such as
physical limitations, low household incomes, and rising costs of
healthcare and/or childcare. Housing affordability may be a key
issue for those living on fixed incomes. High housing costs within
the City can make it difficult to transition from Community Care
Facilities into the private rental market without rental subsidies.
This may put those special needs groups at a higher risk of
becoming homeless.
New Unit Production As per the Needs Assessment and Market Analysis, 35 percent of
renters are cost burdened and paying more than 30 percent of
their income toward housing costs. Forty-seven percent of those
cost burdened renter households are LMI households. The HACSC
currently has 21,000 households on its waitlist for Section 8, and
the waitlist has been closed since 2006.
Rehabilitation As per the Needs Assessment and Market Analysis, 77 percent of
the City’s housing stock is over 40 years old and may require
maintenance and repair.
Acquisition, Including Preservation There are currently 4,268 units in the City that are affordable for
households earning below 80% AMI, yet there are 5,845
households within this income bracket in need of affordable
housing. This reflects a total deficit of 1,780 units for LMI
households. With a lack of vacant land for new development,
acquisition and preservation are important tools for growing the
affordable housing stock.
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SP-35 Anticipated Resources - 91.215(a) (4), 91.220(c) (1, 2)
Introduction
The amount of federal entitlement funding has seen an overall decrease of approximately 41 percent
in the five year period from Fiscal Years (FY) 2010-2014. For the purposes of the Strategic Plan the
City anticipates an annual five percent entitlement reduction per year, with the addition of
approximately $136,049 in Program Income annually.
Table 69 - City Entitlement Funding Received FY 2010 – FY 2014
FY 10 FY 11 FY 12 FY 13 FY 14 Total
CDBG $731,566 $606,566 $429,304 $467,192 $433,933 $2,668,561
Figure 4 - City Entitlement Funding Received FY 2010 - FY 2014
$0
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
$700,000
$800,000
FY 10 FY 11 FY 12 FY 13 FY 14
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Table 70 - Anticipated Resources
Program Source
of
Funds
Uses of Funds Expected Amount Available Year 1 Expected
Amount
Available
Reminder
of ConPlan
$
Narrative Description
Annual
Allocation:
$
Program
Income: $
Prior Year
Resources:
$
Total:
$
CDBG Public
Federal
Admin and
Planning
Acquisition
Economic
Development
Housing
Public
Improvements
Public Service
$442,460
$136,049
$303,164
$881,673
$2,103,594 CDBG funds will be used
for the creation and
preservation of
affordable rental units,
improvements in lower
income neighborhoods,
and public services that
benefit low income and
special needs
households.
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Explain how federal funds will leverage those additional resources (private, state and local funds),
including a description of how matching requirements will be satisfied
Entitlement Funds
Leverage, in the context of the CDBG and HOME, means bringing other local, state, and federal
financial resources to maximize the reach and impact of the City’s HUD Programs. HUD, like many
other federal agencies, encourages the recipients of federal monies to demonstrate that efforts are
being made to strategically leverage additional funds in order to achieve greater results. Leverage is
also a way to increase project efficiencies and benefit from economies of scale that often come with
combining sources of funding for similar or expanded scopes. Funds will be leveraged if financial
commitments toward the costs of a project from a source other than the originating HUD program
are documented.
Additionally, the City has recently been approved to join Santa Clara County's HOME Consortium.
HOME funds can be used to fund eligible affordable housing projects for acquisition, construction
and rehabilitation. Starting in FY 2015-2016 developers of affordable housing projects will be eligible
to competitively apply through an annual RFP process directly to the County for HOME funds to help
subsidize affordable housing projects in Palo Alto. If the City receives HOME dollars from its
participation in the HOME consortium, the required 25 percent matching funds will be provided from
the City’s Affordable Housing Fund, which is comprised of two sub-funds: the Commercial Housing
Fund and the Residential Housing Fund. As of August 25, 2014 the Commercial Housing Fund had an
available balance of approximately $6,600,000 and the Residential Housing Fund had an available
balance of $1,400,000.
Other Federal Grant Programs
In addition to the entitlement dollars listed above, the federal government has several other funding
programs for community development and affordable housing activities. These include: the Section
8 Housing Choice Voucher Program, Section 202, Section 811, the Affordable Housing Program (AHP)
through the Federal Home Loan Bank, and others. It should be noted that, in most cases, the City
would not be the applicant for these funding sources as many of these programs offer assistance to
affordable housing developers rather than local jurisdictions.
State Housing and Community Development Sources
In California, the Department of Housing and Community Development (HCD) and the California
Housing Finance Agency (CalHFA) administer a variety of statewide public affordable housing
programs that offer assistance to nonprofit affordable housing developers. Examples of HCD’s
programs include the Multifamily Housing Program (MHP), Affordable Housing Innovation Fund
(AHIF), Building Equity and Growth in Neighborhoods Program (BEGIN), and CalHOME. Many HCD
programs have historically been funded by one-time State bond issuances and, as such, are subject
to limited availability of funding. CalHFA offers multiple mortgage loan programs, down payment
assistance programs, and funding for the construction, acquisition, and rehabilitation of affordable
ownership units. The State also administers the federal Low Income Housing Tax Credit (LIHTC)
program, a widely used financing source for affordable housing projects. As with the other federal
grant programs discussed above, the City would not apply for these funding sources. Rather, local
affordable housing developers could apply for funding through these programs for particular
developments in the City.
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Additionally, the County also receives Mental Health Services Act (MHSA) funds from the State for
housing.
County and Local Housing and Community Development Sources
There are a variety of countywide and local resources that support housing and community
development programs. Some of these programs offer assistance to local affordable housing
developers and community organizations while others provide assistance directly to individuals.
These resources are discussed below:
Human Service Resource Allocation Process
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 nonprofit agencies.
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 August 25, 2014 the Commercial
Housing Fund had an available balance of approximately $6,600,000.
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
August 25, 2014 the Residential Housing Fund had an available balance of $1,400,000.
Below Market Rate Emergency Fund
This fund was authorized by City 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 13, 2014 the BMR
Emergency Fund had a balance of approximately $450,000.
The Housing Trust Silicon Valley
This nonprofit organization combines private and public funds to support affordable housing
activities in the County, including assistance to developers and homebuyers. Housing Trust
Silicon Valley is among the largest housing trusts in the nation building special needs and
affordable housing and assisting first-time homebuyers. Since HTSV began distributing funds
in 2001, the trust has invested over $75 million and leveraged over $1.88 billion to create more
than 9,953 housing opportunities
Mortgage Credit Certificates (MCC) Program
The MCC program provides assistance to first-time homebuyers by allowing an eligible
purchaser to take 20 percent of their annual mortgage interest payment as a tax credit
against federal income taxes. The County administers the MCC Program on behalf of the
jurisdictions, including Palo Alto. The program does establish maximum sales price limits on
units assisted in this program and, due to the high housing costs in Cupertino, there have
been few households assisted in Cupertino in recent years.
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Santa Clara County Affordable Housing Fund (AHF)
The 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 the County. The County has awarded over $10 million from the AHF to
date. $960,000 was awarded to the Tree House project developed by the Palo Alto Housing
Corporation.
Stanford Affordable Housing Fund
The County maintains this affordable housing fund intended to benefit low income
households. The County distributes the funds through a Notice of Funding Availability
(NOFA) process and has assisted developers in creating 91 units regionally.
If appropriate, describe publically owned land or property located within the jurisdiction that may
be used to address the needs identified in the plan
The City has no surplus vacant land that would be available for the development of housing or
services. Sixty-five percent of land in the City is open space.
Discussion
Please see discussions above.
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SP-40 Institutional Delivery Structure – 91.215(k)
Explain the institutional structure through which the jurisdiction will carry out its Consolidated
Plan, including private industry, non-profit organizations, and public institutions.
Table 71 - Institutional Delivery Structure
Responsible Entity Responsible
Entity Type
Role Geographic
Area Served
City of Palo Alto, Planning
and Community
Environment
Government
agency
Affordable housing – ownership
Affordable housing – rental
Public housing
Homelessness
Non-homeless special needs
Community development: public facilities
Community development: neighborhood
improvements
Community development: public services
Community development: economic
development
Planning
Jurisdiction
City of Palo Alto, Human
Services Division
Government
agency
Planning Jurisdiction
County of Santa Clara –
Office of Supportive
Housing
Continuum of
Care
Homelessness
Region
Housing Authority of the
County of Santa Clara
PHA Affordable housing – rental
Affordable housing – ownership
Public housing
Region
Assess of Strengths and Gaps in the Institutional Delivery System
Strengths
The City manages the institutional delivery structure surrounding the acceptance and allocation of
federal grant funds for Consolidated Plan programs. The goals and objectives of the Strategic Plan
could not have been formulated without residents’ informed assistance. Public presentation and
participation is a vital component in the formulation and development of the City’s public policy
documents, such as its Comprehensive Plan, Housing Element, and Specific and Precise Plans. These
are just a few of the policy documents that the City has in place to influence and guide the economic,
housing, and social service developments in the City.
The City’s Planning and Community Environment Department is responsible for the review of
development and building activity to ensure compliance with zoning and building codes, the
achievement of economic development goals, Comprehensive Plan policies, housing policies, and
community values. The department assists the community in establishing land use and neighborhood
plans and ensures the quality of new projects through the design and development review process.
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
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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.
The City benefits from a strong jurisdictional and regional network of housing and community
development partners. For example, the HACSC improves neighborhoods by assisting low income
residents, increasing the supply of affordable safe housing, and rehabilitating residential properties
in many jurisdictions in the County. HACSC assists approximately 17,000 households countywide
through federal rental housing assistance, and developing and managing affordable rental housing
properties. Working closely with landlords, housing developers, charities and local governments, the
HACSC provides housing and support services to as many eligible families as possible.
In addition, the Santa Clara Fair Housing Task Force includes representatives from the City and the
other entitlement jurisdictions, fair housing providers, legal service providers, and other community
service providers. Since its inception, the Task Force has implemented a calendar of countywide fair
housing events and sponsors public information meetings, including Accessibility Training, First-Time
Homebuyer training, and Predatory Lending training.88
As standard practice, CDBG entitlement jurisdictions from throughout the County hold quarterly
meetings to discuss issues of common interest. Meeting agendas cover such topics as projects
receiving multi-jurisdictional funding, performance levels and costs for contracted public services,
proposed annual funding plans, HUD program administration requirements, and other topics of
mutual concern. These quarterly meetings provide an opportunity for the City to consult with other
jurisdictions on its proposed use of federal funds for the upcoming Program Year. They 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.
These quarterly meetings provide the opportunity for the City to consult with other jurisdictions on
its proposed use of federal funds for the upcoming Program Year. The CDBG Coordinators Group
meetings are often followed by a Regional Housing Working Group meeting, which is open to staff of
entitlement and non-entitlement jurisdictions. The Working Group provides a forum for jurisdictions
to develop coordinated responses to regional housing challenges.
Gaps
Nonprofit affordable housing developers and service providers play an important role in promoting
community development within the City. However, they are often at a disadvantage in the housing
development arena, as they compete with developers in the private sector for the limited land
available for the development of housing. Affordable housing developers must adhere to noticing,
88 City of Palo Alto. “Fiscal Year 2015 Annual Action Plan. 2014.
https://www.google.com/url?q=http://www.cityofpaloalto.org/civicax/filebank/documents/39839&sa=U&ei=AHyQVOHpI8ff
oATsg4KgAg&ved=0CAgQFjAB&client=internal-uds-cse&usg=AFQjCNF_XnDk4Zbw8fKMZf7TrMDdbPAgpg
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outreach and evaluation processes associated with the use of public funds. Private market rate
developers do not have such requirements and are able to purchase sites quickly. Many market rate
developers have funds available to purchase properties rather than needing to seek financing, which
saves time. The market realities of increased value due to scarcity of land and the ability to acquire
sites quickly provide advantages to market rate developers, while posing challenging constraints to
affordable housing developers.
Availability of services targeted to homeless persons and persons with HIV and mainstream
services
Table 72 - Homeless Prevention Services Summary
Homelessness
Prevention Services
Available in the
Community
Targeted to Homeless Targeted to People with
HIV
Homelessness Prevention Services
Counseling/Advocacy X
Legal Assistance X X
Mortgage Assistance X
Rental Assistance X X
Utilities Assistance X
Street Outreach Services
Law Enforcement X X
Mobile Clinics X X
Other Street Outreach
Services
X
Supportive Services
Alcohol & Drug Abuse X
Child Care X
Education X
Employment and
Employment Training
X
Healthcare X X
HIV/AIDS
Life Skills X X
Mental Health
Counseling
X
Transportation X
Describe how the service delivery system including, but not limited to, the services listed above
meet the needs of homeless persons (particularly chronically homeless individuals and families,
families with children, veterans and their families, and unaccompanied youth)
As part of the institutional delivery system, the City participates in the Santa Clara County CoC, a
multi-sector group of stakeholders dedicated to ending and preventing homelessness in the County.
The CoC’s primary responsibilities are to coordinate large-scale implementation of efforts to prevent
and end homelessness. The CoC is governed by the CoC Board, which stands as the driving force
committed to supporting and promoting a systems change approach to preventing and ending
homelessness in the County. 89
89 County of Santa Clara. “Housing Element 2015-2022.” 2014.
http://www.sccgov.org/sites/planning/PlansPrograms/GeneralPlan/Housing/Documents/HE_2015_Adopted_Final.pdf
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Destination: Home, a public-private partnership committed to collective impact strategies to end
chronic homelessness, serves as the backbone organization for the CoC and is responsible for
implementing by-laws and protocols that govern the operations of the CoC. Destination: Home is
also responsible for ensuring that the CoC meets the requirements outlined under the Homeless
Emergency Assistance and Rapid Transition to Housing Act of 2009 (HEARTH).90
Describe the strengths and gaps of the service delivery system for special needs population and
persons experiencing homelessness, including, but not limited to, the services listed above
In fall 2014, the CoC released a Draft Community Plan to End Homelessness in Santa Clara County,
which outlines a roadmap for community-wide efforts to end homelessness in the County by 2020.
The strategies and action steps included in the plan were informed by members who participated in
a series of community summits designed to address the needs of homeless populations from April to
August 2014. The Plan identifies strategies to address the needs of homeless persons in the County,
including chronically homeless individuals and families, families with children, veterans, and
unaccompanied youth. Additionally, it also intended to address the needs of persons at risk of
homelessness.
To address the needs of homeless individuals and individuals at risk of homelessness, the Plan aims
to implement the following three action steps:91
1. Disrupt systems: Develop disruptive strategies and innovative prototypes that transform the
systems related to housing homeless people.
2. Build the solution: Secure the right amount of funding needed to provide housing and
services to those who are homeless and those at risk of homelessness.
3. Serve the person: Adopt an approach that recognizes the need for client-centered strategies
with different responses for different levels of need and different groups, targeting
resources to the specific individual or household.
Over the next five years, the Plan seeks to house 2,518 homeless individuals, 718 homeless veterans,
and more than 2,333 children, unaccompanied youth, and homeless individuals living in families.
Provide a summary of the strategy for overcoming gaps in the institutional structure and service
delivery system for carrying out a strategy to address priority needs
The City is striving to improve intergovernmental and private sector cooperation to synergize efforts
and resources, and develop new revenues for community service needs and the production of
affordable housing.
Collaborative efforts include:
Regular quarterly meetings between entitlement jurisdictions
Joint jurisdiction Request for Proposals and project review committees
90 Santa Clara County. “Continuum of Care Governance Charter.” 2013.
91 Destination: Home. “Community Plan to End Homelessness in Santa Clara County 2015-2012.” 2014.
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Coordination on project management for projects funded by multiple jurisdictions.
Recent examples include the effort by the County to create a regional affordable housing fund, using
former redevelopment funds that could be returned to the County to use for affordable housing.
Another effort underway involves the possible use of former redevelopment funds to create a
countywide pool for homeless shelters and transitional housing. These interactions among agencies
generate cohesive discussion and forums for bridging funding and service gaps on a regional scale.
The City’s decision to join the County’s HOME Consortium (along with the cities of Gilroy and
Cupertino) is another example of a collaborative strategy to improve the institutional delivery
structure for address affordable housing needs.
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SP- 45 Goals Summary – 91.215(a) (4)
Goals Summary Information
Table 73 - Goals Summary
Sort
Order
Goal Name Start
Year
End
Year
Category Geographic
Area
Needs Addressed Funding Goal Outcome Indicator
1 Affordable
Housing
2015 2020 Affordable Housing N/A Affordable Housing CDBG:
$1,018,421
Rental units rehabilitated:
300 Housing Units
2 Homelessness 2015 2020 Homeless N/A Homelessness CDBG:
$254,605
Public service activities
other than for low/mod
income housing benefit:
2,500 Persons Assisted
3 Strengthen
Neighborhoods
2015 2020 Non-Housing Community
Development
Non-Homeless Special
Needs
N/A Community Services
and Public
Improvements
CDBG:
$127,302
Public service activities
other than for low/mod
income housing benefit:
2,500 Persons Assisted
Public facility or
infrastructure activities
other than for low/mod
income housing benefit:
500 Persons Assisted
4 Fair Housing 2015 2020 Non-Housing Community
Development
N/A Fair Housing CDBG:
$152,763.24
Public service activities
other than for low/mod
income housing benefit:
100 Persons Assisted
5 Economic
Development
2015 2020 Non-Housing Community
Development
N/A Economic
Development
CDBG:
$992,963
Jobs created/retained:
125 Jobs
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Goal Descriptions
1 Goal Name Affordable Housing
Goal Description Assist in the creation and preservation of affordable housing for low income and special needs households.
2 Goal Name Homelessness
Goal Description Support activities to end homelessness.
3 Goal Name Strengthen Neighborhoods
Goal Description Support activities that strengthen neighborhoods through the provision of community services and public improvements
to benefit low income and special needs households.
4 Goal Name Fair Housing
Goal Description Promote fair housing choice.
5 Goal Name Economic Development
Goal Description Expand economic opportunities for low income households.
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 91.315(b)(2)
Currently, the City’s HUD allocation for entitlement grants does not include funding from the HOME program. In prior 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 previous funding cycle the City did not receive any applications for affordable
housing supported through the production of new units or rehabilitation of existing units. While future provision of affordable housing will
depend on the availability of projects, the City estimates that CDBG funds will be used to provide affordable housing to approximately 300
households over the next five years.
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SP-50 Public Housing Accessibility and Involvement – 91.215(c)
Need to Increase the Number of Accessible Units (if Required by a Section 504 Voluntary
Compliance Agreement)
Not applicable.
Activities to Increase Resident Involvements
HACSC is proactive in incorporating resident input into the agency’s policy-making process. An
equitable and transparent policy-making process that includes the opinions of public housing
residents is achieved through the involvement of two tenant commissioners, one being a senior
citizen, on the HACSC board. Furthermore, HACSC has installed a Resident Counsel which is
comprised of five residents from all HUD-funded programs (Multifamily Housing, LIHTC, HOME,
public housing, and Section 8). The Resident Counsel works with HACSC staff on evaluating the
effectiveness and efficiency of the agency’s rental assistance programs. This grants members the
opportunity to provide input on necessary program modifications.
As previously noted, HACSC has been a Moving to Work (MTW) agency since 2008. In this time the
agency has developed 31 MTW activities. The vast majority of their successful initiatives have been
aimed at reducing administrative inefficiencies, which in turn opens up more resources for programs
aimed at LMI families.92 The following is excerpted from HACSC’s August 2014 Board of
Commissioner’s report:
“HACSC’s Family Self Sufficiency (FSS) Program is designed to provide assistance to current HACSC
Section 8 families to achieve self-sufficiency. When a family enrolls in the five-year program, HPD’s
FSS Coordinator and LIFESteps service provider helps the family develop self-sufficiency goals and a
training plan, and coordinates access to job training and other services, including childcare and
transportation. Program participants are required to seek and maintain employment or attend
school or job training. As participants increase their earned income and pay a larger share of the rent,
HACSC holds the amount of the tenant’s rent increases in an escrow account, which is then awarded
to participants who successfully complete the program. HACSC is currently in the initial stages of
creating a pilot successor program to FSS under the auspices of its MTW flexibility called Focus
Forward.” 93
Is the public housing agency designated as troubled under 24 CFR part 902?
No.
Plan to remove the ‘troubled’ designation
Not applicable.
92 HACSC. “Moving to Work (MTW) 2014 Annual Report.” September 2014.
93 HACSC. “Housing Programs Department (HPD) Monthly Board Report.” August 2014.
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SP-55 Barriers to Affordable Housing – 91.215(h)
Barriers to Affordable Housing
As previously discussed, the incorporated and unincorporated jurisdictions within the County face
barriers to affordable housing that are common throughout the Bay Area. High on the list is the lack
of developable land, which increases the cost of available lands and increases housing development
costs. Local opposition is another common obstacle as many neighbors have strong reactions to
infill and affordable housing developments. Their opposition is often based on misconceptions, such
as a foreseen increase in crime; erosion of property values; increase in parking and traffic congestion;
and overwhelmed schools.94 However, to ensure a healthy economy, the region must focus on
strategies and investment that provide housing for much of the region’s workforce – for example,
sales clerks, secretaries, firefighters, police, teachers, and health service workers – whose incomes
significantly limit their housing choices.95
Even when developments produce relatively affordable housing, in a constrained housing supply
market, higher income buyers and renters generally outbid lower income households and a home’s
final sale or rental price will generally far exceed the projected sales or rental costs. Public subsidies
are often needed to guarantee affordable homes for LMI households.
The City identified several constraints to the maintenance, development and improvement of
housing and affordable housing in its 2015-2023 Housing Element update: 96
Local policies and regulations can impact the price and availability of housing and, in
particular, the provision of affordable housing
Land use controls
Site improvement requirements
Fees and exactions
Permit processing procedures
Strategy to Remove or Ameliorate the Barriers to Affordable Housing
As stated in previous chapters, the City is addressing the barriers to affordable housing through the
following programs and ordinances:
Context-Based Design Codes
The City adopted form-based codes in 2006 to ensure and encourage residential development by
following context-based design guidelines to meet increased density needs. The code encourages
the creation of walkable, pedestrian-oriented neighborhoods, following green building design
principles, and increasing density along transit corridors and in mixed-use neighborhoods. The
Context-Based Design Code allows for increased density and mixed-use buildings in a way that
enhances neighborhood character and walkability.
94 Association of Bay Area Governments. “Affordable Housing in the Bay Area.” 2014.
95 Association of Bay Area Governments. “Jobs-Housing Connection Strategy.” 2012.
96 City of Palo Alto. “2015-2023 Housing Element.” 2014. http://www.cityofpaloalto.org/civicax/filebank/documents/44951
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Density Bonus Ordinance
Density bonus provisions are a tool for attracting and assisting developers in constructing affordable
housing. Density bonuses allow a developer to increase the density of a development above that
allowed by standard zoning regulations, as well as provide regulatory relief in the form of
concessions. In exchange, a developer provides affordable units in the development.
In 2004, the California State Legislature lowered the thresholds required to receive a density bonus
and increased the number of concessions a developer can receive. The City adopted a Density Bonus
Ordinance in January 2014. The density bonus regulations allow for bonuses of 20 to 35 percent,
depending on the amount and type of affordable housing provided. As required by state law, the
regulations also allow for exceptions to applicable zoning and other development standards, to
further encourage development of affordable housing.
Below Market Rate Housing Program
Established in 1974, the City’s BMR Housing Program has been instrumental in the production of
affordable housing by requiring developers to provide a certain percentage of units as BMR in every
approved project of three units or more. The program originally required that for developments on
sites of less than five acres, the developer must provide 15 percent of the total housing units as BMR
housing units. If the site was larger than five acres, the developer was required to provide 20 percent
of the units as BMR housing.
However, recent court cases have drastically changed the BMR, or “inclusionary zoning”,
environment in California. Two factors have received recent attention by the courts: whether
inclusionary housing is considered rent control, and whether inclusionary housing and related
housing mitigation fees are considered exactions. As a result of ongoing litigation, many cities have
suspended or amended the portions of their inclusionary housing requirements that require
affordable units to be included in market‐rate rental developments and many cities have turned,
instead, to the use of development impact fees charged on new, market-rate housing and/or
commercial development. Known as “Housing Impact Fees” and “Commercial Linkage Fees,” these
fees are based on an assessment of the extent to which the development of new market-rate
housing or commercial uses, respectively, generates additional demand for affordable housing. 97
Commercial Housing Fund
The Commercial Fund is composed solely of housing mitigation fees collected from commercial
developers under Chapter 16.47 of the Municipal Code. This ordinance was adopted in 1984. Fee
revenue varies greatly from year to year. However, over a ten-year period from 1998 to 2008, over
$5.4 million was collected in fees at an average of $542,000 per year. During that period the fee rate
ranged from about $3.00 to $4.00 per square foot. In May 2002, the housing impact fee was
increased to $15.00 per net new square feet of commercial space and, as of May 2008, it had gone up
to $17.06 with annual CPI adjustments. The Commercial Fund monies are used only to assist in the
development of new housing units. Since initiation of commercial housing impact fees through June
97 California Building Industry Association. “California Supreme Court takes Inclusionary Zoning Case.”
http://www.cbia.org/go/government-affairs/cbia-reports1/september-23-2013/california-supreme-court-takes-inclusionary-
zoning-case/
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2008, seven new housing projects have been constructed with City financial assistance from the
Commercial Fund producing 377 new affordable rental units.
Residential Housing Fund
The Residential Fund is primarily composed of fees received from developers of market-rate
residential projects in-lieu of the provision of on-site or off-site below market rate units. These fees
are collected pursuant to the City's BMR housing program. Over the ten-year period from 1998 to
2008, almost $5.8 million in fees were collected, for an average of about $580,000 per year in
revenue. Residential Fund monies may be used to assist new housing development or the
acquisition, rehabilitation or the preservation of existing housing for affordable housing. All housing
assisted has been rental and most of the units have been affordable to very low and low income
households. Through 2008, a total of nine housing projects with 379 units have been acquired,
rehabilitated or constructed with City assistance from this Fund.
In all cases, the housing projects assisted by the City have been developed, owned and managed by
local nonprofit housing organizations. Many housing types have been developed serving different
housing needs. Examples include: senior apartments, SRO units, family apartments, units for
persons with disabilities, studio units and large family units. Typically, the developer has also used
state of federal housing subsidies such as the housing tax credits in addition to the City's financial
assistance.
The City provides its funds through long-term loans with low interest rates and usually deferred
payment. All loans must be approved by the City Council and the City restricts the projects under
long-term regulatory agreements. Any cost necessary to develop the housing can be funded by the
City. Developers are encouraged to apply through the funding cycle for the CDBG program, but may
apply at other times if necessary.
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 $18.44 to $18.89
per square foot, effective May 8, 2013. 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.
Housing Trust Silicon Valley (HTSV)
This nonprofit organization combines private and public funds to support affordable housing
activities in the County, including assistance to developers and homebuyers. The HTSV is among the
largest housing trusts in the nation building special needs and affordable housing and assisting first-
time homebuyers. 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 Palo Alto. The most recent contribution included $200,000 from
the City’s Residential Housing Fund for Fiscal Year 2012. Participation in the Trust has increased the
available housing funding for a number of Palo Alto projects. In addition, HTSCC has invested over
$100,000 assisting 16 households to purchase homes in Palo Alto through its first-time homebuyer
program.
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HOME Investment Partnerships Program (HOME)
Additionally, the City has recently been approved to join the County's HOME Consortium. HOME
funds can be used to fund eligible affordable housing projects for acquisition, construction and
rehabilitation. Starting in FY 2015-2016, developers of affordable housing projects will be eligible to
competitively apply through an annual RFP process directly to the County for HOME funds to help
subsidize affordable housing projects in the City.
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SP-60 Homelessness Strategy – 91.215(d)
Describe the five-year goals and actions for reducing and ending homelessness including:
Following a six-month planning process, the Santa Clara County Collaborative on Affordable Housing
and Homeless Issues recommended the people serving on the Destination: Home Leadership Board
should also serve as the Continuum of Care (CoC) Board. The Destination: Home Leadership Board
agreed to accept this dual role due to the overwhelming need for a unified and community-wide
strategy to end and prevent homelessness, especially chronic homelessness, which is a priority both
locally and nationally. The new CoC Board identified the County’s Office of Supportive Housing as the
Collaborative Applicant to ensure that the local CoC fully implemented the requirements and intent
of The Homeless Emergency Assistance and Rapid Transition to Housing (HEARTH) Act of 2009.
Lead by Destination: Home, the CoC created a five-year strategic plan entitled the 2015-2020
Community Plan to End Homelessness in Santa Clara County through a series of community summits
related to the specific homeless populations and homeless issues in the County.98 As previously
discussed, the CoC’s target is to house 2,518 chronically homeless individuals, 718 homeless veterans,
and more than 2,333 homeless children, youth, and families.
The CoC’s plan includes the following overarching strategies:
1. Disrupt Systems – Develop disruptive strategies and innovative prototypes that transform
the systems related to housing a homeless person.
2. Build the Solution – Secure the right amount of funding needed to provide housing and
services to those who are homeless and those at risk of homelessness.
3. Serve the Person – Adopt an approach that recognizes the need for client-centered
strategies with different responses for different levels of need and different groups,
targeting resources to the specific individual or household.
Within each strategy the CoC identifies several tasks:
1. Disrupt Systems
a. Transform the Way Government Responds to Homelessness
i. Rethink how government organizes to respond to homelessness
ii. Ensure people leaving systems do not become homeless
iii. Increase access to benefits for people who are homeless or at risk of
homelessness
b. Include the Private Sector and the Community in the Solution
i. Increase awareness
ii. Increase and align private resources
iii. Provide opportunities for the business sector to address homelessness
iv. Collaborate with community organizations
v. Engage with the environmental community to reduce the environmental
impacts of homelessness
c. Create the Best Homeless System of Care
i. Coordinate housing and services to connect each individual with the right
housing solution
98 Santa Clara County CoC. “Community Plan to End Homelessness in Santa Clara County 2015-2020.” 2014.
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ii. Respond to system barriers and service gaps by making the best use of
existing assets
iii. Partner across public and private sectors to improve systemic coordination
iv. Increase provider capacity
2. Build the Solution
a. Create New Homes and Opportunities to House Homeless Men, Women, and
Children
i. Create 6,000 Housing Opportunities
ii. Fund supportive services for the new housing opportunities
3. Serve the Population
a. Have Different Responses for Different Levels of Need
i. Provide permanent supportive housing to end chronic homelessness
ii. Expand rapid rehousing resources to respond to episodic homelessness
iii. Prevent homelessness before it happens
Reaching out to homeless persons (especially unsheltered persons) and assessing their individual
needs
Two formally homeless persons are on the Continuum of Care Board. Homeless outreach primarily
occurs in the City of San Jose, although outreach efforts to the rest of the County are expected to
increase in the next 12 months.
Addressing the emergency and transitional housing needs of homeless persons
New Directions, on a county-wide basis, provides intensive case management to frequent users of
the emergency departments at four area hospitals, many of whom are chronically homeless
individuals. Santa Clara Valley Medical Center, O’Connor Hospital, Regional Medical Center and Saint
Louise Regional Hospital are served by this project. Health Care for the Homeless provides medical
care to homeless people through its clinics and mobile medical van at homeless encampments.
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.
Particularly for chronically homeless, it is preferred that individuals receive intensive case
management rather than simple information and referral services. Case managers work to assist
homeless individuals find housing, connect with resources, and receive services to maintain housing.
The provision of case management is person-based rather than shelter-based with the goal of rapid
re-housing. Within the five-year goals of the Community Plan to End Homelessness, the target is to
create 6,000 housing opportunities for persons who are homeless. An additional goal is for each of
the 6,000 new tenants to have access to the services that will allow them to maintain that housing.99
99 Santa Clara County CoC. “Community Plan to End Homelessness in Santa Clara County 2015-2020.” 2014.
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The City spends part of its CDBG funds and local funds toward a variety of public services to address
the needs of homeless and very low income persons. Services provided include free food, clothing,
medical care, legal assistance, and rental assistance. The City allocates funding to the following
homeless service providers:
CDBG Funded
InnVision Shelter Network - Opportunity Services Center
The Opportunity Services Center facility in Palo Alto provides a clean, safe environment and
resources for 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 de Zink rotating church shelter
program is housed at a different location each month.
Downtown Streets Team – Workforce Development Program
This economic development program helps motivated graduates of the Downtown Streets
Team programs move on to stable employment. The program includes 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 Infrastructure
The Community Technology Alliance 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
Downtown Streets Team 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
Momentum for Mental Health outreach program provide 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.
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Help low-income individuals and families avoid becoming homeless, especially extremely low-
income individuals and families who are likely to become homeless after being discharged from a
publicly funded institution or system of care, or who are receiving assistance from public and
private agencies that address housing, health, social services, employment, education or youth
needs
The City allocates funding to the following service providers:
Palo Alto Housing Corporation – SRO Tenant Counseling
Palo Alto Housing Corporation 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
This agency is the main provider of senior services in the Mid-Peninsula area.
La Comida de California – Hot Meals for the Elderly
La Comida provides a daily hot meal program for the elderly.
May View Health Center – Health Care for Low Income & Homeless Residents
The Center provides 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
This is a 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 for the Elderly
Senior Adults Legal Assistance (SALA) provides affordable legal assistance to elderly
residents.
Discussion
Please see discussion above.
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SP-65 Lead based paint Hazards – 91.215(i)
Actions to address LBP hazards and increase access to housing without LBP hazards
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 (LBP) hazards. Any
house to be rehabilitated with City financial assistance is required to be inspected for the existence
of LBP and LBP hazards. The City will provide financial assistance for the abatement of such hazards
in units rehabilitated with City funding.
How are the actions listed above related to the extent of lead poisoning and hazards?
Building age is used to estimate the number of homes with LBP which was prohibited on residential
units after 1978. For the purposes of this plan, units built before 1980 are used as a baseline for units
that contain LBP. Seventy-nine percent of all units (20,265 units) in the City were built before 1980
and provide potential exposure to LBP. As discussed in the Needs Assessment, 23 percent of
households within the City have incomes ranging from 0-80% AMI. Using this percentage as a
baseline, we can estimate that 4,661 LBP units are occupied by LMI families.
How are the actions listed above integrated into housing policies and procedures?
The City requires that contractors are trained and certified in an effort to decrease the risk of
potential use of LBP in new units. All development and rehabilitation projects must be evaluated
according to HUD’s Lead Safe Housing Rule 24 CFR Part 35.
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SP-70 Anti-Poverty Strategy – 91.215(j)
How are the Jurisdiction poverty reducing goals, programs, and policies coordinated with this
affordable housing plan
As stated in the Needs Assessment, almost a quarter of households (23 percent, or 5,845
households) in the City are LMI, with incomes ranging from 0-80% AMI. To address this, the City
employs a multi-tiered anti-poverty strategy, with each of the goals and programs described in this
plan addressing poverty directly or indirectly. The City provided either CDBG or HSRAP funding to
several services for persons within the community who are low income, homeless, or at-risk of
becoming homeless. In summary, the goal of all of the services listed in this chapter is to prevent
homelessness, help people move out of homelessness, and to reduce the number of persons below
the poverty line.
The City’s Workforce Development Program, administered by Downtown Streets, Inc., provides a
transition from unemployment and homelessness to regular employment and housing through case
management, job training, mentoring, housing, and transportation assistance. The City also partners
with NOVA, a local nonprofit agency that provides job seekers with resume and job search
assistance, assessment, and referrals to specialized training and educational programs.
The City provided $1,216,177 in General Funds during FY 2013-2014 to address primary human service
needs in the community. These funds include multi-year agreements with others allocated by HSRAP
and administered by the Office of Human Services in the Community Services Department. Funded
projects addressed priority needs in the following categories: early child care and education, youth
programs, senior nutrition and social services, homelessness, and basic needs such as health care
and mental health.100
In 2013 the Palo Alto City Council approved the allocation of $150,000 in CDBG funds toward a
Microenterprise Assistance Program (MAP). The purpose of the program is to provide access to new
opportunities to improve the economic self-sufficiency of LMI families and individuals. This program
builds on the foundation of entrepreneurship and empowers clients by increasing their economic
literacy, business skills, self-esteem, and personal behavior appropriate to the workplace. The MAP
program seeks to accomplish the following:101
Provide an innovative path out of poverty
Create self-sufficiency
Improve the survival rate of microenterprise businesses
Improve employment skills
Promote community economic development
100 City of Palo Alto. “Consolidated Annual Performance and Evaluation Report FY2013-2014.” 2014
101 City of Palo Alto. “Pilot Microenterprise Assistance Program (MAP).
http://www.cityofpaloalto.org/news/displaynews.asp?NewsID=2480&TargetID=268
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SP-80 Monitoring – 91.230
Describe the standards and procedures that the jurisdiction will use to monitor activities carried
out in furtherance of the plan and will use to ensure long-term compliance with requirements of
the programs involved, including minority business outreach and the comprehensive planning
requirements
A key element of the CDBG Planner’s role in management and oversight responsibilities is the
monitoring of program performance. In general, the CDBG Coordinator is responsible for managing
the day-to-day operations of the City’s CDBG Program and ensuring that funds are used in keeping
with program requirements. Monitoring is a review of program or project performance and
compliance.
The City uses a CDBG Monitoring Responsibilities and Plan to provide an internal control mechanism
designed to review performance over a period of time and to evaluate compliance of nonprofit sub-
recipients funded under CDBG pursuant to 24 CFR 570.502. Applicability of Uniform Administrative
Requirements, (a) (14) and with 24 CFR Section 85, Uniform Administrative Requirements for Grants
and Cooperative Agreements to States and Local Governments, 24 CFR Section 85.40 “Monitoring
and reporting program performance,” and other laws and regulations based on the funding
source.102
Monitoring allows the City to provide technical assistance to help subrecipients comply with
applicable laws and regulations, improve technical skills, increase capacity and stay updated on
regulations relevant to CDBG. Additionally, monitoring helps to identify deficiencies, and highlight
accomplishments and best practices that can be duplicated.
Monitoring will be conducted in two phases. File review will generally confirm compliance with
reporting requirements, financial submittals, and contract provisions and much of it will be
completed prior to the onsite visit. On-site reviews will focus more on the beneficiary documentation
and services provided, including quantitative performance outcomes to local and federal objectives,
and financial processes and documentation only available at the program site.
The City will coordinate its monitoring efforts of Public Service activities funded by other entitlement
jurisdictions, in an effort to standardize the process and reduce the burden on the providers.
Monitoring checklists will be used to assure regulatory requirements are being met and will
adequately be designed to test for client eligibility. Subrecipients who are found to be in
noncompliance and receive a finding as a result of their monitoring will be provided with technical
assistance towards resolution. Actions taken by the City to achieve compliance may include, but not
be limited to, withholding further disbursements of CDBG funds until satisfactory compliance with
applicable regulations are achieved.
102 U.S. Department of Housing & Urban Development. “Monitoring and Reporting Program Performance.”
http://www.gpo.gov/fdsys/pkg/CFR-2000-title24-vol1/pdf/CFR-2000-title24-vol1-sec85-40.pdf
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Minority Outreach (MBE/WBE)
Through the CDBG Program the City works with non-profit affordable housing developers on
awarding contractors and subcontractors performing the construction contracts awarded
participation by minority businesses in each construction project.
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First Year Action Plan
AP-15 Expected Resources – 91.220(c) (1, 2)
Introduction
The City of Palo Alto’s (City) Fiscal Year (FY) 2015-2016 Action Plan covers the time period from July 1,
2015 to June 30 2016 (HUD Program Year 2015). The City’s FY 2016 entitlement amount is $442,460.
Additionally, the City estimates approximately $136,049 in program income and an estimated
$303,164 in available uncommitted funds from the prior program year, bringing the total estimated
budget for FY 2015-2016 to $881,673.
While U.S. Department of Housing and Urban Development (HUD) allocations are critical, they are
not sufficient to overcome all barriers and address all needs that low income individuals and families
face in attaining self-sufficiency. The City will continue to leverage additional resources to
successfully provide support and services to the populations in need.
Currently, the City is not eligible to receive direct funding under the HOME Investment Partnership
Act (HOME), Emergency Solutions Grant (ESG), or Housing Opportunities for Persons with AIDS
(HOPWA) – also programs covered under the Consolidated Plan Regulations.
Within the CDBG funding, Year One allocations are as follows:
Table 74 - CDBG Fiscal Year 2015-2016 Annual Budgetary Priorities
CDBG Fiscal Year 2015 Annual Budgetary Priorities
FY 2015-2016 Budget
($442,460 Allocation + $136,049 Program Income)
$578,509
Administration and Planning (20% Cap = $115,701) 20% $115,702
Public Services (15% Cap = $82,910) 15% $82,880
Affordable Housing Projects 40% $231,140
Economic Development Projects 25% $148,787
Total 100% $578,509
FY 2014-2015 Uncommitted Funds
(Affordable Housing & Economic Development Projects)
$303,164
Total Available to Allocate $881,673
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Table 75 - Expected Resources – Priority Table
Program Source
of
Funds
Uses of Funds Expected Amount Available Year 1 Expected
Amount
Available
Reminder
of ConPlan
$
Narrative Description
Annual
Allocation:
$
Program
Income: $
Prior Year
Resources:
$
Total:
$
CDBG Public
Federal
Admin and
Planning
Acquisition
Economic
Development
Housing
Public
Improvements
Public Service
$442,460
$136,049
$303,164
$881,673
$2,103,594 CDBG funds will be used
for the creation and
preservation of
affordable rental units,
improvements in lower
income neighborhoods,
and public services that
benefit low income and
special needs
households.
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Explain how federal funds will leverage those additional resources (private, state and local funds),
including a description of how matching requirements will be satisfied
Entitlement Funds
Leverage, in the context of the CDBG and HOME, means bringing other local, state, and federal
financial resources to maximize the reach and impact of the City’s HUD Programs. HUD, like many
other federal agencies, encourages the recipients of federal monies to demonstrate that efforts are
being made to strategically leverage additional funds in order to achieve greater results. Leverage is
also a way to increase project efficiencies and benefit from economies of scale that often come with
combining sources of funding for similar or expanded scopes. Funds will be leveraged if financial
commitments toward the costs of a project from a source other than the originating HUD program
are documented.
Additionally, the City has recently been approved to join the County's HOME Consortium. HOME
funds can be used to fund eligible affordable housing projects for acquisition, construction and
rehabilitation. Starting in FY 2015-2016 developers of affordable housing projects will be eligible to
competitively apply through an annual Request for Proposals (RFP) process directly to the County
for HOME funds to help subsidize affordable housing projects in Palo Alto. If the City receives HOME
dollars from its participation in the HOME consortium, the required 25 percent matching funds will
be provided from the City’s Affordable Housing Fund, which is comprised of two sub-funds: the
Commercial Housing Fund and the Residential Housing Fund. As of August 25, 2014 the Commercial
Housing Fund had an available balance of approximately $6,600,000 and the Residential Housing
Fund had an available balance of $1,400,000.
Other Federal Grant Programs
In addition to the entitlement dollars listed above, the federal government has several other funding
programs for community development and affordable housing activities. These include: the Section
8 Housing Choice Voucher Program, Section 202, Section 811, the Affordable Housing Program (AHP)
through the Federal Home Loan Bank, and others. It should be noted that, in most cases, the City
would not be the applicant for these funding sources as many of these programs offer assistance to
affordable housing developers rather than local jurisdictions.
State Housing and Community Development Sources
In California, the Department of Housing and Community Development (HCD) and the California
Housing Finance Agency (CalHFA) administer a variety of statewide public affordable housing
programs that offer assistance to nonprofit affordable housing developers. Examples of HCD’s
programs include the Multifamily Housing Program (MHP), Affordable Housing Innovation Fund
(AHIF), Building Equity and Growth in Neighborhoods Program (BEGIN), and CalHOME. Many HCD
programs have historically been funded by one-time State bond issuances and, as such, are subject
to limited availability of funding. CalHFA offers multiple mortgage loan programs, down payment
assistance programs, and funding for the construction, acquisition, and rehabilitation of affordable
ownership units. The State also administers the federal Low Income Housing Tax Credit (LIHTC)
program, a widely used financing source for affordable housing projects. As with the other federal
grant programs discussed above, the City would not apply for these funding sources. Rather, local
affordable housing developers could apply for funding through these programs for particular
developments in the City.
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Additionally, the County also receives Mental Health Services Act (MHSA) funds from the State for
housing.
County and Local Housing and Community Development Sources
There are a variety of countywide and local resources that support housing and community
development programs. Some of these programs offer assistance to local affordable housing
developers and community organizations while others provide assistance directly to individuals.
These resources are discussed below:
Human Service Resource Allocation Process
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 nonprofit agencies.
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 August 25, 2014 the Commercial
Housing Fund had an available balance of approximately $6,600,000.
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
August 25, 2014 the Residential Housing Fund had an available balance of $1,400,000.
Below Market Rate Emergency Fund
This fund was authorized by City 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 13, 2014 the BMR
Emergency Fund had a balance of approximately $450,000.
Housing Trust Silicon Valley
This nonprofit organization combines private and public funds to support affordable housing
activities in the County, including assistance to developers and homebuyers. The Housing
Trust is among the largest housing trusts in the nation building special needs and affordable
housing and assisting first-time homebuyers. Since HTSV began distributing funds in 2001, the
trust has invested over $75 million and leveraged over $1.88 billion to create more than 9,953
housing opportunities.
Mortgage Credit Certificates (MCC) Program
The MCC program provides assistance to first-time homebuyers by allowing an eligible
purchaser to take 20 percent of their annual mortgage interest payment as a tax credit
against federal income taxes. The County administers the MCC Program on behalf of the
jurisdictions, including Palo Alto. The program does establish maximum sales price limits on
units assisted in this program and, due to the high housing costs in the City, there have been
few households assisted in Palo Alto in recent years.
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Santa Clara County Affordable Housing Fund (AHF)
The County Board of Supervisors established the AHF 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 the County. The
County has awarded over $10 million from the AHF to date. $960,000 was awarded to the
Tree House project developed by the Palo Alto Housing Corporation.
Stanford Affordable Housing Fund
The County maintains this affordable housing fund intended to benefit low income
households. The County distributes the funds through a Notice of Funding Availability
(NOFA) process and has assisted developers in creating 91 units regionally.
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; the existing land that the City has jurisdiction over is currently utilized by facilities and
parks. Sixty-five percent of the City is open space.
Discussion
Please see discussions above.
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AP-20 Annual Goals and Objectives
Goals Summary Information
Table 76 - Goals Summary
Sort
Order
Goal Name Start
Year
End
Year
Category Geographic
Area
Needs Addressed Funding Goal Outcome
Indicator
1 Affordable Housing 2015 2020 Affordable
Housing
N/A Affordable
Housing
CDBG:
$392,368
Rental units
rehabilitated:
156 Housing Units
2 Homelessness 2015 2020 Homeless N/A Homelessness CDBG:
$63,360
Public service activities
other than for
low/mod income
housing benefit:
531 Persons Assisted
3 Strengthen
Neighborhoods
2015 2020 Non-Housing
Community
Development
Non-Homeless
Special Needs
N/A Community
Services and
Public
Improvements
CDBG:
$19,520
Public service activities
other than for
low/mod income
housing benefit:
305 Persons Assisted
4 Fair Housing 2015 2020 Non-Housing
Community
Development
N/A Fair Housing CDBG:
$32,016
Public service activities
other than for
low/mod income
housing benefit:
30 Persons Assisted
5 Economic
Development
2015 2020 Non-Housing
Community
Development
N/A Economic
Development
CDBG:
$290,723
Jobs created/retained:
30 Jobs
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Goal Descriptions
1 Goal Name Affordable Housing
Goal Description Assist in the creation and preservation of affordable housing for low income and special needs households.
2 Goal Name Homelessness
Goal Description Support activities to end homelessness.
3 Goal Name Strengthen Neighborhoods
Goal Description Support activities that strengthen neighborhoods through the provision of community services and public improvements
to benefit low income and special needs households.
4 Goal Name Fair Housing
Goal Description Promote fair housing choice.
5 Goal Name Economic Development
Goal Description Expand economic opportunities for low income households.
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AP-35 Projects – 91.220(d)
Introduction
The Consolidated Plan goals below represent high priority needs for the City of Palo Alto (City) and
serve as the basis for the strategic actions the City will use to meet these needs. The goals, listed in
no particular order, are:
1. Assist in the creation and preservation of affordable housing for low income and special
needs households.
2. Support activities to end homelessness.
3. Support activities that strengthen neighborhoods through the provision of community
services and public improvements to benefit low income and special needs households.
4. Promote fair housing choice.
5. Expand economic opportunities for low income households.
Projects
Table 77 - Project Information
# Project Name
1 Long-Term Care Ombudsman Program
2 Opportunity Services Center
3 SRO Resident Support Services
4 Housing & Emergency Services
5 Domestic Violence Services
6 Fair Housing Services
7 Planning and Administration
8 Palo Alto Gardens Rehabilitation Project
9 Workforce Development Program
Describe the reasons for allocation priorities and any obstacles to addressing underserved needs
The City’s Consolidated Plan update coincides with the development of the first year Action Plan and
the biennial RFP process. The City awards CDBG funding to nonprofit agencies to provide public
services and housing for low income and special needs households. The City operates on a two-year
grant funding cycle for CDBG grants.
The City allocates its CDBG funds to projects and programs that will primarily benefit 0-50% AMI
households, the homeless and special needs populations. The allocation of funds is made based on
the needs identified in the Consolidated Plan.
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AP-38 Project Summary
Project Summary Information
Table 78 - Project Summary
Sort
Order
Project Name Target
Area
Goals Supported Needs Addressed Funding Goal Outcome
Indicator
1 Catholic Charities of Santa Clara County
– Long-term Care Ombudsman Program
N/A Strengthen
Neighborhoods
Homelessness
Community Services
and Public
Improvements
$5,422 Public service activities
other than for low/mod
income housing benefit:
260 Persons Assisted
2 InnVision Shelter Network –
Opportunity Services Center
N/A Homelessness
Strengthen
Homelessness
Community Services
and Public
Improvements
$38,499 Public service activities
other than for low/mod
income housing benefit:
400 Persons Assisted
3 Palo Alto Housing Corporation –
SRO Resident Support Program
N/A Strengthen
Neighborhoods
Homelessness
Affordable Housing
Fair Housing
Community Services
and Public
Improvements
Homelessness
Affordable Housing
$24,861 Public service activities
other than for low/mod
income housing benefit:
131 Persons Assisted
4 Silicon Valley Independent Living Center
– Housing & Emergency Housing
Services
N/A Strengthen
Neighborhoods
Fair Housing
Community Services
Fair Housing
$5,422 Public service activities
other than for low/mod
income housing benefit:
20 Persons Assisted
5 YWCA of Silicon Valley –
Domestic Violence Activities
N/A Community
Services
Community Services $8,676 Public service activities
other than for low/mod
income housing benefit:
40 Persons Assisted
6 Project Sentinel – Fair Housing Services N/A Fair Housing Fair Housing
Affordable Housing
$32,016 Public service activities
other than for low/mod
income housing benefit:
40 Persons Assisted
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Sort
Order
Project Name Target
Area
Goals Supported Needs Addressed Funding Goal Outcome
Indicator
7 City of Palo Alto Planning and
Administration
N/A Affordable Housing
Homelessness
Strengthen
Neighborhoods
Fair Housing
Economic
Development
Affordable Housing
Homelessness
Community Services
Public Facilities, Public
Improvements and
Infrastructure
Fair Housing
Economic Development
$83,686 N/A
8 MidPen Housing – Palo Alto Garden
Housing Rehabilitation
N/A Affordable Housing
Affordable Housing $392,368 Rental units
rehabilitated:
156 Housing Units
9 Downtown Streets – Workforce
Development Program
N/A Economic
Development
Economic Development
$290,723 Jobs created/retained:
30 Jobs
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AP-50 Geographic Distribution – 91.220(f)
Description of the geographic areas of the entitlement (including areas of low income and minority
concentration) where assistance will be directed
Not applicable. The City has not established specific target areas to focus the investment of CDBG
funds.
Table 79 - Geographic Distribution
Target Area Percentage of Funds
N/A N/A
Rationale for the priorities for allocating investments geographically
Not applicable.
Discussion
Please see discussion above.
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AP-55 Affordable Housing – 91.220(g)
Introduction
Palo Alto has identified affordable housing as the primary objective for the expenditure of CDBG
funds in the Consolidated Plan. The City will continue to allocate the maximum funding available to
activities and projects that meet this objective. While CDBG entitlement dollars are limited, the City
does anticipate expending a significant portion of its CDBG funds on the preservation and
rehabilitation of affordable housing. A detailed discussion of how HUD entitlements will be used to
support affordable housing needs within the City is provided in AP-20, with the number of
households to be assisted itemized by goal.
Table 80 - One Year Goals for Affordable Housing by Support Requirement
One Year Goals for the Number of Households to be Supported
Homeless 0
Non-Homeless 0
Special-Needs 156
Total 156
Table 81 - 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 156
Acquisition of Existing Units 0
Total 156
Discussion
Please see discussion above.
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AP-60 Public Housing – 91.220(h)
Introduction
HACSC assists approximately 17,000 households through the federal Section 8 Housing Choice
Voucher program (Section 8). The Section 8 waiting list contains 21,256 households (estimated to be
a 10-year wait). HACSC also develops, controls, and manages more than 2,600 affordable rental
housing properties throughout the County. HACSC’s programs are targeted toward LMI households
and more than 80 percent of their client households are extremely low income families, seniors,
veterans, persons with disabilities, and formerly homeless individuals. 103
In 2008, HACSC entered a ten-year agreement with HUD to become a Moving to Work (MTW)
agency. The MTW program is a federal demonstration program that allows greater flexibility to
design and implement more innovative approaches for providing housing assistance.104 Additionally,
HACSC has used LIHTC financing to transform and rehabilitate 535 units of public housing into
HACSC-controlled properties. The agency is an active developer of affordable housing and has either
constructed, rehabilitated, or assisted with the development of more than 30 housing developments
that service a variety of households, including special needs households.
Actions planned during the next year to address the needs to public housing
Not applicable. HACSC owns and manages four public housing units, which are all located in the City
of Santa Clara.
Actions to encourage public housing residents to become more involved in management and
participate in homeownership
While the majority of their units have been converted to affordable housing stock, HACSC is
proactive in incorporating resident input into the agency’s policy-making process. An equitable and
transparent policy-making process that includes the opinions of residents is achieved through the
involvement of two tenant commissioners, one being a senior citizen, on the HACSC board.
HACSC has been a MTW agency since 2008. In this time the agency has developed 31 MTW activities.
The vast majority of its successful initiatives have been aimed at reducing administrative
inefficiencies, which in turn opens up more resources for programs aimed at LMI families. The
following is excerpted from HACSC’s August 2014 Board of Commissioner’s report:
“HACSC’s Family Self Sufficiency (FSS) Program is designed to provide assistance to current HACSC
Section 8 families to achieve self-sufficiency. When a family enrolls in the five-year program, HPD’s
FSS Coordinator and LIFESteps service provider helps the family develop self-sufficiency goals and a
training plan, and coordinates access to job training and other services, including childcare and
transportation. Program participants are required to seek and maintain employment or attend
school or job training. As participants increase their earned income and pay a larger share of the rent,
HACSC holds the amount of the tenant’s rent increases in an escrow account, which is then awarded
103 Housing Authority of the County of Santa Clara. “Welcome to HACSC.” http://www.hacsc.org/
104 HACSC. “Moving to Work (MTW) 2014 Annual Report.” September 2014.
http://www.hacsc.org/assets/1/6/MTW_FY2014_Annual_Report-Final_Draft_9.30.14.pdf
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to participants who successfully complete the program. HACSC is currently in the initial stages of
creating a pilot successor program to FSS under the auspices of its MTW flexibility called Focus
Forward.”105
If the PHA is designated as troubled, describe the manner in which financial assistance will be
provided or other assistance
Not applicable.
Discussion
Please see discussions above.
105 HACSC. “Housing Programs Department (HPD) Monthly Board Report.” August 2014.
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AP-65 Homeless and Other Special Needs Activities – 91.220(i)
Introduction
The Santa Clara region is home to the fourth-largest population of homeless individuals (6,681 single
individuals)106 and the highest percentage of unsheltered homeless of any major city (75 percent of
homeless people sleep in places unfit for human habitation). The homeless assistance program
planning network is governed by the Santa Clara Continuum of Care (CoC), governed by the
Destination: Home Leadership Board, who serves as the CoC Board of Directors. The membership of
the CoC is a collaboration of representatives from local jurisdictions comprised of community-based
organizations, the Housing Authority of Santa Clara, governmental departments, health service
agencies, homeless advocates, consumers, the faith community, and research, policy and planning
groups. The homeless services system utilized by the CoC is referred to as the Homeless
Management Information System (HMIS). The HMIS monitors outcomes and performance measures
for all the homeless services agencies funded by the County.
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 2015, 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. Palo Alto financially contributed to this effort.
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. One example includes the Hotel de Zink rotating
shelter program housed at various faith based organizations throughout the calendar year. CDBG
funding is provided to InnVision Shelter Network, the operator of the program. A total of 15 beds are
provided on a nightly basis.
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
106 The U.S. Department of Housing and Urban Development. “2014 Annual Homeless Assessment Report (AHAR) to
Congress.” October 2014. https://www.hudexchange.info/resources/documents/AHAR-2014-Part1.pdf
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homeless individuals and families to affordable housing units, and preventing individuals
and families who were recently homeless from becoming homeless again.
The City spends part of its CDBG funds and local funds toward a variety of public services to address
the needs of homeless and very low income persons. Services provided include free food, clothing,
medical care, legal assistance, and rental assistance. The City allocates funding to the following
homeless service providers:
CDBG Funded
InnVision Shelter Network - Opportunity Services Center: $35,500
The Opportunity Services Center facility in Palo Alto provides a clean, safe environment and
resources for 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 de Zink rotating church shelter
program is housed at a different location each month.
Downtown Streets Team – Workforce Development Program: $276,654
This economic development program helps motivated graduates of the Downtown Streets
Team programs move on to stable employment. The program includes mentoring,
counseling, job readiness, job training, and assistance.
HSRAP Funded
Abilities United – Disability Services: Amount Pending
This organization provides services and activities for adults and children with mental and
physical disabilities.
Community Technology Alliance – Shared Technical Infrastructure: Amount Pending
The Community Technology Alliance 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: Amount Pending
Downtown Streets Team 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: Amount Pending
Momentum for Mental Health outreach program provide 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.
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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: $22,924
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.
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.
Discussion
Please see discussion above.
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AP-75 Barriers to Affordable Housing – 91.220(j)
Introduction:
The incorporated and unincorporated jurisdictions within the County face barriers to affordable
housing that are common throughout the Bay Area. High on the list is the lack of developable land,
which increases the cost of available lands and increases housing development costs. Local
opposition is another common obstacle as many neighbors have strong reactions to infill and
affordable housing developments. Their opposition is often based on misconceptions, such as a
foreseen increase in crime; erosion of property values; increase in parking and traffic congestion; and
overwhelmed schools.107 However, to ensure a healthy economy the region must focus on strategies
and investment that provide housing for much of the region’s workforce – for example, sales clerks,
secretaries, firefighters, police, teachers, and health service workers – whose incomes significantly
limit their housing choices.108
Even when developments produce relatively affordable housing, in a constrained housing supply
market, higher income buyers and renters generally outbid lower income households and a home’s
final sale or rental price will generally far exceed the projected sales or rental costs. Public subsidies
are often needed to guarantee affordable homes for LMI households.
The City identified several constraints to the maintenance, development and improvement of
housing and affordable housing in its 2015-2023 Housing Element update: 109
Local policies and regulations can impact the price and availability of housing and, in
particular, the provision of affordable housing
Land use controls
Site improvement requirements
Fees and exactions
Permit processing procedures
Strategy to Remove or Ameliorate the Barriers to Affordable Housing
The City is addressing the barriers to affordable housing through the following programs and
ordinances:
Context-Based Design Codes
The City adopted form-based codes in 2006 to ensure and encourage residential development by
following context-based design guidelines to meet increased density needs. The code encourages
the creation of walkable, pedestrian-oriented neighborhoods, following green building design
principles, and increasing density along transit corridors and in mixed-use neighborhoods. The
Context-Based Design Code allows for increased density and mixed-use buildings in a way that
enhances neighborhood character and walkability.
107 Association of Bay Area Governments. “Affordable Housing in the Bay Area.” 2014.
108 Association of Bay Area Governments. “Jobs-Housing Connection Strategy.” 2012.
109 City of Palo Alto. “2015-2023 Housing Element.” 2014. http://www.cityofpaloalto.org/civicax/filebank/documents/44951
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Density Bonus Ordinance
Density bonus provisions are a tool for attracting and assisting developers in constructing affordable
housing. Density bonuses allow a developer to increase the density of a development above that
allowed by standard zoning regulations, as well as provide regulatory relief in the form of
concessions. In exchange, a developer provides affordable units in the development.
In 2004, the California State Legislature lowered the thresholds required to receive a density bonus
and increased the number of concessions a developer can receive. The City adopted a Density Bonus
Ordinance in January 2014. The density bonus regulations allow for bonuses of 20 to 35 percent,
depending on the amount and type of affordable housing provided. As required by state law, the
regulations also allow for exceptions to applicable zoning and other development standards, to
further encourage development of affordable housing.
Below Market Rate Housing Program
Established in 1974, the City’s BMR Housing Program has been instrumental in the production of
affordable housing by requiring developers to provide a certain percentage of units as BMR in every
approved project of three units or more. The program originally required that for developments on
sites of less than five acres, the developer must provide 15 percent of the total housing units as BMR
housing units. If the site was larger than five acres, the developer was required to provide 20 percent
of the units as BMR housing.
However, recent court cases have drastically changed the BMR, or “inclusionary zoning”,
environment in California. Two factors have received recent attention by the courts: whether
inclusionary housing is considered rent control, and whether inclusionary housing and related
housing mitigation fees are considered exactions. As a result of ongoing litigation, many cities have
suspended or amended the portions of their inclusionary housing requirements that require
affordable units to be included in market‐rate rental developments and many cities have turned,
instead, to the use of development impact fees charged on new, market-rate housing and/or
commercial development. Known as “Housing Impact Fees” and “Commercial Linkage Fees,” these
fees are based on an assessment of the extent to which the development of new market-rate
housing or commercial uses, respectively, generates additional demand for affordable housing. 110
Commercial Housing Fund
The Commercial Fund is composed solely of housing mitigation fees collected from commercial
developers under Chapter 16.47 of the Municipal Code. This ordinance was adopted in 1984. Fee
revenue varies greatly from year to year. However, over a ten-year period from 1998 to 2008, over
$5.4 million was collected in fees at an average of $542,000 per year. During that period the fee rate
ranged from about $3.00 to $4.00 per square foot. In May 2002, the housing impact fee was
increased to $15.00 per net new square feet of commercial space and as of May 2008 it had gone up
to $17.06 with annual CPI adjustments. The Commercial Fund monies are used only to assist in the
development of new housing units. Since initiation of commercial housing impact fees through June
110 California Building Industry Association. “California Supreme Court takes Inclusionary Zoning Case.”
http://www.cbia.org/go/government-affairs/cbia-reports1/september-23-2013/california-supreme-court-takes-inclusionary-
zoning-case/
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2008, seven new housing projects have been constructed with City financial assistance from the
Commercial Fund producing 377 new affordable rental units.
Residential Housing Fund
The Residential Fund is primarily composed of fees received from developers of market-rate
residential projects in-lieu of the provision of on-site or off-site below market rate units. These fees
are collected pursuant to the City's BMR housing program. Over the ten-year period from 1998 to
2008, almost $5.8 million in fees were collected, for an average of about $580,000 per year in
revenue. Residential Fund monies may be used to assist new housing development or the
acquisition, rehabilitation or the preservation of existing housing for affordable housing. All housing
assisted has been rental and most of the units have been affordable to very low and low income
households. Through 2008, a total of nine housing projects with 379 units have been acquired,
rehabilitated or constructed with City assistance from this Fund.
In all cases, the housing projects assisted by the City have been developed, owned and managed by
local nonprofit housing organizations. Many housing types have been developed serving different
housing needs. Examples include: senior apartments, SRO units, family apartments, units for
persons with disabilities, studio units and large family units. Typically, the developer has also used
state of federal housing subsidies such as the housing tax credits in addition to the City's financial
assistance.
The City provides its funds through long-term loans with low interest rates and usually deferred
payment. All loans must be approved by the City Council and the City restricts the projects under
long-term regulatory agreements. Any cost necessary to develop the housing can be funded by the
City. Developers are encouraged to apply through the funding cycle for the CDBG program, but may
apply at other times if necessary.
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 $18.44 to $18.89
per square foot effective May 8, 2013. 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.
Housing Trust Silicon Valley (HTSV)
This nonprofit organization combines private and public funds to support affordable housing
activities in the County, including assistance to developers and homebuyers. HTSV is among the
largest housing trusts in the nation building special needs and affordable housing and assisting first-
time homebuyers. 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 Palo Alto. The most recent contribution included $200,000 from
the City’s Residential Housing Fund for Fiscal Year 2012. Participation in the Trust has increased the
available housing funding for a number of Palo Alto projects. In addition, HTSCC has invested over
$100,000 assisting 16 households to purchase homes in Palo Alto through its first-time homebuyer
program.
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HOME Investment Partnerships Program (HOME)
Additionally, the City has recently been approved to join the County's HOME Consortium. HOME
funds can be used to fund eligible affordable housing projects for acquisition, construction and
rehabilitation. Starting in FY 2015-2016, developers of affordable housing projects will be eligible to
competitively apply through an annual RFP process directly to the County for HOME funds to help
subsidize affordable housing projects in the City.
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AP-85 Other Actions – 91.220(k)
Introduction:
This section discusses the City’s efforts in addressing the underserved needs, expanding and
preserving affordable housing, reducing lead-based paint hazards, and developing institutional
structure for delivering housing and community development activities.
Actions planned to address obstacles to meeting underserved needs
The diminishing amount of funds continues to be the most significant obstacle to addressing the
needs of underserved populations. To address this, the City supplements its CDBG funding with
other resources and funds, such as:
• The City’s Human Service Resource Allocation Process (HSRAP) provides $1,099,347 million
dollars from the General Fund in support of human services. The HSRAP funds, in
conjunction with the CDBG public service funds, are distributed to local non-profit agencies.
• The Palo Alto 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.
• The Palo Alto Residential Housing Fund is funded with mitigation fees provided under Palo
Alto’s BMR housing program from residential developers and money from other
miscellaneous sources, such as proceeds from the sale or lease of City property.
• The City’s Below Market Rate Emergency Fund was authorized in 2002 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.
• HOME Program funds are available on an annual competitive basis through the State of
California HOME program, and the County’s HOME Consortium.
• The HACSC administers the federal Section 8 program countywide. The program provides
rental subsidies and develops affordable housing for low income households, seniors and
persons with disabilities living within the County.
• The County distributes federal McKinney Homeless Assistance funds to organizations in the
county that provide services to homeless persons and persons at-risk of homelessness.
• The State’s Multifamily Housing Program has been a major source of funding for affordable
housing since 2002. This program provides low-interest loans to developers of affordable
rental housing.
• The State’s Local Housing Trust Fund Grant Program is a public/private partnership created to
receive on-going revenues for affordable housing production such as Palo Alto’s Commercial
and Residential Housing Funds.
• The California Tax Credit Allocation Committee (CTCAC) holds two application cycles for Low
Income Housing Tax Credits each year. Local non-profits apply directly to the CTCAC for these
funds when they have identified a project.
• The Housing Trust Silicon Valley is a nonprofit organization that combines private and public
funds to support affordable housing activities in the County, including assistance to
developers and homebuyers. The Housing Trust is a public/private initiative, dedicated to
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creating more affordable housing in the County, using a revolving loan fund and a grant
making program to complement and leverage other housing resources.
• The Mortgage Credit Certificate (MCC) Program provides assistance to first-time homebuyers
by allowing an eligible purchaser to take 20 percent of their annual mortgage interest
payment as a tax credit against federal income taxes. The County administers the MCC
Program on behalf of the jurisdictions in the County, including the City.
• The Santa Clara County Affordable Housing Fund (AHF) was established 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 the County.
Actions planned to foster and maintain affordable housing
The City will foster and maintain affordable housing by continuing the following programs and
ordinances:
• The Below Market Rate Emergency Fund which provides 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.
• The Commercial Housing Fund is used primarily to increase the number of new affordable
housing units for Palo Alto’s work force.
• The Residential Housing Fund is used to assist new housing development or the acquisition,
rehabilitation or the preservation of existing housing for affordable housing.
• The Density Bonus Ordinance, adopted by the City Council in January 2014. The density bonus
regulations allow for bonuses of 20 to 35 percent, depending on the amount and type of
affordable housing provided
• The City’s participation in the County's HOME Consortium will allow developers of affordable
housing projects to be eligible to competitively apply through an annual RFP process directly
to the County for HOME funds to help subsidize affordable housing projects in Palo Alto,
including acquisition, construction and rehabilitation.
Actions planned to reduce lead-based paint hazards
The City’s housing and CDBG staff provides information and referral to property owners, developers,
and non-profit organizations rehabilitating older housing about lead-based paint (LBP) hazards. Any
house to be rehabilitated with City financial assistance is required to be inspected for the existence
of LBP and LBP hazards. The City will provide financial assistance for the abatement of LBP hazards
in units rehabilitated with City funding. The City also requires that contractors are trained and
certified in an effort to decrease the risk of potential use of LBP in new units. All development and
rehabilitation projects must be evaluated according to HUD’s Lead Safe Housing Rule 24 CFR Part
35.111
111 U.S. Department of Housing & Urban Development. “Lead Safe Housing Rule.”
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Actions planned to reduce the number of poverty-level families
The City, in its continuing effort to reduce poverty, will prioritize funding agencies that provide direct
assistance to the homeless and those in danger of becoming homeless. In FY 2015-2016, these
programs will include the following:
• The Microenterprise Assistance Program provides access to new opportunities to improve
the economic self-sufficiency of LMI families and individuals. This program builds on the
foundation of entrepreneurship and empowers clients by increasing their economic literacy,
business skills, self-esteem, and personal behavior appropriate to the workplace.
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 is a nonprofit in the City that works to reduce homelessness
through a “work first” model. Downtown Streets Team uses their community connections to
provide training and job opportunities to homeless people, specifically in the downtown
area. The Downtown Streets Team has helped 282 people find housing and 291 find jobs since
its inception in 2005. The Downtown Streets Team has initiatives in Palo Alto, Sunnyvale, San
Jose, and San Rafael.
Actions planned to develop institutional structure
The City is striving to improve intergovernmental and private sector cooperation to synergize efforts
and resources and develop new revenues for community service needs and the production of
affordable housing. Collaborative efforts include:
Regular quarterly meetings between entitlement jurisdictions at the CDBG Coordinators
Meeting and Regional Housing Working Group
Joint jurisdiction Request for Proposals and project review committees
Coordination on project management for projects funded by multiple jurisdictions
HOME Consortium between member jurisdictions for affordable housing projects
Recent examples include the effort by the County to create a regional affordable housing fund, using
former redevelopment funds that could be returned to the County to use for affordable housing.
Another effort underway involves the possible use of former redevelopment funds to create a
countywide pool for homeless shelters and transitional housing. These interactions among agencies
generate cohesive discussion and forums for bridging funding and service gaps on a regional scale.
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Actions planned to enhance coordination between public and private housing and social service
agencies
The City benefits from a strong jurisdiction and region-wide network of housing and community
development partners, such as the County and the CoC. To improve intergovernmental and private
sector cooperation, the City will continue to participate with other local jurisdictions and developers
in sharing information and resources.
In addition to the actions listed above, the City will continue to coordinate with the City’s human
services funding efforts to comprehensively address community needs.
Discussion:
Please see discussions above.
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AP-90 Program Specific Requirements – 91.220(l) (1, 2, 4)
Introduction:
The following provides additional information about the CDBG program income and program
requirements.
Community Development Block Grant Program (CDBG)
Reference 24 CFR 91.220(l) (1)
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
$136,049
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 $136,049
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
100%
3. Overall Benefit – A consecutive period of one, two, or three years may be used to
determine that a minimum overall benefit of 70 percent of CDBG funds is used to
benefit persons of low and moderate income. Specify the years that include this
Annual Action Plan
FY 2015 – 2017
Discussion:
Please see discussions above.
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Citizen Participation Plan
Introduction
The City of Palo Alto (City) is a federal entitlement jurisdiction that receives federal grant funding
from the U.S. Department of Housing and Urban Development (HUD).
The City receives federal entitlement grant funding for the following program:
Community Development Block Grants (CDBG)
As an entitlement jurisdiction, the City is required to prepare a:
Five Year Consolidated Plan (Consolidated Plan)
Annual Action Plan (Action Plan)
Annual Consolidated Annual Performance Evaluation Report (CAPER)
Under HUD’s Code of Final Regulations for the Consolidated Plan (24 CFR Part 91 Sec. 91.105), the
City must adopt a Citizen Participation Plan (CPP) that sets forth the City’s policies and procedures
for citizen participation in the planning, execution, and evaluation of the Consolidated Plan, Action
Plans, and CAPER. This CPP provides guidelines for the City to provide and encourage public
participation by residents, community stakeholders, and grant beneficiaries in the process of
drafting, implementing, and evaluating the Consolidated Plan and related documents. The citizen
participation process includes outreach, public hearings, community forums, and opportunities for
comment.
Definitions
Annual Action Plan: The Action Plan summarizes the activities that will be undertaken in the
upcoming Fiscal Year (FY) to meet the goals outlined in the Consolidated Plan. The Action
Plan also identifies the federal and non-federal resources that will be used meet the goals of
the approved Consolidated Plan.
Amendment, Minor: A change to a previously adopted Consolidated Plan or Action Plan that
does not meet the threshold to qualify as a Substantial Amendment. A minor amendment
may include monetary changes or shifts, regardless of size that are both:
1. Necessary for substantially preserving all the programs and activities identified in a
Plan
2. Necessitated by significant changes in the funding levels between HUD’s initial
estimates of funding amounts and HUD’s final allocation notification to the City
Amendment, Substantial: A change to a previously adopted Consolidated Plan or Action Plan
that:
o Increases or decreases the amount allocated to a category of funding within the
City’s entitlement grant program by 25 percent
o Significantly changes an activity’s proposed beneficiaries or persons served
o Allocates funding for a new activity not previously described in the Consolidated Plan
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Citizen Participation Plan: The CPP provides guidelines by which the City will promote
engagement in the planning, implementation, and evaluation of the distribution of federal
funds, as outlined in the Consolidated Plan, Action Plan, and CAPERs.
Community Development Block Grant: HUD’s CDBG program provides communities with
resources to address a wide range of housing and community development needs that
benefit very low and low income persons and areas.
Consolidated Annual Performance Evaluation Report: The CAPER assesses the City’s annual
achievements relative to the goals in the Consolidated Plan and proposed activities in the
Action Plan. HUD requires the City to prepare a CAPER at the end of each fiscal year.
Department Of Housing And Urban Development: HUD is the federal government agency
that creates and manages programs pertaining to federal home ownership, affordable
housing, fair housing, homelessness, and community and housing development.
Displacement: Displacement refers to the involuntary relocation of individuals from their
residences due to housing development and rehabilitation activities paid for by federal funds.
Eligible Activity: Activities that are allowable uses of the CDBG funds covered by the CPP as
defined in the Code of Federal Regulations Title 24 for HUD.
Entitlement Jurisdiction: A city with a population of at least 50,000, a central city of a
metropolitan area, or a qualified urban county with a population of at least 200,000 that
receives grant funding from HUD.
Five Year Consolidated Plan: HUD requires entitlement jurisdictions to prepare a
Consolidated Plan every five years. The Consolidated Plan is a strategic plan that identifies
housing, economic, and community development needs and prioritizes funding to address
those needs over a five-year period.
Low- and Moderate-Income: As defined annually by HUD, low-and moderate-income (LMI) is
0-80 percent of area median family income (AMI) for a jurisdiction, with adjustments for
smaller or larger families. This includes those individuals presumed by HUD to be principally
LMI (abused children, battered spouses, elderly persons, severely disabled adults, homeless
persons, illiterate adults, persons living with AIDS and migrant farm workers). HUD utilizes
three income levels to define LMI households:
o Extremely low income: Households earning 30 percent or less than the AMI (subject
to specified adjustments for areas with unusually high or low incomes)
o Very low income: Households earning 50 percent or less than the AMI (subject to
specified adjustments for areas with unusually high or low incomes)
o Low and moderate income: Households earning 80 percent or less than the AMI
(subject to adjustments for areas with unusually high or low incomes or housing
costs)
Public Hearing: Public hearings are designed to provide the public the opportunity to make
public testimony and comment. Public hearings related to the Consolidated Plan are to be
advertised in local newspapers and made accessible to non-English speakers and individuals
with disabilities.
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Roles, Responsibilities, and Contact Information
The City is a federal entitlement jurisdiction and is a recipient of CDBG funding from the federal
government.
The City’s Charter established a council and manager form of government. Palo Alto’s City Council is
the elected legislative body of the City and is responsible for approving its Consolidated Plan, Action
Plans, amendments to the Plans, and CAPERs prior to their submission to HUD.
It is the intent of the City to provide for and encourage citizen participation with particular emphasis
on participation by lower income persons who are beneficiaries or impacted by CDBG funded
activities. The City encourages the participation in all stages of the Consolidated Planning process of
all its residents, including minorities and non-English speaking persons, as well as persons with
mobility, visual or hearing impairments, and residents of assisted housing developments and
recipients of tenant-based assistance.
All public hearings will be held at times and locations convenient to potential and actual beneficiaries
and with reasonable accommodations for persons with disabilities. In general, hearings will be held
in the evening at City Hall due to its central location, convenient access and disability accessibility.
Translation services will be provided when there is an indication that non-English speaking persons
will be attending. Other reasonable accommodations will be provided on a case-by-case basis.
The General Contact Information for the City’s HUD Entitlement Programs is:
City of Palo Alto
Planning and Community Environment Department
Consuelo Hernandez, Senior Planner
250 Hamilton Avenue
Palo Alto, CA 94301
(650) 329-2428
Consuelo.Hernandez@cityofpaloalto.org
www.cityofpaloalto.org
Citizen Participation Policies
Availability of Draft and Approved Documents
The draft CPP, Consolidated Plan, Action Plan, and any draft Substantial Amendments will be
available for public review and comment for a minimum of 30 days prior to their submission to HUD.
The draft CAPER will be available for public review and comment for a minimum of 15 days prior to its
final submission to HUD. Previously approved plans and amendments will be available to residents,
public agencies, and other interested stakeholders.
The draft and final versions of the CPP, Consolidated Plan, Action Plan, CAPER, and all related
amendments will be available online at the City’s website:
http://www.cityofpaloalto.org/gov/depts/pln/cdbg.asp . Hard copies of all documents will be available
at the City’s Planning and Community Environment Department at 250 Hamilton Avenue, Palo Alto,
CA 94301.
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Information on the City’s Consolidated Plans, including records or documents concerning the
previous Consolidated Plans, CPPs, the current Consolidated Plan, Action Plans, CAPERs, and
program regulations, will be posted on the City’s website at
http://www.cityofpaloalto.org/gov/depts/pln/cdbg.asp , and will be available for public review during
normal working hours at the City’s Planning and Community Environment Department located at 250
Hamilton Avenue, Palo Alto, CA 94301, and upon written request addressed to the City’s General
Contact via the Planning and Community Environment Department. If the City is unable to provide
immediate access to the documents requested, the City will make every effort to provide the
documents and reports within 15 business days from the receipt of the request.
The City will use the following processes to adopt and make any subsequent changes to the
documents listed below:
Citizen Participation Plan: The CPP is designed to facilitate and encourage the public to
participate in the Consolidated Plan process. In particular, the CPP seeks to encourage the
involvement of LMI persons.
o The City will notify the public of any subsequent changes it will make to its CPP
through public notices at libraries, recreation centers, community centers, online
through the City’s website, and advertisement in a local newspaper of general
circulation — in advance of a 30-day public review and comment period.
o During the 30-day public review and comment period, copies of the document will be
available to the public for review at libraries, recreation centers, community centers,
and through the City’s website at
http://www.cityofpaloalto.org/gov/depts/pln/cdbg.asp.
o During the 30-day public review and comment period, the public may file comments
in writing to the City of Palo Alto Planning and Community Environment Department,
250 Hamilton Avenue, Palo Alto, CA 94301; via email to
consuelo.hernandez@cityofpaloalto.org; by phone at 650-329-2428 or in person at
Palo Alto City Hall, 250 Hamilton Avenue, Palo Alto, CA 94301, Monday through Friday
during normal working hours and during the Council adoption hearing.
Any change in the public participation process as outlined in this document will require an
amendment to the CPP.
o Anti-Displacement Policy: It is the policy of the City to avoid, to the greatest extent
feasible, the involuntary displacement of any persons, property or businesses as a
result of CDBG activities. Displacement occurs when a “person” or their property is
displaced as a direct result of a federally assisted acquisition, demolition or
rehabilitation project. All efforts to minimize involuntary displacement will be carried
out by designing activities in such a way that displacement is avoided, except in
extraordinary circumstances where no feasible alternatives to displacement are
available if the City’s community development objectives are to be met.
The City will take all reasonable steps to avoid displacement, such as: assuring
whenever possible that residential occupants of buildings be rehabilitated are
offered an opportunity to return; planning rehabilitation projects to include
“staging” where this would minimize displacement; and following federal
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notification requirements carefully to assure that households do not leave because
they are not informed about the plans for the project or their rights for relocation
benefits.
Should involuntary displacement become necessary under such circumstances,
relocation benefits will be provided in accordance with: (a) the Uniform Relocation
Assistance and Real Property Acquisition Policies Act of 1970, as amended (URA) and
24 CFR 570.606(b); and (b) the requirements of 24 CFR 570.606(c) governing the
Residential Anti-displacement and Relocation Assistance Plan (Plan) under Section
104(d) of the HUD Act. The policies and requirements of these laws are described in
HUD Handbook 1378 and the City shall strictly abide by these policies and laws.
• Consolidated Plan and Action Plans: The steps outlined below provide opportunities for
public involvement in the preparation of the Consolidated Plan and the Action Plan.
To solicit community input, which is essential to determining these needs and priorities, the
City will perform the following:
o Consult with local, state, regional and applicable federal public agencies that assist LMI
persons and areas, in addition to neighboring jurisdictions.
o Consult with private agencies, including local nonprofit service providers and advocates
such as the local public housing agency, health agencies, homeless service providers,
nonprofit housing developers and social service agencies (including those focusing on
services to children, the elderly, persons with disabilities, persons with HIV/AIDS, persons
with substance abuse problems, etc.).
o Place public notices at libraries, recreation centers, community centers and online
through the City’s website and through advertisement in a local newspaper of general
circulation at least 15 days in advance of a meeting. The notice will include an estimate of
the amount of funds available, the range of activities that could be undertaken and the
amount that would benefit LMI persons.
o Provide the public with 30 days to review and comment on the draft Consolidated Plan
and/or the draft Action Plan from the date of the notice. Comments may be filed in
person at the City’s Planning and Community Environment Department located at 250
Hamilton Avenue, Palo Alto, CA 94301; via mail to City of Palo Alto Planning and
Community Environment Department, 250 Hamilton Avenue, Palo Alto, CA 94301; by
phone at 650-329-2428; or by email to consuelo.hernandez@cityofpaloalto.org.
o The City will hold a minimum of one public hearing before the City Council to provide the
opportunity to make public testimony and comment on needs and priorities.
o All comments and views expressed by the public, whether given as verbal testimony at
the public hearing or submitted in writing during the review and comment period, will be
documented. The final documents will have a section noting comments received during
the public review period, along with explanations for comments that were not accepted.
Substantial Amendments to the Consolidated Plan and the Action Plan: Amendments are
considered “Substantial” whenever one of the following is proposed:
o A change in the allocation priorities or a change in the method of fund distribution.
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o A substantial change which increases or decreases the amount allocated to a category of
funding within the City’s entitlement grant programs by 25 percent.
o To implement an activity using CDBG funds for new programs that were not described in
the Consolidated Plan.
o To substantially change the purpose or intended beneficiaries of an activity approved for
CDBG funding, e.g., instead of primarily benefitting lower income households the activity
instead proposes to benefit mostly moderate income households.
The following procedures apply to Substantial Amendments:
o The City will place public notices at libraries, recreation centers, community centers and
online through the City’s website and through advertisement in a local newspaper of
general circulation in advance of a 30-day public review and comment period.
o During the 30-day public review and comment period, copies of the document will be
available for review at the City’s Planning and Community Environment Department
office during normal working hours located at 250 Hamilton Avenue, Palo Alto, CA 94301,
on the City’s and website at http://www.cityofpaloalto.org/gov/depts/pln/cdbg.asp and
upon written request addressed to the City’s General Contact via the Planning and
Community Environment Department.
o The public may file comments in person at the City’s Planning and Community
Environment Department located at 250 Hamilton Avenue, Palo Alto, CA 94301; via mail
to City of Palo Alto Planning and Community Environment Department, 250 Hamilton
Avenue, Palo Alto, CA 94301; by phone at 650-329-2428; or by email to
consuelo.hernandez@cityofpaloalto.org during the 30-day period from the date of the
notice.
o The City will hold a minimum of one public hearing within the community to solicit input
on the Substantial Amendment.
o Hold a minimum of one public hearing before the City Council to solicit additional input
and for adoption consideration.
o In preparing a final Substantial Amendment, all comments and views expressed by the
public, whether given as verbal testimony at the public hearing or submitted in writing
during the review and comment period, will be documented. The final documents will
have a section noting comments received during the public review period, along with
explanations for comments that were not accepted.
CAPER: The CAPER must describe how funds were actually used and the extent to which
these funds were used for activities that benefited LMI persons. The following steps outline
the opportunities for public involvement in the CAPER:
o The City will place public notices at libraries, recreation centers, community centers
and online through the City’s website and through advertisement in a local
newspaper of general circulation in advance of a 15-day public review and comment
period.
o The public has 15 days to review the CAPER from the date of the notice.
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o During the 15-day public review and comment period, the document will be available
for public review and comment at the City’s Community Development Department
office.
o The City will hold a minimum of one public hearing within the community to solicit
input on the CAPER.
o The public may file comments in person at the City’s Planning and Community
Environment Department located at 250 Hamilton Avenue, Palo Alto, CA 94301; via
mail to City of Palo Alto Planning and Community Environment Department, 250
Hamilton Avenue, Palo Alto, CA 94301; by phone at 650-329-2428; or by email to
consuelo.hernandez@cityofpaloalto.org during the 15-day period from the date of
the notice.
o In preparing the CAPER, all comments and views expressed by the public, whether
given as verbal testimony at the public hearing or submitted in writing during the
public review and comment period, will be documented. The final documents will
have a section noting comments received during the public review period, along with
explanations for comments that were not accepted.
Public Hearings and Public Comment Period
Public Hearings: The City will hold public hearings for the Consolidated Plan and Action Plan,
amendments made to the CPP, and Substantial Amendments.
o The City Council Public Hearings will typically be held at City Hall Council Chambers,
located at 250 Hamilton Avenue, Palo Alto, CA 94301. Listening devices,
interpretation services, and other assistance to disabled persons or those with
limited English proficiency will be provided upon request, ranging up to five business
days prior notification to the City Clerk. Requests for disability-related modifications
or accommodations required to facilitate meeting participation, including requests
for auxiliary aids, services or interpreters, require different lead times, ranging up to
five business days. For this reason, it is important to provide as much advance notice
as possible to ensure availability. Assistive Listening Devices (ALDs) are available
upon request.
Notice of Hearings and Review Periods: To allow the public time to provide comments prior
to the submission of approved documents to HUD, the City will hold a minimum 30-day public
review and comment period for adoption consideration of the Consolidated Plan, Action
Plan, and Substantial Amendment. The City will establish a public review period of at least 15
days for each CAPER and CPP to allow for public comments prior to the submission of
approved documents to HUD. Copies of the draft plans will be available to the public at the
City’s Planning and Community Environment Department at 250 Hamilton Avenue, Palo Alto,
CA 94301.
To ensure that the public, including minorities, persons with limited English proficiency,
persons with disabilities, residents of public housing, and LMI residents are able to
participate in the public review process, the City will provide residents, public agencies and
other stakeholder notices on applicable public review periods and public hearings that
adhere to the following:
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o The notices will be published prior to the start of the public comment period and at
least 15 days before the final public hearing and will include information regarding
how to request accommodation and services available for persons with disabilities
who wish to attend the public hearings.
o The notices will be distributed to persons on the CDBG contact list maintained by the
City for those parties expressing interest in receiving information and updates related
to the City’s Consolidated Plan, Action Plan, CAPER, Substantial Amendments and
CPP. Interested parties may request to be added to this contact list by sending an
email to consuelo.hernandez@cityofpaloalto.org, by calling 650-329-2428 or by
writing to the Planning and Community Environment Department at 250 Hamilton
Avenue, Palo Alto, CA 94301.
o The notices will be distributed through a variety of methods, including e-mail,
newspaper publications and the City’s website at
http://www.cityofpaloalto.org/gov/depts/pln/cdbg.asp . The notices will include
information on how to obtain a copy of the draft documents and scheduled hearing
dates, times, and locations.
When necessary or applicable, the City may combine notices complying with several individual
requirements into one comprehensive notice for dissemination and publication.
Comments/Complaints on Adopted Plans: Comments or complaints from residents, public
agencies, and other stakeholders regarding the adopted Consolidated Plan or related
amendments and performance reports may be submitted in writing or verbally to the
General Contact at the City’s Planning and Community Environment Department at 250
Hamilton Avenue, Palo Alto, CA 94301. Written comments or complaints will be referred to
appropriate City staff for consideration and response. The City will attempt to respond to all
comments or complaints within 15 business days and maintain a correspondence file for this
purpose.
Technical Assistance
The City will, to the extent feasible, respond to requests for technical assistance from entities
representing LMI groups who are seeking CDBG and HOME funding in accordance with grant
procedures. This may include, but is not limited to, providing information regarding how to fill out
applications, other potential funding sources, and referrals to appropriate agencies within and
outside the City. "Technical assistance," as used here, does not include the provision of funds to the
entities requesting such assistance. Assistance will also be provided by the City’s Planning and
Community Environment Department’s staff to interested individuals and resident groups who need
further explanation on the background and intent of the Housing and Community Development Act,
interpretation of specific HUD regulations, and project eligibility criteria for federal grants.
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Table of Acronyms
AHP Affordable Housing Program
BEGIN Building Equity and Growth in Neighborhoods
CAPER Consolidated Annual Performance Evaluation Report
CBO Community-Based Organization
CDBG Community Development Block Grant Program
CDI Community Development Initiative
CIP Capital Improvement Projects
CoC Continuum of Care
ESG Emergency Services Grant
FSS Family Self Sufficiency
FY Fiscal Year
HACSC Housing Authority of the County of Santa Clara
HAP Housing assistance payments
HEARTH Homeless Emergency Assistance and Rapid Transition to Housing Act of 2009
HIF Housing Impact Fee
HMIS Homeless Management Information System
HOME HOME Investment Partnerships Program
HOPWA Housing Opportunities for Persons with AIDS
HTF Housing Trust Fund
HTSV Housing Trust Silicon Valley
IIG Infill Infrastructure Grant
LBP Lead-Based Paint
LMI Low and moderate income
MCC Mortgage Credit Certificates
MHSA Mental Health Services Act
MTW Moving to Work
NED Non-Elderly Disabled
NHSSV Neighborhood Housing Services Silicon Valley
NOFA Notice of Funding Availability
NSP Neighborhood Stabilization Program
RDA Redevelopment Agency
RFP Request for Proposal
RHNA Regional Housing Needs Allocation
RTP Regional Transportation Plan
Section 8 Section 8 Housing Choice Voucher Program
SCS Sustainable Communities Strategy
TBRA Tenant-Based Rental Assistance
TOD Transit-Oriented Development
VASH Veterans Affairs Supportive Housing
WIOA Workforce Innovation and Opportunity Act
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Appendix A: Citizen Participation Summary
Regional Forums
The participating Entitlement Jurisdictions of Santa Clara County held three regional public forums to
identify housing and community development needs and priorities for the next five years. Seventy-
six people in total attended the regional forums, including community members, service providers,
fair housing advocates, school district board members, housing and human services commission
members, non-profit representatives, and interested stakeholders.
The regional forums were held in Mountain View, San Jose, and Gilroy to engage the northern,
central, and southern parts of the County. Forums were scheduled on different days of the week and
at various times of day to allow maximum flexibility for participants to attend.
Table 1 – Regional Forums
Community Forums
Local public participation plays an important role in the development of the plans. The community
forums were conducted as part of a broad approach to help local jurisdictions make data-driven,
place-based investment decisions for federal funds. Each of the community forums provided
additional public input and a deeper understanding of housing issues at the local level.
The community forums were held in the cities of Los Gatos, Morgan Hill, Saratoga, San Jose and
Mountain View. The workshops held in San Jose were located in Districts 3, 4 and 5, which are LMI
census tracts. The majority of the community forums were held at neighborhood community centers
or libraries at various times of day to provide convenient access for participants.
Regional
Forum Date Time Number of
Attendees Forum Address
1 Thursday, September
25, 2014
2:00pm -
4:00pm
43 Mountain View City Hall,
500 Castro Street, 2nd Floor
Plaza Conference Room
Mountain View, CA 94041
2 Saturday, September
27, 2014
10:00am -
12:00pm
17 San Jose City Hall,
Room 118-120
200 E. Santa Clara St.
San Jose, CA 95113
3 Wednesday, October
22, 2014
6:30pm -
8:30pm
16 Gilroy Library
350 W. Sixth Street
Gilroy, CA 95020
Total Attendees 76
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Table 2 – Community Forums
Community
Forum Date Time Number of
Attendees Forum Address
1 Tuesday, September 30,
2014
6:00pm-
8:00pm
14 Roosevelt Community Center,
Room 1 and 2
901 E. Santa Clara St.
San Jose, CA 95116
2 Wednesday, October 1,
2014
10:00am-
12:00pm
29 Seven Trees Community Center,
Room 3
3590 Cas Drive
San Jose, CA 95111
3 Tuesday, October 2, 2014 6:00pm-
8:00pm
23 Mayfair Community Center,
Chavez Hall
2039 Kammerer Ave.
San Jose, CA 95116
4 Tuesday, October 7. 2014 6:00pm-
8:00pm
26 Tully Community Brach Library,
Community Room
880 Tully Rd.
San Jose, CA 95111
5 Thursday, October 23,
2014
6:30pm-
8:30pm
14 Mountain View City Hall,
500 Castro Street, 2nd Floor
Plaza Conference Room
Mountain View, CA 94041
6 Saturday, November 1,
2014
11:00am-
1:00pm
7 Centennial Recreation Center
North Room
171 W. Edmundson Avenue
Morgan Hill, CA 95037
7 Wednesday, November 5,
2014
2:00pm-
4:00pm
11 Prospect Center
Grace Room
19848 Prospect Road
Saratoga, CA 95070
8 Thursday, November 20,
2014
6:00pm-
8:00pm
9 Neighborhood Center
208 E. Main Street
Los Gatos, CA 95030
Total Attendees 133
A combined total of 209 individuals attended both the community and regional forums.
Outreach
Approximately 4,847 entities, organizations, agencies, and persons were directly engaged via
outreach efforts and asked to share materials with their beneficiaries, partners, and contacts. These
stakeholders were also encouraged to promote attendance at the public forums and to solicit
responses to the Regional Needs Survey. Stakeholder engagement included phone calls, targeted
emails, newsletter announcements, social media posts, and personalized requests from jurisdiction
staff.
Through these communications, stakeholders were invited to participate in one of the forums
planned throughout the County and to submit survey responses. Each participating jurisdiction also
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promoted the regional forums and regional survey links on their respective websites and announced
the Consolidated Plan process through their electronic mailing lists.
Approximately 1,225 printed flyers noticing the regional forums were distributed throughout the
County, including at libraries, recreation centers, community meetings, and organizations benefiting
LMI residents and areas. These flyers were available online and in print in English and Spanish.
Multi-lingual, print advertisements in local newspapers were posted in the Gilroy Dispatch (English),
Mountain View Voice (English), El Observador (Spanish), La Oferta (Spanish), Thoi Bao (Vietnamese),
Philippine News (Tagalog), World Journal (Chinese) and San Jose Mercury News (English). In addition,
an online display ad was placed in the San Jose Mercury News to reach readers electronically.
Each segment of the community outreach and planning process was transparent to ensure the public
was aware its input was being collected, reviewed, and considered.
Forum Structure
The regional forums began with a welcome and introduction of the jurisdictional staff and consultant
team, followed by a review of the forum’s agenda, the purpose of the Consolidated Plan, and the
goals of the regional forums. Next, the facilitator delivered an introductory presentation covering
the Plan process, programs funded through HUD grants, what types of programs and projects can be
funded, historical allocations, and recent projects.
After the presentation, participants were invited to engage in a gallery walk activity. Participants
interacted with large “HUD Bucks” display boards, which encouraged them to think critically about
community spending priorities in the County. Each display board presented a separate issue area: 1)
Community Facilities, 2) Community Services, 3) Economic Development, 4) Housing, and 5)
Infrastructure and Neighborhood Improvements. Participants were given $200 “HUD Bucks” to
spend on over 50 program choices they support within each issue area. This process encouraged
participants to prioritize facilities, services, programs, and improvements within each respective
category. Thus, the activity functioned as a budgeting exercise for participants to experience how
federal funds are distributed among various programs, projects and services.
Directions to participants were to spend their $200 HUD Bucks up to a limit indicated on each board.
For example, because HUD enforces a 15 percent cap on public service dollars, the community
services board included a limit of $30 HUD Bucks to reflect this cap. (It should be noted that the
infrastructure and housing boards both had a Fair Housing category, which may account for higher
HUD Bucks allocations for fair housing.)
Following the HUD Bucks activity, the group was divided into small group breakout sessions to
discuss community needs and fair housing. Participants dispersed into smaller break-out groups to
gather public input on the needs and barriers with respect to the following categories, which
mirrored the HUD Bucks categories: 1) Community Facilities, 2) Community Services, 3) Economic
Development, 4) Housing, and 5) Infrastructure and Neighborhood Improvements.
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Group facilitators encouraged participants to think critically about housing issues and community
improvement needs within the County. The participants discussed and identified issues and concerns
within their local communities and across the County. During these small group discussions,
participants contributed creative and thoughtful responses to the following questions:
Community Needs:
What are the primary needs associated with:
o Community Facilities
o Community Services
o Economic Development
o Housing
o Infrastructure and Neighborhood Improvements
What services and facilities are currently in place to effectively address these needs?
What gaps in services and facilities remain?
Fair Housing:
Have you (or someone you know) experienced discrimination in housing choice, whether
accessing rental housing or in purchasing a residence?
What did you do, or would you do, if you were discriminated against in housing choice?
While responses generally centered on the specific sub-area of the County where the meeting was
held (i.e., North, Central, South, and San Jose), countywide issues also arose during the discussion.
After the break-out session, participants reconvened to discuss these issues as a single group. The
final part of the meeting included a report back, in which facilitators summarized the small group
discussions. The facilitator then closed the meeting with final comments, next steps and a review of
additional opportunities to provide public input.
The interactive format of the forums solicited strong participation, wherein all attendees were
provided the opportunity to participate in the conversation. Translation services were provided at
each forum.
Key Findings from Regional and Community Forums
The diversity of participants and organizations attending the regional and community forums led to a
nuanced awareness of the housing and community improvement needs across the County. This
section highlights key findings and ideas raised during the small group discussions organized by issue
area. The key findings are based on the most frequently discussed needs, issues and priorities that
were shared by forum participants.
Primary Needs Associated with Each Issue Area
Community Services
Address the needs for accessible and affordable transportation services throughout Santa
Clara County
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Support food assistance and nutrition programs for low income families, seniors and disabled
individuals
Provide health care services to seniors and low income families
Develop free, year-round programs and activities for youth (e.g., recreation programming,
sports)
Offer comprehensive services at homeless encampments (e.g., outreach, health, referrals)
Provide mental health care services for homeless and veterans
Support services to reduce senior isolation
Assist service providers in meeting the needs of vulnerable populations through increased
funding and information sharing
Housing
Ensure availability of affordable housing, including transitional housing
Provide legal services to protect fair housing rights and to mediate tenant/landlord legal
issues
Address affordable housing eligibility restrictions to expand the number of residents who can
qualify
Provide affordable rental housing for low income families, at-risk families and individuals with
disabilities
Fund additional homeless prevention programs
Provide rental subsidies and assistance for low income families to support rapid re-housing
Community Facilities
Increase the number of homeless facilities across the County
Build youth centers and recreational facilities in different locations throughout the County
Support modernization and rehabilitation of senior centers
Coordinate information services to promote and leverage access to community facilities
Economic Development
Increase employment services targeted towards homeless individuals, veterans, and
parolees
Provide access to apprenticeships and mentoring programs for at-risk youth
Offer employment services such as job training, English language and capacity-building
classes
Infrastructure and Neighborhood Improvements
Promote complete streets to accommodate multiple transportation modes
Focus on pedestrian safety by improving crosswalk visibility and enhancing sidewalks
Expand ADA curb improvements
Increase access to parks and open space amenities in low income neighborhoods
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Key Findings from HUD Bucks Activity
Table 3: Top Three Overall Spending Priorities by Issue Area of Regional and Community Forums
Priority Housing Priority Public Facilities
1 Affordable Rental Housing 1 Homeless Facilities
2 Senior Housing 2 Senior Centers
3 Permanent Supportive Housing 3 Youth Centers
Priority Public Services Priority Economic Development
1 Homeless Services 1 Employment Training
2 Senior Activities 2 Job Creation/Retention
3 Transportation 3 Small Business Loans
Priority Infrastructure/Neighborhood Improvements
1 Fair Housing
2 Streets/Sidewalks
3 ADA Improvements
Regional Needs Survey
A Regional Needs Survey was conducted to solicit input from residents and workers in the County of
Santa Clara. Respondents were informed that the Santa County Entitlement Jurisdictions were
updating their Consolidated Plans for federal funds that primarily serve low- to moderate income
residents and areas. The survey polled respondents about the level of need in their neighborhoods
for various types of improvements that can potentially be addressed by entitlement funds.
To give as many people as possible the chance to voice their opinion, emphasis was placed on
making the survey widely available and gathering a large number of responses rather than
administering the survey to a controlled, statistically representative pool. Therefore, the survey
results should be views as an indicator of the opinions of the respondents, but not as representing
the opinions of the County population as a group.
The survey was distributed through a number of channels to gather responses from a broad sample.
It was made available in printed format, as well as electronic format via Survey Monkey. Electronic
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responses could be submitted via smartphone, tablet, and web browsers. The survey was available
online and in print in English and Spanish, and in print in simplified Chinese, Tagalog, and Vietnamese.
Responses were solicited in the following ways:
Links to the online survey in both English and Spanish were placed on the websites of each
Entitlement Jurisdiction.
English: https://www.surveymonkey.com/s/SCC_Regional_Survey
Spanish: https://es.surveymonkey.com/s/SCC_Regional_Survey_Spanish
Approximately, 4,847 entities, organization, agencies, and persons were directly targeted in
the outreach efforts and requested to share project materials with their beneficiaries,
partners, and contacts. Engagement included direct phone calls and targeted emails with
outreach flyers as attachments.
Approximately 1,225 printed flyers noticing the regional survey were printed and distributed
throughout the County, including at libraries, recreation centers, community meetings, and
organizations benefiting LMI residents and areas. These flyers were available online and in
print in English and Spanish.
Multi-lingual, print advertisements in local newspapers were posted in the Gilroy Dispatch
(English), Mountain View Voice (English), El Observador (Spanish), La Oferta (Spanish), Thoi
Bao (Vietnamese), Philippine News (Tagalog), World Journal (Chinese) and San Jose Mercury
News (English). In addition, an online display ad was placed in the San Jose Mercury News to
reach readers electronically.
The survey was widely shared on social media by elected officials, organizations, entities, and
other individuals. An estimated 25,000 persons on Facebook and 11,000 persons on Twitter
were engaged. (This represents the number of “Likes” or “Followers” of each person/entity
that posted a message about the survey or forum.)
At least 3,160 printed surveys were printed and distributed throughout the County at
libraries, community meetings, and organizations benefiting LMI residents and areas.
Survey Results
A total of 1,472 survey responses were collected from September 19, 2014 to November 15, 2014,
including 1,078 surveys collected electronically and 394 collected on paper. The surveys were
available in five languages. Of these surveys, 1,271 individuals responded in English, 124 individuals
responded in Spanish, 25 individuals responded in simplified Chinese, 49 individuals responded in
Vietnamese, and three individuals responded in Tagalog. Figure 1 shows the percentage of
individuals who responded to the survey organized by language.
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Of the individuals who responded to the survey, 1,401 indicated they live in the County of Santa Clara
and 62 indicated they do not live in the County. Respondents who live within the County jurisdictions
mainly reside in San Jose (36%), followed by the city of Santa Clara (17%), Sunnyvale (16%), Gilroy (12%),
and Mountain View (6%). The remaining individuals live within the jurisdictions of Morgan Hill, Palo
Alto, Campbell, Unincorporated Santa Clara County, Los Altos, Saratoga, Milpitas, Los Gatos,
Cupertino, Los Altos Hills, and Monte Sereno. Figure 2 shows a city-by-city analysis of where
respondents live.
86%
8%
2% 0.2% 3%
Figure 1 – Percent of Surveys Taken by Language
English
Spanish
Chinese
Tagalog
Vietnamese
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In addition, the survey polled respondents on whether they worked within any of the County
jurisdictions. The percentage of individuals working in the County of Santa Clara (74%) indicated they
worked primarily in these jurisdictions: San Jose (40%), the city of Santa Clara (13%), Gilroy (8%), and
Mountain View (8%), with the remainder in other jurisdictions.
On the following page, Figure 3 presents a GIS map that illustrates the number of survey
respondents by jurisdiction.
0%5%10%15%20%25%30%35%40%
Monte Sereno
Los Altos Hills
Don’t Know
Cupertino
Los Gatos
Milpitas
Saratoga
Los Altos
Unincorporated Santa Clara County
Campbell
Palo Alto
Morgan Hill
Mountain View
Gilroy
Sunnyvale
City of Santa Clara
San Jose
Percent of Respondents
Figure 2 – Percent of Where Respondents Live by Jurisdiction
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Figure 3 – Number of Survey Respondents by City
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Respondents were primarily residents (70%), but also Community-Based Organizations (14%), Service
Providers (5%), Business Owners (3%), and Public Agencies (2%). The remaining 6% of respondents
indicated “Other” for their response. Many of the “Other” respondents specified themselves as
homeless, educators, developers, retired, landlords, or property managers. More detailed
information about respondents can be seen in Figure 5.
0%5%10%15%20%25%30%35%40%45%
Los Altos Hills
Unincorporated Santa Clara County
Los Altos
Campbell
Don’t Know
Cupertino
Mountain View
Sunnyvale
San Jose
Percent of Respondents
Figure 4 – Percent of Where Respondents Work by
Jurisdiction
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Survey Ranking Methodology
Respondents designated their level of need as low, medium, high, or “don’t know.” This rating
system was chosen to simplify responses and better gauge the level of need. To maintain
consistency, the low, medium, high, and “don’t know” rating system was used throughout the
survey.
Need Ratings in Overall Areas
The survey asked respondents to rate the level of need for 63 specific improvement types that fall
into five distinct categories. These five categories were: Housing, Public Facilities, Infrastructure and
Neighborhood Improvements, Public Services, and Economic Development. The level of need
indicated within these categories provides additional insight into broad priorities.
Respondents rated the level of need in their neighborhood in five overall areas:
1. Create additional affordable housing available to low income residents
2. Improve non-profit community services (such as senior, youth, health, homeless, and fair
housing services)
3. Create more jobs available to low income residents
4. Improve city facilities that provide public services (such as parks, recreation or senior centers,
parking facilities, and street improvements)
5. Other
Table 7 below shows the percentage of respondents who rated each overall need as high.
0%10%20%30%40%50%60%70%80%
Public agency
Business owner
Service provider
Other (please specify)
Community‐based organization/ non‐profit
Resident
Percent of Respondents
Figure 5 –Percent of Respondents by Category
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Table 7 – Overall Areas: High Level of Need
Overall Need Area High Level
of Need
Create additional affordable housing available to low-income
residents
62.1%
Improve non-profit community services (such as senior, youth,
health, homeless, and fair housing services)
54.7%
Create more jobs available to low-income residents 52.5%
Other 46.3%
Improve city facilities that provide public services (such as parks,
recreation or senior centers, parking facilities, and street
improvements)
37.1%
In addition to the four overall need areas, 373 respondents provided open-ended feedback through
the “Other” survey response option. Below are the key themes and needs identified by survey
respondents, organized by categories of need.
Economic Development
Increase funding for senior services
Provide financial assistance for small business expansion
Develop jobs for working class
Ensure workers are given a living wage
Public Facilities
Provide more public facilities for homeless
Expand library operation hours
Build more parks to encompass people of all ages
Develop cultural and arts community center
Improve school infrastructure through extensive remodeling
Build higher quality schools
Housing
Increase availability of senior housing
Provide housing for LGBT/HIV population
Create housing for median income population
Provide more subsidized housing for disabled population
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Public Services
Expand supportive services for the homeless population
Provide affordable daycare options
Increase availability of healthcare services
Expand youth engagement activities
Ensure transportation for seniors is accessible and affordable
Expand transportation services to unincorporated areas of the County
Address the middle class’ inability to access services due to the inability to qualify for low
income services
Increase availability of senior services
Expand crime prevention and enhance gang reduction programs
Address resident fears of making too much money to qualify for low-income services
Infrastructure
Address climate change through infrastructure improvements
Address flooding through street improvements
Improve and expand bike infrastructure
Improve and expand pedestrian infrastructure including sidewalks and crosswalks
Highest Priority Needs
Top priority needs within all categories are described below based on the highest percentage of
respondents for each improvement item. Table 8 summarizes the ten highest priority needs and the
percentage of respondents that selected the particular need.
Among the five need categories, “increase affordable rental housing inventory” was rated as
the highest need. More than 63% of individuals indicated this category as “high level of
need.”
Four housing needs appear among the top ten priorities on this list: 1) increase affordable
rental housing inventory, 2) rental assistance for homeless, 3) affordable housing located
near transit, and 4) housing for other special needs.
Homeless facilities and facilities for abused, abandoned and/or neglected children both
appear among the ten highest level of needs, ranked third and seventh, respectively.
Job training for the homeless received the eighth highest level of need, which is the only
economic development priority to make the top ten priorities.
Three public service improvements appear among the top ten priorities, including emergency
housing assistance, access to fresh and nutritious foods, and homeless services.
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Table 8 – Ten Highest Priority Needs in All Categories
Priority
Rank Category Specific Need Percentage of
Respondents
1 Housing Increase affordable rental housing inventory 63.1%
2 Public Service Emergency housing assistance to prevent homelessness,
such as utility and rental assistance
52.3%
3 Public Facilities Homeless facilities (temporary housing and emergency
shelters)
51.3%
4 Housing Rental assistance for the homeless 51.0%
5 Public Services Access to fresh and nutritious foods 49.8%
6 Public Services Homeless services 49.6%
7 Public Facilities Facilities for abused, abandoned and/or neglected
children
49.5%
8 Economic
Development
Job training for the homeless 48.8%
9 Housing Affordable housing located near transit 48.6%
10 Housing Housing for other special needs (such as seniors and
persons with disabilities)
48.0%
Housing Needs
Respondents rated the need for 13 different housing-related improvements in their neighborhoods.
The five highest priorities in this area were:
1. Increase of affordable rental housing inventory
2. Rental assistance for the homeless
3. Affordable housing located near transit
4. Housing for other special needs
5. Permanent supportive rental housing for the homeless
The table below shows the highest level of need for each of the housing-related improvements and
the share of respondents who rated each category as “high level” of need.
Table 9 – High Level of Need for Specific Housing Improvements
Priority
Rank Housing: High Level of Need Share of
Respondents
1 Increase affordable rental housing inventory 63.1%
2 Rental assistance for the homeless 51.0%
3 Affordable housing located near transit 48.6%
4 Housing for other special needs (such as seniors and persons with
disabilities)
48.0%
5 Permanent supportive rental housing for the homeless 46.8%
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Priority
Rank Housing: High Level of Need Share of
Respondents
6 Energy efficiency and sustainability improvements 41.6%
7 Healthy homes 37.5%
8 Down-payment assistance to purchase a home 33.8%
9 Code enforcement, in coordination with a neighborhood plan 33.4%
10 Housing accessibility improvements 29.7%
11 Rental housing rehabilitation 27.7%
12 Emergency home improvement/repair 24.9%
13 Owner-occupied housing rehabilitation 18.5%
Public Facilities
Respondents rated the level of need for 14 public facility types in their neighborhoods. The six
highest priorities in this area were:
1. Homeless facilities
2. Facilities for abused, abandoned and/or neglected children
3. Educational facilities
4. Mental health care facilities
5. Youth centers
6. Drop-in day center for the homeless
The table below shows the highest level of need for each of the public facilities types and the share
of respondents who rated each category as “high level” of need.
Table 10 – High Level of Need for Specific Public Facility Types
Priority
Rank Public Facilities: High Level of Need Share of
Respondents
1 Homeless facilities (temporary housing and emergency shelters) 51.3%
2 Facilities for abused, abandoned and/or neglected children 49.5%
3 Educational facilities 46.9%
4 Mental health care facilities 45.5%
5 Youth centers 42.6%
6 Drop-in day center for the homeless 41.2%
7 Healthcare facilities 39.0%
8 Child care centers 35.4%
9 Recreation facilities 33.2%
10 Parks and park facilities 32.2%
11 Centers for the disabled 32.0%
12 Senior centers 29.9%
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Priority
Rank Public Facilities: High Level of Need Share of
Respondents
13 Parking facilities 22.5%
14 Facilities for persons with HIV/AIDS 20.5%
Public Services
Respondents rated the level of need for 23 public service improvements in their neighborhoods. The
five highest priorities in this area were:
1. Emergency housing assistance to prevent homelessness
2. Access to fresh and nutritious foods
3. Homeless services
4. Abused, abandoned and/or neglected children services
5. Transportation services
The table below shows the highest level of need for each of the public service improvements and the
share of respondents who rated each category as “high level” of need.
Table 11 – High Level of Need for Specific Public Services Improvements
Priority
Rank Public Services: High Level of Need Share of
Respondents
1 Emergency housing assistance to prevent homelessness – such as utility
and rental assistance
52.3%
2 Access to fresh and nutritious foods 49.8%
3 Homeless services 49.6%
4 Abused, abandoned and/or neglected children services 46.5%
5 Transportation services 46.4%
6 Mental health services 46.4%
7 Youth services 44.1%
8 Crime awareness/prevention services 44.0%
9 Employment training services 43.4%
10 Neighborhood cleanups (trash, graffiti, etc.) 42.9%
11 Services to increase neighborhood and community engagement 40.6%
12 Financial literacy 39.3%
13 Battered and abused spouses services 37.9%
14 Food banks 36.7%
15 Veteran services 36.7%
16 Fair housing activities 36.5%
17 Child care services 36.0%
18 Senior services 35.8%
19 Disability services 35.4%
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Priority
Rank Public Services: High Level of Need Share of
Respondents
20 Tenant/landlord counseling services 30.8%
21 Legal services 30.1%
22 Housing counseling for homebuyers and owners 24.4%
23 Lead-based paint/lead hazard screens 19.1%
24 Services for persons with HIV/AIDS 18.7%
Economic Development
Respondents rated the level of need for five economic development areas in their neighborhoods.
The three highest priorities in this area were:
1. Job training for homeless
2. Financial assistance for low income residents for small business expansion and job creation
3. Storefront improvements in low income neighborhoods
The table below shows the highest level of need for each of the economic development areas and
the share of respondents who rated each category as “high level” of need.
Table 12 – High Level of Need for Specific Economic Development Areas
Priority
Rank Economic Development: High Level of Need Share of
Respondents
1 Job training for the homeless 48.8%
2 Financial assistance for low-income residents for small business
expansion and job creation
35.3%
3 Storefront improvements in low-income neighborhoods 33.9%
4 Microenterprise assistance for small business expansion (5 or fewer
employees)
24.1%
5 Public improvements to commercial/industrial sites 20.3%
Infrastructure and Neighborhood
Respondents rated the level of need for 15 infrastructure and neighborhood improvements within
their neighborhoods. The five highest priorities in this area were:
1. Cleanup of contaminated sites
2. Street improvements
3. Lighting improvement
4. Sidewalk improvements
5. Water/sewer improvements
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The table below shows the highest level of need for each of the infrastructure and neighborhood
improvements and the share of respondents who rated each category as “high level” of need.
Table 13 – High Level of Need for Specific Infrastructure and Neighborhood Improvements
Priority
Rank Infrastructure and Neighborhood: High Level of Need Share of
Respondents
1 Cleanup of contaminated sites 44.9%
2 Street improvements 41.1%
3 Lighting improvements 35.7%
4 Sidewalk improvements 35.2%
5 Water/sewer improvements 34.7%
6 Community gardens 31.5%
7 Stormwater and drainage improvements 30.2%
8 Slowing traffic speed 29.8%
9 New or renovated playgrounds 29.4%
10 Trails 28.8%
11 Acquisition and clearance of vacant lots 26.4%
12 ADA accessibility to public facilities 23.0%
13 Neighborhood signage 21.7%
14 Landscaping improvements 19.5%
15 Public art 18.7%
Fair Housing
Respondents were asked to answer a series of questions related to Fair Housing. Four questions
were used to gauge each individuals experience with housing discrimination.
16%
76%
8%
Figure 6 – Percent of Individuals Who Have Experienced
Housing Discrimination in Santa Clara County
Yes
No
Don’t Know
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Of the 1,472 total respondents, 192 (16%) said they have experienced some form of housing
discrimination. The majority of discrimination occurred within an apartment complex (19%). The next
highest location for discrimination was indicated by the “Other” category. Within this category,
duplexes, condos, and private renters were the most commonly indicated. Many respondents who
selected “Other” expressed experiencing discrimination in multiple locations. The three highest
locations of discrimination were:
Apartment Complex
Other
Single-family neighborhood
The figure below shows where respondents experienced discrimination.
The majority of respondents (29%) who experienced discrimination indicated that race was the
primary factor for that discrimination. Respondents selected “Other” as the next highest basis of
discrimination. Within the “Other” category respondents indicated race, inability to speak English,
religion, credit, and marital status as the cause for discrimination. The three highest basis of
discrimination were:
1. Race
2. Other
3. Familial Status
0%5%10%15%20%25%30%35%40%45%50%
Trailer or mobile home park
When applying for City/County programs
Public or subsidized housing project
Condo development
Single‐family neighborhood
Other (please specify)
Apartment complex
Percent of Respondents
Figure 7 – Locations Where Respondents Reported
Experiencing Discrimination
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The Figure 8 below depicts what respondents believe is the basis for discrimination they have
experienced.
Respondents were then asked to identify who they felt had discriminated against them. The majority
of respondents (66%) indicated they were discriminated against by a landlord or property manager.
Respondents selected “Other” as the next highest category of who discriminated against them.
Within the “Other” selection respondents indicated they experienced discrimination from landlords,
property managers, existing residents, and home owner associations. The three highest categories
that respondents believed discriminated against them were:
1. Landlord/Property Manager
2. Other
3. Don’t Know
Figure 9 on the following page illustrates who respondents believe is responsible for the
discrimination they have experienced.
0%5%10%15%20%25%30%35%
Religion
Sex
Color
Disability
National origin
Sexual orientation
Don’t Know
Familial status (families with children under 18)
Other (please specify)
Race
Percent of Respondents
Figure 8 – The Reason Respondents Believe They
Experienced Discrimination
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0%10%20%30%40%50%60%70%
Mortgage insurer
Real estate agent
Mortgage lender
City/County staff
Don’t Know
Other (please specify)
Landlord/Property manager
Percent of Respondents
Figure 9 – Who Respondents Believe Discriminated Against
Them
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City of Palo Alto (ID # 5428)
Finance Committee Staff Report
Report Type: Action Items Meeting Date: 3/17/2015
City of Palo Alto Page 1
Council Priority: Environmental Sustainability
Summary Title: Palo Alto CLEAN Program Updates and Extension
Title: Utilities Advisory Commission Recommendation that Council Continue
the Palo Alto Clean Local Energy Accessible Now (CLEAN) Program at the Rate
of 16.5 Cents per Kilowatt-hour for Solar Resources for a 20-Year Contract
and a Program Cap of 3 Megawatts, and Add a 25-Year Contract Term Option;
Staff Recommendation that Council Expand CLEAN Program Eligibility to
Non-Solar Renewable Energy Resources with a Rate Equal to their Avoided
Cost for 20- and 25-year Contracts and Program Cap of 3 Megawatts; and
Approval of Amended CLEAN Program Power Purchase Agreement
From: City Manager
Lead Department: Utilities
Recommended Motion
I move that the Finance Committee recommend that the City Council:
1. Adopt a resolution (Attachment A) to:
a. Continue the Palo Alto CLEAN program at the current price of 16.5 cents per
kilowatt-hour (¢/kWh) for a 20-year contract, add a 25-year contract term option
with a 16.5 ¢/kWh price, and continue with a program limit of 3 megawatts
(MW) for solar energy resources, amending the CLEAN Program’s Eligibility Rules
and Regulations accordingly;
b. Amend the CLEAN Program’s Eligibility Rules and Requirements to allow non-
solar eligible renewable energy resources to participate; and
c. Offer local, non-solar eligible renewable energy resources a contract price of 9.3
¢/kWh for a 20-year contract term, or 9.4 ¢/kWh for a 25-year contract term,
with such resources subject to a separate 3 MW capacity cap; and
2. Direct staff to return to the Council with a review of the program in one year or at the
time the program capacity is filled, whichever comes first.
City of Palo Alto Page 2
Recommendation
Staff and the Utilities Advisory Commission (UAC) request that the Finance Committee
recommend that the City Council:
1. Adopt a resolution to continue the Palo Alto CLEAN program at the current price of 16.5
cents per kilowatt-hour (¢/kWh) for a 20-year contract, add a 25-year contract term
option with a 16.5 ¢/kWh price, and continue with a program limit of 3 megawatts
(MW) for solar energy resources, amending the CLEAN Program’s Eligibility Rules and
Regulations accordingly;
2. Direct staff to return to the Council with a review of the program in one year or at the
time the program capacity is filled, whichever comes first; and
3. Approve the attached amended CLEAN program Power Purchase Agreement (PPA)
(Attachment B) to implement the recommended changes and delegate authority to the
City Manager to make any additional changes otherwise necessary to implement any of
the recommended changes identified in this report that are approved by Council.
In addition, staff requests that the Finance Committee recommend that the City Council adopt
a resolution:
1. Amending the Palo Alto CLEAN Program’s Eligibility Rules and Requirements to allow
non-solar eligible renewable energy resources to participate; and
2. Offer local, non-solar eligible renewable energy resources a contract price of 9.3 ¢/kWh
for a 20-year contract term, or 9.4 ¢/kWh for a 25-year contract term, with such
resources subject to a separate 3 MW capacity cap.
The resolution (Attachment A) included as part of this Staff Report incorporates all of the above
recommendations. The amended Palo Alto CLEAN Eligibility Rules and Requirements, which
implement all of the above recommendations as well, are shown in Exhibit A-1 attached to the
resolution. As noted above, staff also seeks approval of an amended PPA (Attachment B)
included with this staff report, which incorporates all of the above recommendations. Staff also
requests that Council delegate authority to the City Manager to make additional changes to the
CLEAN Program PPA that are approved by the City Attorney’s office as may be otherwise
necessary to implement the recommendations set forth in this Staff Report that are approved
by Council.
Executive Summary
In March 2012 the Council adopted the Palo Alto CLEAN (Clean Local Energy Accessible Now)
program (also commonly referred to as a feed-in tariff, or FIT, program). The program was
designed to address the Long-term Electric Acquisition Plan (LEAP) Objective to enhance supply
reliability through the pursuit of local generation opportunities, and to complement the City of
Palo Alto Utilities’ (CPAU’s) existing PV Partners solar rebate program. Palo Alto CLEAN created
an additional alternative for property owners by enabling them to build a new solar system on
their property and sell the energy to CPAU under a long-term, fixed-rate contract rather than
participate in the PV Partners program and use the energy on site.
City of Palo Alto Page 3
Though solar developers expressed interest in Palo Alto CLEAN in 2012, the price (14 ¢/kWh for
a 20-year contract) proved insufficient to facilitate the most common business model used by
project developers, which involves a third-party investor leasing roof space from a property
owner. In December 2012, Council increased the Palo Alto CLEAN program price to 16.5 ¢/kWh
for a 20-year contract with a program cap of 2 megawatts (MW). In February 2014, Council
increased the program capacity limit from 2 MW to 3 MW. At that time, Council directed staff
to return with a review of the program in one year, or at the time the program cap was
reached.
The UAC and staff recommend continuing the Palo Alto CLEAN program for solar resources at
the current 16.5 ¢/kWh price, with a program limit of 3 MW for solar energy resources.
Although no applications have been received to date, there continues to be interest by
developers in the program. Staff has continued its marketing efforts to commercial customers
and property owners, both for the PV Partners program and Palo Alto CLEAN, but expects that
most growth in commercial solar installations will come from customers participating in the PV
Partners program, with Palo Alto CLEAN participation increasing slowly as property owners are
educated about how to make the program work for them and as funding runs out for the PV
Partners program. Although Palo Alto CLEAN is available to all, including residential, customers,
staff expects residents will continue to install PV systems that generate electricity for use on-
site and have the advantages of lowering utility bills through net metering.
In response to comments from solar developers, the UAC and staff also recommend including a
25-year contract term option for solar resources in order to encourage participation. Extending
the maximum contract term length by five years will increase the City’s total cost commitment
over the life of the program from $20 million to $25 million.
Finally, staff recommends expanding Palo Alto CLEAN to include non-solar renewable energy
generation resources, as staff expressly indicated would ultimately be done at the time the
program was first introduced in 2012 and at the time that Council terminated the Power from
Local Ultra-clean Generation Incentive (PLUG-In) program in June 2014. However, because
such resources do not provide the same level of local benefits as local solar generation, staff
recommends compensating these resources at their avoided cost level (contract price of 9.3
¢/kWh for a 20-year contract term, or 9.4 ¢/kWh for a 25-year contract term) consistent with
adopted Council policy Non-solar eligible renewable energy resources would be subject to a
separate 3 MW capacity cap.
The UAC discussed staff’s recommendations at its December 10, 2014 meeting and
unanimously agreed with staff’s recommendations to extend the Palo Alto CLEAN program’s
16.5 ¢/kWh price for local solar resources and to add a 25-year contract term option while
retaining the 3MW program limit. However, the UAC did not support staff’s recommendation
to expand the program to include local, non-solar resources as it did not feel that staff’s
presentation and the report to the UAC provided sufficient support to justify the need for the
City of Palo Alto Page 4
expansion of the program to non-solar eligible renewable energy resources set forth in the
recommendation. In response, staff expanded the discussion in this report to support that
recommendation, including by referring to: the original CLEAN program’s intent to expand to
non-solar resources, the intent when Council terminated the PLUG-In program to capture any
local renewable resources under the Palo Alto CLEAN program, and the need to be consistent
with the Council policy to pay only avoided cost for energy produced by a potential future
anaerobic digester project.
Background
CPAU has a long history of supporting solar power. It initiated the PV Partners program in
1999, and in 2007 the program was expanded to meet the requirements of the State’s Million
Solar Roofs Bill (Senate Bill 1 (SB1), 2006). Under the PV Partners program CPAU provides
rebates to residential and commercial customers who install solar for their own use. The
program has been successful at stimulating solar development, with 5.9 MW of local solar
capacity installed by nearly 681 participants as of the end of September 2014. Palo Alto is one
of the top ten utilities nationwide in PV installations per customer.
Through the PV Partners program, CPAU already provides substantial financial support for local
solar. CPAU’s total SB1 program budget for 2008 through 2017 is $13 million and the total
program goal is 6.6 MW. When this goal is achieved the energy generated by the program
annually will be 11.2 GWh (1.1% of Palo Alto load). The cost of the program is roughly $1.3
million per year for the rebates plus the cost of administration and the lost distribution system
revenue associated with net metering. At the same time, the local solar generation reduces
CPAU’s total supply costs by approximately $1.15 million per year by reducing the cost of
energy purchases, transmission and capacity so that the rate impact is less than 0.2% per year
while rebates are being paid. Due to SB1, PV Partners is a state mandated program, and
regardless of the rate impact, CPAU is required to offer it until the total program budget of $13
million has been exhausted, which is expected to occur within the next one to two years.
In March 2012, the City expanded its support for local distributed generation by launching Palo
Alto CLEAN with a price of 14 ¢/kWh for a 20-year contract (Staff Report 2548, Resolution
9236). The program expanded the options available to property owners by enabling them to
sell energy directly to CPAU under a long term contract instead of using the energy on site.
Initially Palo Alto CLEAN generated a high level of interest from solar developers who wanted to
lease rooftops in Palo Alto in order to build a solar system and sell the energy to CPAU.
However, it soon became apparent that the 14 ¢/kWh price was insufficient to enable third-
party developers to earn their target returns while still offering attractive rooftop lease rates.
In December 2012, Council extended the CLEAN program and increased the rate to 16.5 ¢/kWh
for a 20-year contract (Staff Report 3316, Resolution 9308). In February 2014, Council extended
the CLEAN program again at the rate of 16.5 ¢/kWh for a 20-year contract, increased the
program capacity limit to 3 MW, and requested that staff return to review the program after
one year or when the 3 MW cap was reached (Staff Report 4378, Resolution 9393).
City of Palo Alto Page 5
The Palo Alto CLEAN program has no deadline for participation and interest by solar developers
remains, but no applications have been received for the CLEAN program as of the end of
October 2014. However, CPAU has provided assistance to the Public Works Department to
work with the CLEAN Coalition to issue a Request for Proposals to install solar canopies on the
top decks of five city-owned parking garages (three downtown and two on Cambridge Avenue),
which would provide an estimated 1.5 MW of local solar capacity. Staff interviewed all three
respondents, has selected a top candidate, and (at the time of this writing) is in negotiations for
the site lease. As soon as City Council approves the site lease, the applicant may apply to the
Palo Alto CLEAN program.
Staff also joined a Department of Energy funded initiative, Commercial Acceleration of Solar
Energy for Silicon Valley (CASE-SV), to offer free assistance and educational webinars to
companies in Silicon Valley. Staff has promoted the CLEAN program in local meetings with solar
developers as well as presenting information at the Solar Power International conference held
in October 2014. The property owners who have investigated the program to date either chose
not to participate or chose to evaluate projects under the PV Partners program instead.
However, staff still regularly receives new inquiries about the Palo Alto CLEAN program from
developers and property owners.
Despite the lack of participation, there have been positive outcomes from the program offering.
The program prompted developers to take a serious look at the cost of developing solar
projects in Palo Alto, and some of them shared that information with CPAU staff. At the same
time, the solar project permitting processes at the development center have been improved
based on input gathered from solar developers. In addition, many public utilities across the
country have called CPAU to discuss how to follow Palo Alto’s lead and develop a CLEAN
program in their own service areas
Discussion
When establishing the CLEAN price of 16.5 ¢/kWh in December 2012, Council reviewed the
market value of the local solar energy and determined that there were additional financial and
environmental benefits to increasing local solar generation. In February 2014, when Council re-
affirmed the 16.5 ¢/kWh price, staff estimated the cost of buying renewable energy outside of
Palo Alto and transmitting it to Palo Alto was 9.9 ¢/kWh (including renewable energy value,
transmission and capacity) for a 20-year contract. Therefore, purchasing the energy generated
from 3 MW of local solar projects at 16.5 ¢/kWh was expected to cost about $320,000 per year
more than buying the same energy outside of Palo Alto (and having it transported to Palo Alto).
This was equivalent to a 0.27% increase in the electric utility’s costs. Council determined that
this additional cost was acceptable as a means to encourage local solar installations and in light
of additional benefits of encouraging local solar generation.
Updated Value of Renewable Energy
In June 2014, the City executed a long-term Power Purchase Agreement (PPA) to buy
renewable energy from a 25 MW solar energy project near Bakersfield at a cost of about 6.9
City of Palo Alto Page 6
¢/kWh (Staff Report 4791, Resolution 9416). The cost to deliver that energy to Palo Alto,
combined with the capacity related benefits that local solar would provide, is projected to be
an additional 3.4 ¢/kWh, for a total value of local solar energy of 10.3 ¢/kWh. Based on the
cost of the City’s latest signed PPA (plus transmission costs and capacity value) of 10.3 ¢/kWh,
the cost of continuing the 16.5 ¢/kWh CLEAN price for 3 MW of solar PV projects is about
$310,000 per year more than buying the same energy outside of Palo Alto. This is equivalent to
a 0.26% increase in the electric utility’s costs.
Palo Alto CLEAN Program Price for Local Solar – History and Proposal
Table 1 below shows the history of the Palo Alto CLEAN price since the program started as well
as the proposed CLEAN price for local solar, which is a continuation of the current 16.5 ¢/kWh
rate.
Table 1 – Palo Alto CLEAN Program Prices for Local Solar
Council
Approval
Avoided Cost of Local
Solar Generation *
(¢/kWh)
CLEAN Price
(¢/kWh)
Annual Excess
Cost (Rate Impact)
Total Excess
Cost over 20-
year Term
March 2012 13.553 14.0 $15,000 (0.01%)
for 2 MW cap
$300,000
December 2012 11.6 16.5 $160,000 (0.10%)
for 2 MW cap
$3.2 million
February 2014 9.9 16.5 $332,500 (0.27%)
for 3 MW cap
$6.45 million
Current Proposal 10.3 16.5 $310,000 (0.26%)
for 3 MW cap
$6.2 million
* The cost of buying renewable energy outside of Palo Alto and transmitting it to Palo Alto.
Add a 25-Year Contract Term Option
Since the inception of Palo Alto CLEAN, staff has held numerous meetings and conversations
with solar developers who are eager to participate in the program. To date, however, these
developers have been unsuccessful in finding sufficient local rooftop space at lease rates that
are low enough to make the project financially attractive under the current program structure.
Although, as noted above, Public Works recently issued a Request for Proposals to lease
rooftop space on five City-owned parking garages, and is currently in negotiations on the lease
with the finalist – who is expected to apply to participate in the CLEAN program once the lease
is approved by the City Council.
Recently, staff distributed a survey to a large number of local solar developers inquiring about
program modifications that they would like to see. A number of these developers indicated that
the CLEAN Program might be somewhat more attractive to them (and their investors) if the PPA
term were extended from 20 to 25 years in part, to synchronize the term of a PPA with the 25-
City of Palo Alto Page 7
year expected life of solar panels. The City does not have a strong preference for one contract
term or the other; therefore, staff and the UAC recommend allowing developers to choose
either a 20- or 25-year contract term at the time they execute a CLEAN program PPA. The
levelized value of local solar energy is estimated at 10.4 ¢/kWh for a 25-year contract term so
the impact on ratepayers is $7.6 million over a 25-year term as shown in Table 2.
Table 2 – Cost of Palo Alto CLEAN Program by Contract Term
Contract
Term
Avoided Cost of Local Solar
Generation * (¢/kWh)
CLEAN Price
(¢/kWh)
Annual Excess
Cost for 3 MW
Total Excess
Cost over Term
20 years 10.3 16.5 $310,000 $6.2 million
25 years 10.4 16.5 $305,000 $7.6 million
* The cost of buying renewable energy outside of Palo Alto and transmitting it to Palo Alto.
Expanding CLEAN Program Eligibility to Non-Solar Eligible Renewable Energy Resources at their
Avoided Cost
When Council first approved the Palo Alto CLEAN program in March 2012, the impetus for the
program was the community’s desire for a feed-in tariff program to encourage greater rates of
large rooftop solar PV development in Palo Alto. At the time, there was little to no potential
seen for other types of renewable energy resources to be sited locally, due to lack of resource
potential and developable land. However, in the March 2012 staff report (Staff Report 2548),
staff noted that, “[w]hile the first year of the program is restricted to solar systems on large
rooftops, future program years may include a wider range of renewable technologies and may
be available to smaller projects
In addition, in June 2014 Council terminated the PLUG-In program (Staff Report 4878,
Resolution 9440). This program was designed to encourage high efficiency renewable and non-
renewable local distributed generation projects. Besides the program having no participants
and being inconsistent with the City’s recently adopted Carbon Neutral Plan, another reason
cited in the report for the program’s termination was that the City “anticipates expanding [the
Palo Alto CLEAN program] to other [non-solar] local renewable electric supplies.”
As new technology and energy storage systems are developed, local renewable energy
generation, including technology beyond local solar, in combination with storage systems, has
the potential to provide resiliency to the City’s electric distribution system. Further, local
renewable energy generation that participates in the CLEAN Program provides long-term supply
cost certainty and value to the entire community—benefits that are not provided when such
energy is sold to the City on a short-term basis or used on-site.
For these reasons, staff recommends expanding the program’s eligibility criteria to include all
eligible renewable energy resources (as defined by state law), rather than limiting participation
to solar resources. Doing so would permit the proposed anaerobic digester facility near the
City of Palo Alto Page 8
Baylands to apply to the CLEAN program if Public Works staff decides to sell all of that
resource’s output to CPAU, rather than using it onsite to meet the Regional Water Quality
Control Plant’s (RWQCP’s) energy needs. Expanded eligibility beyond solar resources would
also allow other locally-sited resources to participate in the program, so long as they meet the
state’s definition of a renewable resource1 and satisfy all of the City’s other zoning and
permitting requirements.
Palo Alto would not be the first utility in the country to allow non-solar resources to participate
in a feed-in tariff (FIT) program; the Los Angeles Department of Water and Power currently has
a 100 MW FIT program that is likewise open to all resources that are deemed to be renewable
under state law. Sonoma Clean Power also has a FIT program with broad eligibility2.
However, because solar generation facilities provide certain local economic and environmental
benefits that do not apply to non-solar resources, staff recommends offering a contract price to
these non-solar projects that is equal to the estimated cost of buying renewable energy outside
of Palo Alto and transmitting it to Palo Alto (9.3 ¢/kWh for a 20-year contract, or 9.4 ¢/kWh for
a 25-year contract). This pricing is consistent with prior Council action to price non-solar
renewable resources at avoided cost. The City Council’s May 12, 2014 motion stated that the
proposed anaerobic digester facility be compensated at “the local market price for Northern
California for green electricity” for any electrical generation that the facility produces and sells
to CPAU (Staff Report 4744).
The avoided cost estimate for non-solar resources assumes that the generation resource will be
producing energy essentially around the clock all year long, which is, for example, how an
anaerobic digester facility would be expected to operate. This is in contrast to a solar energy
resource, which only produces power during the middle of the day, when wholesale energy
costs are significantly higher. This difference in the generation profile of solar resources is the
reason behind the 1.0 ¢/kWh premium in the avoided cost of solar energy compared to non-
solar energy. Because the contract price for these resources will be equal to the value of
renewable energy generation to the City, their participation in the Palo Alto CLEAN program will
not have any rate impact on customers.
While staff believes that there is unlikely to be much uptake from non-solar resources due to
the lack of non-solar resource potential and the high cost of land in Palo Alto, staff recommends
that the non-solar renewable resources be subject to a 3 MW cap, which is separate from the 3
MW cap for solar resources. Even though Public Works staff expects that a potential anaerobic
digester is unlikely to participate in the CLEAN program, as it would be more financially
beneficial to the project to use its output onsite to meet the RWQCP’s electricity needs,
1 The state’s renewable resource definitions are articulated in Section 399.12(e) of the Public Utilities Code and
Section 25741 of the Public Resources Code. Examples of eligible renewable resources (besides solar) include wind,
landfill gas, biomass, geothermal, small hydroelectric and ocean/tidal resources. Electrical generation provided by
a fuel cell is eligible as well, provided that the fuel cell uses a renewable fuel to produce this output.
2 See Sonoma Clean Power’s ProFIT program: https://sonomacleanpower.org/profit/.
City of Palo Alto Page 9
expanding the program will provide another option for consideration when evaluating the
economics of that technology.
Recommendation
As noted above, in addition to adding a 25-year contract term option, staff and the UAC
recommend that the current CLEAN price of 16.5 ¢/kWh for solar projects continue for another
year, or until the 3 MW cap for solar projects is reached. There has been renewed interest by
customers and solar developers and solar system costs have continued to decrease so it is
anticipated that the price may be sufficient to attract some participation in 2015.
Further, staff recommends opening the CLEAN program to non-solar renewable energy
resources, and offering such resources a contract price equal to the avoided cost of energy for
baseload generation facilities: 9.3 ¢/kWh for a 20-year contract, or 9.4 ¢/kWh for a 25-year
contract, under a separate 3MW cap.
Staff updated the CLEAN program PPA (Attachment B) so that it can accommodate the two
options for the delivery term (20-year and 25-year) and so that it can accommodate non-solar
eligible renewable energy resources. Staff additionally made minor clerical changes and
removed Section 6.9 (“Participating Intermittent Resource Program”), which addresses a
program that is no longer available to new generation facilities. Staff seeks Council approval of
the amended CLEAN program PPA and also requests delegation of authority from Council to the
City Manager to make such other changes to the CLEAN program PPA that are approved by the
City Attorney’s office as may be necessary to implement any recommendations set forth in this
staff report that are approved by Council.
Commission Review and Recommendation
The UAC considered staff’s recommendation at its December 10, 2014 meeting. While
expressing overall support for the Palo Alto CLEAN program, and expressing no concerns about
adding a 25-year contract term option to the program, some commissioners voiced concerns
about the proposal to expand the program to non-solar renewable energy resources.
For example, some Commissioners indicated concerns about potential unanticipated
consequences resulting from opening the program to such resources, in terms of the type and
scale of projects that might participate. Staff’s original proposal to the UAC included no cap on
non-solar resource participation. The commission expressed general support for including a
program cap on participation by non-solar resources. Commissioners also stated their interest
in seeing a fuller discussion of the rationale and potential impacts of opening the program up to
non-solar resources before providing their formal endorsement for such a proposal.
After its discussion, the UAC voted 3-2 (with Vice Chair Waldfogel and Commissioners Eglash
and Hall voting yes, Chair Foster and Commissioner Melton voting no, Commissioner Cook
abstaining, and Commissioner Chang absent) to recommend that the City Council:
City of Palo Alto Page 10
1. Continue the Palo Alto CLEAN program at the current price of 16.5 cents per kilowatt-
hour (¢/kWh) for a 20-year contract, add a 25-year contract term option with a 16.5
¢/kWh price, and continue with a program limit of 3 megawatts (MW) for solar
resources; and,
2. Direct staff to return to the Council with a review of the program in one year or at the
time the program capacity is filled, whichever comes first.
The draft notes from the UAC’s December 10, 2014 meeting are provided as Attachment C.
In response to the commission’s comments at its December 10, 2014 meeting, staff modified its
proposal by including a program participation cap of 3 MW on non-solar renewable energy
resources. In addition, staff has expanded the discussion on the proposal to expand the CLEAN
program to non-solar resources in this report—specifically, noting the Council’s May 12, 2014
motion establishing the compensation rate to be paid by CPAU to the anaerobic digester for
electricity sales, and elaborating on the participation eligibility requirements for non-solar
resources and the historical background for expanding the program’s eligibility criteria.
Resource Impact
Staff estimates the current cost of buying energy from solar resources outside of Palo Alto is
10.3 ¢/kWh (including transmission and capacity) for a 20-year contract, or 10.4 ¢/kWh for a
25-year contract. Purchasing the energy generated from 3 MW of local solar projects at 16.5
¢/kWh is expected to cost about $310,000 per year more than buying the same energy outside
of Palo Alto. This is equivalent to a 0.26% increase in the electric utility’s costs. If the program
increased costs by $310,000 per year, staff has determined that the system average electric
rate would have to increase by 0.03 ¢/kWh. This is equivalent to a bill impact of $1.50 per year
for the median residential customer using 410 kWh/month, or $2.30 per year for a residential
customer using 650 kWh/month.
Expanding the program to local, non-solar renewable energy projects is not expected to impact
the cost to the Utility since the recommended price for those projects is equal to the value of
acquiring such projects outside the City.
In addition to the energy costs described above, staff time is associated with marketing and
project review. The project review can be absorbed with existing staff over the life of the
program, and costs will be recovered through project review fees. The additional marketing will
require about 0.1 FTE of staff time and may involve an additional budget for marketing
materials, which would be requested through the annual budget process. The marketing work
will be absorbed by existing staff, but will decrease time spent on other account management
and efficiency program delivery activities.
Policy Implications
The recommendation to continue the CLEAN program and expand it to non-solar eligible
renewable energy resources supports the City’s carbon neutral electric supply portfolio policy
City of Palo Alto Page 11
as well as the LEAP Objective to enhance supply reliability through the pursuit of local
generation opportunities.
Environmental Review
Adoption of this resolution is not subject to California Environmental Quality Act (CEQA) review
under California Public Resources Code section 21080(b)(8), because the price adopted reflects
the reasonable cost of the CLEAN Program’s operating expenses, including the cost of
purchasing renewable energy from local renewable energy generating systems and the value of
local benefits to CPAU and its ratepayers. Approval of the amended CLEAN program PPA is not
a project under CEQA, and therefore, no environmental assessment is necessary.
Attachments:
Attachment A: Resolution Expanding the Palo Alto CLEAN Program's Eligibility to Non-
Solar Renewable Energy Resources and Adding a 25-Year Contract Term Option (with
Exhibit A-1 Revised Program Rules) (PDF)
Attachment B: Updated Palo Alto CLEAN Power Purchase Agreement (PDF)
Attachment C: Final Excerpted Minutes of the December 10 2014 UAC Meeting (PDF)
*NOT YET APPROVED*
Resolution No. _________
Resolution of the Council of the City of Palo Alto Expanding the Palo Alto Clean Local Accessible
Now Program’s Eligibility to Non-solar Renewable Energy Resources and Adding a 25-Year
Contract Term Option
R E C I T A L S
A. On March 5, 2012, the City approved the Palo Alto Clean Local Energy Accessible
Now (CLEAN) Program (or feed-in tariff). Under the Palo Alto CLEAN Program, participants who
build a new solar generating system in Palo Alto may obtain a long-term, fixed-price contract
with the City to sell the energy from the system to the City’s electric utility.
B. The first program year of Palo Alto CLEAN commenced on April 2, 2012 and was
originally set to terminate on December 31, 2012.
C. On February 3, 2014, Council approved Resolution 9393, which continued Palo
Alto CLEAN and established a maximum total Palo Alto CLEAN Program cost commitment of
$20,000,000 over the life of the program. This amount was sufficient for a program cap of 3
megawatts (MW) of generating capacity.
D. The City wants to add a 25-year contract term option at a price of 16.5 cents per
Kilowatt-hour (kWh), while continuing to offer the program at the current price of 16.5 cents
per kWh for a 20-year contract under the existing 3 MW cap of generating capacity.
E. The City also wants to open the program to local, non-solar eligible renewable
energy resources and offer contract prices of 9.3 cents per kWh for a 20-year contract term or
9.4 cents per kWh for a 25-year contract term for such resources.
F. The City intends that non-solar, local eligible renewable energy resources not be
counted toward the Palo Alto CLEAN Program’s 3 MW generating capacity cap for solar
resources, but be subject to a separate 3 MW generating capacity cap of their own.
The Council of the City of Palo Alto (“City”) RESOLVES:
SECTION 1. The Council adopts revised Palo Alto CLEAN Program Eligibility Rules
Requirements, set forth in Exhibit A-1 attached to this Resolution.
SECTION 2. The Council authorizes the City Manager or his designee to sign contracts
for the output of one or more solar, or other non-solar eligible renewable energy resource
meeting the CLEAN Program Eligibility Rules and Requirements described in Section 1. The total
CLEAN Program cost commitment made by the City during the life of the program shall not
exceed $25,000,000, which is sufficient for a program cap of 3 MW of local solar generating
capacity and 3 MW of local, non-solar generating capacity over a 25-year contract term.
ATTACHMENT A
*NOT YET APPROVED*
SECTION 3. The Council finds that the City of Palo Alto Utilities’ (CPAU’s) purchase of
energy from local renewable sources provides additional local benefits to CPAU when
compared to energy purchased outside Palo Alto, which in turn become benefits to CPAU
ratepayers and the local community. These benefits include a reduction in CPAU’s costs and
energy losses associated with energy transmission and distribution, and a reduction in CPAU’s
capacity requirements. When the City purchases energy from local sources, a portion of the
City’s electric expenditures remain within the community, which provides revenue for local
economic development. Locating generation near load centers can also reduce the need for
new transmission lines, thus reducing the environmental impacts of the electric system and
improving reliability in transmission-constrained regions like the Greater Bay Area. When solar
systems are installed on rooftops and parking facilities, the shade created reduces the energy
required for cooling and creates value for vehicle owners. In addition, as new technology and
energy storage systems are developed, the local renewable energy generation, in combination
with storage systems, has the potential to provide resiliency to the City’s electric distribution
system. Further, local renewable energy generation that participates in the CLEAN Program
provides long-term certainty and value to the entire community – benefits that are not
provided when such energy is sold to the City on a short-term basis or used on-site. The
Council therefore finds that offering the Palo Alto CLEAN Program to participants is a
reasonable cost of providing electric service to CPAU’s electric customers.
SECTION 4. The Council finds that the adoption of this resolution is not subject to
California Environmental Quality Act review under California Public Resources Code section
21080(b)(8), because the rate adopted reflects the reasonable cost of the CLEAN Program’s
operating expenses, including the cost of purchasing renewable energy from local solar
generating systems, and the value of local benefits to CPAU and its ratepayers as described in
SECTION 3 of this resolution.
INTRODUCED AND PASSED:
AYES:
NOES:
ABSENT:
ABSTENTIONS:
ATTEST:
___________________________ _______________________
City Clerk Mayor
APPROVED AS TO FORM: APPROVED:
___________________________ _______________________
Senior Deputy City Attorney City Manager
___________________________
Director of Utilities
___________________________
Director of Administrative Services
PALO ALTO CLEAN (CLEAN LOCAL ENERGY ACCESSIBLE NOW)
PROGRAM ELIGIBILITY RULES AND REQUIREMENTS
Effective __________
A. PARTICIPATION ELIGIBILITY:
The Palo Alto Clean Local Energy Accessible Now Program (the “CLEAN Program”) is open to
participation by any Eligible Renewable Energy Resource, as defined in Section D.4, that
satisfies these Program Eligibility Rules and Requirements.
B. TERRITORIALITY REQUIREMENT:
In order to be eligible to participate in the CLEAN Program, an Eligible Renewable Energy
Resource must be located in and generating electricity from within the utility service area of
the City of Palo Alto.
C. PRICES AND TERM FOR ELIGIBLE RENEWABLE RESOURCES:
The following purchase price shall apply to the electricity produced by an Eligible
Renewable Energy Resource participating in the Program, except as provided in Section D.5.
Solar Energy Resources:
Contract Term Contract Price
20 years $0.165 / kWh
25 years $0.165 / kWh
Other, Non-Solar Eligible Renewable Energy Resources:
Contract Term Contract Price
20 years $0.093 / kWh
25 years $0.094 / kWh
D. ADDITIONAL RULES AND REQUIREMENTS:
1.The owner of the Eligible Renewable Energy Resource shall enter into an Eligible
Renewable Energy Resource Power Purchase Agreement (“PPA”) with the City of Palo
Alto prior to delivering energy to the City.
2.The maximum, aggregate generation capacity from all solar facilities participating in the
CLEAN Program is three (3) Megawatts (“MW”) (the “Program Capacity – Solar”, based
on the generating facility’s California Energy Commission rating, CEC-AC). Generating
capacity from non-solar, eligible renewable energy resources will not be counted
towards this 3 MW cap, but will be subject to a separate 3 MW cap of its own (the
“Program Capacity – Non-Solar”.
3.An application for participation in the CLEAN Program to sell output to the City (the
“Application”) may be submitted at any time. Applications will be considered in the
EXHIBIT A-1
PALO ALTO CLEAN (CLEAN LOCAL ENERGY ACCESSIBLE NOW)
PROGRAM ELIGIBILITY RULES AND REQUIREMENTS
Effective __________
order received.
4. Eligible Renewable Energy Resource means an electric generating facility that: (a) is
defined and qualifies as an “eligible renewable energy resource” under California Public
Utilities Code Section 399.12(e) and California Public Resources Code Section 25741,
respectively, as amended; and (b) meets the territoriality requirement set forth in
Section B.
5. The California Energy Commission’s (“CEC”) certification of the Eligible Renewable
Energy Resource shall be required within six (6) months of the commercial operation
date of the generating facility; the facility’s owner shall provide written notice of the
CEC’s certification to the City within ten (10) business days of receipt of said
certification. If the City agrees, in its sole discretion, to take delivery of the generating
facility’s electricity prior to the CEC’s certification, then, as the facility’s electricity
cannot be considered in fulfillment of the City’s RPS requirements, the price that the
City will pay for the generating facility’s electricity (the “Pre-Certification Price”) will be
set to $0.076 per kWh (for a 20-year contract term) or $0.08 per kWh (for a 25-year
contract term), based on the estimated levelized cost of brown power over a 20-year or
25-year period, respectively. Upon the CEC’s certification of the generating facility and
the provision of notice of such certification to the City in accordance with this section,
the City will pay the Price set forth in Section C of these CLEAN Program Rules and
Requirements and the PPA (collectively referred to as the “Contract Price”) for the
generating facility’s electricity delivered on and after the date of the CEC’s certification.
The City will, in its sole discretion, “true-up”, as appropriate, the difference between the
Contract Price and the Pre-Certification Price for any electricity received and paid for by
the City, effective as of the date of certification of the Eligible Renewable Energy
Resource.
6. If an Eligible Renewable Energy Resource is authorized to participate in the CLEAN
Program, then that Resource shall not be entitled to receive any rebate or other
incentive from the City’s Photovoltaic (PV) Partners Program or any other similar
incentive program funded by the City’s ratepayers. To the extent any rebate or
incentive is paid to the owner of the Resource, that rebate or incentive shall be
disgorged and refunded to the City upon 30 days’ notice, if the Eligible Renewable
Energy Resource continues to participate in the CLEAN Program. If a rebate or an
incentive has been paid to the Eligible Renewable Energy Resource, then that Resource
shall be ineligible to participate in the CLEAN Program.
7. All electricity generated by the Eligible Renewable Energy Resource shall be delivered
only to the City. No portion of the electricity may be used to offset any load of the
generating facility (other than incidental loads associated with operating the generating
facility).
8. A metering and administration fee will be charged to each Eligible Renewable Energy
PALO ALTO CLEAN (CLEAN LOCAL ENERGY ACCESSIBLE NOW)
PROGRAM ELIGIBILITY RULES AND REQUIREMENTS
Effective __________
Resource that participates in the CLEAN Program. See Utilities Rate Schedule E-15
(Electric Service Connection Fees).
040914 jrm 0180042 1
POWER PURCHASE AGREEMENT
ELIGIBLE RENEWABLE ENERGY RESOURCE
(Palo Alto Clean Local Energy Accessible Now Program)
This Power Purchase Agreement - Eligible Renewable Energy Resource, dated, for convenience,
, 20 (the “Effective Date”), is entered into by and between the CITY OF PALO
ALTO, a California chartered municipal corporation, and ,
a corporation (individually, a “Party” and, collectively, the “Parties”).
RECITALS
1.The Buyer has adopted and implemented its CLEAN Program, which allows an owner of a
qualifying electric generation system to sell to the Buyer the power output of a small-scale distributed
generation Eligible Renewable Energy Resource, subject to the CLEAN Program’s rules and requirements.
2.The Seller owns or operates and desires to interconnect its Facility in parallel with Buyer’s
Distribution System and sell the Energy produced by its Facility, net of Station Service Load, directly to the
Buyer in furtherance of the CLEAN Program.
3.The Parties do not intend this Agreement to constitute an agreement by the Buyer to provide
retail electrical service to the Seller.
4.The Parties wish to enter into a power purchase agreement for the sale and purchase of the
Output of the Facility. The Parties will enter into a separate “Interconnection Agreement” in connection
with this Agreement.
NOW THEREFORE, in consideration of the foregoing recitals and the following covenants,
terms and conditions, the Parties agree, as follows:
AGREEMENT
1.1 DEFINITIONS
The initially capitalized terms, whenever used in this Agreement, have the meanings set forth
below, unless they are otherwise herein defined. The terms “include,” “includes,” and “including,” when
used in this Agreement, shall mean, respectively, “include, without limitation,“ “includes, without
limitation” and “including, without limitation.”
“Agreement” means this Power Purchase Agreement – Eligible Renewable Energy Resource between the
Buyer and the Seller.
“Business Day” means any day except a Saturday, Sunday, or a day that the City observes as a regular
holiday under Palo Alto Municipal Code section 2.08.100(a).
“Buyer” refers to the City of Palo Alto, California, with a principal place of business at 250 Hamilton
Avenue, Palo Alto, California 94301.
“Buyer’s Distribution System” means the wires, transformers, and related equipment used by the Buyer to
deliver electric power to the Buyer’s retail customers, typically at sub-transmission level voltages or lower.
“CAISO” means the California Independent System Operator Corporation, or successor entity.
“CAISO Tariff” means the CAISO FERC Electric Tariff, as amended.
“Capacity” means the ability of a generator at any given time to produce Energy at a specified rate, as
ATTACHMENT B
040914 jrm 0180042 2
measured in megawatts (“MW”) or kilowatts (“kW”), and any reporting rights associated with it.
“Capacity Attributes” means any current or future defined characteristic, certificate, tag, credit, or
ancillary service attribute, whether general in nature or specific as to the location or any other attribute of
the Facility, intended to value any aspect of the Contract Capacity of the Facility to produce Energy or
ancillary services, including contributions towards Resource Adequacy (including those requirements
defined in Section 40 of the CAISO Tariff) or reserve requirements (if any), and any other reliability or
power attributes.
“CEC” means the California Energy Resources Conservation and Development Commission, or successor
agency.
“Certificate of RPS Eligibility” means a certificate issued by the CEC as evidence of RPS Certification of
the Facility.
“City” means the government of the City of Palo Alto, California.
“CLEAN Program” refers to the Palo Alto Clean Local Energy Accessible Now Program, a renewable
energy program established by the City by adoption of resolution number , dated , of the
Palo Alto City Council, whereby the Buyer will purchase from the Seller the Output of Eligible Renewable
Energy Resources that meet specified criteria set forth in the City’s applicable ordinances and resolutions.
“Commercial Operation” means the period of operation of the Facility, once the Commercial Operation
Date has occurred.
“Commercial Operation Date” means the date specified in the Commercial Operation Date Confirmation
Letter, which the Parties execute and exchange in accordance with this Agreement.
“Contract Capacity” means the installed electrical Capacity available upon the Commercial Operation
Date of the Facility in an amount, as specified in Exhibit “PPA-A.” “Contract Capacity” is measured at the
Buyer’s revenue meter at the Delivery Point and is net of any Station Service Loads, any applicable Facility
step-up transformer losses, and distribution losses on Buyer’s Distribution System up to the Delivery Point.
“Contract Price” means the price paid by the Buyer to the Seller for the Output generated at the Facility
and received by the Buyer, as set forth in Exhibit “PPA-A.”
“CPUC” means the California Public Utilities Commission, or successor agency.
“Delivery Point” means the point of interconnection to Buyer’s Distribution System, where the Buyer
accepts title to the Output.
“Delivery Term” has the meaning set forth in Section 14.2 hereof.
“Eligible Renewable Energy Resource” means an electric generating facility that is defined and qualified
as an “eligible renewable energy resource” under California Public Utilities Code Section 399.12(e) and
California Public Resources Code Section 25471, respectively, as amended.
“Energy” means electrical energy generated from the Facility and delivered to Buyer’s Distribution System
with the voltage and quality required by the Buyer, and measured in megawatt-hours (“MWh”) or kilowatt-
hours (“kWh”), as metered at the Delivery Point.
“Facility” means the qualifying renewable energy generation equipment and associated power conditioning
and interconnection equipment that deliver the Output to the Buyer at the Delivery Point.
“FERC” means the Federal Energy Regulatory Commission, or successor agency.
040914 jrm 0180042 3
“Forced Outage” means an unplanned outage of one or more of the Facility’s components that results in a
reduction of the ability of the Facility to produce Capacity.
“Force Majeure” means an event or circumstance, which prevents a Party from performing its obligations
under this Agreement, and which is not in the reasonable control of, or the result of negligence of, the Party
claiming Force Majeure, and which by the exercise of due diligence is unable to overcome or cause to be
avoided. “Force Majeure” shall include: (a) An act of nature, riot, insurrection, war, explosion, labor
dispute, fire, flood, earthquake, storm, lightning, tidal wave, backwater caused by flood, act of the public
enemy, terrorism, or epidemic; (b) Interruption of transmission or generation services as a result of a
physical emergency condition (and not congestion-related or economic curtailment) not caused by the fault
or negligence of the Party claiming Force Majeure and reasonably relied upon and without a reasonable
source of substitution to make or receive deliveries hereunder, civil disturbances, strike, labor disturbances,
labor or material shortage, national emergency, restraint by court order or other public authority or
governmental agency, actions taken to limit the extent of disturbances on the electrical grid; or (c) Other
similar causes beyond the control of the Party affected, which causes such Party could not have avoided by
the exercise of due diligence and reasonable care. A Party's financial incapacity, the Seller’s ability to sell
the Output at a more favorable price or under more favorable conditions, or the Buyer’s ability to acquire
the Output at a more favorable price or under more favorable conditions or other economic reasons shall
not constitute an event of Force Majeure. “Force Majeure” does not include a Forced Outage to the extent
such event is not caused or exacerbated by an event of Force Majeure, as described above, and does not
include the Seller’s inability to obtain financing, permits, or other equipment and instruments necessary to
plan for, construct, or operate the Facility.
“Good Utility Practice” means those practices, methods and acts that would be implemented and followed
by prudent operators of electric energy generating facilities in the western United States, similar to the
Facility, during the relevant time period, which practices, methods and acts, in the exercise of prudent and
responsible professional judgment in the light of the facts known at the time the decision was made, could
reasonably have been expected to accomplish the desired result consistent with good business practices,
reliability, and safety. The Seller acknowledges that its use of Good Utility Practice does not exempt it
from performing any of its obligations arising under this Agreement. “Good Utility Practice” includes, at a
minimum, those professionally responsible practices, methods and acts described in the preceding
paragraph that comply with manufacturers’ warranties, restrictions in this Agreement, the interconnection
requirements of Buyer, the requirements of governmental authorities, and WECC and NERC standards.
“Good Utility Practice” also includes the taking of reasonable steps to ensure that:
(a) Equipment, materials, resources, and supplies, including spare parts inventories, are available
to meet the Facility’s needs;
(b) Sufficient operating personnel are available at all times and are adequately experienced and
trained and licensed as necessary to operate the Facility properly and efficiently, and are capable
of responding to reasonably foreseeable emergency conditions at the Facility and emergencies
whether caused by events on or off the Facility’s site;
(c) Preventive, routine, and non-routine maintenance and repairs are performed on a basis that
ensures reliable, long-term and safe operation of the Facility, and are performed by
knowledgeable, trained, and experienced personnel utilizing proper equipment and tools;
(d) Appropriate monitoring and testing are performed to ensure equipment is functioning as
designed; and
(e) Equipment is not operated in a reckless manner, in violation of manufacturer’s guidelines or in
a manner unsafe to workers, the general public, or the connecting utility’s electric system or
contrary to environmental laws, permits or regulations or without regard to defined limitations
such as, flood conditions, safety inspection requirements, operating voltage, current, volt ampere
reactive (VAR) loading, frequency, rotational speed, polarity, synchronization, and control system
limits; and equipment and components are designed and manufactured to meet or exceed the
standard of durability that is generally used for electric energy generating facilities operating in the
western United States and will function properly over the full range of ambient temperature and
weather conditions reasonably expected to occur at the Facility site and under both normal and
emergency conditions.
040914 jrm 0180042 4
“Green Attributes” refers to the definition set forth in the Standard Terms and Conditions, Appendix A-2,
as amended, Decision D.07-02-011, as modified by D.07-05-057, of the CPUC, which incorporates the
definition of “Environmental Attributes” set forth in the Standard Terms and Conditions, Appendix A-1, as
amended, D. 04-06-014. “Green Attributes” includes any and all credits, benefits, emissions reductions,
environmental air quality credits, offsets, and allowances, howsoever entitled, attributable to the generation
from the Facility, and its displacement of conventional energy generation, whether existing now or arising
in the future. “Green Attributes” includes RECs, as well as (1) any avoided emissions of pollutants to the
air, soil or water, such as sulfur oxides (“SOx”), nitrogen oxides (“NOx”), carbon monoxide (“CO”) and
other pollutants; (2) any avoided emissions of carbon dioxide (“CO2”), methane (“CH4”), nitrous oxide,
hydrofluorocarbons, perfluorocarbons, sulfur hexafluoride, and other greenhouse gases (“GHGs”) that have
been determined by the United Nations Intergovernmental Panel on Climate Change, or otherwise by law,
to contribute to the actual or potential threat of altering the Earth’s climate by trapping heat in the
atmosphere; and (3) the reporting rights to these avoided emissions such as Green Tag Reporting Rights
and RECs. “Green Tag Reporting Rights” are the right of a Green Tag Purchaser to report the ownership
of accumulated Green Tags in compliance with federal or state law, if applicable, and to a federal or state
agency or any other party at the Green Tag Purchaser’s discretion, and include those Green Tag Reporting
Rights accruing under Section 1605(b) of the Energy Policy Act of 1992 and any present or future federal,
state, or local law, regulation or bill, and international or foreign emissions trading program. Green Tags
are accumulated on a kWh basis and one Green Tag represents the Green Attributes associated with one (1)
MWh of Energy. “Green Attributes” do not include (i) any Energy, Capacity, reliability, or other power
attributes of the Facility, (ii) production or investment tax credits associated with the construction or
operation of the Facility and other financial incentives in the form of credits, grants, reductions, or
allowances associated with the Facility that are applicable to a state or federal income taxation obligation,
(iii) fuel-related subsidies or “tipping fees” that may be paid to Seller to accept certain fuels, or local
subsidies received by the generator for the destruction of particular pre-existing pollutants or the promotion
of local environmental benefits, or (iv) emission reduction credits encumbered, used or created by the
Facility for compliance with or sale under local, state, or federal operating and/or air quality permits or
programs. If the Facility is a biomass or landfill facility and the Seller receives any tradable Green
Attributes based on the Facility’s greenhouse gas reduction benefits or other emission offsets attributed to
its fuel usage, the Seller shall provide the Buyer with sufficient Green Attributes to ensure that there are
zero net emissions associated with the production of electricity from the Facility. “Green Attributes”
includes any other environmental credits or benefits recognized in the future and attributable to Energy
generated by the Facility during the Term that may not be represented by Green Tag Reporting Rights or
RECs, unless otherwise excluded herein. Any Green Attributes provided under this Agreement shall be
documented by RECs, or any other representation of the environmental benefits of the Output, the monthly
cumulative total of which shall be provided to the Buyer, as specified herein.
“Interconnection Agreement” refers to the agreement between the Buyer and the Seller, specific to the
interconnection of the Facility to Buyer’s Distribution System.
“NERC” means the North American Electric Reliability Corporation, or successor organization.
“NCPA” means Northern California Power Agency, a California joint action agency, or successor agency.
“Output” means all Capacity associated with Contract Capacity and associated Energy made available
from the Facility, as well as any Capacity Attributes, Green Attributes, or other attributes existing now or in
the future associated with Contract Capacity and/or associated Energy. “Output” does not include
production or investment tax credits associated with the construction or operation of the Facility and other
financial incentives in the form of credits, grants, reductions, or allowances associated with the Facility that
are applicable to a state or federal income taxation obligation.
“Planned Outage” means an outage, scheduled in advance, of one or more of the Facility’s components
that results in a reduction of the ability of the Facility to produce Capacity.
040914 jrm 0180042 5
“Pre-Certification Price” means the contract price to be paid for all Energy delivered to the Buyer prior to
the RPS Certification Date, as specified in Exhibit “PPA-A”.
“Renewable Energy Credit” or “REC” has the meaning set forth in Section 399.12(h)(1) and (2) of the
California Public Utilities Code, and includes a certificate of proof that one unit of electricity was generated
by an Eligible Renewable Energy Resource. Currently, RECs are used to convey all Green Attributes
associated with electricity production by a renewable energy resource. RECs are accumulated on a kWh
basis and one REC represents the Green Attributes associated with the generation of 1 MWh (1,000 kWhs)
from the Facility. For purposes of this Agreement, the term REC shall be synonymous with the term Green
Tag, green ticket, bundled or unbundled renewable energy credit, tradable renewable energy certificates, or
any other term used to describe the documentation that evidences the renewable and Green Attributes
associated with electricity production by an Eligible Renewable Energy Resource.
“Renewables Portfolio Standard” or “RPS” means the standard adopted by the State of California
pursuant to Senate Bill 2 1st Extraordinary Session (SBX1 2, Chapter 1, Statutes 2011-12), and California
Public Utilities Code Sections 399.11through 399.31, inclusive, as may be amended, setting minimum
renewable energy targets for local publicly owned electric utilities.
“Reservation Deposit” means the monetary deposit submitted by the Seller (or the Facility sponsor on
behalf of the Seller) to secure a reservation of the CLEAN Program’s prices. The Reservation Deposit is
set forth in Exhibit “PPA-A.”
“Resource Adequacy” means a requirement by a governmental authority or in accordance with its FERC-
approved tariff, or a policy approved by a local regulatory authority, that is binding upon either Party and
that requires that Party to procure a certain amount of electric generating capacity.
“RPS Certification” means certification by the CEC that the Facility qualifies as an Eligible Renewable
Energy Resource for RPS purposes, and that all Energy produced by the Facility qualifies as generation
from an Eligible Renewable Energy Resource, as evidenced by a Certificate of RPS Eligibility.
“RPS Certification Date” means the date on which the RPS Certification begins, as specified in the
Certificate of RPS Eligibility.
“Seller” means with a principal place of business at
, , .
“Station Service Load” means the electrical loads associated with the operation and maintenance of the
Facility, which may at times be supplied from the Facility’s Energy.
“Term” has the meaning set forth in Section 14.1 hereof.
“WECC” means the Western Electricity Coordinating Council, the regional entity responsible for
coordinating and promoting regional bulk electric system reliability in the Western Canada and the United
States, or any successor organization.
2.0 SELLER’S GENERATING FACILITY, PURCHASE PRICE AND PAYMENT
2.1 Facility. This Agreement governs the Buyer’s purchase of the Output from the Facility,
as described in Exhibit “PPA-A.” The Seller shall not modify the Facility to increase or decrease the
Contract Capacity after the Commercial Operation Date.
2.2 Products Purchased. During the Delivery Term, the Seller shall sell and deliver, or cause
to be delivered, and the Buyer shall purchase and receive, or cause to be received, the Output from the
Facility. The Seller shall not have the right to procure the Output from sources other than the Facility for
sale or delivery to the Buyer under this Agreement or to substitute the Output.
040914 jrm 0180042 6
2.3 Delivery Term. The Delivery Term shall commence on the Commercial Operation Date .under this
Agreement, and shall continue for an uninterrupted period of twenty (20) years. This period will commence
on the first day of the calendar month immediately following the Commercial Operation Date. As evidence
of the Commercial Operation Date, the Parties shall execute and exchange the “Commercial Operation
Date Confirmation Letter,” attached hereto as Exhibit “PPA-B.” The Commercial Operation Date shall be
the date on which the Parties acknowledge, in writing, that the Facility starts operating and is otherwise in
compliance with applicable interconnection and system protection requirements, including the final
approvals by the City’s building department official.
2.4 Payment for Products Purchased.
2.4.1 Deliveries Prior to RPS Certification Date. Once the Facility has achieved
Commercial Operation, if the CEC has not issued a Certificate of RPS Eligibility for the Facility
or the Facility has not been registered with the appropriate entity for the tracking of Green
Attributes, the Buyer will pay the Seller for the Output by multiplying the Pre-Certification Price
by the quantity of Energy.
2.4.2 Deliveries After RPS Certification Date. Once the Facility has achieved
Commercial Operation, the CEC has issued a Certificate of RPS Eligibility for the Facility, and
the Facility has been registered with the appropriate entity for the tracking of Green Attributes, the
Buyer shall pay the Seller for all Output on or after the RPS Certification Date by multiplying the
Contract Price by the quantity of Energy.
2.4.3 True-up Upon Issuance of Certificate of RPS Eligibility. Once the Facility has
achieved Commercial Operation, the CEC has issued a Certificate of RPS Eligibility for the
Facility, and the Facility has been registered with the appropriate entity for the tracking of Green
Attributes, the Buyer will pay the Seller an amount equal to the difference between the Contract
Price and the Pre-Certification Price for the Output (a) that was delivered on or after the RPS
Certification Date and (b) for which the Seller has already received payment at the Pre-
Certification Energy Price.
2.4.4 Energy in Excess of Contract Capacity. The Seller shall not receive payment for
any Energy or Green Attributes delivered in any hour to the Buyer in excess of the following
amount of energy (in kilowatt-hours): 110% of the Contract Capacity (in kilowatts) multiplied by
one hour. Any payment in excess of this amount shall be refunded to the Buyer, on demand.
2.5 Billing. The Buyer shall pay the Seller by check or electronic funds transfer, on a
monthly basis, within thirty (30) days of the meter reading date.
2.6 Title and Risk of Loss. Title to and risk of loss related to the Output shall be transferred
from the Seller to the Buyer at the Delivery Point. The Seller warrants that it will deliver to the Buyer the
Output free and clear of all liens, security interests, claims, encumbrances or any interest therein or thereto
by any person, arising prior to the Delivery Point.
2.7 No Additional Incentives. The Seller warrants that it has not received any other
incentives funded by the Buyer’s ratepayers and it further agrees that, during the Term, it shall not seek
additional compensation or other benefits from the Buyer pursuant to the following programs of the Buyer:
(a) Photovoltaic (PV) Partners Program; (b) Power from Local Ultra-Clean Generation Incentive (PLUG-
In) Program; or (c) other similar programs that are or may be funded by the Buyer’s ratepayers.
040914 jrm 0180042 7
3.0 RPS CERTIFICATION; GREEN ATTRIBUTES
3.1 CEC Certification. The Seller, at its own cost and expense, shall obtain the RPS
Certification within six (6) months of the Commercial Operation Date. The Seller shall maintain the RPS
Certification at all times during the Delivery Term. The foregoing provision notwithstanding, the Seller
shall not be in breach of this Agreement and the Buyer shall not have the right to terminate this Agreement,
if the Seller’s failure to obtain or maintain the RPS Certification is due to a change in California law,
occurring after the Commercial Operation Date, so long as the Seller has used commercially reasonable
efforts to obtain and maintain the RPS Certification and the Seller’s actions or omissions did not contribute
to its inability to obtain and maintain the RPS Certification.
3.2 Obligation to Deliver Green Attributes. The Seller shall sell and deliver to the Buyer, and
the Buyer shall buy and receive from the Seller, all right, title, and interest in and to Green Attributes
associated with Energy, produced by the Facility and delivered to the Buyer at the Delivery Point, whether
now existing or that hereafter come into existence during the Term, except as otherwise excluded herein;
provided, the Buyer shall not be obligated to purchase and pay the Seller for any Green Attributes
associated with any amount of the Output, that is generated by any fuel which is not renewable and which
cannot be counted for the purpose of the production of Green Attributes. The Seller agrees to sell and make
all such Green Attributes available to the Buyer to the fullest extent allowed by applicable law, in
accordance with the terms and conditions of this Agreement. The Seller warrants that the Green Attributes
provided under this Agreement to the Buyer shall be free and clear of all liens, security interests, claims
and encumbrances.
3.3 Conveyance of Green Attributes. The Seller shall provide Green Attributes associated
with the Facility, which shall be documented and conveyed to the Buyer in accordance with the procedure
described in Exhibit “PPA-D.”
3.4 Additional Evidence of Green Attributes Conveyance. At the Buyer’s request, the Seller
shall provide additional reasonable evidence to the Buyer or to third parties of the Buyer’s right, title, and
interest in the Green Attributes and any other information with respect to Green Attributes, as may be
requested by the Buyer.
3.5 Modification of Green Attributes Conveyance Procedure. The Buyer may unilaterally
modify Exhibit “PPA-D” in order to reflect changes necessary in the Green Attributes conveyance
procedures, so that the Buyer may be able to receive and report the Green Attributes, purchased under this
Agreement, as belonging to the Buyer.
3.6 Reporting of Ownership of Green Attributes. The Seller shall not report to any person or
entity that the Green Attributes sold and conveyed to the Buyer belong to any person other than the Buyer.
The Buyer may report under any applicable program that Green Attributes purchased by the Buyer
hereunder belong to it.
3.7 Greenhouse Gas Emissions. The Seller shall comply with any laws and/or regulations
regarding the need to offset emissions of GHGs by delivering to the Buyer the Energy from the Facility
with a net zero GHG impact.
4.0 CONVEYANCE OF CAPACITY ATTRIBUTES
4.1 Conveyance of Resource Adequacy Capacity. The Seller shall not report to any person or
entity that the Resource Adequacy Capacity, as defined in the CAISO Tariff) associated with the Facility,
if any, belongs to a person other than the Buyer, which may report that Resource Adequacy Capacity
purchased hereunder belongs to it to fulfill the Resource Adequacy requirements, as defined in Section 40
of the CAISO Tariff, as amended, or any successor program. The Seller shall take those actions described
in Section 6.0 hereof, as applicable, to secure recognition of Resource Adequacy Capacity by the CAISO.
4.2 Conveyance of Other Capacity Attributes. In addition to the obligations imposed on the
040914 jrm 0180042 8
Seller under Section 4.1, the Seller will undertake any and all actions reasonably needed to enable the
Buyer to effect the recognition and transfer of any Capacity Attributes in addition Resource Adequacy, to
the extent that such Capacity Attributes exist now or will exist in the future; provided, if such actions
require any actions beyond the giving of notice by the Seller, then the Buyer shall reimburse all out-of-
pocket costs and charges of such actions.
4.3 Reporting of Ownership of Capacity Attributes. The Seller shall not report to any person
or entity that the Capacity Attributes sold and conveyed to the Buyer belong to any person other than the
Buyer. The Buyer may report under any such program that such Capacity Attributes purchased hereunder
belong to it.
5.0 METERING AND OPERATIONS
5.1 Timing of Outages. The Seller may not schedule or take any Planned Outage from 12:00
p.m. through 7:00 p.m. Pacific Time during the months of June through October.
5.2 Outage Reporting.
5.2.1 Buyer Request. The Seller is not required to report any Planned Outage or Forced
Outage, unless the Buyer first submits a written request to the Seller to commence Outage
reporting. Upon receipt of such a request, the Seller shall report all subsequent Planned Outages
and the Forced Outages according to the procedures described in subsections 5.2.2 and 5.2.3, and
shall continue such reporting until (a) the termination of this Agreement for any reason, or (b) the
Buyer subsequently provides written notice to the Seller that the Seller may cease such reporting
in the future.
5.2.2 Planned Outage Notifications. The Seller shall notify the Buyer at least 72 hours in
advance of any Planned Outage that would result in a reduction in the effective Output of the
Facility during the period over which the Planned Outage is scheduled. Notification shall be
provided by e-mail to the e-mail address (or addresses) set forth in Exhibit “PPA-F.”
5.2.3 Forced Outage Notifications. Within 24 hours of the occurrence of a Forced
Outage of the Facility that impacts the ability of the Facility to produce Energy, the Seller shall
notify the Buyer of the Forced Outage, including the Capacity of the Facility that is impacted, and
the expected duration of the Forced Outage. Within 24 hours of the return of the Facility to service
following the Forced Outage, the Seller shall notify the Buyer of the return-to-service details.
Notification shall be made by e-mail to the address (or addresses) set forth in Exhibit “PPA-F.”
5.3 Metering. The Buyer shall furnish and install one or more standard watt-hour meters to
read Energy generated by the Facility, and it will charge a meter fee to the Seller to cover the costs
associated with the meter’s purchase and installation. As requested, the Seller shall provide and install a
meter socket in accordance with the Buyer’s metering standards. The Buyer reserves the right to install
additional metering equipment at its sole cost and expense.
6.0 PARTICIPATING GENERATORS
6.1 Applicability. This Section 6.0 shall apply if the Facility meets the definition of a
“Participating Generator,” as may be defined by the CAISO Tariff. This Section 6.0 shall not apply if the
definition applies to the Facility only upon the election by the Seller. For the purposes of this Section 6.0,
all special terms not otherwise defined in Section 1.0 are defined in the CAISO Tariff.
6.2 Participating Generator Agreement. The Buyer will notify the CAISO of the Seller’s
interconnection to Buyer’s Distribution System. If the CAISO requires it, the Seller, at its own expense,
shall negotiate and enter in to two contracts, a “Participating Generator Agreement” and a “Meter Services
Agreement for CAISO Metered Entities,” with the CAISO.
040914 jrm 0180042 9
6.3 Scheduling Coordination. If the CAISO requires the Seller to enter in to a Participating
Generator Agreement, then the Seller shall designate NCPA as the Buyer’s scheduling coordinator. The
Buyer, acting in its sole discretion, may replace NCPA as the scheduling coordinator for the Facility. If
NCPA ceases to be the scheduling coordinator for the Facility and the Buyer has not, upon fourteen (14)
days’ prior written notice of inquiry from the Seller, appointed a replacement scheduling coordinator, then
the Seller shall have the right to appoint a replacement scheduling coordinator on the Buyer’s behalf.
Thereafter, the Buyer shall enter into all reasonable and appropriate agreements with such replacement
scheduling coordinator at its own costs.
6.4 Scheduling Procedure. The Buyer may require the Seller to provide the Buyer with
Energy forecasts on a periodic basis, as may be necessary for the Buyer to account for expected Facility
generation in its daily power scheduling process. The requirements are set forth in Exhibit “PPA-C.”
6.5 Modification of Scheduling and Outage Notification Procedure. The Buyer may
unilaterally modify Exhibit “PPA-C” to reflect changes necessary in the scheduling and Outage notification
procedures. The Buyer shall give the Seller reasonable notice of any such changes.
6.6 Provision of Other Equipment. If the Seller is required to enter into a Participating
Generator Agreement with the CAISO, then the Seller, at its own cost and expense, shall provide and
maintain data transmission-grade phone line and telecommunications equipment at the meter location that
complies with applicable requirements of the CAISO, the Buyer, and NCPA. Any meter installed by the
Seller shall comply at all times with the CAISO’s metering requirements. If the Seller fails to provide or
maintain any such required equipment or data connection, then the Buyer shall acquire, install and maintain
the same at the Seller’s sole cost and expense.
6.7 Designation as Resource Adequacy Resource. The Buyer may submit a written request
to the Seller to obtain the CAISO’s designation of the Facility as a Resource Adequacy Resource. Upon
receipt of such request, the Seller shall provide such information and undertake such steps as may be
required by the CAISO in order to complete such an assessment. If the Buyer makes such a request, then
the Buyer shall be responsible for the following: (1) any costs charged to the Seller by the CAISO as a
condition of applying for or receiving designation as a Resource Adequacy Resource, including any
deposits required during the study process or the cost of any related studies or deliverability assessments
performed by the CAISO; (2) the capital, installation, and maintenance costs of any additional equipment
required by the CAISO as a condition of receiving designation as a Resource Adequacy Resource; (3) the
costs of any Network Upgrades, as defined in the CAISO Tariff, as may be required by the CAISO,
provided, the Buyer shall receive any subsequent repayments from the CAISO or the Participating
Transmission Owner related to such upgrades; and (4) any charges or penalties assessed by the CAISO as a
consequence of the Facility’s designation as a Resource Adequacy Resource.
6.8 CAISO Charges. The Buyer shall be solely responsible for paying all costs and charges
associated with the receipt of Energy under this Agreement, at the Delivery Point, and for the transmission
and delivery of Energy from the Delivery Point to any other point downstream of the Delivery Point,
including transmission costs and charges, competition transition charges, applicable control area service
charges, transmission congestion charges, inadvertent energy flows, any other CAISO charges related to
the transmission of such Energy by the CAISO and any charge assessed or collected in the future pursuant
to any utility tariff or rate schedule, however defined, for transmission or transmission-related service
rendered by or for any transmission-owning or operating entity. The Seller will undertake any and all
actions reasonably needed to allow the Buyer to comply with any obligations, and minimize any potential
liability, under the CAISO tariff. If and to the extent that the Seller fails to comply with the notice
provision in Exhibit “PPA-C,” concerning Outages, or with its obligations as outlined in the previous
sentence, the Seller shall be wholly responsible for all imbalances, deviations, or any other CAISO charges
or penalties associated with such Outage or other CAISO Tariff obligation.
6.9 Inclusion in Metered Subsystem. At the option of the Buyer, the Facility may be
included within NCPA’s metered sub-system in connection with the scheduling of power over the CAISO
grid and related functions; provided, however, that such inclusion shall have no adverse effect on the
Facility’s operations or the Seller (or any such effect shall be fully mitigated by the Buyer). The Seller will
undertake any and all actions reasonably needed to allow the Buyer to comply with any obligations, and
040914 jrm 0180042 10
minimize any potential liability, under the CAISO Tariff; provided, that if such actions require any actions
beyond the giving of notice to be provided by the Buyer, then the Buyer shall reimburse the Seller for all
out-of-pocket costs and charges of such actions.
7.0 COMMERCIAL OPERATION DATE; REFUND OF RESERVATION DEPOSIT
7.1 Commercial Operation Date. The Facility shall achieve Commercial Operation by the
Commercial Operation Date deadline (the “Deadline”), which is one (1) year from the Effective Date.
7.2 Reservation Deposit. The Buyer acknowledges that, as of the Effective Date or other
date established by the Buyer, the Seller has provided the Reservation Deposit to the Buyer.
7.2.1 If the Commercial Operation Date occurs on or prior to the Deadline, the Buyer
shall refund to the Seller the Reservation Deposit without interest.
7.2.2 If the Commercial Operation Date commences within seventy (70) days of the
Deadline, the Seller, as liquidated damages and not as a penalty, shall relinquish its claim to a ten
percent (10%) portion of the amount of the Reservation Deposit for every full week transpiring
between the Deadline and the Commercial Operation Date, but the total amount to be relinquished
to the Buyer shall not exceed 100% of the Reservation Deposit.
7.2.3 If the Facility has not achieved Commercial Operation within seventy (70) days of
the Deadline, then the Buyer may terminate this Agreement without liability of either Party to the
other Party by giving written notice of termination to the Seller.
7.2.4 If the Seller gives notice of termination to terminate the Agreement before
Commercial Operation occurs, then the Buyer shall refund a percentage of the Reservation
Deposit equal to the following: the percentage to be refunded will equal A/B, where A equals the
number of days between the date of the Seller’s notice of termination, received by the Buyer, and
the Deadline, and B equals the number of days between the Effective Date and the Deadline.
7.3 Return of Reservation Deposit. The Buyer shall return to the Seller the Reservation
Deposit, without interest, in the event that (a) the Buyer furnishes written notice of the costs of
interconnection (defined in the Interconnection Agreement to include the costs related to the
Interconnection Facilities and Distribution Upgrades) to the Seller and (b) within thirty (30) days of receipt
of the notice regarding costs of interconnection, the Seller provides the Buyer with written notice that the
Seller does not intend to sign the Interconnection Agreement and does intend to proceed with the project.
8.0 REPRESENTATION AND WARRANTIES; COVENANTS
8.1 Representations and Warranties. On the Effective Date, each Party represents and
warrants to the other Party that:
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8.1.1 It is duly organized, validly existing and in good standing under the laws of the
jurisdiction of its formation;
8.1.2 The execution, delivery and performance of this Agreement is within its powers,
have been duly authorized by all necessary action and do not violate any of the terms and
conditions in its governing documents, any contracts to which it is a party or any law, rule,
regulation, order or the like applicable to it;
8.1.3 This Agreement and each other document executed and delivered in accordance
with this Agreement constitutes its legally valid and binding obligation enforceable against it in
accordance with its terms;
8.1.4 It is not bankrupt and there are no proceedings pending or being contemplated by it
or, to its knowledge, threatened against it which would result in it being or becoming bankrupt;
8.1.5 There is not pending or, to its knowledge, threatened against it or any of its
affiliates, if any, any legal proceedings that could materially adversely affect its ability to perform
its obligations under this Agreement; and
8.1.6 It is acting for its own account, has made its own independent decision to enter into
this Agreement and as to whether this Agreement is appropriate or proper for it based upon its
own judgment, is not relying upon the advice or recommendations of the other Party in so doing,
and is capable of assessing the merits of, and understands and accepts, the terms, conditions and
risks of this Agreement.
8.2 General Covenants. Each Party covenants that, during the Term:
8.2.1 It shall continue to be duly organized, validly existing and in good standing under
the laws of the jurisdiction of its formation;
8.2.2. It shall maintain (or obtain from time to time as required, including through
renewal, as applicable) all regulatory authorizations necessary for it to legally perform its
obligations under this Agreement; and
8.2.3 It shall perform its obligations under this Agreement in a manner that does not
violate any of the terms and conditions in its governing documents, any contracts to which it is a
party or any law, rule, regulation, order or the like applicable to it.
8.3 Covenant by Seller. The Seller covenants that, during the Term:
8.3.1 If the Eligible Renewal Energy Resource or the Facility is considered an ‘eligible
qualifying facility’ under applicable law and has a net power production capacity of greater than
one (1) megawatt, then the Seller covenants and agrees that, within thirty (30) days of the
Effective Date or longer period allowed by law, it will complete and file Form No. 556 or other
similar form with FERC as the same may be required by law.”
9.0 GENERAL CONDITIONS
9.1 Facility Care and Interconnection. During the Delivery Term, the Seller shall execute
and maintain an “Interconnection Agreement” with the Buyer, whereby the Seller shall pay and be
responsible for designing, installing, operating, and maintaining the Facility in accordance with all
applicable laws and regulations and shall comply with all applicable Buyer, WECC, FERC, and NERC
requirements, including applicable interconnection and metering requirements. The Seller shall also comply
with any modifications, amendments or additions to the applicable tariff and protocols. The Seller also shall
arrange and pay independently for any and all necessary costs under the Interconnection Agreement with
the Buyer.
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9.2 Standard of Care. The Seller shall: (a) operate and maintain the Facility in a safe manner
in accordance with its existing applicable interconnection agreements, manufacturer’s guidelines, warranty
requirements, Good Utility Practice, industry norms (including standards of the National Electrical Code,
Institute of Electrical and Electronic Engineers, American National Standards Institute, and the
Underwriters Laboratories, and in accordance with the requirements of all applicable federal, state and
local laws and the National Electric Safety Code, as such laws and code norms may be amended from time
to time; (b) obtain any governmental authorizations and permits required for the construction and operation
thereof. The Seller shall make any necessary and commercially reasonable repairs with the intent of
optimizing the availability of electricity to the Buyer. The Seller shall reimburse the Buyer for any and all
losses, damages, claims, penalties, or liability that the Buyer incurs as a result of the Seller’s failure to
obtain or maintain any governmental authorizations and permits required for the construction and operation
of the Facility throughout the Term.
9.3 Access Rights. The Buyer, its authorized agents, employees and inspectors shall have the
right to inspect the Facility on reasonable advance notice during normal business hours and for any
purposes reasonably connected with this Agreement or the exercise of any and all rights secured to the
Buyer by law, including, without limitation, its ordinances, resolutions, tariffs, utility rate schedules or
utilities rules and regulations. The Buyer shall make reasonable efforts to coordinate its emergency
activities with the safety and security departments, if any, of the Facility’s operator. The Seller shall keep
the Buyer advised of current procedures for communicating with the Facility operator’s safety and security
departments.
9.4 Protection of Property. Each Party shall be responsible for protecting its own facilities
from possible damage resulting from electrical disturbances or faults caused by the operation, faulty
operation, or non-operation of the other Party’s facilities and such other Party shall not be liable for any
such damages so caused.
9.5 Insurance. During the Term, the Seller shall obtain and maintain and otherwise comply
with the insurance requirements, as set forth in Exhibit “PPA-E.”
9.6 Buyer’s Performance Excuse; Seller Curtailment.
9.6.1 Buyer Performance Excuse. The Buyer shall not be obligated to accept or pay for
the Output during Force Majeure that affects the Buyer’s ability to accept Energy.
9.6.2 Seller Curtailment. The Buyer may require the Seller to interrupt or reduce
deliveries of Energy: (a) whenever necessary to construct, install, maintain, repair, replace,
remove, or investigate any of its equipment or part of the Buyer’s Distribution System or facilities;
or (b) if the Buyer determines that curtailment, interruption, or reduction is necessary due to a
System Emergency, as defined in the CAISO Tariff, an unplanned outage on Buyer’s Distribution
System, Force Majeure, or compliance with Good Utility Practice.
9.7 Notices of Outages. Whenever possible, the Buyer shall give the Seller reasonable notice
of the possibility that interruption or reduction of deliveries may be required.
9.8 No Additional Loads. The Seller shall not connect any loads not associated with Station
Service Loads at the location of the Facility in a manner that would reduce Energy provided from the
Facility to the Buyer hereunder. The Seller shall obtain separate retail electric service under the Buyer’s
rate schedules for the service of such additional loads.
10.0 FORCE MAJEURE
10.1 Effect of Force Majeure. A Party shall be excused from its performance under this
Agreement to the extent, but only to the extent, that its performance hereunder is prevented by Force
Majeure. A Party claiming Force Majeure shall exercise due diligence to overcome or mitigate the effects
040914 jrm 0180042 13
of Force Majeure; provided, that nothing in this Agreement shall be deemed to obligate the Party affected
by Force Majeure (a) to forestall or settle any strike, lock-out or other labor dispute against its will; or (b)
for Force Majeure affecting the Seller only, to purchase electric power to cure Force Majeure.
10.2 Remedial Action. A Party shall not be liable to the other Party if the Party is prevented
from performing its obligations hereunder due to Force Majeure. The Party rendered unable to fulfill an
obligation by reason of Force Majeure shall take all action necessary to remove such inability with all due
speed and diligence. The nonperforming Party shall be prompt and diligent in attempting to remove the
cause of its failure to perform, and nothing herein shall be construed as permitting that Party to continue to
fail to perform after that cause has been removed. Notwithstanding the foregoing, the existence of Force
Majeure shall not excuse any Party from its obligations to make payment of amounts due hereunder.
10.3 Notice of Force Majeure. In the event of any delay or nonperformance resulting from
Force Majeure, the Party directly impacted by Force Majeure shall, as soon as practicable under the
circumstances, notify the other Party, in writing, of the nature, cause, date of commencement thereof and
the anticipated extent of any delay or interruption in performance.
10.4 Termination Due to Force Majeure. If a Party will be prevented from performing its
material obligations under this Agreement for an estimated period of twelve (12) consecutive months or
longer due to Force Majeure, then the unaffected Party may terminate this Agreement, without liability of
either Party to the other, upon thirty (30) Days’ prior written notice at any time during Force Majeure.
11.0 INDEMNITY
11.1 Indemnity by the Seller. The Seller shall indemnify, defend, and hold harmless the
Buyer, its elected and appointed officials, directors, officers, employees, agents, and representatives against
and from any and all losses, claims, demands, liabilities and expenses, actions or suits, including reasonable
costs and attorney’s fees, resulting from, or arising out of or in any way connected with claims by third
parties associated with (A) (i) Energy delivered at the Delivery Point; (ii) the Seller’s operation and/or
maintenance of the Facility; or (iii) the Seller’s actions or inactions with respect to this Agreement, and (B)
any loss, claim, action or suit, for or on account of injury, bodily or otherwise, to, or death of, persons, or
for damage to or destruction of property belonging to the Buyer or other third party, excepting only such
loss, claim, action or suit as may be caused solely by the willful misconduct or gross negligence of the
Buyer, its agents, employees, directors or officers.
11.2 Indemnity by the Buyer. The Buyer shall indemnify, defend, and hold harmless the
Seller, its directors, officers, employees, agents, and representatives against and from any and all losses,
claims, demands, liabilities and expenses, actions or suits, including reasonable costs and attorney’s fees
resulting from, or arising out of or in any way connected with claims by third parties associated with acts of
the Buyer, its officers, employees, agents, and representatives, relating to: (A) Energy delivered by the
Seller under this Agreement after the Delivery Point, and (B) any loss, claim, action or suit, for or on
account of injury, bodily or otherwise, to, or death of, persons, or for damage to or destruction of property
belonging to the Seller or other third party, excepting only such loss, claim, action or suit as may be caused
solely by the willful misconduct or gross negligence of the Seller, its agents, employees, directors or
officers.
12.0 LIMITATION OF DAMAGES
EXCEPT AS OTHERWISE PROVIDED IN THIS AGREEMENT THERE IS NO WARRANTY
OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, AND ANY AND ALL
IMPLIED WARRANTIES ARE DISCLAIMED. LIABILITY SHALL BE LIMITED TO DIRECT
ACTUAL DAMAGES ONLY, SUCH DIRECT ACTUAL DAMAGES SHALL BE THE SOLE AND
EXCLUSIVE REMEDY AND ALL OTHER REMEDIES OR DAMAGES AT LAW OR IN EQUITY
ARE WAIVED UNLESS EXPRESSLY HEREIN PROVIDED. NEITHER PARTY SHALL BE LIABLE
FOR CONSEQUENTIAL, INCIDENTAL, PUNITIVE, EXEMPLARY OR INDIRECT DAMAGES,
LOST PROFITS OR OTHER BUSINESS INTERRUPTION DAMAGES, BY STATUTE, IN TORT OR
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CONTRACT, UNDER ANY INDEMNITY PROVISION OR OTHERWISE. UNLESS EXPRESSLY
HEREIN PROVIDED, AND SUBJECT TO THE PROVISIONS OF SECTION 11 (INDEMNITY), IT IS
THE INTENT OF THE PARTIES THAT THE LIMITATIONS HEREIN IMPOSED ON REMEDIES
AND THE MEASURE OF DAMAGES BE WITHOUT REGARD TO THE CAUSE OR CAUSES
RELATED THERETO, INCLUDING THE NEGLIGENCE OF ANY PARTY, WHETHER SUCH
NEGLIGENCE BE SOLE, JOINT OR CONCURRENT, OR ACTIVE OR PASSIVE.
13.0 NOTICES
Notices shall, unless otherwise specified herein, be given, in writing, and may be delivered by
hand delivery, United States mail, overnight courier service, facsimile or electronic messaging (e-mail) to
the addresses set forth in Exhibit “PPA-F.”. Whenever this Agreement requires or permits delivery of a
“notice” (or requires a Party to “notify”), the Party with such right or obligation shall provide a written
communication in the manner specified below. A notice sent by facsimile transmission or electronic mail
will be recognized and shall be deemed received on the Business Day on which such notice was transmitted
if received before 5 p.m. Pacific Time (and if received after 5 p.m., on the next Business Day) and a notice
by overnight mail or courier shall be deemed to have been received two (2) Business Days after it was sent
or such earlier time as is confirmed by the receiving Party unless it confirms a prior oral communication, in
which case any such notice shall be deemed received on the day sent. A Party may change its addresses by
providing notice of same in accordance with this provision. A Party may request a change to Exhibit “PPA-
F” as necessary to keep the information current.
14.0 TERM, TERMINATION EVENT AND TERMINATION
14.1 Term. The Term shall commence upon the execution by the duly authorized representatives
of each of the Parties, and shall remain in effect until the conclusion of the Delivery Term, unless
terminated sooner pursuant to the terms and conditions of this Agreement. All indemnity rights shall
survive the termination of this Agreement for twelve (12) months.
14.2 Delivery Term. The Delivery Term of the Agreement is _______ years and is defined as
the period of time from the Commercial Operation Date through the expiration or early
termination of this Agreement.
14.3 Termination Event.
14.3.1 The Buyer shall have the right, but not the obligation, to terminate this Agreement
upon the occurrence of any of the following, each of which is a “Termination Event”: (a) The
Facility has not achieved Commercial Operation within seventy (70) days following the Deadline;
(b) After the Commercial Operation Date, the Seller has not sold or delivered Energy from the
Facility to the Buyer for a period of twelve (12) consecutive months; (c) If the Facility does not
obtain RPS Certification within six (6) months of the Commercial Operation Date and maintain
RPS Certification as required by Section 3.2; or (d) The Seller breaches any other material
obligation of this Agreement.
14.3.2 The Seller shall have the right, but not the obligation, to terminate this Agreement
upon the occurrence of any of the following, each of which is a “Termination Event”: (a) The
Buyer fails to make a payment due and payable under this Agreement within thirty (30) days after
written notice that such payment is due; or (b) The Buyer breaches any other material obligation
of this Agreement. The preceding sentence notwithstanding, the Seller may terminate this
Agreement without cause at any time prior to the Commercial Operation Date, subject to the
provisions of Section 7 of this Agreement.
14.4 Time to Cure. None of the events described in Section 14.2.1 and 14.2.2 shall constitute
a Termination Event if the Buyer or the Seller cures the event, failure, or circumstance within thirty (30)
days after receipt of written notification sent by the other Party, seeking termination, or such longer period
as may be necessary to cure so long as the Party subject to the Terminating Event is exercising diligent
efforts to cure.
14.5 Termination.
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14.5.1 Declaration of a Termination Event. If a Termination Event has occurred and is
continuing, the Party with the right to terminate shall have the right to: (a) send notice, designating
a day, no earlier than thirty (30) days after such notice is deemed to be received (as provided in
Section 13), as an early termination date of this Agreement (the “Early Termination Date”), unless
the Seller has timely communicated with the Buyer and the Parties have agreed to resolve the
circumstances giving rise to the Termination Event; (b) accelerate all amounts owing between the
Parties; and (c) terminate this Agreement and end the Delivery Term effective as of the Early
Termination Date.
14.5.2 Release of Liability for Termination Event. Upon termination of this Agreement
pursuant to this section neither Party shall be under any further obligation or subject to liability
hereunder, except with respect to the indemnity provision in Section 11 hereof, which shall remain
in effect for a period of 12 months following the Early Termination Date.
14.6 No Limitation on Damages. Nothing in this Agreement shall be deemed or construed to
limit a Party’s right to recover damages from the other Party, except as otherwise provided in this
Agreement.
15.0 RELEASE OF DATA
Except as may be exempt from disclosure under applicable law, the Seller authorizes the Buyer to
release to any regulatory authority having jurisdiction over the Facility or a Party, or to any request made
pursuant to the California Constitution or the California Public Records Act, information regarding the
Facility, including the Seller’s name and location, operational characteristics, the Term of this Agreement,
the Facility resource type, the scheduled Commercial Operation Date, the actual Commercial Operation
Date, the Contract Capacity, payments made to the Seller and Energy production information. The Seller
acknowledges that this information may be made publicly available.
16.0 ASSIGNMENT
Neither Party shall assign this Agreement or its rights hereunder without the prior written consent
of the other Party, which consent shall not be unreasonably withheld.
16.1 Upon the written request of the Seller, the Buyer will execute a “Lender Consent and
Agreement” between the Seller and the Seller’s lender(s), if any, in the form acceptable to the Parties;
provided, for illustration purposes only, an exemplar is attached hereto as Exhibit “PPA-G.”
16.2 Notwithstanding the foregoing, no Consent and Agreement shall be required for:
16.2.1 Any assignment or transfer of this Agreement by the Seller to an affiliate of the
Seller, provided that such affiliate’s creditworthiness is equal to or better than that of Seller, as
reasonably determined by the non-assigning or non-transferring Party; or
16.2.2 Any assignment or transfer of this Agreement by the Seller or the Buyer to a
person succeeding to all or substantially all of the assets of such Party, provided that such person’s
creditworthiness is equal to or greater than that of such Party, as reasonably determined by the
non-assigning or non-transferring Party.
16.2.3 Notification of any assignment or transfer of this Agreement under Section 16.2.1
or 16.2.2 shall be given to the non-assigning or non-transferring Party in accordance with Exhibit
“PPA-F.”
17.0 APPLICABLE LAW, VENUE, ATTORNEYS’ FEES, AND INTERPRETATION
This Agreement will be governed by and construed in accordance with the laws of the State of
California. The Parties will comply with applicable laws pertaining to their obligations arising under this
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Agreement. 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 or in the United States District Court for the Northern District
of California in the County of Santa Clara, State of California. 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. If a court of competent jurisdiction finds or rules that any provision of this
Agreement, the Exhibits, or any amendment thereto is void or unenforceable, the unaffected provisions of
this Agreement, the Exhibits, or any amendment thereto will remain in full force and effect. The Parties
agree that the normal rule of construction to the effect that any ambiguity is to be resolved against the
drafting party will not be employed in the interpretation of this Agreement or any Exhibit or any
amendment thereof.
18.0 SEVERABILITY
If any provision in this Agreement is determined to be invalid, void or unenforceable by any court
having jurisdiction, such determination shall not invalidate, void, or make unenforceable any other
provision, agreement or covenant of this Agreement and the Parties shall use their best efforts to modify
this Agreement to give effect to the original intention of the Parties.
19.0 COUNTERPARTS; INTERPRETATION OF CONFLICTING PROVISIONS
This Agreement may be executed in one or more counterparts, each of which shall be deemed an
original and all of which shall be deemed one and the same Agreement. Delivery of an executed
counterpart of this Agreement by facsimile or portable document format (“PDF”) transmission will be
deemed as effective as delivery of an originally executed counterpart. Each Party delivering an executed
counterpart of this Agreement by facsimile or PDF transmission will also deliver an originally executed
counterpart, but the failure of any Party to deliver an originally executed counterpart of this Agreement will
not affect the validity or effectiveness of this Agreement. In the event of a conflict between the Agreement
and any, some or all of the Exhibits, the document imposing the more specific duty or obligation will
prevail.
20.0 GENERAL
No amendment to or modification of this Agreement shall be enforceable unless reduced to writing and
executed by both Parties. This Agreement shall not impart any rights enforceable by any third party other
than a permitted successor or assignee bound to this Agreement. Waiver by a Party of any default by the
other Party shall not be construed as a waiver of any other default. The headings used herein are for
convenience and reference purposes only.
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21. EXHIBITS
The following exhibits shall be deemed incorporated in and made a part of this Agreement.
Exhibit “PPA-A” - Facility Description, Prices, and Reservation Deposit
Exhibit “PPA-B” - Commercial Operation Date Confirmation Letter
Exhibit “PPA-C” - Scheduling and Outage Notification Procedure
Exhibit “PPA-D” - Green Attributes Reporting and Conveyance Procedures
Exhibit “PPA-E” - Insurance Requirements
Exhibit “PPA-F” - Notices
Exhibit “PPA-G” - Form of Lender Consent and Agreement
IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed by their
authorized representatives as of the Effective Date.
CITY OF PALO ALTO SELLER
APPROVED AS TO FORM
Senior Deputy City Attorney
APPROVED
City Manager
Director of Utilities
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EXHIBIT “PPA-A”
Facility Description, Rates, and Reservation Deposit
Program Rates
Contract Term: Twenty (20) or twenty-five (25) years
Contract rate: $0.165 per kWh for solar resources
$0.093 per kWh for non-solar resources, 20 year contract term
$0.094 per kWh for non-solar resources, 25 year contract term
Pre-certification rate: $0.08 per kWh
Reservation Deposit
Reservation Deposit ($20/kW of Contract Capacity) $
Service address:
Facility Description:
Contract Capacity: kW (CEC-AC), based on solar array rating (Panel rated
output at PV USA test conditions x inverter efficiency)
Facility primary fuel/technology:
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EXHIBIT “PPA-B”
Commercial Operation Date Confirmation Letter
In accordance with the terms of the Power Purchase Agreement (Palo Alto CLEAN), dated
(the “Agreement”) by and between the City of Palo Alto, as the Buyer, and
, as the Seller, this Confirmation Letter serves to
document the Parties’ agreement that (i) the conditions precedent to the occurrence of the Commercial
Operation Date have been satisfied, and (ii) the Buyer has received Energy, as specified in the Agreement,
as of , . The actual installed Contract Capacity is kW.
This Confirmation Letter shall confirm the Commercial Operation Date, as defined in the Agreement, as of
the date referenced in the preceding sentence.
IN WITNESS WHEREOF, each Party has caused this letter to be duly executed by its authorized
representative as of the date of last signature provided below:
Buyer Seller
By: By:
Name: Name:
Title: Director of Utilities Title:
Date: Date:
In recognition of the Commercial Operation Date relative to the Effective Date of the Agreement by
and between the Buyer and the Seller, the Seller hereby calculates the amount to return, if any, of the
Seller’s deposit, as follows:
Original Reservation Deposit Amount: $
Commercial Operation Date Deadline:
□ Commercial Operation Date is prior to Deadline
□ Commercial Operation Date occurred weeks following the Deadline, meaning that %
of the Reservation Deposit is relinquished by Seller per Section 7.2.2 of the Power Purchase
Agreement.
Amount (if any) of Reservation Deposit to return to the Seller is: $
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EXHIBIT “PPA-C”
Scheduling and Outage Notification Procedure
C.1 Applicability. This Exhibit” PPA-C” shall apply if the Facility is subject to Section 6.0
of this Agreement.
C.2 Annual Operations Forecast
C.2.1 By the tenth (10th) day September of each calendar year, the Seller will provide
NCPA with an annual operations forecast detailing hourly expected generation and all proposed
planned Outages for the next calendar year. The annual operations forecast for the calendar year
shall be provided by not later than ninety (90) days prior to the scheduled Commercial Operation
Date of the Generating Facility.
C.2.2 NCPA may request modifications to the annual operations forecast at any time,
and the Seller shall use good faith efforts to accommodate the requested modifications.
C.2.3 The Seller shall not conduct Planned Outages at times other than as set forth in
its annual operations forecast, unless approved in advance by NCPA, which approval shall not be
withheld or delayed unreasonably.
C.2.4 The Seller shall not schedule or conduct Planned Outages from 12:00 p.m.
through 7:00 p.m. Pacific Time during the months of June through October.
C.3. Short Term Operations Forecasts
C.3.1. Quarterly Operations Forecast
C.3.1.1 By the fifth (5th) day of January, April and July of each Contract Year,
the Seller shall provide a calendar quarter-operations forecast by hour of expected
generation and all proposed Planned Outages for the next full calendar quarter and the
twelve (12) months following that calendar quarter. As an example, by January 5, 2014,
the Seller would provide a calendar quarter-operations forecast by hour of expected
generation for the period, April 1, 2014 through June 30, 2014, and identify all proposed
Planned Outages for the period, April 1, 2014 through June 30, 2015.
C.3.1.2 NCPA will approve or require modifications to the proposed calendar
quarter-operations forecast within ten (10) days of receipt of the forecast.
C.3.1.3 If required by NCPA, the Seller will provide a modified calendar
quarter-operations forecast within seven (7) days after receipt of required modifications
from NCPA.
C.3.2 Weekly Update
C.3.2.1 By 14:00 of each Wednesday, the Seller shall provide an electronic
update, in a format specified by NCPA, to the calendar quarter-operations forecast for the
following seven (7) days (Thursday through the next Wednesday).
C.3.2.2 The weekly update shall include hourly expected generation and all
proposed planned Outages for the relevant seven (7) day period.
C.4 Outage Detail for Annual and Short Term Operations Forecasts. Outage information
provided by the Seller shall include, at a minimum, the start time and stop time of the Outage, capacity out
of service (kW), the equipment that is or will be out of service, and the reason for the Outage.
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C.5 General Scheduling Protocols
C.5.1 Daily Modifications to Forecasts. Unless otherwise mutually agreed, the Seller
may make changes to the weekly update to the calendar quarter-operations forecast by providing
such changes to NCPA prior to 08:00 of the day that is two (2) Business Days before the active
scheduling day as determined by the WECC prescheduling calendar. Example: For power that is
scheduled for generation or delivery on Friday, March 29, 2014, changes must be submitted to
NCPA by 08:00 on Wednesday, March 27, 2014.
C.5.2 Hourly Modifications to Active Schedules. Unless otherwise mutually agreed,
the Seller may request changes to active schedules by providing such changes to NCPA with a
minimum of four (4) hours’ notice prior to the applicable CAISO market deadline (e.g. Hour
Ahead Scheduling Process (“HASP”) Scheduling deadline, as defined in the CAISO Tariff).
Active day Schedule changes are not binding. Changes to active Schedules are limited to two (2)
changes per day, excluding forced Outages, unless otherwise agreed to between the Parties. One
request for a Schedule change, of one-hour or multiple-hours duration, constitutes one Schedule
change. Example: For power that is scheduled for generation or delivery in hour ending 15:00 (for
the period from 14:01 to 15:00), changes must be submitted to NCPA by 10:00.
C.5.3. Unforeseen Circumstances. At the Seller’s request, NCPA may, but is not
required to, modify the Schedules for the Generation Facility Output due to unforeseen
circumstances in accordance with the above scheduling timeline constraints described in this
Exhibit PPA-C.
C.5.4. Absence of Forecasts. In the absence of forecasts and schedules as required by
this Agreement or this Exhibit, NCPA shall utilize the most current information the Seller
provides in the development and submission of Schedules.
C.6 Outage Reporting Protocols
C.6.1. Notification. The Seller shall notify NCPA of all planned or forced Outages of
the Generating Facility to ensure compliance with the CAISO Outage Coordination and
Enforcement Protocols.
C.6.1.1 Outage information provided by the Seller shall include, at a minimum,
the start time and stop time of the Outage, Capacity out of service (kW), equipment out of
service, and the reason for the Outage.
C. 6.1.2 Seller shall provide the Planned Outages not included in the annual
operations forecast, the calendar quarter-operations forecast, or the weekly update, to
NCPA at least four (4) Business Days prior to the start of the requested outage.
C. 6.1.3 At any time prior to the start of a Planned Outage, the CAISO may
deny the Outage due to a System Emergency (as defined in the CAISO Tariff) or as
otherwise permitted under the CAISO Tariff. If NCPA receives notice that the CAISO
has denied an Outage in accordance with the CAISO Tariff, NCPA will notify the Seller
as soon as possible and the Seller shall modify the planned Outage as required by the
CAISO.
C.6.2 Commencement of an Outage. The Seller shall not begin any Planned Outage
without the prior approval of NCPA and the CAISO.
C.6.3 Forced Outages
C.6.3.1 The Seller shall report the Forced Outages to NCPA within twenty (20)
040914 jrm 0180042 22
minutes of such Outages.
C.6.3.2 The Seller’s notice of a Forced Outage sent to NCPA shall include the
reason for the Outage (if known), expected duration of the Outage, and the Capacity
reduction.
C.6.3.3 By the end of the next Business Day following the day on which a
Forced Outage has occurred, the Seller shall provide to NCPA a detailed written report,
specifying the reason for the Outage, expected duration of such Outage, capacity
reduction, and actions taken to mitigate such Outage.
C.6.4 Return to Service. The Seller shall notify NCPA as soon as possible, but in any
case before the Generating Facility is returned to service.
C.7 Notices. All Scheduling notices and Schedules shall be submitted to NCPA by phone,
fax or email, or other means as may be mutually agreed by the Parties, to the persons designated in Exhibit
“PPA-F.”
C.8 Changes in Scheduling and Outage Procedure. The Buyer shall revise Exhibit “PPA-C,”
or, as appropriate, give written notice to the Seller regarding the revision, and issue a new Exhibit
“PPA-C,” which shall then become part of the Agreement to reflect changes in the scheduling and outage
notification procedure.
040914 jrm 0180042 23
EXHIBIT “PPA-D”
Green Attributes Reporting and Conveyance Procedures
D.1 Additional Definitions for the Conveyance of Green Attributes
D.1.1 “Certificate Transfers” means the process, as described in the WREGIS
Operating Rules, whereby a WREGIS account holder may request that WREGIS Certificates from
a specific generating unit shall be directly deposited to another WREGIS account.
D.1.2 “WREGIS Certificates” means a certificate created within the WREGIS system
that represents all Renewable and Green Attributes from one MWh of electricity generation from
an Eligible Renewable Energy Resource that is registered with WREGIS.
D.1.3 “WREGIS Operating Rules” means the document published by WREGIS that
governs the operation of the WREGIS system for registering, tracking, and conveying, among
others, RECs produced from Eligible Renewable Energy Resources that shall be registered with
WREGIS.
D.1.4 “WREGIS” means Western Renewable Energy Generation Information System.
D.2 RECs. Green Attributes shall be conveyed by the Seller to the Buyer through RECs,
which shall be registered tracked and conveyed to the Buyer, using WREGIS.
D.3 WREGIS Registration. Prior to the Commercial Operation Date, the Buyer will register
the Facility in the Buyer’s WREGIS account on behalf of the Seller. The Buyer shall charge back to the
Seller any costs of registering and maintaining the registration of the Facility with WREGIS. The Seller
shall provide to the Buyer any documents required by WREGIS and assign the Seller’s rights to register the
Facility in WREGIS, using agreements provided by WREGIS.
D.4 B u yer ’s W REGI S Acco unt . The Buyer shall, at its sole expense, establish and maintain
the Buyer’s WREGIS account sufficient to accommodate the WREGIS Certificates produced by the output
of the Facility. The Buyer shall be responsible for all expenses associated with (A) establishing and
maintaining the Buyer’s WREGIS Account, and (B) subsequently transferring or retiring WREGIS
Certificates.
D.5 Qualified Reporting Entity. The Buyer shall be the Qualified Reporting Entity (as such
term is defined by WREGIS) for the Facility, and shall be responsible for providing the metered Output
data to WREGIS.
D.6 Reporting of Environmental Attributes. In lieu of the Seller’s transfer of the WREGIS
Certificates using Certificate Transfers from the Seller’s WREGIS account to the Buyer’s WREGIS
account, the Buyer shall report the Facility as being held directly in its WREGIS account, which will
preclude the Seller from reporting the Facility in its own WREGIS account.
D.6.1 By avoiding the use of Certificate Transfers, there will be no transaction costs to
the Seller or the Buyer for the Certificate Transfers that would otherwise be used.
D.6.2 WREGIS Certificates for the Facility will be created on a calendar month basis
in accordance with the certification procedure established by the WREGIS Operating Rules in an
amount equal to the Energy generated by the Project and delivered to the Buyer in the same
calendar month.
D.6.3 WREGIS Certificates will only be created for whole MWh amounts of energy
generated. Any fractional MWh amounts (i.e., kWh) will be carried forward until sufficient
generation is accumulated for the creation of a WREGIS Certificate and all such accumulated
040914 jrm 0180042 24
MWh of Environmental Attributes will then be available to Buyer.
D.6.4 If a WREGIS Certificate Modification (as such term is defined by WREGIS)
will be required to reflect any errors or omissions regarding the Green Attributes from the Facility,
then the Buyer will manage the submission of the WREGIS Certificate Modification.
D.6.5 Due to the expected delay in the creation of WREGIS Certificates relative to the
timing of invoice payments under Section 2, the Buyer will normally be making an invoice
payment for the Output for a given month in accordance with Section 2 before the WREGIS
Certificates for such month may be created in the Buyer’s WREGIS account. Notwithstanding this
delay, the Buyer shall have all right and title to all such WREGIS Certificates upon payment to the
Seller in accordance with Section 2.
D.7 Changes in Green Attributes Reporting and Conveyance Procedures. The Buyer shall
revise this Exhibit “PPA-D,” as appropriate, give written notice to the Seller regarding the revision, and
issue a new Exhibit “PPA-D,” which shall then become part of this Agreement in the event that:
D.7.1 WREGIS changes the WREGIS Operating Rules (as defined by WREGIS) after
the Effective Date or applies the WREGIS Operating Rules in a manner inconsistent with this
Exhibit “PPA-D” after the Effective Date; or,
D.7.2 WREGIS is replaced as the primary method that the Buyer uses for conveyance
of Green Attributes, or additional methods to convey all Green Attributes, are required.
040914 jrm 0180042 25
EXHIBIT “PPA-E”
Insurance Requirements
CONTRACTORS TO THE CITY OF PALO ALTO (CITY), AT THEIR SOLE EXPENSE, WILL FOR THE TERM OF THE
CONTRACT OBTAIN AND MAINTAIN INSURANCE IN THE AMOUNTS FOR THE COVERAGE SPECIFIED BELOW,
AFFORDED BY COMPANIES WITH A BEST’S KEY RATING OF A-:VII, OR HIGHER, LICENSED OR
AUTHORIZED TO TRANSACT INSURANCE BUSINESS IN THE STATE OF CALIFORNIA.
AWARD IS CONTINGENT ON COMPLIANCE WITH CITY’S INSURANCE REQUIREMENTS, AS SPECIFIED,
BELOW:
REQUIRED
TYPE OF COVERAGE
REQUIREMENT
MINIMUM LIMITS
EACH
OCCURRENCE AGGREGATE
YES
YES
WORKER’S COMPENSATION
AUTOMOBILE LIABILITY
STATUTORY
STATUTORY
YES
COMMERCIAL GENERAL
LIABILITY, INCLUDING
PERSONAL INJURY, BROAD FORM
PROPERTY DAMAGE BLANKET
CONTRACTUAL, AND FIRE LEGAL
LIABILITY
BODILY INJURY
PROPERTY DAMAGE
BODILY INJURY & PROPERTY DAMAGE
COMBINED.
$1,000,000
$1,000,000
$1,000,000
$2,000,000
$2,000,000
$2,000,000
YES
COMPREHENSIVE AUTOMOBILE
LIABILITY, INCLUDING, OWNED,
HIRED, NON-OWNED
BODILY INJURY
- EACH PERSON
- EACH OCCURRENCE
PROPERTY DAMAGE
BODILY INJURY AND PROPERTY
DAMAGE, COMBINED
$1,000,000
$1,000,000
$1,000,000
$1,000,000
$1,000,000
$1,000,000
$1,000,000
$1,000,000
$1,000,000
$1,000,000
NO
PROFESSIONAL LIABILITY,
INCLUDING, ERRORS AND
OMISSIONS, MALPRACTICE
(WHEN APPLICABLE), AND
NEGLIGENT PERFORMANCE
ALL DAMAGES
$1,000,000
YES
THE CITY OF PALO ALTO IS TO BE NAMED AS AN ADDITIONAL INSURED: PROPOSER, AT ITS SOLE COST AND
EXPENSE, SHALL OBTAIN AND MAINTAIN, IN FULL FORCE AND EFFECT THROUGHOUT THE ENTIRE TERM OF ANY RESULTANT AGREEMENT, THE INSURANCE COVERAGE HEREIN DESCRIBED, INSURING NOT ONLY PROPOSER AND ITS SUBCONSULTANS, IF ANY, BUT ALSO, WITH THE EXCEPTION OF WORKERS’ COMPENSATION, EMPLOYER’S
LIABILITY AND PROFESSIONAL INSURANCE, NAMING AS ADDITIONAL INSURES CITY, ITS COUNCIL MEMBERS,
OFFICERS, AGENTS, AND EMPLOYEES.
I. INSURANCE COVERAGE MUST INCLUDE:
A. A PROVISION FOR A WRITTEN THIRTY DAY ADVANCE NOTICE TO CITY OF CHANGE IN COVERAGE
OR OF COVERAGE CANCELLATION; AND
B. A CONTRACTUAL LIABILITY ENDORSEMENT PROVIDING INSURANCE COVERAGE FOR CONTRACTOR’S
AGREEMENT TO INDEMNIFY CITY – SEE, SAMPLE AGREEMENT FOR SERVICES.
II. SUBMIT CERTIFICATE(S) OF INSURANCE EVIDENCING REQUIRED COVERAGE, OR COMPLETE THIS
SECTION AND IV THROUGH V, BELOW.
A. NAME AND ADDRESS OF COMPANY AFFORDING COVERAGE (NOT AGENT OR BROKER):
B. NAME, ADDRESS, AND PHONE NUMBER OF YOUR INSURANCE AGENT/BROKER:
040914 jrm 0180042 26
C. POLICY NUMBER(S):
D. DEDUCTIBLE AMOUNT(S) (DEDUCTIBLE AMOUNTS IN EXCESS OF $5,000 REQUIRE CITY’S PRIOR
APPROVAL):
III. AWARD IS CONTINGENT ON COMPLIANCE WITH CITY’S INSURANCE REQUIREMENTS, AND
PROPOSER’S SUBMITTAL OF CERTIFICATES OF INSURANCE EVIDENCING COMPLIANCE WITH THE
REQUIREMENTS SPECIFIED HEREIN.
IV. ENDORSEMENT PROVISIONS, WITH RESPECT TO THE INSURANCE AFFORDED TO “ADDITIONAL
INSURES”
A. PRIMARY COVERAGE
WITH RESPECT TO CLAIMS ARISING OUT OF THE OPERATIONS OF THE NAMED INSURED, INSURANCE AS
AFFORDED BY THIS POLICY IS PRIMARY AND IS NOT ADDITIONAL TO OR CONTRIBUTING WITH ANY
OTHER INSURANCE CARRIED BY OR FOR THE BENEFIT OF THE ADDITIONAL INSURES.
B. CROSS LIABILITY
THE NAMING OF MORE THAN ONE PERSON, FIRM, OR CORPORATION AS INSURES UNDER THE POLICY
SHALL NOT, FOR THAT REASON ALONE, EXTINGUISH ANY RIGHTS OF THE INSURED AGAINST ANOTHER,
BUT THIS ENDORSEMENT, AND THE NAMING OF MULTIPLE INSUREDS, SHALL NOT INCREASE THE TOTAL
LIABILITY OF THE COMPANY UNDER THIS POLICY.
C. NOTICE OF CANCELLATION
1. IF THE POLICY IS CANCELED BEFORE ITS EXPIRATION DATE FOR ANY REASON OTHER THAN THE
NON-PAYMENT OF PREMIUM, THE ISSUING COMPANY SHALL PROVIDE CITY AT LEAST A THIRTY (30) DAY
WRITTEN NOTICE BEFORE THE EFFECTIVE DATE OF CANCELLATION.
2. IF THE POLICY IS CANCELED BEFORE ITS EXPIRATION DATE FOR THE NON-PAYMENT OF PREMIUM,
THE ISSUING COMPANY SHALL PROVIDE CITY AT LEAST A TEN (10) DAY WRITTEN NOTICE BEFORE THE
EFFECTIVE DATE OF CANCELLATION.
V. PROPOSER CERTIFIES THAT PROPOSER’S INSURANCE COVERAGE MEETS THE ABOVE
REQUIREMENTS:
THE INFORMATION HEREIN IS CERTIFIED CORRECT BY SIGNATURE(S) BELOW. SIGNATURE(S) MUST BE
SAME SIGNATURE(S) AS APPEAR(S) ON SECTION II, ATTACHMENT A, PROPOSER’S INFORMATION FORM.
Firm:
Signature:
Name:
(Print or type name)
Signature:
Name:
(Print or type name)
040914 jrm 0180042 27
NOTICES SHALL BE MAILED TO:
PURCHASING AND
CONTRACT ADMINISTRATION
CITY OF PALO ALTO
P.O. BOX 10250
PALO ALTO, CA 94303.
040914 jrm 0180042 28
EXHIBIT “PPA-F”
Notices
Contract Administration
BUYER: SELLER:
City of Palo Alto
Utilities Resource Management
250 Hamilton Avenue
Palo Alto, CA 94301
Ph: 650-329-2689
Email: UtilityCommoditySettlements@CityofPaloAlto.Org
Billing and Settlements
BUYER: SELLER:
City of Palo Alto
Utilities Resource Management
250 Hamilton Avenue
Palo Alto, CA 94301
Ph: 650-329-2689
Email: UtilityCommoditySettlements@CityofPaloAlto.Org
Forecasting and Outage Reporting under Section 6 of this Agreement
Planned Outages:
BUYER: SELLER:
Northern California Power Agency Real-
Time Dispatch
651 Commerce Drive
Roseville, CA 95678
Ph: 916-786-3518
Forced Outages
BUYER: SELLER:
Northern California Power Agency Real-
Time Dispatch
651 Commerce Drive
Roseville, CA 95678
Ph: 916-786-3518
Forecasting and Scheduling
BUYER: SELLER:
Northern California Power Agency
Operations and Pre-Scheduling
651 Commerce Drive
Roseville, CA 95678
Ph: 916-786-0123
040914 jrm 0180042 29
EXHIBIT “PPA-G”
Form of Lender Consent and Agreement
This CONSENT AND AGREEMENT (this “Consent”), dated as of , 20 , is entered into
by and among the CITY OF PALO ALTO, a California chartered municipal corporation (the “City”),
, a corporation (the “Lender),” by its agent,
(the “Administrative Agent”), and , a
corporation (the “Borrower”) (collectively, the “Parties”). Unless otherwise defined, all
capitalized terms have the meaning given in the Contract (as hereinafter defined).
RECITALS
A. Borrower intends to develop, construct, install, test, own, operate and use an approximately
MW electric generating facility located in the city of Palo Alto in the State of California, known as
the Project (the “Project”).
B. In order to partially finance the development, construction, installation, testing, operation and
use of the Project, Borrower has entered into that certain financing agreement dated as of
(as amended, amended and restated, supplemented or otherwise modified from time to time, the “Financing
Agreement”), among Borrower, the financial institutions from time to time parties thereto (collectively, the
“Lenders”) , and Administrative Agent for the Lenders, pursuant to which, among other things, Lenders
have extended commitments to make loans and other financial accommodations to, and for the benefit of,
Borrower.
C. The City and Borrower have entered into that certain Power Purchase Agreement, dated as of
(attached hereto and incorporated herein by reference, as amended, amended and restated,
supplemented or otherwise modified from time to time in accordance with the terms thereof and hereof, the
“Power Purchase Agreement”).
D. The City and Borrower have entered into that certain Interconnection Agreement, dated as of
_ (attached hereto and incorporated herein by reference, as amended, amended and restated,
supplemented or otherwise modified from time to time in accordance with the terms thereof and hereof, the
“Interconnection Agreement”).
E. Pursuant to a security agreement executed by Borrower and Administrative Agent for the
Lenders (as amended, amended and restated, supplemented or otherwise modified from time to time, the
“Security Agreement”), Borrower has agreed, among other things, to assign, as collateral security for its
obligations under the Financing Agreement and related documents (collectively, the “Financing
Documents”), all of its right, title and interest in, to and under the Power Purchase Agreement and
Interconnection Agreement to Administrative Agent for the benefit of itself, the Lenders and each other
entity or person providing collateral security under the Financing Documents.
F. It is a requirement under the Financing Agreement that the Parties hereto execute this Consent.
AGREEMENT
NOW THEREFORE, for good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, and intending to be legally bound, the Parties agree, as follows:
1. CONSENT TO ASSIGNMENT. The City acknowledges the assignment referred to in Recital E
above, consents to an assignment of the Power Purchase Agreement and Interconnection Agreement
pursuant thereto, and agrees with Administrative Agent, as follows:
(a) Administrative Agent shall be entitled (but not obligated) to exercise all rights and to cure any
040914 jrm 0180042 30
defaults of Borrower under the Power Purchase Agreement or Interconnection Agreement, as the
case may be, subject to applicable notice and cure periods provided in the Power Purchase
Agreement and Interconnection Agreement. Upon receipt of notice from Administrative Agent,
the City agrees to accept such exercise and cure by Administrative Agent if timely made by
Administrative Agent under the Power Purchase Agreement or Interconnection Agreement, as the
case may be, and this Consent. Upon receipt of Administrative Agent's written instructions and to
the extent allowed by law, the City agrees to make directly to such account as Administrative
Agent may direct the City, in writing, from time to time, all payments to be made by the City to
Borrower under the Power Purchase Agreement or Interconnection Agreement, as the case may
be, from and after the City’s receipt of such instructions, and Borrower consents to any such
action. The City shall not incur any liability to Borrower under the Power Purchase Agreement,
Interconnection Agreement, or this Consent for directing such payments to Administrative Agent
in accordance with this subsection (a).
(b) The City will not, without the prior written consent of Administrative Agent (such consent not
to be unreasonably withheld), (i) cancel or terminate the Power Purchase Agreement or
Interconnection Agreement, or consent to or accept any cancellation, termination or suspension
thereof by Borrower, except as provided in the Power Purchase Agreement or Interconnection
Agreement and in accordance with subparagraph 1(c) hereof, (ii) sell, assign or otherwise dispose
(by operation of law or otherwise) of any part of its interest in the Power Purchase Agreement or
Interconnection Agreement, except as provided in the Power Purchase Agreement or
Interconnection Agreement, or (iii) amend or modify the Power Purchase Agreement or
Interconnection Agreement in any manner materially adverse to the interest of the Lenders in the
Power Purchase Agreement and Interconnection Agreement as collateral security under the
Security Agreement.
(c) The City agrees to deliver duplicates or copies of all notices of default delivered by the City
under or pursuant to the Power Purchase Agreement or Interconnection Agreement to
Administrative Agent in accordance with the notice provisions of this Consent. The City shall
deliver any such notices concurrently with delivery of the notice to Borrower under the Power
Purchase Agreement or Interconnection Agreement. To the extent that a cure period is provided
under the Power Purchase Agreement or Interconnection Agreement, Administrative Agent shall
have the same period of time to cure the breach or default that Borrower is entitled to under the
Power Purchase Agreement or Interconnection Agreement, except that if the City does not deliver
the default notice to Administrative Agent concurrently with delivery of the notice to Borrower
under the Power Purchase Agreement or Interconnection Agreement, then as to Administrative
Agent, the applicable cure period under the Power Purchase Agreement or Interconnection
Agreement shall begin on the date on which the notice is given to Administrative Agent. If
possession of the Project is necessary to cure such breach or default, and Administrative Agent or
its designee(s) or assignee(s) declare Borrower in default and commence foreclosure proceedings,
Administrative Agent or its designee(s) or assignee(s) will be allowed a reasonable period to
complete such proceedings so long as Administrative Agent or its designee(s) continue to perform
any monetary obligations under the Power Purchase Agreement or Interconnection Agreement, as
the case may be. The City consents to the transfer of Borrower's interest under the Power Purchase
Agreement and Interconnection Agreement to the Lenders or Administrative Agent or their
designee(s) or assignee(s) or any of them or a purchaser or grantee at a foreclosure sale by judicial
or nonjudicial foreclosure and sale or by a conveyance by Borrower in lieu of foreclosure and
agrees that upon such foreclosure, sale or conveyance, the City shall recognize the Lenders or
Administrative Agent or their designee(s) or assignee(s) or any of them or other purchaser or
grantee as the applicable party under the Power Purchase Agreement and Interconnection
Agreement (provided that such Lenders or Administrative Agent or their designee(s) or
assignee(s) or purchaser or grantee assume the obligations of Borrower under the Power Purchase
Agreement and Interconnection Agreement, including, without limitation, satisfaction and
compliance with all credit provisions of the Power Purchase Agreement and Interconnection
Agreement, if any, and provided further that such Lenders or Administrative Agent or their
designee(s) or assignee(s) or purchaser or grantee has a creditworthiness equal to or better than
040914 jrm 0180042 31
Borrower, as reasonably determined by City).
(d) In the event that either the Power Purchase Agreement or Interconnection Agreement, or both
is rejected by a trustee or debtor-in-possession in any bankruptcy or insolvency proceeding, and if,
within forty-five (45) days after such rejection, Administrative Agent shall so request, the City
will execute and deliver to Administrative Agent a new power purchase agreement or
interconnection agreement, as the case may be, which power purchase agreement or
interconnection agreement shall be on the same terms and conditions as the original Power
Purchase Agreement or Interconnection Agreement for the remaining term of the original Power
Purchase Agreement or Interconnection Agreement before giving effect to such rejection, and
which shall require Administrative Agent to cure any defaults then existing under the original
Power Purchase Agreement or Interconnection Agreement. Notwithstanding the foregoing, any
new renewable power purchase agreement or interconnection agreement will be subject to all
regulatory approvals required by law. The City will use good faith efforts to promptly obtain any
necessary regulatory approvals.
(e) In the event Administrative Agent, the Lenders or their designee(s) or assignee(s) elect to
perform Borrower's obligations under the Power Purchase Agreement and Interconnection
Agreement, succeed to Borrower’s interest under the Power Purchase Agreement and
Interconnection Agreement, or enter into a new power purchase agreement or interconnection
agreement as provided in subparagraph 1(d) above, the recourse of the City against Administrative
Agent, Lenders or their designee(s) and assignee(s) shall be limited to such Parties’ interests in the
Project, and the credit support required under the Power Purchase Agreement and Interconnection
Agreement, if any.
(f) In the event Administrative Agent, the Lenders or their designee(s) or assignee(s) succeed to
Borrower's interest under the Power Purchase Agreement and Interconnection Agreement,
Administrative Agent, the Lenders or their designee(s) or assignee(s) shall cure any then-existing
payment and performance defaults under the Power Purchase Agreement or Interconnection
Agreement, except any performance defaults of Borrower itself, which by their nature are not
susceptible of being cured. Administrative Agent, the Lenders and their designee(s) or assignee(s)
shall have the right to assign all or a pro rata interest in the Power Purchase Agreement and
Interconnection Agreement to a person or entity to whom Borrower’s interest in the Project is
transferred, provided such transferee assumes the obligations of Borrower under the Power
Purchase Agreement and Interconnection Agreement and has a creditworthiness equal to or better
than Borrower, as reasonably determined by the City. Upon such assignment, Administrative
Agent and the Lenders and their designee(s) or assignee(s) (including their agents and employees)
shall be released from any further liability thereunder accruing from and after the date of such
assignment, to the extent of the interest assigned.
2. REPRESENTATIONS AND WARRANTIES. The City hereby represents and warrants that as
of the date of this Consent:
(a) It (i) is duly formed and validly existing under the laws of the State of California, and (ii) has
all requisite power and authority to enter into and to perform its obligations hereunder and under
the Power Purchase Agreement and Interconnection Agreement, and to carry out the terms hereof
and thereof and the transactions contemplated hereby and thereby;
(b) the execution, delivery and performance of this Consent, the Power Purchase Agreement and
the Interconnection Agreement have been duly authorized by all necessary action on its part and
do not require any approvals, material filings with, or consents of any entity or person which have
not previously been obtained or made;
(c) each of this Consent, the Power Purchase Agreement, and the Interconnection Agreement is in
full force and effect;
040914 jrm 0180042 32
(d) each of this Consent, the Power Purchase Agreement, and the Interconnection Agreement has
been duly executed and delivered on its behalf and constitutes its legal, valid and binding
obligation, enforceable against it in accordance with its terms, except as the enforceability thereof
may be limited by (i) bankruptcy, insolvency, reorganization or other similar laws affecting the
enforcement of creditors’ rights generally and (ii) general equitable principles (whether considered
in a proceeding in equity or at law);
(e) there is no litigation, arbitration, investigation or other proceeding pending for which the City
has received service of process or, to the City’s actual knowledge, threatened against the City
relating solely to this Consent, the Power Purchase Agreement, or the Interconnection Agreement
and the transactions contemplated hereby and thereby;
(f) the execution, delivery and performance by it of this Consent, the Power Purchase Agreement,
and the Interconnection Agreement, and the consummation of the transactions contemplated
hereby, will not result in any violation of, breach of or default under any term of any material
contract or material agreement to which it is a party or by which it or its property is bound, or of
any material requirements of law presently in effect having applicability to it, the violation, breach
or default of which could have a material adverse effect on its ability to perform its obligations
under this Consent;
(g) neither the City nor, to the City’s actual knowledge, any other party to the Power Purchase
Agreement or Interconnection Agreement, is in default of any of its obligations thereunder; and
(h) to the City’s actual knowledge, (i) no Force Majeure Event exists under, and as defined in, the
Power Purchase Agreement or Interconnection Agreement and (ii) no event or condition exists
which would either immediately or with the passage of any applicable grace period or giving of
notice, or both, enable either the City or Borrower to terminate or suspend its obligations under the
Power Purchase Agreement or the Interconnection Agreement.
Each of the representations and warranties set forth herein shall survive the execution and delivery
of this Consent and the consummation of the transactions contemplated hereby.
3. NOTICES. All notices required or permitted hereunder shall be given, in writing, and shall be
effective (a) upon receipt if hand delivered, (b) upon telephonic verification of receipt if sent by facsimile
and (c) if otherwise delivered, upon the earlier of receipt or three (3) Business Days after being sent
registered or certified mail, return receipt requested, with proper postage affixed thereto, or by private
courier or delivery service with charges prepaid, and addressed as specified below:
If to the City:
[ ]
[ ]
[ ]
Telephone No.: [ ]
Facsimile No.: [ ]
Attn: [ ]
If to Administrative Agent:
[ ]
[ ]
[ ]
Telephone No.: [ ]
Facsimile No.: [ ]
Attn: [ ]
040914 jrm 0180042 33
If to Borrower:
[ ]
[ ]
[ ]
Telephone No.: [ ]
Facsimile No.: [ ]
Attn: [ ]
Any party shall have the right to change its address for notice hereunder to any other location within the
United States by giving thirty (30) days written notice to the other parties in the manner set forth above.
4. ASSIGNMENT, TERMINATION, AMENDMENT. This Consent shall be binding upon and
benefit the successors and assigns of the Parties hereto and their respective successors, transferees and
assigns (including without limitation, any entity that refinances all or any portion of the obligations under
the Financing Agreement). The City agrees (a) to confirm such continuing obligation, in writing, upon the
reasonable request of (and at the expense of) Borrower, Administrative Agent, the Lenders or any of their
respective successors, transferees or assigns, and (b) to cause any successor-in-interest to the City with
respect to its interest in the Power Purchase Agreement or Interconnection Agreement to assume, in writing
and in form and substance reasonably satisfactory to Administrative Agent, the obligations of City
hereunder. Any purported assignment or transfer of the Power Purchase Agreement or Interconnection
Agreement not in conjunction with the written instrument of assumption contemplated by the foregoing
clause (b) shall be null and void. No termination, amendment, or variation of any provisions of this Consent
shall be effective unless in writing and signed by the parties hereto. No waiver of any provisions of this
Consent shall be effective unless in writing and signed by the party waiving any of its rights hereunder.
5. GOVERNING LAW. This Consent shall be governed by the laws of the State of California
applicable to contracts made and to be performed in California. The federal courts or the state courts
located in California shall have exclusive jurisdiction to resolve any disputes with respect to this Consent
with the City, Assignor, and the Lender or Lenders irrevocably consenting to the jurisdiction thereof for
any actions, suits, or proceedings arising out of or relating to this Consent.
6. COUNTERPARTS. This Consent may be executed in one or more duplicate counterparts, and
when executed and delivered by all the parties listed below, shall constitute a single binding agreement.
7. SEVERABILITY. In case any provision of this Consent, or the obligations of any of the Parties
hereto, shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining
provisions, or the obligations of the other Parties hereto, shall not in any way be affected or impaired
thereby.
8. ACKNOWLEDGMENTS BY BORROWER. Borrower, by its execution hereof, acknowledges
and agrees that neither the execution of this Consent, the performance by the City of any of the obligations
of the City hereunder, the exercise of any of the rights of the City hereunder, or the acceptance by the City
of performance of the Power Purchase Agreement by any party other than Borrower shall (1) release
Borrower from any obligation of Borrower under the Power Purchase Agreement or Interconnection
Agreement, (2) constitute a consent by the City to, or impute knowledge to the City of, any specific terms
or conditions of the Financing Agreement, the Security Agreement or any of the other Financing
Documents, or (3) except as expressly set forth in this Consent, constitute a waiver by the City of any of its
rights under the Power Purchase Agreement or Interconnection Agreement. Borrower and Administrative
Agent acknowledge hereby for the benefit of City that none of the Financing Agreement, the Security
040914 jrm 0180042 34
Agreement, the Financing Documents or any other documents executed in connection therewith alter,
amend, modify or impair (or purport to alter, amend, modify or impair) any provisions of the Power
Purchase Agreement.
CITY OF PALO ALTO ADMINISTRATIVE AGENT
APPROVED AS TO FORM
Senior Deputy City Attorney
BORROWER
APPROVED
City Manager
Director of Utilities
Utilities Advisory Commission Minutes Approved on: February 4, 2015 Page 1 of 4
EXCERPTED FINAL MINUTES OF THE DECEMBER 10, 2014
UTILITIES ADVISORY COMMISSION MEETING
ITEM 2 (Original Agenda New Business Item 1): ACTION: Staff Recommendation that the
Utilities Advisory Commission Recommend that Council Continue the Palo Alto Clean Local
Energy Accessible Now (CLEAN) Program at the Rate of 16.5 cents per Kilowatt-hour for a 20-
Year Contract and a Program Cap of 3 Megawatts, Add a 25-Year Contract Term Option, and
Expand CLEAN Program Eligibility to Non-Solar Renewable Energy Resources
Senior Resource Planner Jim Stack summarized the history of the Palo Alto CLEAN program
from when it was first adopted in March 2012 to the last updated price and program cap in
February 2014. Stack indicated that the City released a Request for Proposals for lease
agreements for City-owned parking structures and has selected a finalist who is expected to
participate in the program at five facilities for a total of about 1.5 megawatts (MW).
Stack explained that the value of local solar has fallen since the program was first launched, but
has increased slightly since last year's evaluation. He said that staff recommends that the
current price of 16.5 cents/kilowatt-hour (¢/kWh) and program participation cap of 3 MW be
recommended to Council. He also said that staff recommends allowing participants to choose
either a 20-year or 25-year contract term, noting that some developers had requested a longer
contract term given that it would align better with the solar module lifetime and product
warranties.
Stack also said that staff recommends expanding the CLEAN program’s eligibility to include non-
solar local renewable resources, while offering these resources a contract price that is equal to
their avoided cost (9.3 ¢/kWh for a 20-year term or 9.4 ¢/kWh for a 25-year term). He noted
that expanding the program to non-solar resources has been discussed since the program’s
inception, but that it was initially not done due to the fact that the City already had a competing
program (the Power from Local Ultra-clean Generation Incentive, or PLUG-In, program) in place
for such resources. However, this program was terminated by Council earlier this year. Stack
noted that the potential anaerobic digester facility that has been discussed for the wastewater
treatment plant has been mentioned as a possible non-solar participant in the CLEAN program.
Finally, Stack stated that staff recommends that there be no participation cap on non-solar
resources participating in the CLEAN program, given that these resources will be compensated
at their avoided cost and therefore not have any impact on ratepayers.
Commissioner Eglash asked if resources are paid only for the energy that is delivered, not based
on their nameplate capacity. Stack said that this was the case; that payments are made only for
energy received, as with a regular power purchase agreement (PPA). Commissioner Eglash
ATTACHMENT C
Utilities Advisory Commission Minutes Approved on: February 4, 2015 Page 2 of 4
noted that this means the City does not have to worry about degradation of the solar panels
over time.
Commissioner Eglash commented on the types of non-solar resources that would be eligible for
the program, and asked about a hypothetical example of a system of lead-acid batteries that
are charged at night using electricity from the grid, and whether that would be eligible to
participate in the program. Stack stated that the program Eligibility Rules and Requirements
stipulate that a resource must be deemed an “eligible renewable” resource under the California
Public Utilities Code in order to participate.
Commissioner Eglash asked whether there are any risks that the City should consider in opening
the program up to non-solar renewable energy resources, and also asked whether there are
any other utilities that are allowing non-solar renewable energy resources to participate in their
feed-in tariff programs. Senior Deputy City Attorney Jessica Mullan mentioned that the Los
Angeles Department of Water and Power has a feed-in tariff program that is open to wind and
biomass projects.
Commissioner Eglash asked whether a customer who wanted to install a small wind turbine on
their property would have to go through a zoning review process in order to do that. Assistant
Director Jane Ratchye stated that such a project would have to go through a regular City review
process—possibly including an architectural review process and an environmental review
process—just like any other development project.
Vice Chair Waldfogel asked whether a fuel cell using “green gas” would be considered a
renewable resource by the California Energy Commission (CEC). Stack stated it would be
considered a renewable resource, while Ratchye noted that it would likely be difficult to get
physical “green gas” delivered to the City. Commissioner Eglash asked whether a fuel cell such
as a Bloom Box that simply used a regular natural gas supply would be deemed eligible, and
Stack stated that it would not. Vice Chair Waldfogel asked whether a Bloom Box that used gas
from the City’s PaloAltoGreen Gas program would be eligible. Stack stated that it would not,
because that program uses environmental offsets to “green up” a regular natural gas supply,
whereas the state Public Utilities Code requires that fuel cells use actual green gas in order to
be deemed a renewable electricity supply.
Commissioner Eglash asked Stack for his opinion on whether the staff recommendation to open
the CLEAN program to non-solar renewable energy resources was wise and well thought out.
Stack responded that he thought it did make sense to open the program to non-solar resources
rather than discriminate against them, and that as long as they can pass through the City’s
regular permitting and review processes they should be eligible to participate.
Commissioner Eglash stated his concern that opening the program up to any type of renewable
resource, for a 20- or 25-year term, with no participation cap (for non-solar resources) exposed
the City to risks that it may not have considered. However, he also noted that the City regularly
signs long-term PPAs, locking in a contract price for an extended period of time.
Utilities Advisory Commission Minutes Approved on: February 4, 2015 Page 3 of 4
Ratchye agreed that opening the CLEAN program to non-solar resources would not be
significantly different from the City’s regular PPA process. She also noted that staff would be
returning to Council every year to review the program and its contract price, so the prices and
terms being proposed right now would not be available forever. She also noted that staff does
not expect significant participation from non-solar resources. She stated that the only real
concern with the staff proposal was for a non-solar price that was based on the avoided cost of
a baseload type of resource, such as an anaerobic digester, and that it might not accurately
reflect the value of a renewable resource with a different generation profile such as a wind
resource. Finally, she pointed out that one way to address the concern about participation of
non-solar resources in the CLEAN program would be to impose a program participation cap on
those resources.
Commissioner Eglash noted that in the case of regular PPAs, each project is reviewed by the
UAC, the Finance Committee, and the full City Council. Whereas with the CLEAN program the
City would be committing itself to projects of unlimited size without any additional review. He
suggested that the UAC might want to consider requiring Council approval of larger projects.
Ratchye responded that the UAC could certainly make that recommendation; however, it would
defeat the purpose of a feed-in tariff program, which is to establish a known price and a
standard contract and a set of participation criteria, and allow projects to participate in the
program without going through the typical thorough review process. She also noted that the
chances of a giant locally-sited project are incredibly remote.
Vice Chair Waldfogel commented that large projects would have long lead times to develop and
that it would not be unreasonable to expect some negotiations to occur for such large projects.
Commissioner Hall stated that he has problems with the anaerobic digester being part of this
program due to the fact that it could be a very large project and it should have to go through
the regular PPA negotiation and review process. He also said that since the anaerobic digester
would likely be a City-owned project (but not owned by Utilities) and therefore it would be a
transfer price and this could be an issue for the public. However, he likes the idea of having a
feed-in tariff program in place, and that in the future fuel cells could be a good technology to
participate in the program as their prices come down.
Commissioner Foster noted that although there has not been any uptake for the program yet,
he is supportive of continuing the program for solar at the 16.5 ¢/kWh price and that he
supports adding a 25-year contract term option. He also noted that for solar projects, the
incremental cost of those projects participating is very small for residential customers (he
calculated the rate impact as 12.5 ¢/month for the median residential customer, assuming the
CLEAN program was fully subscribed).
Commissioner Foster noted that the anaerobic digester is a large motivation for expanding the
program to non-solar projects, and that it is a complicated project for the City. He noted that if
that project participates in the CLEAN program it will bring certainty to one aspect of the
project (the revenue it will receive for the power it generates) that is currently up in the air. He
also stated that because the project will be compensated at its avoided cost he feels that the
Utilities Advisory Commission Minutes Approved on: February 4, 2015 Page 4 of 4
arrangement is reasonable and therefore he supports the non-solar portion of the staff
recommendation in addition to the solar portion.
Commissioner Melton stated that he is also comfortable with the staff proposal and that he is
convinced that there will not be any off-the-wall projects coming out of this program, since any
resource that wishes to participate must be defined by the state as an eligible renewable
energy resource.
Commissioner Cook stated that he also likes the staff recommendation, but he would put a cap
on the non-solar projects, such as 3 MW, in order to have more control on the City’s exposure.
For a compelling project that is larger than 3 MW, the developers would come to staff to
discuss the project and staff could seek Council approval of the project or seek Council approval
to raise the 3 MW cap. He also stated that he is not concerned about the transfer pricing issue,
since the price is set at the avoided cost of the energy.
Commissioner Eglash commented that Commissioner Cook’s recommendation did not signal
that the City would reject projects larger than 3 MW, but that such projects would have to go
through a more thorough review process.
Ratchye asked Stack to remind the Commission about the size of the anaerobic digester project.
Stack stated that Public Works staff currently anticipates that the project will consist of three
800 kilowatt (kW) engines, with two engines operating and one idle at any point in time;
therefore the project would have an operating capacity of about 1.6 MW.
Ratchye also reminded the Commission that when Council terminated the PLUG-In program
earlier this year, staff told Council that after terminating that program, it would return to
Council with a recommendation to expand the CLEAN program to include non-solar renewable
energy resources such as the anaerobic digester.
ACTION:
Chair Foster made a motion to approve staff’s recommendation. Commissioner Melton
seconded the motion.
Commissioner Eglash, explaining that he doesn't feel that the UAC has received a full discussion
and justification for non-solar projects, made a substitute motion to eliminate the non-solar
aspect of the staff recommendation. His motion was to approve staff’s recommendation parts
1.a. and 2 (Adopt a resolution to continue the Palo Alto CLEAN program at the current price of
16.5 cents per kilowatt-hour (¢/kWh) for a 20-year contract, add a 25-year contract term option
with a 16.5 ¢/kWh price, and continue with a program limit of 3 megawatts (MW) for solar
energy resources; and Direct staff to return to the Council with a review of the program in one
year or at the time the program capacity is filled, whichever comes first.). Commissioner Hall
seconded the substitute motion. The motion carried by a vote of 3-2 (with Chair Foster and
Commissioner Melton voting no, Vice Chair Waldfogel and Commissioners Eglash and Hall
voting yes, Commissioner Cook abstaining, and Commissioner Chang absent).
City of Palo Alto (ID # 5418)
Finance Committee Staff Report
Report Type: Action Items Meeting Date: 3/17/2015
City of Palo Alto Page 1
Summary Title: Enterprise Resource Planning Evaluation Findings and
Recommendation
Title: Review of the Assessment Results of the Enterprise Resource Planning
(ERP) Needs and Consideration of the Staff Recommendation to Plan for the
Acquisition of a New Integrated Government-oriented ERP System and
Separate Provisioning of Billing Systems.
From: City Manager
Lead Department: IT Department
RECOMMENDATION
Staff recommends that the Finance Committee: consider the following:
(1) Review the results of the City’s Enterprise Resource Planning (ERP) evaluation. ERP is the
City’s software platform for finance, human resources, public works, and utilities core
functions.
(2a) Review Staff’s plan to evaluate the potential opportunities for using third party-
managed services for functions identified in the scope of the existing City’s ERP system.
(2b) Review Staff’s recommendation that the City should plan for the acquisition of a new
integrated government-oriented ERP and a separate provision of utility and refuse billing
services, taking into account any recent investments in ERP functionality, such as the new
budgeting software, and the results of potential opportunities for using third party
managed services (as recommended in 2a above) in determining the new system
requirements.
BACKGROUND
The City’s association with SAP began in 2002, when the City selected SAP as its preferred
vendor for an Enterprise Resource Planning (ERP) system for the purpose of integrating various
business processes within the City and to pave the path for the City to move toward the
direction of electronic Government. SAP Core modules installations were completed during
fiscal year 2003, when the implementation of the SAP Enterprise Central Component (ECC 6.0)
was completed. SAP has been operating within the City since 2003, supporting Accounting,
City of Palo Alto Page 2
Finance, Purchasing, Project Management, Plant Maintenance, Budgeting, Payroll, Human
Resource Management, and Service Order management functions.
In 2009, the City completed a major upgrade to the SAP ERP system. It also replaced the former
utility billing system (Banner) with the implementation of the SAP module for utilities,
Customer Relationship Management (CRM), Utilities Customer Electronic Services (also known
as My Utilities Account customer portal) and Business Intelligence systems (BI).
Both business and technology needs have changed since SAP was selected and implemented.
Therefore, the City recently conducted a comprehensive evaluation to develop and determine a
refreshed vision to reduce IT application and infrastructure support costs, improve flexibility,
increase ease of use, facilitate further automation of business processes, and improve the
quality and reliability of information for decision making.
In June 2014, staff contracted with Plante Moran (CMR:4560:14) for the Enterprise Resource
Planning Evaluation project to perform an comprehensive assessment of the City’s SAP ERP
environment and identify key strategic options and recommendations. In addition to addressing
the core SAP related functions, the project included the identification and review of major
third-party systems used by the City.
DISCUSSION
The assessment report resulting from Plante Moran’s work was completed in December 2014.
The report’s Executive Summary is attached (Attachment A). In its report, Plante Moran
recommended that the City should replace SAP with a new, fully integrated government-
oriented ERP solution and a separate Utility billing best-of-breed solution.
Staff considered Plante Moran’s recommendation to replace SAP with a new, fully integrated
government-oriented ERP solution with a separate Utility billing best-of-breed solution. Staff
also considered the input of a large SAP stakeholder group, made up of representatives across
departments. Finally the SAP steering committee, made up of leaders from SAP user
departments, provided additional leadership input and recommended the following next steps:
(1a) Evaluate the potential opportunities for using 3rd party managed services for functions
identified in the scope of the existing City’s ERP system.
(1b) Plan for the acquisition of a new integrated government-oriented ERP and separate
provision of billing services. In this proposed planning, the City would take into account any
recent investments in ERP functionality, such as the new budgeting software being
deployed, and also review the results of (1a) – first recommendation item above--in
determining the new system requirements.
The planning and execution of the above two recommendations would require the
identification of a vendor through the RFP process, and the possibility of adding temporary
City of Palo Alto Page 3
staffing, at a cost of up to $250,000. This amount would be included in the FY16 budget. Staff
expects more specific discussion and decisions during Finance’s review of the FY 2016 Budget.
Our discussion tonight is a preview of staff’s plans.
Later in FY 2016, after the getting the results from the RFP process, staff will return to the
Finance committee for a deeper discussion on the implications for moving forward with an
award to a vendor. Staff does not typically come to Finance in advance of the Council meeting
on the award of a contract, but the scale and potential implications of this project warrant in-
depth Committee discussion and recommendations in advance of any full Council
consideration.
For completeness, staff is including the following information as suggestive of future
implementation costs. No consideration is required at this time and the following dollar
amounts are shared for information purposes only. As part of the Plante Moran assessment
study, a five-year total cost analysis was performed. A new integrated government-oriented
ERP system is estimated to cost between $10,000,000 and $15,000,000 (5-year cost).
Approximately 60% will be funded by the Utilities Enterprise Fund and 40% by General Fund.
RESOURCE IMPACT
A project to complete the planning as recommended above will start in early FY16. Staff intends
to bring forward a recommendation to the City Council to fund this project from the
Technology Internal Service Fund as part of the Fiscal Year 2016 budget process.
ENVIRONMENTAL REVIEW
This is not a project under the California Environmental Quality Act (CEQA).
Attachments:
Palo Alto ERP System Evaluation Final Report (PDF)
Enterprise Resource Planning
System Evaluation
CITY OF PALO ALTO, CA | NOVEMBER 24, 2014
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Table of Contents
1 ERP Evaluation ................................................................................................................................. 4
1.1 Project Overview And Executive Summary ............................................................................. 4
1.1.1 Project Background .............................................................................................................. 4
1.1.2 Project Scope ....................................................................................................................... 4
1.1.3 Project Approach .................................................................................................................. 6
1.1.4 Summary of Observations .................................................................................................... 7
1.1.5 Executive Summary of Options and Recommendations ................................................... 11
1.1.6 Plante Moran Recommendation......................................................................................... 13
2 Current State/Gap Assessment ...................................................................................................... 14
2.1 Overview of Findings .............................................................................................................. 14
2.2 General Ledger / Financial Reporting .................................................................................... 14
2.3 Investment/Cash Management .............................................................................................. 16
2.4 Budgeting ............................................................................................................................... 17
2.5 Fixed Asset | Asset Management | Capital Improvement Planning ....................................... 20
2.6 Project Accounting ................................................................................................................. 22
2.7 Procurement ........................................................................................................................... 23
2.8 Accounts Payable .................................................................................................................. 25
2.9 Revenue Collection/Miscellaneous Billing/Accounts Receivable ........................................... 26
2.10 Payroll/Time Entry .................................................................................................................. 27
2.11 People Strategy and Operations (PSO) ................................................................................. 29
2.12 Utility Services Management / Refuse ................................................................................... 31
2.13 Current Technology Profile .................................................................................................... 33
3 ERP Marketplace Assessment ....................................................................................................... 36
3.1 Integrated ERP Environment ................................................................................................. 36
3.2 Best-of-Breed ......................................................................................................................... 37
3.3 Alternative Software Delivery Options: Hosting (“Cloud”) ...................................................... 38
3.4 ERP Vendor Consolidation .................................................................................................... 39
3.5 Summary Comparisons .......................................................................................................... 39
4 Options Analysis ............................................................................................................................. 43
4.1 Option 1: Status Quo with Investment .................................................................................. 43
4.2 Option 2: Upgrade SAP ......................................................................................................... 46
4.3 Option 2, Alternative A ........................................................................................................... 46
4.4 Option 2, Alternative B: .......................................................................................................... 47
4.5 Option 2: Cost Estimates and Summary ................................................................................ 48
4.6 Option 3: New ERP Environment ........................................................................................... 49
4.7 Option 3, Alternative A: .......................................................................................................... 49
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4.8 Option 3, Alternative B: .......................................................................................................... 50
4.9 Option 3: Cost Estimates and Summary ................................................................................ 51
4.10 Plante Moran Recommendation............................................................................................. 53
5 Recommended Next Steps ............................................................................................................. 54
5.1 ERP System Evaluation Approach ........................................................................................ 54
5.2 Phasing .................................................................................................................................. 56
5.3 Staff Backfill............................................................................................................................ 57
5.4 Data Cleansing / Conversion ................................................................................................. 58
5.5 Interface Development ........................................................................................................... 59
5.6 Report Development .............................................................................................................. 59
5.7 Change Management ............................................................................................................. 60
5.8 Communication Planning ....................................................................................................... 61
5.9 Process Re-Design ................................................................................................................ 62
5.10 5ERP System Training ........................................................................................................... 62
6 Appendices ..................................................................................................................................... 64
6.1 Appendix A: Project Charter .................................................................................................. 64
6.2 Appendix B: Application Inventory ........................................................................................ 73
6.3 Appendix C: Response Summary from City-wide User Survey ............................................. 80
6.4 Appendix D: Total Cost of Ownership Details and Assumptions ........................................... 81
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1 ERP Evaluation
1.1 PROJECT OVERVIEW AND EXECUTIVE SUMMARY
1.1.1 PROJECT BACKGROUND
The City of Palo Alto, CA (the “City” or “Palo Alto”) has an estimated 65,000 residents and is located in
Silicon Valley in the San Francisco Bay Area of California. The City’s FY 2014 operating budget is
$447 million and the City employs over 1,000 full and part time staff. Palo Alto is a full service city
providing administration, planning, code enforcement, public works,
water/wastewater/gas/electric/fiber utility, parks and recreation, public safety police and fire services.
The City is also the home to Stanford University, a world renowned Pac-12 conference research
institution.
The City currently utilizes the SAP ERP system to support its major Finance, Human Resource and
Utility Billing processes. The City’s history with SAP began in 2002 when the City selected SAP as its
preferred vendor for an Enterprise Resource Planning (ERP) 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 SAP Enterprise
Central Component (ECC 6.0), 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, the City completed a major upgrade to the SAP ERP system, which also replaced the former
utility billing system (Banner) with the implementation of the SAP IS-U module, Customer Relationship
Management (CRM), Utilities Customer Electronic Services (also known as My Utilities Account
customer portal) and Business Intelligence systems (BI). Both business and technology needs have
changed dramatically since the current ERP solution was selected and implemented. Therefore, the
City desired to conduct a comprehensive evaluation to determine a solution to reduce IT application
and infrastructure support costs, improve flexibility, increase user friendliness and intuitiveness of
system, facilitate further automation of business processes, and improve quality and reliability of
information for decision making.
1.1.2 PROJECT SCOPE
The City engaged Plante Moran to perform a comprehensive assessment of the City’s SAP ERP
environment and identify key strategic options and recommendations. In addition to the core SAP
related functions the project included the identification and review of major best-of-breed and third-party
systems used by the City. The City requested that the evaluation provide the following:
GAP analysis to identify deficiencies in the current system
Identify effectiveness of current system at meeting business needs
Evaluation of hardware
Benchmark maintenance/support costs
Determine if city would benefit by soliciting proposals for alternative ERP solutions
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Specifically, the project scope included conducting project management tasks, reviewing
documentation, conducting interviews and assessing the City’s technical environment to develop this
ERP evaluation for the following functional areas:
Administrative Services
Budget Accounting
Payroll Purchasing
Store
Utilities
Billing Management Device Management
Work Management
Business Intelligence
Financial Contract Accounts
Utilities Customer Electronic
Services
Customer Service and Customer Relationship Management
People Strategy & Operations
Processes and Management
Public Works
Refuse and Recycle Billing
Information Technology
Technology Strategy and Roadmap
All other departments (City Attorney, City Auditor, City Clerk, City Manager, Community Services,
Planning & Community Development, Information Technology, Library, Police and Fire)
Budget/Position
Time Entry
Procurement
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1.1.3 PROJECT APPROACH
The following chart illustrates the approach that was taken in performing the City’s ERP Evaluation:
The project was conducted using a participative and inclusive approach with significant input from the
City management and staff to ensure accuracy, completeness, and ownership of the resulting
recommendations. Participation was obtained through the following activities:
Establishing a Project Sponsor to maintain the project vision, act as a project champion,
provide a strategic perspective, and to remove project roadblocks when necessary.
Defining a Project Manager to ensure prompt and clear communication with the City
department staff, manage project activities, ensure project deliverables were reviewed by the
appropriate City staff, and to provide progress updates to the City management and other
interested stakeholders.
Conducting a project kick-off meeting and building awareness around the project.
Facilitating multiple project management status meetings to manage project activities and
provide status updates.
Conducting interviews with the City departmental end users to evaluate current systems and
business processes. Departmental management was encouraged to participate and invite
team members.
Collection and review of numerous documents provided by the City, as well as completed
questionnaires by the departments.
1. Initiation
•Define Project
Organizational Structure
•Develop Project Charter
•Develop Project Plan
•Establish Project
Collaboration Center
2. ERP Evaluation
•Review City
Documentation
•Conduct Departmental
Interviews
•Assess Technology
Environment
3. Draft
Evaluation Report
•Compile Findings
•Identify ERP Options
•Develop
Recommendations
•Prepare Draft Report
•Develop Action Plan
•Present Draft Findings
4. Finalize Report
•Review Draft ERP
Evaluation
•Update Draft Report
•Finalize Report
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Soliciting input from the participating Departments that included the evaluation of the following
items:
o Identification of current systems
o Duplicate entry / re-keying of information
o Issues with / shortcoming of current systems
o Strengths of existing systems
o Unused features / functionality of SAP
o Opportunities to interface systems
o Unique City business rules
o Vendor interaction
o Current technology project initiatives / Future technology projects
Requesting and collecting data which was used to develop a total cost of ownership (TCO)
analysis.
Developing this ERP evaluation
The overall goal for implementing new technology not only focuses on the technology itself, but also
aims to enhance existing business processes performed by individual departments across the City.
Technology is intended to enhance departmental business processes by:
Making them more efficient
Making them more effective
Improving decision-making
Providing enhanced customer service to both internal and external customers
Improving access to information
Streamlining processes to reduce costs.
The overall goal of this ERP evaluation was to define a future course of action for the City’s SAP
investment and related applications and shadow systems. The approach utilized for collecting
information included interviews with primary process and systems owners, IT staff, and the City
department users regarding the existing technologies and processes.
1.1.4 SUMMARY OF OBSERVATIONS
While the current SAP environment supports the daily needs of the City and supports the ability of end
users to accomplish their responsibilities at a basic level, the current system structure has left the City
with many challenges. The following points summarize the key functional weaknesses regarding the
systems and processes that support financial management, human resources, payroll and other City
administrative functions.
Inefficiencies Due to Redundant Data Entry and Manual Processes
The existence of multiple standalone systems and reliance on desktop applications like Excel and
Access inevitably results in inefficient business processes. Disparate information systems result in
redundant data entry efforts because information is taken out of one system and entered into another.
Even when data can be directly downloaded via automated means, the organization of data and
formatting requires significant effort. In addition, there are still a host of manual processes that support
certain business functions. In a number of cases where standalone systems and desktop applications
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are now being used it is possible that unused modules of the SAP system could support these
functions.
Lack of an intuitive user interface
The City’s current financial, human resources and utility billing systems do not provide end users with
an intuitive and integrated experience across common transactions. With few exceptions, end-users
across all business areas stated that the current system was cumbersome and not user-friendly. The
systems lack sufficient querying tools and most departments rely on the Finance or IT department to
develop and provide many reports.
Workflow within SAP is Not Fully Utilized
One of the benefits of ERP systems is the availability of workflow to signal to a user when items exist
that require approval, review, or attention. The City is not currently using this feature in many areas of
the SAP system. This requires the need for separate manual approval processes and notifications
when work is ready to be completed in the system, leading to inefficiencies in the business process.
The SAP investment is not fully utilized overall
For several reasons, whether it is availability of staff, complexity of the function, or failure to fully meet
the needs of the department, the staff is not utilizing various features of SAP.
Heavy Reliance on IT and Outside Consultants for SAP Enhancement Requests
Along with SAP, the City utilizes a number of stand-alone systems. To meet the ever-changing needs
of government, it is often necessary to add a field or function or tweak a transaction process. These
minor or major enhancements to systems must be prioritized and handled by an IT Department whose
resources are stretched as a result and/or must be outsourced to a third party contractor. Additionally,
most reporting requests must be handled by IT staff, meaning that there is often a delay in getting
necessary information.
Complicated / Limited System Integration Requirements
Numerous standalone systems are used to report and gather data resulting in complex integrations to
the City’s main ERP system. Reliability of data is an issue in many City areas because information is
not processed in real-time or can be immediately synchronized between systems when reporting from
SAP. There are also cases where staff has limited ability to access current information in the required
systems. The cost to establish interfaces between additional systems to ensure timely and accurate
information is available is significant when considering the staff time necessary to test and maintain
these interfaces for the long term. The ERP Applications Environment Diagram represents the
complexity of the City’s existing application landscape. The City intends to continue adding systems to
this environment within the next year adding further system administration responsibility to the team.
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Current ERP Applications Environment Diagram
texttext
SAP ERP
Expanded ERP
Capabilities
Outside Agency /
3rd Party Interfaces
Special Ledger
Project System
General Ledger
Accounting
Financial Supply
Chain
Management
Funds Management
Bank Accounting
WellsFargoPositive Pay, Cleared Checks,
Direct Deposit, AP Checks
US
Treasury
1099s
Social
Security
Administration
Cost Controlling
Business Objects
Sales and
Distribution
Accounts
Receivable
Financial
Accounting
Advanced Micro
Solutions (AMS)Accounts Payable
Doc1/e2Vault
Utilities
Management
Docusign
Purchasing
Checkfree
Online payments
Commerce Bank
E-Payables
Accounts Payable
Business
Warehouse
Asset Accounting
Logistics Materials
Management
Plant Maintenance
Human Resource
Management
Active Directory
Organizational
ManagementBenefits
Time Entry
Payroll
Utility Billing
Device
Management
Customer Service
Financial Contracts
Accounting
Utilities Customers
E-Services
Autodesk Utility DesignUtilities
Management
BMIPurchasing
CivicaIT
CLASSParks and Rec
CORE (iPay)Revenue
Collections
Dassian
OMB
GIS Geodesy
GIS Mapping
GoldMine
Utilities
Management
InTime/ISELINK
Payroll/Time Entry
I-Tron/MVRSUtilities Management
JP Morgan Chase
Smart Data
Accounts Payable
Maintenance ConnectionPublic Works and
Community ServicesMS Access
Utilities Management
MS Excel
Various
MS Project
Project Accounting
NeoGov
PSO
OpenGov
Financial Reporting
Outage ManagementUtilities
Management
Pattern Stream
OMB
Pitney Bowes
Utilities
Management
Questica
OMB
Quick ServeRevenue
Collections
SharePoint
Various
Segal Waters
Compensation Database
Skillsoft
PSO
Spinifex
PSO
SymPro
Treasury
TopobaseUtilities
Management
Training DB
PSO
US BankP-Card
ICMAEmployee Contributions
PARS
Employee Contributions
Hartford
Employee Contributions
ACES
Employee PERS Contributions
CalPERS
Employee Retirement
GreenWaste
Refuse
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Reporting is Inadequate for City’s Needs
The City is faced with a number of mandated reporting needs. The standard reports that are available
within the system do not meet the overall needs of the City. Therefore, many departments are
maintaining separate spreadsheets in order to meet the day-to-day informational needs of the City and
its departments.
Lack of Self Service Functionality
Several employee facing processes are entirely manual and could benefit from better employee and
manager self-service functionality. For example manager self-service for employee performance
reporting is non-functional and employee self-service functionality is limited to read only transactions.
There were a number of consistent themes expressed during the process review sessions. Although it
is difficult to summarize opportunities to resolve dozens of issues identified, the unmet needs which
the City management and staff expressed as opportunities for improvement are as follows.
1. Redesigned and streamlined business processes incorporating established best business
practices.
2. Full integration between all system modules, allowing for the elimination of shadow
systems and other supplemental applications.
3. Real-time, immediate update and access to the financial and human resources
information.
4. Single entry of data and reduction in manual processes.
5. User-friendly, user-driven and flexible reporting tools with distributed, securitized access
to all users.
6. Elimination of paper-based processes and replacement with automated, online workflows
and approvals
7. Self-service capabilities and other “e-government” opportunities such as employee self-
service, remote time entry and mobile workforce capability.
8. Performance measurement and improved reporting capabilities.
9. Improved system of internal controls.
10. Reduced total cost of ownership.
11. City wide document management system and policy is needed. This will also help
automate many workflows.
As these themes indicate, there is an obvious need to improve upon the current systems environment.
To seize on this opportunity, Plante Moran is presenting a variety of strategic options and alternatives
for the City to evaluate as part of this assessment.
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1.1.5 EXECUTIVE SUMMARY OF OPTIONS AND RECOMMENDATIONS
Plante Moran has evaluated the City’s current ERP environment and has observed a clear trend toward selecting best of breed systems that
interface with SAP in order to achieve desired business objectives. In many cases, these best of breed systems replicate core SAP functionality
the City cannot realize at present. In recognition of this trend, three key options, with multiple best-of-breed alternatives have been identified to
assist the City to identify a viable strategic approach to further investment over the next five years. Each option offers some advantages and one
offers the most cost-effective and most suitable alternative based upon Plante Moran’s experience conducting system needs assessments and
selections when facing circumstances similar to Palo Alto. The table below defines these options and detailed information relative to each option.
The specific advantages and disadvantages of each option are provided in detail in a later section of this report.
OPTIONS DEFINITION AND EXECUTIVE ANALYSIS
Options Description
Option 1: Status Quo with Investment
ON PREMISE: Status Quo Current SAP
Modules + Existing Applications (Best of Breed
Systems) w/ Extended SAP Support
This option represents the City’s current investment position with the resources currently in
place supporting the SAP environment on premise today. It also represents the existing mix
of best of breed or third party applications interfaced with SAP supporting the budgeting, fixed
asset / asset management, human resources, purchasing, revenue collection, treasury, and
utilities management. The City is paying a premium for the addition of best of breed solutions
when core SAP functionality exists but cannot be fully realized.
Option 2a: Upgrade SAP
ALL IN CLOUD: Upgrade SAP Modules + Other
Existing Applications + Planned Applications
(Includes SAP Utility Billing)
This option represents the City’s migration to a Hybrid Cloud where the City would take
advantage of the HANA Enterprise Cloud to take advantage of hosted and managed services
from SAP. The City would assume maintenance responsibility for the non-SAP applications
that would reside in this environment and will retain ownership of these licenses.
Option 2b: Upgrade SAP
MIXED ENVIRONMENTS: Cloud Upgrade SAP
+ Existing + Planned Applications + On-Premise
Utility Billing Best of Breed
This option is essentially the same as 2a above with the exception of the addition of a utilities
best of breed system. The overlap between the core SAP and best of breed solutions
remains in this option and it does not appear to offer a viable strategic alternative.
Option 3a: New ERP Environment
NEW Fully Integrated ERP Environment + Utility
Billing Best of Breed
This option assumes the City reinvests in a new, fully integrated ERP solution that would take
advantage of the capabilities of a solution. The City would prepare an RFP for a solution that
incorporates all of the required functionality in addition to integrating with a new utilities best of
breed system.
Option 3b: New ERP Environment
NEW Limited ERP Environment + Existing
Applications + Planned Applications + Utility
Billing Best of Breed
This option assumes the City reinvests in a limited ERP environment where the existing and
planned best of breeds would be acquired in addition to a best of breed utilities management
system.
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Plante Moran performed a total cost analysis (TCO) for each option presented above. This analysis takes into consideration the one-time cost as
well as estimated ongoing costs, for each option based on assumptions defined later in this report. A summary analysis of the total cost of
ownership for each option identified in the report is provided in the table below:
Option 1 Option 2a Option 2b Option 3a Option 3b
ON PREMISE
Status Quo
with Investment
ALL IN CLOUD
Upgrade SAP and
Retain Existing Best of
Breed Systems
MIXED ENVIRONMENTS
Upgrade SAP Core
Financials/HR/Payroll Modules
Only Keep Existing Best of Breed
Systems Obtain Best of Breed
Utility Billing System
NEW ERP
Go to Market for a Fully
Integrated Public Sector
Focused ERP Solution and
Procure a Separate Utility
Billing Best of Breed Solution
NEW ERP
Go to Market for a Fully Integrated Core
Financials/Human Capital Management
Solution, Retain the Current Best of
Breed Systems and Procure a Utility
Billing Best of Breed
EXTERNAL COSTS
One-Time Cost Summary
Software License Fees -$ 3,628,151$ 3,391,151$ 1,069,984$ 1,670,133$
Additional Hardware Costs N/A N/A N/A N/A N/A
Consulting Implementation / Data Conversion / Interface
Development -$ 589,350$ 1,009,757$ 2,142,027$ 2,338,275$
Training N/A 566,850$ 686,850$ 120,000$ 250,850$
System Selection & Implementation Planning Fees N/A N/A 80,000$ 200,000$ 200,000$
Total External One-Time Costs -$ 4,784,351$ 5,167,758$ 3,532,012$ 4,459,258$
Reoccurring Cost Summary
Annual Software Licensing & Solution Support 667,910$ -$ 64,138$ 241,675$ 205,874$
Consulting Support Services 250,000$ -$ -$ 80,698$ 64,425$
Cloud (includes Licensing, Support, Interfaces & Consulting
Services)-$ 3,421,439$ 2,921,439$ -$ 646,080$
Training 112,500$ 150,000$ 165,000$ 75,000$ 115,000$
Total External Recurring Costs 1,030,410$ 3,571,439$ 3,150,577$ 397,373$ 1,031,379$
INTERNAL COSTS
Reoccurring Cost Summary
Current Support FTE 2,073,000$ 510,000$ 510,000$ 510,000$ 510,000$
Additional Support FTE'S -$ 530,000$ 530,000$ 400,000$ 530,000$
Total Internal Recurring Costs 2,073,000$ 1,040,000$ 1,040,000$ 910,000$ 1,040,000$
Year #1 Grand Total Cost 4,133,820$ 6,267,261$ 6,650,668$ 4,442,012$ 5,942,168$
FIVE YEAR ESTIMATES
Five-Year Estimate *17,138,248.00$ $25,559,803 $24,182,480 $9,911,572 $14,608,045
* Estimate includes one-time and reoccurring costs during year one, annual software licensing and solution support for planned application purchases in year one are assumed to incurred in years 2-5 only, and the future value of investments
has been adjusted for years 2-5 to account for a 3% annual rate for inflation.
Executive Summary of ERP Evaluation Project Alternatives
Cost Category
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1.1.6 PLANTE MORAN RECOMMENDATION
The SAP system offers a significant range of functionality and is capable of meeting most of the City’s
ERP needs. However, the City has not demonstrated the capacity of effectively utilize the range of
features offered by this complex system. The primary challenges with maintaining Options 1 and 2
would be the inefficiencies due to multiple systems and the cost of maintaining and supporting the
SAP system and the interfaces with a proliferation of best-of-breed solutions in the long run. Internal
and external costs to support the current environment, variety of standalone systems, and the lack of
integrated information are also main drivers for the City to consider additional options. Plante Moran
does not view Option 1 as a viable long term strategy primarily because the current version is not
supported by SAP starting in 2016.
At the time that the City purchased the SAP system, the ERP software market was quite limited.
Today there are a number of ERP options, designed explicitly for and available to, cities the size and
complexity of Palo Alto. Some of today’s ERP systems offer not only the core ERP functions, but also
many of the Expanded Capabilities, as shown in the prior diagram.
Overall, the City may decide to continue with SAP, but in view of the total cost of ownership differential
as well as the problems that it has had in maintaining and optimizing SAP in the past, Option 3 may
allow the City to lower the total cost of ownership and improve the functionality for City end users.
We recommend that the City issue an RFP to evaluate best of breed solutions with a fully
integrated public sector focused ERP solution and procure a separate utility billing best-of-
breed solution.
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2 Current State/Gap Assessment
2.1 OVERVIEW OF FINDINGS
One of the main strengths of the City’s current set of business systems is that they enable the City
business processes – i.e., employees are paid on time, purchases are made, applicants are hired,
financial reports are completed, and funds are budgeted and accounted for. In general, the current
systems facilitate basic financial, purchasing and human resource functions. There are, however,
some weaknesses that will be reviewed in further detail in the functional assessment areas below.
2.2 GENERAL LEDGER / FINANCIAL REPORTING
The City utilizes SAP for General Ledger, Budget Control and core Financial Reporting. SAP was
implemented over 10 years ago and is still supported by the vendor to this day. A majority of the
organization utilizes SAP for basic financial reporting purposes, however many of the departments
utilize Excel spreadsheets for budget tracking/reporting, as reporting from SAP has been described as
difficult.
Overall, the chart of accounts at the City has five segments and can approach 30 alpha numeric
characters as defined below:
Segment: Fund
Cost
Center
Business
Area/Dept. Account WBS
# of
characters:
3 8 3 5 10
As a whole, the current Chart of Accounts accommodates GAAP based on GASB standards for the
City’s CAFR. Despite not being on the most recent version of SAP, City staff has been able to
maintain a high level of effectiveness in its accounting processes.
STRENGTHS
The strengths of the current General Ledger / Financial Reporting environment include:
1. Chart of Accounts Structure: The current Chart of Accounts adequately accommodates
required GAAP based on GASB standards for the City’s CAFR.
2. Interdepartmental funds transfer: The system enables the transfer of funds between
departments, funds and projects through an automatic fund balancing feature. The feature
allows an authorized user to complete entries across multiple funds and the system prepares
the balancing entries in the background. This capability provides prevents these transfers
from creating out of balance situations and prevents the need to manually perform these
entries.
3. Audit Trail/Drill Down Functionality: Basic audit trail and drill down functionality is available
within SAP.
4. Closing Flexibility: SAP effectively supports month end and annual closings.
5. Familiarity with system: The current accounting staff is knowledgeable and familiar with the
current system.
6. Useful query/reporting tools: Users identified the query feature and Spinifex reporting tools
as major strengths that need to be retained in a new solution. However, staff would like
additional functionality, such as the ability to drill into further information from the reports.
7. Upload tools: SAP has functionality to upload journal entries from Excel into the financial
system.
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WEAKNESSES
1. Data Integrity: During the initial SAP implementation the City converted historical data which
is causing data integrity issues (remaining AR balances) to this day. While this is not an issue
resulting from SAP, this information converted resulted from an implementation process that
was not validated and it perpetuates error within the system.
2. Chart of Accounts and Validations: Not enough automated validations were implemented
when it comes to creation of new GL accounts, thus duplicates exist. Unique description for
each general ledger account is needed to avoid confusion when posting transactions and
generate reports. This is a process issue that has no relationship with SAP.
3. Manual Processes: SAP has automatic and recurring journal entry functionality, however it is
not being utilized. While the City does have the ability to utilize a template to upload the
journal into SAP, it requires manual intervention to open up the template and execute the
journal process. This is a process issue and not identified as an SAP system functional
deficiency.
4. Journal Entries Workflow: Requests for journal entries from the departments are submitted
via a hardcopy memo, which is difficult to track and ensure completion. Staff would like to
submit journal entries electronically, along with supporting documentation.
5. Reporting Tools: It is difficult for the casual system user to write new reports with the SAP
and Spinifex reporting tools. Staff indicated that the current financial system is not user-
friendly and provides limited ability to extract, manipulate and analyze data. Third party CPA
(MGO) compiles the CAFR and annual Streets Reports on behalf of the City. The City needs
more access and transparency in the third party system. Microsoft Excel is heavily used to
analyze the financial results (i.e. budget to actual variances).
6. Internal Orders Functionality: The City uses The Internal Orders functionality of SAP for
tracking statistical data for expenses relating to grants or specific sub-projects. It is also used
in other areas including Planning, Community Services, and others.
7. Accounting Decisions Responsibility: Various City departments have their own Accounting
liaison that make accounting decisions, which should reside strictly with the trained accounting
staff. This is recognized as a process and governance issue unrelated to SAP’s system
capabilities.
8. Electronic Document Management: Reviewing backup documentation is currently a
manual/paper process. Departments will park their journal entries in the system and send
paper "backup" for accounting to review.
9. Loss of Institutional Knowledge: City has lost quite a bit of institutional knowledge through
retirements which has hurt the SAP support structure. As a result, much of the functionality
SAP can provide has been ‘lost’ as the City power users retire. This is identified as a system
governance issue and not related to an SAP functional limitation or deficiency.
10. Reporting System Gaps: FI and FM funds integration reports differ in the way SAP is
configured resulting in conflicting reporting results creating confusion among the user base.
11. Donations Tracking: Accounting has to track outside of SAP and Questica the status of all
donations since the amounts cannot be determined by the individual departments at this time.
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OPPORTUNITIES
1. End-user financial reporting will be greatly improved from either an SAP upgrade of the
implementation of a new system, as many of the components and CAFR required financial
reports are provided out of the box from a host of potential vendor solutions.
2. If the City decides to upgrade its current SAP environment, it should start taking advantage of
the Internal Order feature for interdepartmental costs allocations or for tracking costs of a
specific job, allocating the costs to an asset, cost center or GL Account and analyzing the cost
centers for better-decision making purposes. Furthermore, the City should take advantage of
the SAP automatic and recurring journal entry functionality and turn on the journal entry
approval and posting workflow by turning on email alerts and modifying the rights of the roles
for the users involved in the process, in such a way that segregation of duties is achieved or
maintained.
3. A modern system can potentially provide users with improved non-financial reporting tools,
increased account and budget validation at the point of data entry, and greater ability to drill
down into system transactions. The City owns SAP Business Intelligence module, which is
currently used only by Utilities department. This City should consider expanding the use of this
tool across all departments in order to achieve better reporting and creation of user defined
automated dashboards that include financial and non-financial metrics.
4. The chart of accounts structure and cost center structures need to be optimized in order to
better align with business needs and provide more meaningful information to decision makers
and citizens.
5. A future system should include accounts payable invoice scanning, document storage and
retrieval, and electronic workflow processes. The City is currently contracting to outsource the
payables processing through Commerce Bank to provide these services, it is more efficient to
perform these functions within the core ERP whenever possible.
2.3 INVESTMENT/CASH MANAGEMENT
The City has the responsibility of managing many types of debt and investment instruments that
require significant planning and tracking efforts for ensuring sufficient funds are available to cover
liability and contractual obligations. The City’s Money Management / Treasury Division is responsible
for investing the City’s cash resources, investments, and facilitating the debt financing process in
accordance with the City’s investment policies and State statutes.
The City currently uses the Sympro software to centrally track the City’s investment portfolio activity
valued at $500 million. The software generates reports for analysis, reconciliation, and meet legal and
accounting reporting requirements including the production of quarterly investment reports for City
Council, forecasting investment maturities, and ensuring the City has sufficient cash liquidity.
Examples of reports generated including GASB 40, owned security list, variety of interest earnings,
past and future maturity activity, etc.
STRENGTHS
Sympro is a versatile and appropriate system for managing City’s investment portfolio.
WEAKNESSES
1. SAP Use: SAP is not being used to track the City’s management of investments and cash
flows and there is no programmed interface between Sympro and the City’s SAP GL at this
time. This requires all activities including, but not limited to, interest earnings, purchases, and
sales, to be represented as manual journal entries.
2. Reporting and Analysis: Cash flow analysis is currently being managed in MS Excel to
represent the needs of the entire organization.
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3. Staff Availability: Because cash flow forecasting involves manual processes necessary to
update these Excel workbooks to synchronize transactions, there is greater overhead to
produce current, actual summaries of cash flow forecasts reflecting the City’s current
investment holdings.
OPPORTUNITIES
It is very common for ERP vendors to partner with investment management solution providers,
including Sympro, to offer a direct integration with the ERP system can be achieved. A direct
integration with the City’s ERP system would:
1. Reduce administrative overhead involved in creating journal entries for account updates in
the GL and provide greater line item control options.
2. Provide the City with options to have utility and non-utility accounts receivables represented
in addition to an expense side module so a single cash flow analysis could be represented.
2.4 BUDGETING
Starting with the FY 2016 budget, the City’s annual operating and capital budgets are developed with
Questica Budget software, using extracted financial data from the City’s Enterprise Resource System
(SAP). Previously, the General Fund Long Range Financial Forecast (LRFF), labor cost modeling,
financial reporting, and monitoring of the City’s budget were completed on spreadsheets. Starting in
the FY 2016 budget process, Questica Budget will be used to develop, monitor, and review the City’s
budget.
The workflow process of receiving a budget proposal, packaging decision materials, and compiling text
and figures into the budget document will be automated using Questica Budget and the budget
document publishing software (PatternStream). Questica is integrated with the City’s current ERP
system (SAP) and PatternStream.
During the fiscal year, the Office of Management and Budget (OMB) and city departments adjust
department budgets to reallocate existing funds into more appropriate line items or augment a
department budget based on Council action. Beginning FY 2016, workflow for these processes will be
managed using Questica Budget by documenting the budget change and its justification. Any budget
change in Questica Budget will be adjusted in SAP through an interface that occurs daily.
STRENGTHS
The strengths of the current Budgeting environment include:
1. Systems Integrations: Budget preparation in Questica Budget is integrated with SAP and
Pattern Stream. The workflow and budget entry for this process will be managed by Questica
Budget with a daily interface to SAP to record the transaction in the financial system.
2. Streamlined Processes: Questica Budget results in a more a more streamlined budget
process. Staff in departments will provide information for budget change submittals, Budget
Amendment Ordinances (BAO), and annual budget proposals in a work flow environment.
Specific budget proposals for vehicle requests or position requests will be routed through the
workflow process to Public Works or People Strategy and Operations, respectively. OMB and
department staff can review and approve proposals and generate decision packages for
decision makers to review in a controlled setting.
3. Automated Workflows: Questica software has workflow capabilities for receiving a budget
proposal, packaging decision materials, and compiling text and figures into the budget
document, which eliminates manual processes, reduces errors, and allows Analysts in OMB to,
work with departments on cost saving measures
4. Reporting and Modeling Capabilities: Budget modeling, summarization, and reporting are
performed in Questica Budget. The functionality of the budget system allows staff to input
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escalation factors or dollar amounts for these scenarios and have these changes
automatically flow through the next ten fiscal years.
5. Performance Management and Dashboard Monitoring: The City reviewed various
performance management software solutions. Questica Budget released a performance
management module with dashboard capabilities in summer 2014. Staff intends to bring
forward a contract amendment in the fall to the City Council to change the license agreement
from seat licenses to a site license at a highly reduced cost. It is expected that managing the
City’s operations through central review of performance measures and dashboards will
enhance productivity and services for residents and the community.
6. Automated Spending Controls: SAP’s Budgeting Availability Controls (AVC) is used to warn
the user if 10% or 5% of budget remains. The department must then submit a budget change
request to OMB.
7. Efficiency Gains: With the implementation of Questica Budget software manual processes
will be eliminated, which reduces errors and allows Analysts in OMB and the departments to
work on higher value tasks such as cost saving measures, organizational analysis, and
performance management.
WEAKNESSES
The weaknesses of the current Budgeting environment include:
1. PO and PR Carry Forward (Reappropriations): The City carries forward its Purchase
Orders and Purchase Requisitions from one year to another. In the New Year the Accounting
department is posting the accruals thereby creating problems for budget reports by
department. The City is working to perform a change to the Municipal Code to address this
issue.
2. Cost Allocations: OMB department does not understand the basis of how percentages of
overhead costs allocations was determined and the execution of this process in SAP (no
assurance that is complete nor accurate). The configuration of these cost allocations was
performed by staff during SAP’s initial implementation who are no longer in the City’s employ
and the knowledge to understand how these were established was undocumented. OMB is in
the process of implementing Questica which will address this shortcoming.
3. SAP Reporting: Generating custom reports from SAP is difficult (i.e. department budget
showing key parameters) and requires a program to write the report. It is very difficult to obtain
fund reserve balance reports for any of the funds in real time. Data reports do not have the
required detail (i.e. budget to actual reports). Report data varies when reports are generated
by different users and cannot be tied back to the cost centers detail. As a result, departments
do not have confidence in the data in some reports.
4. SAP User Friendliness: Some City Departments do not use the SAP system to track and
report transactions (i.e. Public Safety) due to the perceived level of difficulty to produce reports.
As a result, departments feel they are not in control of their financial situation. In extreme
cases, due to the lag in P-card transaction posting, departments fully expend their budget and
have the need to submit a budget change request..
5. SAP User Training: Users are in high need of continuous training when it comes to budget
management and reporting in SAP modules (SAP FM, SAP PS, etc.).
PENDING ISSUES
1. Double Entries: SAP will remain the system of record for Position Management due to the
ERP system controlling and maintaining employee master data. Position cost center
allocations will be maintained in SAP. Since the budget for positions will be developed in
Questica Budget, and unless SAP and Questica Bydget integrates position changes during
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the Questica Budget implementation, position changes derived from the annual budget
process must be performed in parallel with both systems (SAP and Questica Budget).
OPPORTUNITIES
In the near term, the City will benefit from implementing and integrating Questica budgeting system
with SAP. The expected advantages of reducing the staff time involved in the budget development,
review, approval and adjustment processes in combination with an electronic workflow-driven
environment is anticipated.
In an optimally configured system the City would be able to accurately define and track progress
toward mission elements, while taking advantage of the following additional opportunities:
1. Streamline and make transparent the overhead costs allocations to easily check
completeness and accuracy
2. Gain control over budget line items changes, made directly within the system, via user security
rights and automated approval workflows
3. Implement better automated spending controls, fund center assignee controls, position
management controls etc.
4. Avoid double entries in two systems when it comes budgeting changes
5. Track donation status within the ERP system by the individual department
6. Improve reporting granularity, accuracy, confidence and speed
7. Increased user friendliness when it comes to usage of the ERP system due to its predefined
module functionality and reporting capabilities
Further the City should consider:
1. Providing formal and informal annual ERP and non-ERP systems training to end user, based
on business need and keep track of each user training compliance
2. Documenting in a “Center of Excellence” repository the best practices and lessons learned to
which all users have restricted access based on their business needs
3. Hold each Department accountable for maintaining updated policies, procedures, user
manuals and desktop procedures for all systems
4. Enforce ERP and non-ERP systems governance, especially when turnover takes place within
the Departments
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2.5 FIXED ASSET | ASSET MANAGEMENT | CAPITAL IMPROVEMENT
PLANNING
The City has decentralized asset management responsibilities involving multiple divisions and
departments. Community Services, Public Works, Utilities, and Administrative Services are key
service providers with responsibilities to ensure the City’s infrastructure assets provide reliable,
predictable levels of service at the lowest cost possible. The City recently completed an Enterprise
Asset Management Needs Assessment, Selection, and Implementation Plan to improve and manage
on the asset management practices. The assessment revealed the City had been maintaining its fixed
asset inventory to compliance with GASB 34 standards using SAP’s Fixed Asset module. New capital
projects and capital rehabilitation projects that extend asset life are captured from invoices and
timecards and posted into SAP’s project module. The project module is reconciled with the
construction in process account and project costs are capitalized annually during the year a given
project is closed.
The City maintains a rolling, five year capital improvement planning window which categories projects
into programs and into funds to facilitate the reporting process. Budgets for projects are developed by
phase, by program, and by project which assists in the management activity tracking process. The
City is further required to track its infrastructure investments by IBRC category which introduces a
more granular reporting and tracking requirement beginning with this year’s asset management
requirements.
STRENGTHS
1. Project Accounting: The City’s ability to account for labor and contracted costs by project
through the City’s time and attendance system in SAP so these costs can be accounted for
and capitalized, as appropriate, is a model best practice (as evidenced in non-internal service
funds or those involving Account 471).
2. Budget Development: Additionally, the City’s recent investment in Questica this year will
completely transform the budget development process for FY 2015 by establishing a
structured workflow for all departmental budget item submissions. It will reduce administrative
overhead in managing numerous complicated Excel spreadsheets and will integrate directly
with SAP which will be expected to remain as the system of record for all budget to actual
reporting within the City. Questica will provide the ability for departments to submit budget
changes for projects, close out projects, reallocate funds between projects, open new projects,
and tag new sources of revenue. Daily updates will be provided from SAP into Questica to
enable departments to more readily retrieve current state budget to actual information by
project, program, or fund.
3. Grant Accounting: The City is currently managing its $2.5 million in grants successfully
through SAP where each department is responsible for administering their own grant
obligations including advances (e.g. VTA), CDBG, FAA (new airport operations), county
(transportation reimbursement), and utilities (Santa Clara County Water District). The grant
reporting and tracking needs have been sufficient for those responsible in tracking this
information.
WEAKNESSES
1. Use of SAP Modules: The City’s asset management activities outside of the Utilities Department
are not using any of SAP’s Plant Management (PM) module capabilities. As a result, there is very
limited asset management accounting for activities involving regular and capital maintenance due
to several factors including:
The use of disparate systems and databases that are not integrated with SAP or its interfaced
systems preventing the City from portraying a uniform view of its asset infrastructure.
The inability to portray accumulated maintenance deficits contributing to accelerated asset life
deterioration
The absence of any work order or service request management tools to track regular and
preventive maintenance leads to increased asset liability.
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2. Capital Improvement Planning (Budget to Actual Reporting): The City does not currently
have a means to generate reports allowing departments to determine the status of a multi-year
projects. This is caused by the need to carryover previous year(s) funding from earlier budgets
when a project spans more than one fiscal year. When this happens, the ability to freeze a
project prior to the carryover at a specific point in time to reflect current to actual details is not
possible.
3. Tracking Internal Labor Against Projects: The means to provide an instant status report that a
project manager can design and initiate exports from remains elusive and not possible to
generate without advanced SAP system knowledge. This restriction appears to be limited to
internal service fund activity tracking at this time as CIP projects do not appear to have this
restriction.
4. Absence of a Comprehensive Asset Infrastructure Inventory: Capital assets are typically
tracked by aggregated quantities which is adequate for meeting GASB 34 accounting guidelines
but are insufficient for operational asset management activities. Non-capitalized assets also
involve significant maintenance responsibility for the City and are not inventoried in any system,
including SAP at this time. Without a comprehensive inventory, there is no way for the City to
manage its overall maintenance obligations to know where maintenance has been deferred or
needs to be performed.
5. Absence of Multi-Year Asset Maintenance/Management Forecasting: The City does not
have a program in place that forecasts asset maintenance needs beyond the five-year rolling CIP
planning horizon. The City currently recognizes fixed asset lifespans for infrastructure at 40+
years but there is no current planning mechanism in place to represent these longer term
commitments.
OPPORTUNITIES
The City’s recently completed Enterprise Asset Management System (EAMS) Needs Assessment,
Selection, and Implementation Strategy report identified the following opportunities that could be
realized through the use of an Enterprise Asset Management System. Integrations with the ERP
environment are necessary to execute a number of the following items:
1. Maintain Current Asset Inventories for Current Asset State Evaluations: The EAMS
must allow City staff to establish a comprehensive, uniform, current-state inventory asset
types across operational divisions in Public Works, Community Services, and Administrative
Services by current asset operating status (e.g. current/active, scheduled, retired). This
inventory needs to identify capitalized and non-capitalized fixed assets so they can be
associated with the identification numbers currently in SAP for fixed asset value tracking (e.g.
government-wide financial reports, statement of net assets).
2. Provide a Basis for Budgeting and Capital Asset Planning: The means to track budget to
actual cost at the asset detail level in addition to the project and program levels through the
City’s ERP presents new opportunities to weigh asset management alternatives at both the
near and long term. At present, the City’s operational divisions are identifying priorities based
upon an annual budget cycle and a five year capital investment timeframe. The lifespan of
most infrastructure far exceeds this planning window (often greater than 20 or more years).
The ability to identify past, present, and future resource asset resource commitments will
ultimately determine if infrastructure is being managed as cost-effectively as possible or if
corrective measures are necessary to prevent reduced asset life.
3. Balance New Infrastructure Investment Planning with Operations & Maintenance:
Operations and maintenance (O&M) budgets need to be re-evaluated to determine the impact
to service levels as operations and maintenance budgets are expected to support a larger
asset pool. In most cases, the size of asset pool increases at a rate faster than the amount of
funds allocated to O&M activities. This obviously diminishes the organization’s ability to
realize the given assets expected lifespan.
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4. Integrate City’s EAMS with ERP Human Resources, GL, and Budgeting Modules:
o The ability to access personnel rates through the HR module and assign these rates
to work activities within the City’s EAMS will ensure direct labor costs associated with
projects are accurately represented and available. Budgeting integration will allow for
capital maintenance or construction activities to be captured according to existing
project/program accounts. It will also facilitate the collection of this information at the
operations detail level. This allows for improved fixed asset reporting and accounting
at the end of each fiscal year when this inventory is updated. Integration with the GL
will allow for specific labor, materials, and equipment to be expensed to the assigned
account numbers which will expedite budget-to-actual reporting and improve the City’s
capability to calculate actual service level cost.
2.6 PROJECT ACCOUNTING
The City is currently using the SAP-PS (Project System) for its project cost accounting activities in
addition to Microsoft Project and Microsoft Excel. Project accounting is conducted by phase, by
program, and by individual project and typically involves larger capital projects involving public works,
utilities, and facilities related projects. Projects are typically created through the budgeting process on
a rolling five-year cycle. The City is able to use the SAP-PA to track project phasing but is not
currently using project task tracking capabilities at this time. Project management activities involving
scheduling, task assignments, activity dependencies, and milestone completion percentages are
performed outside of SAP using Microsoft Project or Excel.
STRENGTHS
1. Labor Cost Tracking: Project accounting is very effective at capturing labor costs through
SAP’s time and attendance entry system which can be coded directly to specific projects.
This provides a very efficient and effective means of providing labor cost allocations to
projects and also produces reports with accuracy. The City maintains tracking relationship
information for budgeted CIP projects against current and scheduled projects. Because of
these strengths the City has been able to:
2. Reporting Compliance: SAP allows the city to comply with all external reporting
requirements (e.g. Federal, State).
3. Disaster Reimbursement: In emergency or disaster declaration situations, the City has the
ability to track emergency related project costs through SAP’s project accounting toolset
allowing for reimbursement reporting. This is a critical function necessary to support public
safety and public works professionals responsible for ensuring the delivery of essential
services.
WEAKNESSES
1. Project Budget Tracking: One of the greatest obstacles to SAP’s project accounting system
is the capability of tracking real-time project budget or contract balances. Presently, project
managers are responsible for tracking their own project costs, tasks, and retainage in Excel
spreadsheets. This creates reporting challenges as information pertaining to the completion
status of project tasks, retainage release approvals, and vendor performance is not being
captured within SAP. Which results in a lost ability to generate standardized project status
reports. It is possible for departments to overspend their project budgets without exceeding
budget controls on a multi-year type project involving multiple funds. Therefore, budgetary
controls are not effective in these types of situations. Project managers are also constrained
by the fact that they cannot represent prior year budget to actual reporting because funds can
be carried over from the previous fiscal year. This precludes the ability to represent project
variances at previous points in time when conducting project status comparisons on similar
types of projects. It also prevents project managers from determining the amount remaining to
fund their projects.
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2. Project close-out: since project open/close dates are not consistently defined in SAP, the
ability to run a report on project closeout status leaves many projects open beyond their actual
lifespan. It also requires project managers to manually notify their financial analysis and/or
accounting when projects are completed to effectively closeout a project (e.g. releasing
payment/performance bonds, liquidating escrow accounts, accurately tracking the valid dates
for warranty coverage, etc.).
3. Contract Compliance: Contract administration is also complicated by the fact that there is no
way to track a contract back to multiple projects or from multiple contracts back to a single
contract. The absence of this knowledge prevents the organization from identifying the quality
and performance of prior vendors in addition to knowing whether vendors are authorized to
continue working for the City in accordance with performance requirements (e.g. liability
insurance is current, performance guarantees in place, business licenses are up to date, W-
9’s are still valid, etc.). At present, there is no relationship between the project management
module and SAP’s MM (Materials Management) where contract information resides.
4. Reporting Limitations: User/custom reporting queries are currently limited to those
personnel who are granted access to the SAP system and/or are afforded sufficient user
rights. SAP allows for users to have the ability to query on any data fields, project information,
or account codes however, many project managers are reported to not have sufficient access
system to generate their own reports. It should be noted, this information may not always be
consistently entered into SAP and therefore a process improvement opportunity could resolve
this challenge.
OPPORTUNITIES
In order to improve efficiencies in the area of project accounting, the City should consider the following
opportunities:
1. SAP’s Project System provides the opportunity to track projects encompassing multiple funds
and/or departments but this functionality is currently not being utilized. This creates situations
where shadow systems must be relied upon for accurately tracking this information to ensure
expenses are fairly allocated to the appropriate fund(s) involved.
2. The ability to reference contract terms involving the scope, services, materials, and milestones
through the Project System would be very beneficial. This would also avoid the time
consuming process involved in generating reports from purchase requisitions in order to locate
contract documents for specific projects and programs.
3. The City should identify options to institute project workflows that will enforce standardization
across all projects and departments involving approvals, expenditures, and receipts based
upon the City’s internal reporting policies and procedures. The ability to closeout projects on a
timely manner, represent project costs accurately for future performance comparison and
institute standardized reporting will provide a means to establish reliable performance metrics
in the future. This will also enable the City to benchmark its performance against other peer
municipalities as the City seeks to evaluate similar project types.
In late 2011, an Infrastructure Blue Ribbon Commission issued a report recommending the City invest
in an infrastructure management system. The system would track the condition and use of City
infrastructure at the project level with the intention of providing the basis for asset-detail budgeting and
longer-range asset maintenance projections. A new Enterprise Asset Management System (EAMS)
which will be capable of tracking work activities at the asset, project, program, and fund levels. The
system’s future (anticipated) integration with the City’s ERP will provide a means of capturing project
specific labor, equipment, materials, contract specifications, and other cost details. The opportunity to
provide project specific details involving work performed, GL line items charged, and dates of
performance will significantly advance the City’s project administration and reporting capabilities.
2.7 PROCUREMENT
The City has conducted extensive evaluations of its Purchasing Division policies, procedures, and
requirements under the City’s Municipal Code and Charter over the past four years. In 2011, the
Leadership ICMA team evaluated the City’s procurement operations and City’s Purchasing Manual. In
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2014, the City commissioned NIGP Consulting to prepare recommendations (Periscope Report) to
improve the administrative efficiency of the purchasing process in addition to focusing the
department’s efforts to become more strategic in focus. Reoccurring observations from the following
observations that were taken into account during the ERP evaluation process by Plante Moran:
Continued staff turnover in the Purchasing Division has led to inconsistency in administering
the purchasing manual and guiding staff through the purchasing process including contract
administration, bid solicitation, and the submittal of purchase requisitions
Formal and informal staff training is necessary for both purchasing and non-purchasing staff
to ensure purchasing processes are understood and enforced uniformly throughout the City’s
operations
Decentralization of the purchasing process has been identified as a strategic objective for the
City. The ability to allow departments greater flexibility to manage their own solicitation
process while maintaining necessary oversight controls administered by the City’s Purchasing
Division was repeatedly identified
A need to streamline the administrative process involving informal and formal solicitation
requirements was recognized by weighing the administrative costs to administer each form of
competitive bidding process against the overall risk to the City
The City currently issues about 2,220 purchase orders annually representing a total spend of
nearly $190 million
The City now requires a purchase order for any purchase over $5,000 at present and is
encouraging the use of P-Cards (avoiding the need to issue a PO) as a way to facilitate the
purchasing process and reduce the amount of time necessary to complete a purchase
Informal purchases (three quotes obtained by department) require about 3-6 weeks for
processing and formal procurements (public advertisement) require between 6-12 weeks to
process from start to finish
Limited oversight and flexibility relating to purchasing processes in SAP have lead the
Division to seek Requests for Proposal for the procurement of an e-procurement system
(including vendor self-registration) to replace the use of SAP as the Division’s main
purchasing system.
The Division has also investigated the potential investment in a document management
system to associate documents to purchasing and contract transactions in the new e-
procurement system.
STRENGTHS
The City has successfully initiated a P-Card system that has integrated with the SAP system for single
unit purchases under a $5,000 threshold. The City is currently able to pre-encumber funds when
purchase requisitions are made and encumber funds when a purchase order is issued. City staff are
able to see both types of encumbrances on their budgets in real time when reviewing their budget
status by fund (including specific line items).
WEAKNESSES
1. Contract Management: SAP’s Supplier Relationship Management Module (SRM) processing
is not being used to maintain contracts in SAP which limits capabilities for accessing contract
data and requires that the City maintain contracts with the creation of a purchase order.
Decentralization in the purchasing process along with missing controls in the SAP system
require that both the Purchasing Division and City departments manually monitor open
purchase orders. The system does not currently maintain contract expiration data and
automatically carries open purchase orders are carried over to subsequent fiscal years.
2. Lack of electronic workflow: SAP’s configuration is also noticeably weak in supporting
workflow processes. For example, W9 processing can be an issue for purchases made below
the PO threshold if the vendors W9 is not on file. The system allows purchases to be made
without confirming that the vendor has a W9 on file.
3. Commodity Codes: The City does not currently use NIGP codes but realizes the future
benefit in utilizing commodity codes.
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4. Limited Process Control: There is a weak relationship between the Municipal Code and
City’s Purchasing Manual. Inconsistencies provide for risks and create possible areas of
failure.
OPPORTUNITIES
The City’s selection of a new e-procurement system gives the organization flexibility to evaluate its
current purchasing processes and determine where these processes can be improved. When
evaluating a new “Best of Breed” purchasing system the division should consider:
1. Associating commodity codes to account codes to enable the organization to classify
purchasing data by products and services. The use of commodity codes facilitates the
grouping, categorization and analysis of spend data supporting the development of term
contracts.
2. Investigating/continuing to investigate the potential investment in a document management
system to associate documents to purchasing and contract transactions in the new e-
procurement system. A document management system is also necessary to take advantage
of vendor self-registration capabilities.
3. Establishing workflow controls for purchases that do not require a PO. A control to verify that
the vendors W9 is on file before automatically purchasing from a vendor would eliminate the
risk that purchases have been made from a vendor without a W9 on file.
4. Tracking vendor performance. Currently the City can’t track failure to perform situations.
Maintaining this additional vendor data can help the City make financial investments that have
the highest ROI.
Outside of Purchasing’s technology initiatives, the Division should evaluate, review and revise terms in
the Purchasing Manual to be consistent with the Municode. In accordance with the Periscope report,
the Code is law and is the highest level of procurement policy. The Manual should include the
requirements of the Municode.
2.8 ACCOUNTS PAYABLE
The City is entering into a contract with Commerce Bank to outsource its payment functions. This
process is set to start planning the project January 1st, 2015 with a go-live on or before June 30th. The
bank will scan invoices and pay vendors via credit card, check or ACH payment. These outsourced
activities will provide badly needed accountability over vendor invoices, increase efficiency of and
provide accountability over the invoice approval process, provide an electronic storage and retrieval
system for vendor invoices, and eventually may reduce overhead expenses related to processing
payments and cutting checks. Activities performed by the bank will be reported via an electronic
reconciliation file from Commerce Bank to the City. In addition to these services staff at the City are
also using Advanced Micro Solutions (AMS) 1099-ETC software and JP Morgan Chase Smart Data.
STRENGTHS
The City is currently issuing check runs on a weekly basis and this frequency is generally higher than
many communities Plante Moran evaluates. This practice prevents the City from incurring additional
liability for late fees when invoices are remitted by the departments on a timely basis.
WEAKNESSES
1. Limited Process Control: Decentralization in the process along with the absence of a vendor
self-service function has created situations where departments hold onto invoices creating
unknown liabilities, year-end accrual issues, unhappy vendor’s, late fees etc. Outsourcing the
City’s payment functions will eventually eliminate this issue to some degree assuming
departments promptly approve their invoices for payment.
2. Employee reimbursements: There are many California Public Records Act requests on
employee reimbursement transactions. It is vital to the organization that supporting
documentation is available and accessible. The absence of an integrated document
management system creates the need for shadow systems/shadow processes, especially
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where associated documentation is vital to maintain. The employee expense reimbursement
process exists mostly outside of the financial system. Supporting documentation is maintained
at the department level outside of SAP and is attached and forwarded to AP via excel
spreadsheet. This process is expected to move from AP to payroll.
OPPORTUNITIES
An integrated content management system would support the City’s response to public requests for
information as well as help support the organizations transparency. The outsourcing of the payables
function will reduce staff overhead for the City and will introduce the benefits of a third-part document
management system.
2.9 REVENUE COLLECTION/MISCELLANEOUS BILLING/ACCOUNTS
RECEIVABLE
Payments arrive at the City via a variety of methods and departments. The Cashier’s Office and
several departments accept cash payments, with some departments taking deposits directly to the
City’s bank. The City also uses a lockbox for utility payments. Procedures across the City for
recording and processing receipts vary (including both manual and automated methods for sending
receipt information to Accounting Department). Revenue Collections department and 12 other
departments across the City collect revenue and fees. Revenue Collections department has 4
cashiers. CORE system (the cash receipting system) and SAP (SCM and AR) are the primary cash
receipting, billing and posting systems at the City.
The City outsourced to third party vendor the collection of paramedic receivables.
STRENGTHS
The strengths of the current Miscellaneous Billing/Accounts Receivable environment include:
1. Multiple Receiving Methods: The current set of systems effectively accommodates the
organization’s receiving methods (i.e., Cash, Lock Box, Credit Card, Check, ACH, Credit
Memos, etc.)
2. Debit Card Transactions Processing: Transitioning to iPay (web version of Core system)
will allow processing of debit card transactions
3. Query Capability: Ability to query information in Core system
4. Revenue Collections Controls: Good controls have been put in place, like locked offices
with restricted access to cash registers, unique log-on in Core and locked cash drawers,
password protected the safe, no posting to accounts with no revenue allowed in SAP.
WEAKNESSES
The weaknesses of the current Miscellaneous Billing/ Accounts Receivable environment include:
1. ACH Payment Processing: ACH Payment processing is not automated. They are posted via
manual adjusting entries by the Accounting department, after research is performed to
determine whose department they pertain to.
2. Account validation: Core does not validate account numbers before posting transactions.
As a result, cashiers can post transactions to incorrect or invalid accounts. These errors are
not identified until they are interfaced with SAP. The process could be streamlined if cashiers
were notified of the errors, via a pop-up error message or other notification, before the
transaction was posted.
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3. Duplicate Records: SAP has many customer duplicates that need to be cleaned out. Thus,
the reporting of owed and paid amounts from SAP is hard to track by customer. This is a
process issue unrelated to the core functionality of SAP.
4. Reconciling Items: SAP GL does not match CORE system cash receipts balances.
Departments are not reconciling their cash receipts to their paid receivables. Some
departments rarely resolve reconciling items between SAP GL and their subledgers, leaving
them on the list of reconciling items for ever. This is a process issue unrelated to the core
functionality of SAP.
5. Delinquent Accounts and Interest Calculation: The SAP interest calculations are currently
incorrect due to wrong AR aging terms in SAP (SAP has 60-90-120 AR collection terms and
they need 30-60-90). As such, staff have to manually calculate interest on each of those
accounts and the automatic delinquent letters generated by SAP, are replaced with the
corrected manual ones by Revenue Collections department.
6. Police Department Issues: Police Department doesn’t have an automated POS system to
collect cash, even though it handles thousands of dollars/month and is in real need of a
system.
7. SAP Reporting: SAP AR Aging Reports have too many inaccuracies (cancellations, partial
payments, etc.), since SAP GL and Core are not reconciled. This is a process related issue
and not related to SAP’s core functionality.
8. SAP Training: Departments expressed the need of further training relating to SAP cash
receipts and receivables. They don’t feel like tracking and reporting of receivables and cash
receipts information in SAP is flexible or friendly enough (i.e. they can’t make a distinction
between write off and a cancelation of a receivable, document number type is the same for an
invoice, a cancellation and a write off type transaction on the reports, they can’t view
breakdown of payments that are received by payment type, etc.).
OPPORTUNITIES
In order to increase revenue realization, the City should consider the following opportunities:
1. Accounting should reconcile and resolve on time the cash receipts reconciling items between
SAP GL and Core system
2. Implement account validations in Core to validate account numbers before posting
transactions via a pop-up error message or other notification.
3. Clean up SAP customer duplicate records
4. Adjust AR aging terms in SAP from 60-90-120 to 30-60-90 to avoid recalculation of interest
and retyping of delinquent notices
5. Roll out the use of Core system to all other cash collecting departs (i.e Police department)
6. Train cash receipting departments how to use SAP tracking and reporting functionalities
2.10 PAYROLL/TIME ENTRY
The City’s Payroll process supports between 1100 – 1400 employees (depending on those employees
that are seasonal) and 11 different compensation/memorandum of understanding (MOU) plans.
Because of the many differences across the plans the fields in SAP need to be very specific.
Managers are responsible for approving timecards for salary staff and entering time for hourly staff.
Payroll processing is bi-weekly and all staff are paid on the same pay cycle regardless of
classification. The majority of employees take advantage of direct deposit and employees receive
their pay advices through email and through employee self-service.
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STRENGTHS
The SAP system is currently capable of handling most pay scenarios for standard classifications. A
simulated payroll is run on Monday and data elements associated with each payroll run including the
dates, number of work days, holidays, and accruals can be verified. FLSA reporting is fully supported
and overtime calculations impacting FLSA can also be handled. Strong capabilities also include:
1. Interfaces: Files are created by the SAP support team for CalPERS, ICMA, Mass Mutual,
and SSA so these organizations can receive notice of payroll disbursements. Other forms of
interfaces exist for situations involving:
a. COBRA Billings
b. Deferred Compensation
c. Annual Tax Witholdings to IRS
d. Garnishments
e. Work Orders (time entry against work orders)
f. Check Reconciliation
g. Budgeting (merit date and associated pay increases)
h. Deferred Compensation
i. Flex Spending
2. Employee Self Service: Allows employees to see accruals, benefit enrollment, and access
their pay advices on demand. Employees can edit their time cards within a six week period.
More capabilities could be realized but the current SAP version of ECC 6.0 does not allow for
an optimal configuration to support with the present City resources.
3. Absence/Leave Management: SAP enforces all PTO accruals and enforcement including
FMLA, donations of sick time to other employees, attendance policy management, and other
forms of general tracking are fully supported.
WEAKNESSES
1. Lack of electronic workflow: The absence of workflows, change notifications and the lack-off
ability to access data detail impacts managers’ ability to efficiently manage time card
approvals. The payroll process is dependent on each manager’s approval of their staff’s time
cards during the period. Some of the road blocks preventing timely submission of timecard
approvals include:
2. Data Validation: Approval of timecards that reference incorrect pay codes. Pay code detail
can only be viewed during time entry, not during approvals. Because of this, managers must
be familiar with all of the different compensation codes applicable to the staff they manage.
3. Workflow Notifications: Timecard edits after approval don’t trigger a re-approval workflow.
Managers do not receive a notification for timecard edits made after a timecard has been
approved. Managers are dependent on employees to notify them of these changes or the
change may go unapproved.
4. Shadow Systems: Hourly staff time detail is tracked outside of the system. Depending on the
department, hourly staff supporting data exists outside of SAP in the form of a paper sign in
sheet with time in/out or in an excel spreadsheet. Supervisors are responsible for entering
time for hourly employees and supporting documentation must be maintained.
5. Set-Up Challenges: Union detail is tied to pay code instead of job title/role In addition the
system restricts employees to enter time based on the schedule configured for their role. This
prevents some employees from entering the actual time worked (e.g., employees can’t enter
less/more than scheduled hours, night or weekend time unless they have a flex schedule).
6. Lack of Scheduling Functionality: Scheduling functionality is not available in the current
time and attendance system. Managers maintain shadow scheduling tools such as shared
outlook, Google, or paper calendars to manage employee time off throughout their
department.
7. Limited Training/Knowledge Transfer: It was also apparent during these sessions that
knowledge transfer across departments is limited because of the City’s decentralized
structure. As departments experience turnover and become dependent on shadow systems to
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conduct processes knowledge of current/available functionality may be lost. The group
participating in the cross-functional time entry/payroll session expressed frustration over
managing leave requests without a leave request submission portal. Discussion led to the
discovery that leave request submissions and approval capabilities exist in employee self-
service.
OPPORTUNITIES
In a decentralized environment it is even more essential that organizations focus on communicating
knowledge consistently and frequently. Documented processes that are continuously updated or
having quarterly management discussion sessions, for issue resolution discovery (mentioned in the
example above) are good communication practices.
Overall, the weaknesses that exist in the time entry/payroll processes exist because of the current
systems configuration or lack of functionality. In a new payroll environment union details could be tied
to job title/role instead of using different pay codes to differentiate between union employees.
Workflow and scheduling functionality should also be investigated during the selection of a new
system.
2.11 PEOPLE STRATEGY AND OPERATIONS (PSO)
People Strategy and operations (PSO) owns the employee lifecycle data for approximately 1,091
regular and up to 400 temporary/seasonal employees. The City has a complex collective bargaining
environment, with nine separate employee groups, some with different contract provisions. The
processes that PSO “owns” range from recruitment to new hire, benefits and compensation,
promotions, leaves of absence, changes in schedules and salary to retirement or end of employment.
Additional processes include that PSO manages include labor negotiations, discipline and grievances,
customer service inquiries, risk management, workers compensation, compensation, job descriptions,
salary schedules, employee development and training, succession planning, performance assessment,
and exit interviews.
PSO utilizes SAP for the majority of employee transactions from onboarding through employee
termination. In addition, NeoGov is utilized by the City for recruiting, applicant tracking and hiring
purposes. To summarize, human resources is another area in which it has been necessary to
purchase or develop a number of standalone systems in order to perform necessary business
functions. The lack of integration between these many systems results in a lot of manual reconciliation
and duplicate data entry.
STRENGTHS
The strengths of the current SAP and NeoGov environment include:
1. Basic Human Resources Management: Overall, the system facilitates many basic human
resources functions in an effective manner.
2. Security: The system has the ability to restrict user access to employee records.
3. Online applications: The City accepts online applications via NeoGov. Candidates are able
to enter their own information and have the flexibility to apply for a position from anywhere at
any time.
4. Job Descriptions: Job descriptions are retained in SAP and thus could be accessible to staff
and candidates via employee self-service and online recruiting.
5. Limited Self-Service: Employees can view read only payroll and benefit information online.
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WEAKNESSES
The key weaknesses of the current environment include:
1. Employee File: SAP maintains one master employee file, however departments must keep
paper files outside the system to be able to capture the level of employee information they
require.
2. Position Control: The position control ability within SAP is limited, with a particular problem
being an inability to tie positions to the budget.
3. Volunteer/Intern Management: Volunteer Management is a decentralized process, with
limited central PSO control.
4. Lack of Electronic Workflow: All Personnel Actions are paper driven processes which are
very tedious/labor intensive.
5. Lack of electronic document management: The employee record is kept in paper as the
current system does not accommodate scanned images/attach to the employee file.
6. Licenses and Certifications: The City uses multiple systems across departments to track
required licenses and certifications.
7. Compliance Reporting Limitations: The current system does not track federal compliance
related items such as EEO job categories. This makes reporting very tedious/labor intensive.
8. Employee Performance Management: Employee goal plans and performance evaluations
are a paper based process. While grading/comments are captured in SAP, the annual
evaluations are facilitated outside of the system.
9. Discipline Tracking: SAP is not being utilized to track disciplinary actions or employee
grievances. All associated grievance or disciplinary documentation is housed in the City's
SharePoint system.
10. Limited Employee Self-Service: The City does not have more robust employee self-service
functionality such as electronic benefit self-enrollment functionality.
11. Limited Manager Self-Service: SAP does not enable managers to manage their teams and
for employees to manage their transactions and information.
12. Reporting Limitations: The reports in some cases may lack the detail needed and this can
drive the need for separate spreadsheets to track personnel data. There are mandated reports
that need to be filed that SAP simply does not track. EEO reports are difficult to configure,
partly because the system was not set up for governmental reporting. Again, this leads to
redundancies and process inefficiencies.
OPPORTUNITIES
If fully deployed, a public sector focused ERP system will provide functionality that can resolve many
of the items listed above. Some of these automated functionalities include:
Automated performance evaluation/review
Tracking for investigations, disciplinary action, FMLA, grievances, reasonable
accommodations, etc.
Workflows for policy distribution, employee changes and improved data integration for auto-
populating information
Employee Self Service
Benefit Self Service
Overall, with new software integration and workflow many of the issues listed above will be resolved
and a savings of resources should be realized.
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2.12 UTILITY SERVICES MANAGEMENT / REFUSE
The City of Palo Alto Utilities (CPAU) started using SAP for their Utility Billing software needs in 2009.
Refuse billing was added to SAP ISU-BM at a later date. CPAU is currently serving about 30,000
customers and manages seven different types of services.
STRENGTHS
1. SAP Customization: The current SAP software can be configured to the City of Palo Alto
Utilities’ needs. An example would be the many unique validations that have been created in
the Utilities Billing to alert the end user when there is a billing exception. Users like the fact
that many views can be customized, the Utilities Billing layouts are flexible and FICA screens
can be modified to users’ desire
2. Data Availability: Level of detail that is available in Utilities Billing view in IC Web is
impressive. The amount of data available and the display of Business Partner & Premise in IC
Web are important to the Utilities users.
3. Data Export: Departments can easily export data from SAP to Excel
4. System Speed: In general SAP is very reliable and fast
5. Reporting Flexibility: The device management and FICA module of the SAP Utilities has a
lot of flexibility when it comes to reporting
WEAKNESSES
1. SAP ISU Maintenance: Because SAP is complex, is hard to maintain it with only internal
resources, thus specialized consultants are required. CPAU is only able to maintain the
software with its current resource. The City's SAP knowledgeable staff has been reduced so
that the remaining staff only have time to maintain the database. All enhancements have to be
contracted out to a third party and it has been difficult and expensive to find quality consultants
to make the necessary enhancements.
2. SAP ISU Customization and Upgrades: It is time consuming and costly to maintain and
customize SAP ISU modules
3. SAP ISU Standard Reporting: Very few standard reports have been defined in SAP so the
CPAU relies on the SAP BI software for most of their reporting needs. However, BI is very
complex and requires a specific skill set to master. Thus the data is typically downloaded and
manipulated in MS Excel. All statistical reporting comes from Green Waste so the City is very
dependent on their third party hauler for data. Currently Green Waste maintains all the data on
who has the trash containers/bins. If this information was included in the file that is sent to the
City, the City would no longer be dependent on Green Waste for their reporting needs. Service
Orders Dashboard with employee defined areas is needed to visualize all SO information on
one page.
4. Legislative Requirements: SAP ISU modules have not been upgraded in a while, thus the
software configuration does not incorporate the latest legal requirements which has forced the
City to use manual workarounds in order to fulfill legal requirements. This is becoming an
issue with net metering and peak/off-peak billing. As the utility industry becomes more
environmental friendly, more legislation will likely occur that will affect how the bills are
processed. If the software does not have updates to automate these mandated processes,
manual workarounds will have to continue.
5. SAP Training: A user needs to be trained well to maneuver through the program. Most people
only know what they use frequently and really don’t know what else might be available to
assist them with their job. Some also don’t understand how their actions in the software affect
others.
6. Utilities Business Practices: Most users feel that standard functionality is missing in the SAP
ISU software; therefore they have to find less efficient methods to perform tasks to do their
jobs, which adds more stress and frustration. The identification of best practices and possible
best of breed utilities software to satisfy them should be taken into account.
7. Pressure to Improve Services: Due to the location of Palo Alto the majority of the City
customers are more tech savvy than average, therefore their expectations for sophisticated
tools are higher than normal, which leads to pressure for improvement. The current customer
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utilities portal is lacking presentation and requires core functionality that is absent in the
current release.
8. Utilities Billing: Corrections/fixes/enhancements to the utilities invoice are challenging,
lengthy, costly, time consuming and difficult for the customer to understand. If an adjustment
needs to be made on a bill from a few months back, each bill after that adjustment will also
have to be manually adjusted. The current utility invoice/bill is not customer friendly. Some of
the miscellaneous refuse charges are billed through SD because there is no account in CRM,
but it is billed on a utility invoice with no description and it causes many customers to call in for
assistance on what they are being billed for. Budget billing is very complicated for the
customer and time consuming for staff when a payment is missed. This is due to penalty
amount not being printed on the budget bill. For payment arrangements, the staff has to create
two payment arrangements per customer to ensure that the unpaid amount goes back into
delinquency.
9. Utilities Rates Calculations: The rate design is challenging and limited in SAP. The City is
running out of rate codes so they are limited in adding more services. To set up rate
assistance, currently the user has to mark a flag twice on each service.
10. Refuse Billing: The design/configuration for refuse billing had to be manipulated to work with
the configuration set up for utilities, since the City did not purchase the SAP Waste & Recycle
module. Also there are issues with transferring of data between the third party (GreenWaste)
hauler’s software and SAP, which has caused incorrect billings.
11. System Validations: Many validation rules have been set which is causing thousands of
exceptions/plausible to be reported which is taking many labor hours to research and fix.
Many classification of errors once analyzed, no longer need to be reviewed at each step in the
billing process but they still reoccur.
12. Meter Reading Technology: It is very outdated. Reads are being hand keyed into the
majority of the hand held devices. Only 11% are drive by radio type meters. The downloading
the meter information to the hand helds is very complicated and restrictive. The SAP system
only allows for one meter read action per day.
13. Meter Inventory and Inspections: Meter inventory is difficult to enter. Meter
testing/inspection results cannot be tracked in SAP so Excel is being used instead.
14. Utilities AR Collections: Currently SAP ISU FICA does not have an aging report that shows
customers and how delinquent they are. Therefore, many delinquent accounts get unnoticed
until 6 months later. Accounts that have a delinquency less than $150, do not go through the
delinquent process and are maintained on a separate spreadsheet. Comparison of SAP ISU
AR balances to SAP SD AR balances is not performed currently.
15. Service Order Management: Customers cannot enter their own service order. The electrical
engineers create the service order estimate using AUD software and then the estimates are
loaded in SAP to compare to actuals. When looking at charges on a service order, the cost
line items do not sum up to the same line that has the planned cost, so the plan/Actual
comparison % is never accurate. City has no way of dispatching service order tasks directly
from SAP to employee calendars.
16. SAP ISU Integrations: There is no direct integration of Geodesy with SAP ISU modules (i.e.
DM). Every installed meter has information that has to be inputted into the GIS software.
17. IC Web Issues: CSR Dashboard is seriously lacking regarding ready data. Retrieval of data
requires multiple selections. Back buttons in IC Web do not consistently go back one level.
Lack of refresh button.
OPPORTUNITIES
If the City of Palo Alto Utilities would fully implement a best of breed utility billing software solution it
would resolve many of the weaknesses listed above. Some of the advantages of implementing a best
of breed solution are:
1. A fully featured, functional and configurable solution, one that is constantly evolving to meet
CPAU’s business needs without significant customizations or need for external spreadsheets
to complete core business process functions.
2. Integration with industry-leading applications due to formed partnerships and extensive
experience interfacing and integrating with many other third party applications.
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3. Successful implementations because the vendor’s staff only works with utility operations.
4. Hundreds of standard reports come with the standard software.
5. Majority of the best of breed solutions also come with an Ad-Hoc reporting tool that is very
user friendly.
6. A robust web portal which allows the CPAU’s administrator to make changes to the portal
when necessary.
7. The use of mobile devices in the field.
8. Standard software product releases and updates which include State and/or Federal
mandated changes. The cost of these updates is usually included with the software
maintenance agreement.
9. Regional user group meetings focused only on utilities.
2.13 CURRENT TECHNOLOGY PROFILE
OVERVIEW
The City’s IT staff with the sporadic help from outside consultants, support over 200 applications and
charge back the rest of the city departments. The current IT environment at the City includes:
1. The City network is spread across 30 sites interconnected in a star topology and uses dark
fiber optic connections, running at 1GB for the majority of the sites. The City has a dedicated
Gigabit fiber infrastructure connecting all remote sites, so all sites can be actually treated as
part of an extended LAN topology.
2. The City uses HP network equipment and is configured to have firewall redundancy, IPS
redundancy and core aggregation switch redundancy.
3. Remote access to the network is provided via PPTP VPN with AD/RADIUS authentication and
remote desktop service. The other network security features are rogue AP detection, wireless
spectrum, redundant controllers, and access control.
4. The City does not have a “bring your own device” or a mobile data management policy, but is
currently evaluating potential strategies and solutions which will allow access to the City’s
data. SolarWinds is used to administer, monitor and detect network issues.
5. For majority of the servers, the CPU utilization is normally greater than 50%, but the City does
not formally track the network traffic volume associated with the servers. For the server
maintenance, the City has vendor hardware and software maintenance contract.
6. Windows 2003 is the operating system used on the majority of the servers in the data center.
There are instances of Unix/Linux servers at the City as well. System access audits are
performed on a regular basis and access is adjusted accordingly.
7. The organization has standardized on the use of HP-UX 11.31 servers. The City has no cloud
services and is looking into various options (SaaS, IaaS and PaaS). A centralized storage
system is available for use and has expansion capabilities, but not without affecting the
backup windows currently being utilized.
8. Key services and applications on the servers are monitored using Solution Manager and early
watch reports. Backups are currently performed periodically to disk and then to tape and disk-
to-disk-to-tape using HP Data Protector 6.x software. The results of the backups are
monitored.
9. Oracle database platform is used as database management systems which serve various
applications.
10. Outlook is used for office productivity such as e-mail and calendaring, and there are
approximately 1200 e-mail mailboxes in use at the City.
11. The SAP ECC 6.0, BI, CRM, and ISU are installed on premise, on non-virtualized servers
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STRENGTHS
Selected strengths of the current IT environment include:
1. Network: The availability of the network is very high while its reliability is stable with minor
issues
2. Data Center Security: All systems in the data center are protected by UPS systems and also
by a power generator. Access to the data center is protected by a door access control system.
3. Antivirus and Anti-spyware: The operating system is running on the latest service pack and
antivirus and anti-spyware are run multiple times a day.
4. Audits: Security and license audits are conducted yearly
5. System and Data Backups: Nightly there is a file system back up, weekly database backups,
data is tested quarterly and an official test policy has been put in place
6. Data Retention: The city if following the 7 year data retention policy by keeping back-up tapes,
which are Weekly/monthly sent to off storage location
7. Centralized Management: The City is using Solution Manager to reduce and centralize the
management all its systems and end-to-end business processes
WEAKNESSES
The key weaknesses of the current environment include:
1. Encryptions: The backups are not encrypted, but are stored at an off-site secure data center
2. Server Redundancy: The City doesn’t have server redundancy
3. Workflow/Notifications: The City has not implemented in the SAP modules and portals the
workflows and notifications
4. Cloud services: The City doesn’t currently use any type of cloud services (SaaS, IaaS, PaaS)
5. Document Management System: The City didn’t purchase or implement any major
document management systems, due to storage space concerns
6. Data Archiving Strategy: The City doesn’t have in place a data archiving strategy for the
SAP ECC 6.0 data.
7. Disaster Recovery Plan: The City currently doesn’t have a documented disaster recovery
plan in place
8. Service Packs/Updates: SAP upgrades have not been performed in long time
9. IT Policies: The City had not written and implemented some of its IT policies, like the "Patch
Policy"
10. SAP Training: SAP is complex, but reliable and most issues come down to IT training
11. SAP Consulting Support: Third party SAP support consultants available in the market don’t
have deep knowledge of the areas the City needs help with. The ones that are available are
very expensive and need to be booked ahead of time and they work on East Coast timeframe
OPPORTUNITIES
Overall, specific opportunities for improvement in regard to the current technology environment
include:
1. The IT department should finish the full implementation of Solution Manager.
2. The City should consider encrypting at least of its backups stored at the off-site data center.
3. IT processes should be documented and followed to ensure policies and best practices are
followed.
4. The City should implement and document its disaster recovery plan as soon as possible
5. Regardless of its ERP system in operation, the City should not allow more than 1 year to pass,
before it performs the latest upgrade. Otherwise it runs the risk of not being able to operate
properly and not have the ERP system supported by the vendor, Thus, the IT depart should
install the latest SAP upgrades as soon as possible, if the City will decide to keep SAP as its
ERP of record.
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6. The City should consider implementing and turn on as many Workflows and Notifications as
possible in order to improve segregation of duties issues and help users complete
appropriately and on time all they tasks
7. The City should consider its storage issues and find a solution to implement a City wide
document management system and policy, to help user handle all support documentation
electronically relating to various transactions to meet statutory requirements
8. Budget permitted, the City should consider implementing a data archiving strategy, but only
after it stabilized its processes and finished implementing its main software systems
9. The IT department should document and maintain written SAP support procedures, to ensure
consistent and proper maintenance of the system
10. Since ERP systems are complex, all IT staff should be trained through rotation every year in
the latest changes of the ERP system in order to maintain it properly
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3 ERP Marketplace Assessment
3.1 INTEGRATED ERP ENVIRONMENT
The purpose of the Marketplace Assessment is to provide the City with an overview of the current
financial system and ERP software vendor marketplace. Information provided in this marketplace
assessment was gathered from prior Plante Moran project and consulting experience, feedback from
City staff during interviews, and external research.
Generally, enterprise financial system solutions evolved out of a desire to provide the functionality of
two or more systems, such as Financials and Human Resources, in an integrated software solution.
Enterprise software solutions experienced its first major growth in private sector businesses in their
manufacturing and supply chain operations. Many of these “Tier 1” ERP solution providers offer broad
solutions designed specifically for the private sector. Over the past several years, these solutions
were enhanced, configured and tested in public sector organizations. With these enhancements,
these solutions originally developed for private sector organizations could now be deployed in a public
sector setting.
There are also a number of “Tier 2” ERP software providers that originated and offer specific vertical
solutions designed for the public sector including fund accounting encumbrance accounting,
sophisticated budgeting, grants management, etc. and capabilities which are pervasive in this
segment. These solutions are typically characterized as “Tier 2” solutions and are normally deployed
in medium sized public organizations. Over time, there has been increased focus from these Tier 2
vendors towards developing niche solutions designed to compete with the Tier 1 providers. A third tier
of software providers also exists that are implemented in small organizations and will not be discussed
in this report due to the lack of relevance to the City. Medium size government agencies, such as the
City, often select financial management solutions identified as either Tier 1 or Tier 2 solutions.
The most basic differentiation between Tier 1 and Tier 2 providers lie within the depth of functionality,
breadth and complexity of the software.
Tier 1 providers have a broader offering that often include modules for Customer Relationship
Management (CRM), Enterprise Asset Management (EAM), Learning Management, Analytics and
Reporting, Data Warehousing, and Project Management modules. While Tier 1 providers offer robust
core financial modules, as well as HR and Payroll, typically they rely on third party vendors for
functionality specific to government activities in other functional areas. Most, but not all, Tier 1
providers have a large network of implementers available to implement their solution, many of which
have dedicated public sector practices. The most significant challenge with Tier 1 solutions is that
government agencies often find that they are not able to dedicate enough technical resources to
leverage expansive capabilities of the system to meet their needs. Due to their flexibility (thus
complexity) Tier 1 implementations are most successful at organizations with structured IT software
governance and/or ERP process governance, not typically demonstrated in organizations which have
implemented a fragmented software approach. In addition to the necessary governance, strong IT
project management is also critical for Tier 1 deployment. In several instances, Plante Moran has
worked with public sector clients who have implemented Tier 1 ERP systems and the following
situations have prevented them from realizing the full benefit of these systems; thus diminishing their
return on investment:
The governmental body did not budget the necessary capital to implement the solution and
optimize current business processes due to cost factors related to capital budget and resource
constraints.
The operating costs to maintain Tier 1 solutions relative to software maintenance and support
consumed operating budgets thus creating a situation where hiring the necessary internal
resources to maintain and enhance these systems (e.g., data mining, workflow, custom
reporting, etc.) was not feasible.
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Users of Tier 2 solutions often find that these solutions are more prescriptive; i.e., governmental best
practices are designed within the application. This is intuitive since Tier 2 solutions were designed for
use within the government sector. They may offer less flexibility and configurability than Tier 1 system
but, as a result, are typically less cumbersome to implement within their organization, because of their
native public sector design and more prescriptive implementation approach. Tier 2 vendors tend to
have their origin based in the government sector and have been improving and updating their software
products to offer a greater range of modules and functionality. As such, the Tier 2 vendors are touting
themselves as viable alternative solutions to Tier 1 providers. However, beyond enhanced
functionality, the scalability of the services being offered by Tier 2 solution providers is a strong
consideration when determining the best overall solution. Unlike Tier 1 solution providers, nearly all
Tier 2 solution providers implement their own software and do not rely on third party implementers.
The software marketplace has seen the emergence of solutions being touted as Tier 1.5’s, or “one and
a half.” Originally positioned as Tier 1 or Tier 2 solutions, these vendors have now positioned
themselves between the two tiers and often offer enhanced functionality in areas such as HR and
Payroll. They are also offering modules that are able to scale up to a larger client’s complexity and
transaction volume but at a lower cost and time to implement as compared to a Tier 1 provider.
Many of the solution providers will propose modules in the first two areas noted above as components
of their overall solution set that are characterized as “best-of-breed” solutions. For HR/Payroll
specifically, there are a number of niche solutions that have frequently been implemented by public
sector organizations to complement their existing financial system investment to obtain a “best-of-
breed” approach.
3.2 BEST-OF-BREED
A modification to Integrated ERP for delivering enterprise information solutions is the “best of breed”
approach. This solution architecture is based upon selecting the best individual product solution for
each functional requirement within the organization. The City’s current environment represents a “Best
of Breed” approach, utilizing a combination of systems, for example: SAP (Financials), Questica
(Budget) and custom/shadow systems that are not state-of-the-art. Because a business enterprise
operates in an integrated, rather than “stovepipe” fashion, creating an enterprise information solution
using a “best of breed” strategy involves designing, implementing, and supporting the required
technology integration. This, in fact, has represented a significant challenge for the City. Hence, the
City should seriously consider the various potential benefits and challenges inherent in a “best of
breed” approach.
In some cases, there isn’t a choice, and the organization must integrate “best of breed” products to
address requirements. This is the case when the functionality is specialized enough so that it does not
exist in extended ERP systems, e.g., GIS, DCS/SCADA, and LIMS. This is one of the reasons why
ERP vendors and 3rd Party software companies have developed Enterprise Application Integration
software, as well as why consulting firms offer network integration programming assistance.
Benefits of “Best of Breed.” The “Best of Breed” solution strategy enables the organization to select
the optimal solution for a particular problem or function within the enterprise. Hence, on a
requirement-by-requirement basis, there is less compromise required. This can also have some
benefits related to sizing the solution. The customer can avoid “overkill,” or “gold plating” solutions on
the one hand or, on the other hand, have an insufficient technology fit relative to requirements, that
may later result in the development of supplementary, or shadow systems to make up for product
limitations. Because of the more exact “fitting” of the solution to the discrete problem, the initial license
and implementation costs may be more appealing. A critical element is the importance of identifying
and understanding the organization’s functional requirements.
Challenges of “Best of Breed.” The countervailing perspective, as previously described in this
chapter’s description of ERP systems, is that the whole of the enterprise solution is greater than the
sum of its parts. Hence, optimal individual product selections may not result in the best enterprise-wide
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information solution. This can be reflected in both the technical challenges required for creating and
maintaining an integrated solution, the likely limitations of even an integrated “best of breed” solution,
and the total cost of ownership.
“Best of Breed” solutions, being created and implemented by different firms lack the single integrated
enterprise database common to ERP solutions. With ERP solutions, integration is designed into the
product and data is shared in real-time between the application modules. With “best of breed”
solutions, the customer must design and manage application integration. Current technology makes
this somewhat easier with industry programming and database standards, and well as Enterprise
Application Integration software. However, design, customization and maintenance of integrated
systems is far from trivial. Without integration, a “best of breed” approach can’t be considered an
enterprise information system.
Integration of systems can exist at a variety of different levels. One should be careful not to allow
vendor claims of product “integration” to be taken at face value. The devil is in the details. The
following are examples of some of the problems and implications relative to the integration challenge:
End user ability to drill-down into the underlying data may be more limited if data resides on
multiple platforms and databases.
Report development and crosscutting analysis of data across the organization is more
complex and will most likely require the development of an enterprise data warehouse.
Workflow technology may be more limited across platforms. Microsoft Office email products
can be used as a common “pipeline” backbone for workflow notifications. However not all
vendors have workflow capabilities that are integrated with off-the-shelf Office products.
A more global issue is that when a customer adopts a “best of breed” strategy, they assume primary
responsibility for identifying, creating, enhancing, and maintaining product integration. One of the
inherent benefits of the ERP approach being sold by vendors, and demanded by the market, is in
providing and supporting an integrated enterprise solution. As a result, the market applies additional
pressure to drive creative responses to integration challenges. To some degree both ERP and “best of
breed” vendors have created discrete integration solutions. This is usually in response to individual
client requests, and if there is sufficient demand, vendors may productize and provide varying degrees
of support for these solutions. However, as previously noted, the nature of these interfaces needs to
be carefully evaluated.
An additional consideration is accurately estimating the total cost of ownership. The cost of the
solution is typically identified as including initial licenses, training and implementation costs, as well as,
ongoing costs for maintenance support. In addition, a significant cost may be related to developing
and maintaining interfaces between systems. IT staff or consultants must create and document point-
to-point interfaces between applications or implement and maintain Enterprise Application Integration
software. Developing integration capabilities is a type of customization and, as a result, must be
tested when relevant software application product upgrades are implemented. Hence, the total cost of
creating an integrated, “best of breed” solution should include these total lifecycle costs, including the
opportunity cost of applying IT staff and resources to create and maintain these interfaces.
3.3 ALTERNATIVE SOFTWARE DELIVERY OPTIONS: HOSTING (“CLOUD”)
In the past ten years alternative software delivery models have made their way into the ERP
marketplace, the most popular of which are hosted solutions. While the popularity of hosted enterprise
solutions did not materialize in the early part of this decade as many had predicted , organizations are
slowly embracing hosted solutions in order to relieve some of the burden of an overworked business
and technical staff. There are a variety of hosting models available to the public sector today, many
of which have been used interchangeably by vendors providing enterprise software to the public
sector and all identified as ‘the cloud.’
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In general, the market for full scale ERP delivered via ‘the cloud’ is still immature in the public sector.
However, SaaS has proven successful for more specialized applications such as document
management, CRM, and selected human resources applications. Private Cloud Computing is among
the highest interest areas across all cloud computing according to Gartner, with 75% of respondents in
Gartner polls pursuing a strategy in this area. One of the major goals is the evaluation of virtualization-
driven value and benefits. In addition, Software as a Service is rapidly gaining adoption; leading
Gartner to forecast more than 50% of respondents will have some form of SaaS based application
strategy by 2015. Factors driving this adoption are the high priority organizations are putting on
customer relationships, gaining greater insights through analytics, overcoming IT- and capital budget-
based limitations, and aligning IT more efficiently to strategic goals.
Overall, hosted solutions are gradually becoming a popular way to acquire modern software while
containing costs, especially amongst small-mid market public sector organizations.
3.4 ERP VENDOR CONSOLIDATION
Consolidation among public sector software vendors has left a fewer number of vendors providing
customized services to the Public Sector than in prior years. Organizations such as Harris, Oracle,
SunGard Public Sector, and Tyler Technologies have acquired competing software offerings over time
and, to varying extents, marketed, licensed, implemented and supported each of them. As such, the
remaining vendors have a larger installed base per vendor. It is anticipated that, over time, these
vendors will reduce, not increase, the number of ERP solutions that they will maintain and support for
the public sector. This consolidation of solution offerings is typical in the software industry as a result
of their desire to create a sustainable business model. Thus, it is important during the due diligence
and contract negotiation process, to consider any the future product plans available from software
providers, with the purpose of maximizing solution longevity and avoiding expensive capital outlays for
upgrades and for replacements.
3.5 SUMMARY COMPARISONS
Summary Comparison: Tier 1 versus Tier 2
The following table identifies some of the key differences between Tier 1 and Tier 2 software providers
on issues such as support requirements, cost of implementation services, cost of major version
upgrades, software support channel, and other factors:
Characteristic Tier 1 Vendors Tier 2 Vendors
Sample
Representative
Vendors:
Oracle (PeopleSoft and Oracle e-
Business Suite)
Workday
SAP
Oracle (JDE 1.5)
Lawson – (1.5)
CGI – (1.5)
Others
SunGard Public Sector (e.g.
OneSolution)
Tyler Technologies MUNIS and
Eden
New World Systems
Harris (e.g. Innoprise, etc.)
Others
Design
Considerations
Developed product for private sector
and later adapted for public sector
Many modules specific to public sector
Larger organizations with greater R&D
budgets, offer more robust technology
Primarily designed for public sector
More prescriptive functionality and
less conducive to customization
without altering source code
Often leverage common municipal
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Characteristic Tier 1 Vendors Tier 2 Vendors
Robust development tools
Scalable to leverage most robust
development and database
environments
technology standards (e.g. MS SQL
database). Some support Oracle
Environments leverage 3rd party
tools (database, report writer, etc.)
Ongoing
Technology Support
Resource
Requirements
Most require multiple technology FTE
to support
Also impacted by level of integration
with other organizational systems
Requires fewer technology FTE to
support
Also impacted by level of integration
with other organizational systems
Software
Functionality
Core modules have robust functionality
May lack public sector specific features
(e.g. encumbrance rollover, GASB 34
reporting, etc.)
License costs per user typically more
expensive than Tier 2
Incrementally less robust
functionality for core components
HR/Payroll solutions are frequently
less robust as compared to Tier 1
offerings
Many vendors offer additional public
sector modules, such as fleet
management, request for service,
etc.
License costs per user typically less
expensive than Tier 1
Implementation
Services for New
Installation
Requirement for multiple full time staff
to implement
Requires significantly greater
implementation vendor resources than
Tier 2 to implement including key staff
that are full-time to the project
Software implementers are typically
integrators / channel partners
Implementation services cost ratio
comparison to license fees often many
times software cost (frequently 3:1 or
higher)
Vendor “Homework” approach has
organization responsible for many
implementation tasks
Frequently implemented with
organization resources not
dedicated to the project
Rarely requires full-time vendor staff
to implement
Software vendors also implement
their own solutions
Implementation services ratio
typically closer to 1:1. 2:1 would be
more robust services approach
Staff required for
Implementation1
15-30 FTE 3-7 FTE
Ongoing support
staff required
6-14 FTE 1-3 FTE
1 Based on Plante Moran’s experience working with other clients on ERP selection and
implementation initiatives.
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Characteristic Tier 1 Vendors Tier 2 Vendors
Cost Model for
Major Version
Upgrades
Most major upgrades include significant
license fee costs
Most major upgrades require significant
levels of vendor services to assist
License fees for version upgrades
often included with maintenance
fees
Most major upgrades require
moderate levels of vendor services
Software Support
Channel
Mixed, some direct, some through
implementer / value added reseller
channel
Primarily direct vendor support
Hosting Options Generally hosted internally, some
offering ASP. Workday is one of the
only multi-tenant web-based options.
Generally hosted internally, some
offering ASP. Few multi-tenant
web-based options.
Summary Comparison: On-Site vs. Hosted
Characteristic Advantages Disadvantages
On Premises /
Internally Hosted
Financial
Applications
Environment
City has design control of
application architecture to focus on
reliability, availability and scalability
Optimal solution for “heavy-weight”
applications (not necessarily
designed for thin-client
deployment), typical of Tier 2
solutions.
Application are generally more
customizable and more easily able
to be integrated to County best of
breed business applications
Direct data access for custom
reporting
Ongoing maintenance costs are
less substantial that with hosted
solutions
Application upgrades can be
performed and coordinated on the
City schedule incrementally more so
that with a vendor hosted solution
Leverages existing technology,
people, and contracts
System reliability, security,
maintenance, and management
will remain the responsibility of
the City
Higher capital costs –
particularly for hardware and
related operating and database
software
The time required to implement
a new City hosted environment
is typically longer than with the
vendor hosted model
Workstation replacement cycles
must be maintained to more
reasonable levels
Vendor Hosted
Environment
Shared services model will allow the
City the benefit of additional
technology and tools to enhance the
security and administration of the
environment, which otherwise may
be unaffordable
If the City’s network or Internet
service is down, then its
employees lose access to the
application.
Uptime and disaster recovery
become more critical
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Characteristic Advantages Disadvantages
Decreased technical administration
workload for City IT staff. Cost
savings associated with reduced
demands on IT personnel
Typically, there are fewer
workstation software installation
requirements potentially lengthening
workstation replacement cycles.
The ASP vendor is responsible for
installing the system and its
subsequent support. Any type of
technical issue can often be
immediately isolated to the software
client or host application providing
the software.
The City is able to predict and
control costs more accurately,
depending on the negotiated
subscription contract & fees.
Changes to meet the City’s
unique requirements may not be
possible. The City may have to
adapt certain system
administration processes to be
consistent with vendor
processes.
Database or information security
risks increase with the ASP
model. Distributed
responsibilities for security
practices make for a more
complex environment.
Integration to City hosted best of
breed business applications
becomes more complex
While reducing City technical
support effort, will require City IT
managers to increase effort with
maintaining the vendor
relationship. The City would
need to manage a Service Level
Agreement on an ongoing basis
and specifically during periods
of contract discussions or
consulting during customization.
Volatility of future costs: ASP is
a subscription service and fees
are paid over a period of time.
The City can negotiate an initial
purchase price and annual fees,
but has less control over
subsequent subscription fees
and is subject to rate hikes after
the predetermined contract
period ends.
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4 Options Analysis
Consistent with project objectives and based on the evaluation of the current functional and the
technology environment, the City has three primary options in regard to the strategic direction of a
future applications environment, with variations/alternatives within multiple options. These are defined
at high level in the table below and analyzed in additional detail throughout this section of the report.
Key assumptions were necessary in preparing these estimates and these are represented in the
Detailed Cost of Ownership Details and Assumptions Section located in Appendix D.
Option Summary of Options/Alternatives
Option 1: Status
Quo with
Investment
Do Not Change the Current Application Environment. Remain on
the current version of SAP and retain existing best of breed systems.
Option 2: Upgrade
SAP
Upgrade SAP and pursue one of the alternatives below:
Upgrade all existing modules and retain existing best of
breed systems.
Upgrade only SAP Core Financials/HR/Payroll modules,
retain existing Best-of-Breed systems and procure a new
‘Best of Breed’ Utility Billing Solution to replace SAP Utility
Billing.
Option 3: New
ERP Environment
Replace Current Systems with an Integrated Public Sector
Focused ERP System and pursue one of the alternatives below:
Replace SAP and current best of breed solutions with a fully
integrated public sector focused ERP solution and procure a
separate utility billing best-of-breed solution
Replace remaining SAP functionality with a fully integrated
financials/hr solution, retain the current best of breed
systems and procure a utility billing best of breed.
Further details are described within each option analysis including their advantages and
disadvantages and other key factors for the City’s consideration.
4.1 OPTION 1: STATUS QUO WITH INVESTMENT
OVERVIEW
The City always has the option to remain with the ‘status quo’ environment and remain on its current
version of SAP and additional best-of-breed systems. This option represents the City’s current
investment position with the resources currently in place supporting the SAP environment on premise
today. It also represents the existing mix of best of breed or third party applications interfaced with
SAP supporting the budgeting, fixed asset / asset management, human resources, purchasing,
revenue collection, treasury, and utilities management. The City is paying a premium for the addition
of best of breed solutions when core SAP functionality exists but cannot be fully realized.
ADVANTAGES
Included below is a list of the most significant advantages to continuing with the status quo at the City:
1. Focus on existing enhancement requests: The City could focus on completing the existing
SAP enhancement requests in the queue
2. Limited Operational Impact: This option would not impact the financial and human resources
functions which have a broader internal user base.
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DISADVANTAGES
Included below is a listing of the most significant disadvantages to continuing with the status quo at
the City:
1. Product ‘Sunset’: The City is currently reaching the end of SAP’s ECC 6.0 support in
December 2015 and will be charged a premium for support beginning in 2016.
2. Staffing Challenges: The City’s SAP support team is not adequately staffed in number or
sufficient expertise to keep pace with the level of service demanded by the City’s business
units. The delays in supporting the core system environment are driving staff to pursue best of
breed solutions replicating the capabilities within the SAP core and extended modules.
3. High Costs: The City’s investment in supporting its ERP environment is significantly higher
than the vast majority of peer communities Plante Moran evaluates as it conducts its needs
assessments in terms of employees, operational complexity, and ERP requirements
represented by the City and inventoried in this evaluation.
4. Interface Complexity: The number of interfaces the City requires demands a system
architecture that facilities data exchange and the present, legacy environment is not optimized
in this manner.
OPPORTUNITIES
1. Training and Support: Identify staff training requirements and reporting needs within all
business units to support the systems administration for the next three years. Seek to provide
tactical training options to the City’s team especially in the areas of reporting and analysis.
OPTION 1: COST ESTIMATES AND SUMMARY
Based on Plante Moran’s experience with projects of similar scope, we have estimated internal and
external cost projections for the City to remain in its existing environment/status quo as represented
below. Key assumptions were necessary in preparing these estimates and these are represented in
the Detailed Cost of Ownership Details and Assumptions Section located in Appendix D.
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For several reasons, Palo Alto does not appear to have the luxury of maintaining the status quo and
continuing to use the existing SAP system ‘as- is’ for several more years. As noted in the Gap
Assessment section of this report, a number of functions work poorly at best. The support for the SAP
Utility Billing is challenged and this area is especially strategic for the City because of its importance
as a revenue source. Lastly, the SAP release the City is currently running is nearing the end of its
lifecycle, and the City will have increased difficulty in obtaining support for this software if it does not
upgrade.
Option 1
ON PREMISE
Status Quo
with Investment
EXTERNAL COSTS
One-Time Cost Summary
Software License Fees -$
Additional Hardware Costs N/A
Consulting Implementation / Data Conversion / Interface Development -$
Training N/A
System Selection & Implementation Planning Fees N/A
Total External One-Time Costs -$
Reoccurring Cost Summary
Annual Software Licensing & Solution Support 667,910$
Consulting Support Services 250,000$
Cloud (includes Licensing, Support, Interfaces & Consulting Services)-$
Training 112,500$
Total External Recurring Costs 1,030,410$
INTERNAL COSTS
Reoccurring Cost Summary
Current Support FTE 2,073,000$
Additional Support FTE'S -$
Total Internal Recurring Costs 2,073,000$
Year #1 Grand Total Cost 4,133,820$
FIVE YEAR ESTIMATES
Five-Year Estimate *17,138,248.00$
Cost Category
* Estimate includes one-time and reoccurring costs during year one, annual software licensing and solution support for planned
application purchases in year one are assumed to incurred in years 2-5 only, and the future value of investments has been adjusted
for years 2-5 to account for a 3% annual rate for inflation.
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4.2 OPTION 2: UPGRADE SAP
OVERVIEW
The City could decide to increase its current SAP investment and pursue a number of upgrade options.
This choice represents the City upgrading its current SAP investment and pursuing one of the
alternatives below:
1. Option 2, Alternative A: Upgrade all existing SAP modules and retain existing best of breed
systems.
2. Option 2, Alternative B: Upgrade only SAP Core Financials/HR/Payroll modules, retain
existing Best-of-Breed systems and procure a new Best of Breed Utility Billing Solution to
replace SAP Utility Billing Functionality.
4.3 OPTION 2, ALTERNATIVE A
Upgrade SAP and Retain Existing Best-of-Breeds.
This option represents the City’s migration to a Hybrid Cloud where the City would take advantage of
the HANA Enterprise Cloud to take advantage of hosted and managed services from SAP. The City
would assume maintenance responsibility for the non-SAP applications that would reside in this
environment and will retain ownership of these licenses.
ADVANTAGES
Included below is a listing of the most significant advantages to upgrading the current SAP
environment and retaining the existing best-of-breed portfolio:
1. Quicker Implementation: The City could accept the existing SAP proposal and move quickly
to begin work on the project. Even if the City would decide to bid the project with alternative
consulting vendors, as discussed below, the project would still move more quickly than one
requiring selection of a new ERP system.
2. Builds on Existing SAP Expertise: This alternative takes advantages of existing SAP
expertise among the general City staff and also the IT staff.
3. Builds on Existing SAP Relationship: This alternative also allows the City to build on an
existing relationship with SAP, rather than begin a new relationship with a new vendor. The
City retains ownership of its SAP licensing and has flexibility as to the environment it chooses
to manage its applications. The City will continue to pay an annual licensing fee that will
include software maintenance, migration services for SAP’s core finances, a new HR solution,
and a new utilities billing solution.
4. Utilization of Modern Cloud Technology: The City would be able to leverage the HANA
Enterprise Cloud architecture for both its business intelligence and application interface needs.
5. Improved Functionality: The SAP SRM module, enterprise asset management solution, e-
procurement solution, and an HR module are incorporated in this option.
6. Staff Optimization: Internal staff support would be reduced by 4.4 FTE’s in this new
environment for a total of 8 dedicated FTE’s. This includes seven (7) staff dedicated to
supporting SAP and one staff member dedicated to managing of the City’s Enterprise Asset
Management System.
DISADVANTAGES
Included below is a listing of the most significant disadvantages to upgrading the current SAP
environment and retaining the existing best-of-breed portfolio:
1. Mismatch of Technology to City’s Business Requirements: The City’s ERP requirements
do not appear to cross the threshold of being unique enough to require a Tier 1 ERP system
and the capabilities of Tier 1.5 and Tier 2 systems are believed to fulfill the City’s strategic
needs.
2. Proliferation of Best-of-Breed Systems: The City continues to invest in best of breed
solutions that duplicate capabilities available by the core SAP functionality available (e.g.
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e-receivables, asset management, human resources). The addition of specialized best of
breed applications increases the City’s overhead to test, manage, and coordinate the version
control for each system interface.
3. Complexity of Interface development and Support: The specialization necessary to
manage each additional best of breed application requires ongoing training that must be
coordinated between the business unit (core application stakeholders) and information
technology so institutional knowledge is retained.
4. High Cost of Ownership: Excess cost burden over five years exceeds $25 million in external
and internal funding is extreme.
5. Utility Billing Challenges: The SAP utilities billing solution proposed may require further
evaluation and has not been determined to adequately meet the requirements expected by the
Utilities Department.
4.4 OPTION 2, ALTERNATIVE B:
Upgrade SAP Core Financials/HR/Payroll Modules Only Keep Existing Best-of-Breed Systems
Obtain Best of Breed Utility Billing Solution.
This option is essentially identical to as Option 2 ’a’ above with the exception of the addition of a
utilities best of breed system. The overlap between the core SAP and best of breed solutions remains
in this option and it does not appear to offer a viable strategic alternative.
ADVANTAGES
Included below is a listing of the most significant advantages to upgrading the current SAP
financials/HR/payroll environment only, but also selecting a new non-SAP utility billing solution:
1. Appropriate Functionality: The Utilities Department has a solution that is designed to fulfill
the robust requirements servicing its water, sewer, gas, electric, and fiber billing requirements
that is compatible with its field resource application needs.
2. Utilization of Modern Cloud Technology: The City would be able to leverage the HANA
Enterprise Cloud architecture for both its business intelligence and application interface needs.
3. Builds on Existing SAP Expertise: This alternative takes advantages of existing SAP
expertise among the general City staff and also the IT staff.
4. Builds on Existing SAP Relationship: This alternative also allows the City to build on an
existing relationship with SAP, rather than begin a new relationship with a new vendor. The
City retains ownership of its SAP licensing and has flexibility as to the environment it chooses
to manage its applications. The City will continue to pay an annual licensing fee that will
include software maintenance, migration services for SAP’s core finances, a new HR solution.
5. Improved Functionality: The SAP SRM module, enterprise asset management solution, e-
procurement solution, and an HR module are incorporated in this option.
6. Staff Optimization: Internal staff support would be reduced by 4.4 FTE’s in this new
environment for a total of 8 dedicated FTE’s. This includes four (4) staff dedicated to
supporting SAP and one staff member dedicated to managing of the City’s Enterprise Asset
Management System. Three (3) staff business analysts would continue to support the best of
breed utilities system.
DISADVANTAGES
Included below is a listing of the most significant disadvantages to upgrading the current SAP
financials/HR/payroll environment only, but also selecting a new non-SAP utility billing solution:
1. Mismatch of Technology to City’s Business Requirements: The City’s ERP requirements
do not appear to cross the threshold of being unique enough to require a Tier 1 ERP system
and the capabilities of Tier 1.5 and Tier 2 systems are believed to fulfill the City’s strategic
needs.
2. Proliferation of Best-of-Breed Systems: The City continues to invest in best of breed
solutions that duplicate capabilities available by the core SAP functionality available (e.g. e-
receivables, asset management, human resources). The addition of specialized best of breed
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applications increases the City’s overhead to test, manage, and coordinate the version control
for each system interface.
3. Complexity of Interface development and Support: The specialization necessary to
manage each additional best of breed application requires ongoing training that must be
coordinated between the business unit (core application stakeholders) and information
technology so institutional knowledge is retained.
4. High Cost of Ownership: Excess cost burden over five years exceeds $25 million in external
and internal funding is extreme.
4.5 OPTION 2: COST ESTIMATES AND SUMMARY
Based on Plante Moran’s experience with projects of similar scope coupled with existing SAP upgrade
pricing information already provided to the City, we have estimated internal and external cost
projections for the City to upgrade its current SAP investment. Key assumptions were necessary in
preparing these estimates and these are represented in the Detailed Cost of Ownership Details and
Assumptions Section located in Appendix D.
Although upgrading SAP to the newest version and redeveloping the related processes as part of the
project seems viable, using this project to also upgrade Utility Billing with SAP would be difficult. If the
City decides to pursue and SAP upgrade path, we would instead suggest focusing on upgrading to
SAP while implementing a separate best-of-breed utility billing system. Based on our discussion with
City end users and knowledge of the public sector software marketplace, the City would seemingly
receive better utility billing functionality and support from either a separate best-of-breed utility system
or the utility billing abilities in a Tier II ERP system.
Option 2a Option 2b
ALL IN CLOUD
Upgrade SAP and Retain Existing
Best of Breed Systems
MIXED ENVIRONMENTS
Upgrade SAP Core Financials/HR/Payroll
Modules Only Keep Existing Best of Breed
Systems Obtain Best of Breed Utility Billing
System
EXTERNAL COSTS
One-Time Cost Summary
Software License Fees 3,628,151$ 3,391,151$
Additional Hardware Costs N/A N/A
Consulting Implementation / Data Conversion / Interface Development 589,350$ 1,009,757$
Training 566,850$ 686,850$
System Selection & Implementation Planning Fees N/A 80,000$
Total External One-Time Costs 4,784,351$ 5,167,758$
Reoccurring Cost Summary
Annual Software Licensing & Solution Support -$ 64,138$
Consulting Support Services -$ -$
Cloud (includes Licensing, Support, Interfaces & Consulting Services)3,421,439$ 2,921,439$
Training 150,000$ 165,000$
Total External Recurring Costs 3,571,439$ 3,150,577$
INTERNAL COSTS
Reoccurring Cost Summary
Current Support FTE 510,000$ 510,000$
Additional Support FTE'S 530,000$ 530,000$
Total Internal Recurring Costs 1,040,000$ 1,040,000$
Year #1 Grand Total Cost 6,267,261$ 6,650,668$
FIVE YEAR ESTIMATES
Five-Year Estimate *$25,559,803 $24,182,480
Cost Category
* Estimate includes one-time and reoccurring costs during year one, annual software licensing and solution support for planned application purchases in year one are
assumed to incurred in years 2-5 only, and the future value of investments has been adjusted for years 2-5 to account for a 3% annual rate for inflation.
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4.6 OPTION 3: NEW ERP ENVIRONMENT
OVERVIEW
Through a competitive RFP process, the City could procure and implement a fully integrated Tier 2 or
a Tier 1.5 ERP solution that includes both Core ERP and Extended ERP Modules, plus some variety
of integrations with best-of-breed solutions (e.g., Sympro). Most Tier 2 solutions are designed
specifically for the public sector so that they offer a wide variety of integrated modules versus Tier 1
solutions that are utilized by a wide variety of industries, including multi-national corporations with very
unique requirements. Tier 2 solutions typically have fewer configuration options and are tailored to
public sector organizations but require a significantly lower implementation effort and on-going internal
support. Tier 1 solutions (like SAP) typically require a much greater level of implementation,
maintenance and support resources but can provide the City with more robust functionality and greater
flexibility in order to handle very unique operational situations and business processes that are tailored
to the City’s. Given this assessment, it is likely that the a Tier 1.5 or Tier 2 solution would replace the
current SAP and best-of-breed applications and as well as the many additional spreadsheets and
other “shadow systems”
By changing systems, the City would maintain and support the current environment through the future
system selection and implementation effort. The system selection would be a competitive
procurement with stakeholder input to define requirements and measure vendor compliance in fulfilling
them. It would require a capital investment and necessitate ongoing sustained investment through
software maintenance and continued internal technical support.
Overall, in Option 3, the City would replace current systems with an Integrated Public Sector Focused
ERP System and pursue one of the alternatives below:
1. Option 3, Alternative A: Go to market for a fully integrated public sector focused ERP solution
and procure a separate utility billing best-of-breed solution.
2. Option 3, Alternative B: Go to market for a fully integrated core financials / human capital
management solution, retain the current best of breed systems and procure a utility billing best
of breed.
4.7 OPTION 3, ALTERNATIVE A:
Go to market for a fully integrated public sector focused ERP solution and procure a separate
utility billing best-of-breed solution.
This option assumes the City reinvests in a new, fully integrated ERP solution that would take
advantage of the capabilities of a Tier 1.5 or Tier 2 solution. This alternative is to select and
implement a government-oriented ERP system, which would be used for all functions, including those
supported by current best-of-breed solutions such as budget support. This alternative would also
pursue the procurement of a best of breed utility billing module for utility support. Overall, the City
would prepare an RFP for a solution that incorporates all current/required functionality in addition to
integrating with a new utilities best of breed system.
ADVANTAGES
Included below is a listing of the most significant advantages to replacing the existing applications
environment with an integrated ERP at the City:
1. Streamline the City’s Technology Investment and Improve Functionality: The City
selects an integrated ERP solution that fulfills the needs currently serviced by SAP in addition
to divesting itself from a majority of the best of breed systems the City owns and is obligated
to pay licensing maintenance, invest in internal/external staff support, and train staff to
effectively utilize.
2. Least Cost: The value proposition achieved from the savings estimated over five years for
this option exceeds a range between $7 - $15 million over the comparable alternatives.
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3. Staff Optimization: Internal staff support would be reduced by 4.4 FTE’s in this new
environment for a total of 8 dedicated FTE’s. This includes four (4) staff dedicated to
supporting the new ERP and one staff member dedicated to managing of the City’s Enterprise
Asset Management System. Is also retains three (3) staff dedicated to supporting the utility
best of breed system.
4. Less Reliance on Outside Consultants: The City builds internal capacity to administer and
optimally configure its ERP environment without relying upon external contract services for on-
call support services. It can also more effectively recruit and retain staff members that do not
require the specialization or highly competitive salary expectations SAP systems demand in
the heart of Silicon Valley.
5. On Going Support Sustainability: The City’s operations have demanded increased staffing
efficiency following the reductions in force drastically impacting the organization’s ability to
manage its SAP systems. The levels of expertise and staffing continues to increase as
service level expectations increase while support personnel remain unchanged. Furthermore,
the absence of succession planning has significantly impacted the institutional memory of the
organization. A Tier 1.5 or 2 system can be maintained with fewer staff while providing more
options for staff to assume a greater role in learning to manage less complex systems.
6. Most Government-Oriented: The Tier 1.5 or Tier 2 ERP system focused on a government
market would be more responsive to structuring solutions to meet the needs of the municipal
industry best practices.
7. Less Complex ERP: A Tier 1.5 or Tier 2 ERP system would be less complex to learn,
configure.
8. Fresh Start: With the move to a new product, the excitement of a “fresh start” makes the
implementation somewhat more likely to be successful. And in this case, staff involved in utility
billing would have the additional motivation of being able to implement a public sector focused
utility billing system.
DISADVANTAGES
Included below is a listing of the most significant disadvantages to replacing the existing applications
environment with an integrated ERP at the City:
1. Change Management Challenges: This option will cause the greatest disruption to staff
within the organization as processes, procedures, and training needs would likely require the
greatest amount of re-engineering.
2. Existing Investment Lost: The investment made to interface the present SAP systems would
be lost and the third party systems would have to be re-interfaced.
3. Extended Duration of Implementation Project: Establishing a transition of this magnitude
will require staff augmentation that will increase staff support requirements in order to
complete a complete migration which will require several years to perform.
4.8 OPTION 3, ALTERNATIVE B:
Go to market for a fully integrated core financials / human capital management solution, retain
the current best of breed systems and procure a utility billing best of breed.
This option assumes the City reinvests in a limited government-oriented ERP environment where the
existing and planned best of breeds would be retained in addition acquiring a new best of breed
utilities management system.
ADVANTAGES
Included below is a listing of the most significant advantages to replacing the current SAP
financials/HR/payroll environment only, retaining the existing best-of-breed project portfolio and
selecting a new non-SAP best-of-breed utility billing solution:
1. Low Cost: The value proposition achieved from the savings estimated over five years for this
option exceeds a range between $3 - $11 million over the comparable alternatives.
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2. Staff Optimization: Internal staff support would be reduced by 4.4 FTE’s in this new
environment for a total of 8 dedicated FTE’s. This includes four (4) staff dedicated to
supporting the new ERP and one staff member dedicated to managing of the City’s Enterprise
Asset Management System. Is also retains three (3) staff dedicated to supporting the utility
best of breed system.
3. Less Reliance on Outside Consultants: The City builds internal capacity to administer and
optimally configure its ERP environment without relying upon external contract services for on-
call support services. It can also more effectively recruit and retain staff members that do not
require the specialization or highly competitive salary expectations SAP systems demand in
the heart of Silicon Valley.
4. On Going Support Sustainability: The City’s operations have demanded increased staffing
efficiency following the reductions in force drastically impacting the organization’s ability to
manage its SAP systems. The levels of expertise and staffing continues to increase as
service level expectations increase while support personnel remain unchanged. Furthermore,
the absence of succession planning has significantly impacted the institutional memory of the
organization. A Tier 1.5 or 2 system can be maintained with fewer staff while providing more
options for staff to assume a greater role in learning to manage less complex systems.
DISADVANTAGES
Included below is a listing of the most significant disadvantages to replacing the current SAP
financials/HR/payroll environment only, retaining the existing best-of-breed project portfolio and
selecting a new non-SAP best-of-breed utility billing solution:
1. Complexity of Interface development and Support: The complexity of managing the myriad
of best of breed interfaces would present a significant implementation risk to success in
addition to an obvious premium increase with respect to cost as licensing and maintenance for
each system would need to be carried forward. The cost savings benefit is considerably
diminished in this alternative in contrast to a completely integrated alternative.
2. Change Management Challenges: This option will cause significant disruption to staff within
the organization as processes, procedures, and training needs would likely require the
greatest amount of re-engineering.
3. Existing Investment Lost: The investment made to interface the present SAP systems would
be lost and the third party systems would have to be re-interfaced.
4. Extended Duration of Implementation Project: Establishing a transition of this magnitude
will require staff augmentation that will increase staff support requirements in order to
complete a complete migration which will require several years to perform.
4.9 OPTION 3: COST ESTIMATES AND SUMMARY
Based on Plante Moran’s experience with projects of similar scope coupled with past actual pricing
taken from selected Tier 1.5 and Tier 2 vendor proposals to similar sized entities as the City, we have
estimated internal and external cost projections. Key assumptions were necessary in preparing these
estimates and these are represented in the Detailed Cost of Ownership Details and Assumptions
Section located in Appendix D.
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Overall, the City may decide to continue with SAP, but in view of the total cost of ownership differential
as well as the problems that it has had in maintaining and optimizing SAP in the past, Option 3 will
allow the City to pursue a fresh start, lowering the total cost of ownership and improving functionality
for City end users.
Option 3a Option 3bNEW ERP
Go to Market for a Fully
Integrated Public Sector
Focused ERP Solution and
Procure a Separate Utility Billing
Best of Breed Solution
NEW ERP
Go to Market for a Fully Integrated Core
Financials/Human Capital Management
Solution, Retain the Current Best of
Breed Systems and Procure a Utility
Billing Best of Breed
EXTERNAL COSTS
One-Time Cost Summary
Software License Fees 1,069,984$ 1,670,133$
Additional Hardware Costs N/A N/A
Consulting Implementation / Data Conversion / Interface Development 2,142,027$ 2,338,275$
Training 120,000$ 250,850$
System Selection & Implementation Planning Fees 200,000$ 200,000$
Total External One-Time Costs 3,532,012$ 4,459,258$
Reoccurring Cost Summary
Annual Software Licensing & Solution Support 241,675$ 205,874$
Consulting Support Services 80,698$ 64,425$
Cloud (includes Licensing, Support, Interfaces & Consulting Services)-$ 646,080$
Training 75,000$ 115,000$
Total External Recurring Costs 397,373$ 1,031,379$
INTERNAL COSTS
Reoccurring Cost Summary
Current Support FTE 510,000$ 510,000$
Additional Support FTE'S 400,000$ 530,000$
Total Internal Recurring Costs 910,000$ 1,040,000$
Year #1 Grand Total Cost 4,442,012$ 5,942,168$
FIVE YEAR ESTIMATES
Five-Year Estimate *$9,911,572 $14,608,045
* Estimate includes one-time and reoccurring costs during year one, annual software licensing and solution support for planned application purchases in year
one are assumed to incurred in years 2-5 only, and the future value of investments has been adjusted for years 2-5 to account for a 3% annual rate for
inflation.
Cost Category
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4.10 PLANTE MORAN RECOMMENDATION
While many incremental improvements could be made or added to the current applications which
would mitigate the investment required by changing systems, the primary challenge with maintaining
the status quo would be the inefficiencies and lack of centralized information due to multiple systems
and shadow systems.
Should the City conclude to remain with the current financial, procurement and personnel software
applications environment via an SAP Upgrade, it would delay the complexities of the decision process.
However, it may be likely that the City would conclude to change financial and personnel application
suites in the future, and the timing of the change may be less advantageous.
Overall, remaining with the current environment does not appear feasible in the long term and
inappropriate as a future strategic direction in context of the City’s strategic goals and
concerns of the current financial, procurement and personnel applications environment.
As such, the City should direct its analysis efforts towards the consideration of evaluating the
advantages and disadvantages of changing the current environment to either further deploying and
integrating current systems or replacing them with a suite of integrated ERP modules from an ERP
provider.
While current inefficiencies were difficult for City staff to quantify, there is a common belief amongst
staff that information tracking tools and processes are inefficient, and there is a universal
acknowledgement that current information silos and the complexity of the current environment are root
causes of the issue. Given the functional and technical risks associated with interfacing the City’s
multiple standalone core financial, procurement and personnel systems, as well as the related need to
fundamentally re-implement the existing system, the City may be best served to evaluate the full range
of ERP options via a competitive bid process.
Assuming that the results of the ERP System Evaluation are considered and the recommendations for
system selection and implementation presented in the sections below are followed, we recommend
that the City pursue Option 3, Alternative A: Go to market for a fully integrated public sector
focused ERP solution and procure a separate utility billing best-of-breed solution.
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5 Recommended Next Steps
5.1 ERP SYSTEM EVALUATION APPROACH
To implement the recommendations presented herein, the following approach is recommended:
1. Review and obtain a complete understanding of the ERP System Evaluation Report.
The report and accompanying options and alternatives should be reviewed in their entirety to
gain an understanding of what is being presented and to prompt discussion and feedback on
elements of the report.
2. Garner support for the recommendations. Within the report, there are numerous
recommendations that will direct the use of staff time and other resources at the City. Support
for the recommendations will be essential in its success. This support must come from the
City leadership including City Council, Executive Steering Committee and Department
Directors.
3. Establish capital budgets and obtain funding. As part of the initial implementation of the
Plan and on an on-going basis, funding will need to be obtained to implement the initiatives in
the Plan.
4. Execute. Once approval for the project has been obtained and initial capital funding requests
initiated, the implementation of recommendations can occur. Plante Moran has recommended
teams of resources by process area to execute specific initiatives. The City will need to
assign specific resources to fulfill the roles recommended.
5. Continue with system procurement. Best practice system selection approaches and
implementation approaches should be considered in the selection of a new system to replace
current SAP and related systems.
5.2 PROJECT STRUCTURE AND GOVERNANCE
Execution of the recommendations and implementation of a new system will require a well-coordinated
and well-organized governance structure in which to operate and manage the project. For the new
system being considered by the City, many staff at the City will be impacted. Complex system
implementations are most successful at organizations with structured project governance.
The process and technology changes will be significant and will impact all departments. There will
also likely be policy changes that will need to be considered and implemented to receive the full
benefits.
Strong project management is also critical for deployment, and becomes increasingly important with
the new system investment. As a result, it will be critical to form a project structure that incorporates
the following:
1. Considers the needs of a variety of stakeholders
2. Provides the ability to make decisions in the most efficient and effective manner
3. Ensures that project communication is flowing to the right individuals at the right time including
those that are part of the project team and those external to the project team
4. The project team structure is empowered by management to enforce policies
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Recommended Strategies:
1. Confirm a formal governance structure to coordinate the selection of the new system using the
current ERP evaluation teams as a basis, with the intent that structure can be leveraged and
specific roles can be re-defined for future design, implementation and maintenance phases of
the system lifecycle.
2. As part of the RFP process, request information from vendors as to the optimal City staffing
structure and time commitment required for a successful system implementation including on-
going support and maintenance of the system.
3. Prior to launching the implementation phase of the project, establish expectations with the City
staff as to the time commitment that will be required for a successful implementation.
4. With the assistance and advice from the selected vendor(s), institute an implementation
governance structure that is well-staffed and supported by executive management within the
City.
5. Establish policies to sunset legacy solutions, supplemental applications and shadow systems,
in conjunction with the new system implementation so that they do not perpetuate an
environment of dual information tracking.
6. Establish data retention requirements to guide and manage the scope of required data
conversion.
5.3 REQUEST FOR PROPOSAL (RFP) TACTICS
The Request for Proposal (RFP) for a new system will encompass a number of sections including a list
of the scope of software modules to procure and a list of detailed software specifications
supplemented by other tables including interface requirements and migration paths for existing
systems. We recommend the organization of potential modules as they relate to the continued
assessment for inclusion in various phases of the project to be organized as follows:
1. Core Modules: These modules are ones whose existing legacy software resides in SAP that
are intended to be replaced as part of the project through the RFP process although their
replacement will likely occur in various stages of software implementation.
2. Expanded Modules: These modules are ones that are being considered for further evaluation
during the RFP process and may or may not be replaced as part of the project depending on a
number of factors.
3. System Interfaces Required: These modules are ones that are not within the scope of the
project but may have interfaces to the implemented new solution. At some point in the future,
the City may consider replacement of these modules or a marketplace assessment to
determine the current vendor solution set that exists for these areas.
Recommended Strategies:
The following strategies should be considered by the City as it continues through the RFP and due
diligence activities leading up to the selection of a future ERP solution:
1. Vendor clarity in RFP. Ensure that software vendors are clear as to the strategy of the
organization as it relates to the procurement of replacement software.
2. Open procurement process. Preliminary project cost estimates for Tier 1.5 vs. Tier 2
vendors vary significantly. The City should define both functional and technical requirements
as part of the RFP process and allow both tier vendors propose their respective solutions.
Then the City will be able to evaluate the solutions based on the selection criteria and
conclude on the most appropriate level of investment. The ERP Marketplace Assessment
section further details the differences between the tiers.
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3. Identify other vendor capabilities and solution scope. Within the RFP, include additional
questions pertaining to the capabilities of vendors in other areas not considered as part of the
initial scope of the project (i.e., system interface required modules) but which may be available
from the vendors.
4. Balance a strategic vendor decision with a preliminary investment. Include all modules
which the City may consider as part of a new system procurement and structure the RFP to
provide “a la carte” pricing. This will allow the City to evaluate the full scope of the vendor
solution to aid in the strategic decision of the vendor platform, however make a subsequent
conclusion on phasing the investment.
5. Progressive elaboration. As the City learns more about the work of the project, planning can
progress, becoming more elaborate, over time. Using consultant templates and expert
judgment can assist with leveraging lessons learned from other similar local public sector
organizations; however specific implementation planning requirements will be increasingly
defined throughout the project phases.
6. Evaluate financing options. As part of the RFP process, the City may wish to consider
financing options that are available from the vendor or other third party to provide a more
palatable payment stream to fund the capital cost of the project.
7. Leverage a prime vendor approach towards implementation. Regardless of the solution
set that is selected, to the extent possible the City should work to maximize contracting with a
single, prime vendor who has prime responsibility for the implementation of the entire solution
set that is purchased by the organization. It is reasonable to expect that a substantial portion
of the current manual processes and shadow systems could be incorporated within a new
system. With the prime vendor approach, the City would have the opportunity to choose
separate personnel system, financial and purchasing functions should be combined and it is
envisioned that the software marketplace offers solutions that would provide the City the
opportunity to integrate all these major functions if desired.
8. Software and services solutions. Ensure that information is gleaned from providers of new
system solutions in areas of both product and service as part of the RFP and due diligence
activities. Specifically, this would include the following:
a. Review their product offerings as requested in the RFP.
b. Identify and contact relevant references of a comparable size to the City.
c. Develop vendor demonstration agendas that are geared towards identifying how the
vendors will achieve specific the City outcomes.
For multi-product solutions, assess the degree in which these various products have operated with
each other at other clients.
5.2 PHASING
Due to the integration and data access that they can provide, many systems, particularly ERP systems,
are complex and require organizational commitment to successfully implement them. It is not
uncommon for organizations the size of the City to take between 12 to 24 months to implement such
systems. The implementation of a new system presents a number of options as to when certain
modules are deployed frequently based on when the various business cycles are executed within the
City such as:
Fiscal year-end
Calendar year-end
CAFR development
Budget development
Open enrollment
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Recommended Strategies:
Although there is no perfect answer as to when certain modules should be deployed, the following
best practices should be considered related to the implementation phasing set of activities:
1. Implement complimentary modules together. There is a natural implementation phasing of
like modules as part of the deployment of a new system. For example, core financial modules
should be implemented together. Likewise, HR/Payroll modules, to the extent incorporated,
should be implemented together as well. This is another example of factors to be considered
when determining an overall implementation approach.
2. Avoid “Big Bang Approach”. The deployment of a new system is a very significant project
requiring a large amount of staff and vendor time to implement as it will impact people,
process, policy and technology. Careful phasing of implemented modules should be
performed versus a “big-bang” approach of implementing all software at the same time to
minimize overall project risk and to ensure optimal utilization of resources. The City may wish
to consider separating core financial modules, payroll and personnel, and procurement
functions into separate phases. Integrations to other the City systems should follow, as the
system modules are implemented over time.
3. Evaluate opportunities for “Quick-Win” implementations. There are a number of
opportunities to obtain quick-win implementations of a new system that provide visible
evidence of project success and minimize the risk of bringing all modules up simultaneously.
Frequently, modules such as Debt Service Management and Investment Management are
isolated to a limited number of individuals, are relatively simple to deploy and do not have
significant interaction with the core financial system. Opportunities for these quick-wins
should be explored during the vendor selection phase of the project and more closely during
system implementation. Certain “quick-wins” may need to be initially implemented in stand-
alone mode with or without temporary bridges in place and then later integrated when the core
system is live.
4. Implement considering natural business cycles. A natural tendency is to implement the
financial components of a new system such that go-live is on a fiscal year-end to have all
transactions for a year on one system. In general, there are many cases where this is not the
ideal situation as the post go-live challenges with implementing a new system impede
significant activities that are required for year-end close. HR/Payroll solutions tend to go-live
on a quarterly basis and the City may wish to consider going live at a calendar year break due
to the processing of W-2 statements for employees. Regardless, natural business cycles
should be considered as part of the phasing of new system modules.
5.3 STAFF BACKFILL
Frequently, staff who are the most desirable to lead a new system a replacement project are also the
ones who also have the most knowledge of the legacy environment and are viewed as key in
maintaining the integrity of the existing environment. This is true at the City in certain areas such as
Finance.
Recommended Strategies:
1. Factor backfill costs in project budget. The City should consider the feasibility of
additionally factoring backfill costs into the overall project budget that is presented to the City
Council as part of the entire project budget.
2. Consider recent retirees to provide backfill. To the extent feasible, evaluate the
opportunity of using any recently retired staff to provide backfill support for the project or to
provide assistance in critical areas deemed important for the project due to their institutional
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knowledge. This may include areas such as data cleansing, where institutional knowledge is
relevant, or for addressing day to day operational responsibilities, while current the City
subject matter experts focus their attention on the new system implementation effort.
3. Consider workload sharing. Based on normal business cycles, certain City staff may
become especially busy addressing operational requirements. During these times, to the
extent that other City staff can re-focus their efforts to assist them in their operational duties, it
can mitigate the bottlenecks which can result and increase staff availability to participate on
the project. Additionally this can help with staff cross-training, and collectively “upgrade” staff
skills in each work area. To the extent that the City can proactively initiate such approaches in
advance of the new system implementation project, it can provide benefits to allow subject
matter experts to more easily transition to their project roles.
5.4 DATA CLEANSING / CONVERSION
Legacy systems frequently have data stored in a variety of formats either electronically within the
system or in hard-copy format that is deemed as critical, and has data retention requirements.
Vendors will generally provide two approaches towards the conversion of client data. In one method,
vendors will provide a template format to the City and request that all data to be converted is provided
in the requested format regardless of the number of data sources that currently house this information.
In the second method, vendors will manage both the extraction and conversion of information into the
template format. In both cases, the data conversion process will be iterative in terms of extracting,
converting, reporting and reviewing.
Likewise, cleansing of the data prior to the data conversion activity during implementation, though time
consuming, will generally make this process occur more smoothly. Regardless of the methods taken,
data conversion is considered a critical part of system implementation and one that can be a critical
risk to the project if not managed correctly. A certain amount of data cleansing can occur after data is
extracted using programming.
Recommended Strategies:
1. Data conversion requirements. Define general data conversion requirements in the RFP
and work with the tentative finalist vendor during the last stages of the selection to finalize the
scope of conversion within the Statement of Work (SOW) with the vendor.
2. Historical information. Avoid converting all historical information to the new environment.
Establish and use data retention guidelines to drive the scope of conversion. Instead,
consider the conversion of summary information as a first course of action unless detail is
needed.
3. Historical data access. Consider alternative options of accessing historical information other
than electronically. This may include printing of reports to electronic files or the creation of a
data warehouse.
4. Design conversion specifications. Develop a cross-walk between legacy and new system
data as part of the conversion process. For example, this may include development of an
interface that allows users to enter in an old account that then displays the same account in
the new structure. Likewise, an old vendor number could populate a field in the new system to
act as a cross-reference.
5. Data cleansing. Begin data cleansing activities as early as possible. For example, the City
may wish to start reviewing its existing vendor file and eliminating duplicates or vendors who
no longer exist. During the implementation phase of the project, most vendors will provide
specific instructions related to data cleansing activities.
6. Use of data warehouse. As a separate internal project, consider the use of a data
warehouse for housing of legacy data for historical reporting purposes. If this route is chosen,
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clear responsibilities for separately acquiring and implementing the data warehouse will be
required to consider both vendor and the City staff involvement.
5.5 INTERFACE DEVELOPMENT
Interfaces related to the deployment of a new system can exist in various forms as follows:
1. Standard imports or exports provided by the vendor’s solution with entities and systems
outside of the City (e.g., benefit providers, other governmental entities, etc.).
2. Interfaces between the vendor’s solution and applications that are not being considered for
replacement as part of the project.
3. Interfaces between the vendor’s solution and applications that are being considered for
replacement as part of the project that may or may not be provided by the prime vendor.
Decisions as to who will develop and provide on-going support for system interfaces are another
important factor to consider. Certain vendors will provide toolsets that assist in the development and
management of system interfaces.
Recommended Strategies:
1. Identify interface requirements early. Define potentially needed interfaces between the
new system and external entities in the RFP. This would include existing as well as desired
new interfaces that would be populated in the Application Interface Table of the RFP.
2. Define full scope of interfaces. Define potentially needed interfaces between the new
system and other City systems not being replaced in the RFP. This would include existing as
well as desired new interfaces that would be populated in the Application Interface Table of
the RFP. Identify other candidate interfaces in the RFP with systems that may or may not be
replaced.
3. Prime vendor and interfaces. Ensure that the prime vendor is responsible for the delivery of
all system interfaces during implementation.
4. Shadow support staff. City staff should shadow vendor staff during system implementation
to develop an understanding of their conversion tools such that the City can maintain those
interfaces designated for the City support going forward.
5. Leverage existing interfaces. Consider allowing the software vendors to maintain interfaces
that exist between their product and entities outside of the City (e.g. benefit providers, IRS,
etc.) and, as an option, other systems not being considered for replacement by the City.
6. Process redesign consideration of interfaces. In conjunction and as a result of the
implementation’s business process redesign activities, perform the necessary work to further
inventory the system interface requirements, develop an system interface plan, design and
develop the system interfaces, test and accept the interfaces and implement them in
conjunction with the “out of the box” system implementation.
5.6 REPORT DEVELOPMENT
Although the selected vendor will likely provide a significant number of reports and queries through
their base system there will be a need for the City to have existing reports customized and to have
additional reports developed that are not available as part of the core set of reports. The skill sets
required for report development include not only the report development tools but also an
understanding of the database and/or views which the reporting tools access. Likewise, if the City
pursues the use of a separate data mart / data warehouse in order to perform more complex analysis,
additional skill sets will be needed.
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When software vendors demonstrate their solutions, the expectation of users being able to perform
ad-hoc reporting themselves is heightened as the vendors will present the process as simply involving
the point and click of a few buttons to generate the desired results. In reality, the process of using the
tool and developing an understanding of the database/view takes a period of time.
Recommended Strategies:
1. Establish expectations around reporting. Reset staff expectations that traditional reporting
should not necessarily be the first or most appropriate method towards obtaining the financial,
procurement or HR information that they seek. Instead, as part of the overall training
approach, ensure that staff understand the self service, inquiry and portal functions available
in the system, and when to use them. Reset staff expectations that not all reports will be
available at the go-live transition and that all users will be able to generate ad-hoc reports.
2. Ad-hoc reporting tools team. Identify a joint team of process owners and technical support
staff to be trained on the ad-hoc reporting tools during the implementation. These staff will
likely be generating custom-developed reports for some time after the go-live period.
3. Assess ad-hoc reporting tools. Obtain a clear understanding during the selection process
as to the reporting options available with each vendor solution and, for each reporting option,
who typically is using the tool.
4. Custom reports. Work with the software vendor during the implementation phase of the
project to develop a select set of custom reports, with their assistance, to improve knowledge
transfer as to both the product and database structure.
5.7 CHANGE MANAGEMENT
Project success comes from having a very clear idea of how management would like to run the City,
and then using redesigned processes and a new system to facilitate the way the City has envisioned it.
When process and software implementations do not meet expectations it is often due to people issues,
and not necessarily the technology. Research indicates a correlation between the success of a
change initiative and how well the people side is managed throughout the change. That is why
applying a change management methodology is critical to the success of such an initiative. A rigorous
change management methodology is critical to supporting the successful launch of new processes
and systems. The purchase and implementation of a new system and related technology is done to
assist in meeting organizational objectives and improving performance. Organizational performance
is also impacted by the people of an organization and the processes used to complete work.
Throughout the project, the goal is to balance these components, as illustrated:
People
Process
Technology
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5.8 COMMUNICATION PLANNING
As part of the first steps of change management planning, the City should develop communications
plans intended to guide project communications from process redesign through post-implementation.
By its nature, the project will affect many staff across the City.
Acknowledging the diverse City audiences that will be involved and impacted by this project, a
Communication Plan should be developed to create awareness and make the project relevant by
effectively communicating the impacts to both internal and external stakeholders. Sample objectives
for a Communication Plan may include:
1. Accurately distribute information in a timely manner concerning important project benchmarks
and progress to employees.
2. Use various media to provide multiple sources from which information concerning the project
can be accessible.
3. Ensure all information available is updated and accurate.
4. Reduce confusion among employees by providing a sole directive and source from which all
project information originates.
5. Provide clear channels of communication within which City project staff can operate to lead to
an expedited solution to issues that arise during the selection and implementation and after its
completion.
6. Encourage feedback from employees across the City
Recommended Strategies:
1. Assign a communication coordinator. The City should assign a communications
coordinator to the project management office to maintain and execute the communications
plan.
2. Identify and empower change agents. A Communications and Change Management Team
should recommend the appointment of key “change agents” within each Department to nurture
'buy in' and get Department staff committed to taking relevant actions. Such team members
will be involved in educating Department staff about the impacts and benefits of the project
and be “inspiration agents” by helping Department staff find ways to discover their potential,
overcome barriers, and celebrate successes. These staff should monitor "what is working",
"what isn't working" and "what do we need to change" – and provide regular feedback on
progress to Department staff.
5.9 PROCESS RE-DESIGN
The ERP System evaluation activities that were conducted surfaced several opportunities for
improvements in the management and execution of existing processes. Through the course of
conducting process owner process user review sessions, process-specific as well as the City-wide
issues and opportunities were surfaced. The City should re-engineer appropriate business processes
in conjunction with the implementation of the new ERP, as part of a successful change management
approach.
The mapping of “to be” business processes and certain high level process redesign can be performed
in advance of the implementation, either prior to or during the time that the City is facilitating a RFP
process. Along with process redesign, the City should select key performance indicators (KPIs) that
will be used to measure the City’s performance along with targets that are based on best practices.
Ideally, the City will measure performance according to selected KPIs prior to implementation, six
months after implementation, one year after implementation and quarterly thereafter (some
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organizations evolve to monthly, especially once business intelligence and dashboard solutions are
implemented).
The City should keep in mind the following:
1. The earlier process redesign is performed in the selection process, the more information the
City will have about the “to be” process which can serve as a basis for selection, along with
other factors such as cost, functionality, technology, implementation timeframe, etc.
2. If performed early in the process (e.g., prior to selection), management at the City will likely
face trade-offs in terms of cost versus ability to support “to be” processes.
3. The City will need to remain flexible in terms of which parts of the “to be” process are actually
implementable, given the new system capabilities. In fact, the vendor solution may provide
features resulting in a better, more efficient “to be” process.
During the implementation phase of the project, there may be significant levels of review conducted by
the selected vendor(s) to understand existing City processes and how their software can be used to
improve the efficiency and effectiveness of these processes. While vendors may offer additional
optional services to provide enhanced levels of implementation support to their customers, it is
generally considered the responsibility of the client to develop the actual procedural documentation
that defines exactly how these processes will operate with the selected system for use by process
owning and process end-user staff.
5.10 5ERP SYSTEM TRAINING
The City should develop appropriate training plans in conjunction with the implementation of the new
system. The City does not currently have a formalized enterprise wide training program for existing
financial, procurement and human resources systems.
The process of providing training to on the new system should occur in in conjunction with the
implementation of the new system. Training should be both functional and technical. Functional
training should be for both process owners and process end users. It will also be critical to provide the
necessary technical training to the City IT and departmental “power user” staff.
Recommended Strategies:
1. Establish training expectations. During the RFP development and due diligence activities
associated with reviewing vendor responses, ensure that any specific training expectations
are articulated to the vendors. As part of the due diligence phase with the finalist ERP
vendors obtain a clear understanding as to the level of training activities they will conduct
during the implementation phase of the project and the specific training materials.
2. Training team. During the implementation of the new system, formulate a Training Team
which will focus both on the implementation training requirements on the development of an
ongoing internal training program for continued exploitation of the capabilities of the new
system over time. Consider the use of a “train the trainer” approach, whereby the City would
save on vendor implementation expense, as well as encourage process owners to become
knowledgeable about the key aspects of the system.
3. Budget for future training. In future budget cycles, consider including an ongoing training
budget specific to the system, to assist in maximizing the ongoing leveraging of the City’s
investment.
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6 Appendices
6.1 APPENDIX A: PROJECT CHARTER
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Enterprise Resource Planning
Evaluation
Project Charter (Amended)
Project Number #46
Project Manager: Michael Tsao
Date: September 23, 2013
Version: 2
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A.1 Version History
ID Changes Date Created Author
Initial 09/25/2013 Mtsao
Modify contends 10/24/2013 mtsao
Add Appendix A 11/12/2013 Mtsao
SAP team diagram 06/18/2014 Mtsao
A.2 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 SAP Enterprise Central Component (ECC
6.0), 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, the City completed
a major upgrade to the SAP ERP system and , which also replaced the former utility billing system
(Banner) with the implementation of the SAP IS-U module, Customer Relationship Management
(CRM), Utilities Customer Electronic Services (also known as My Utilities Account customer portal) and
Business Intelligence systems (BI). Both business and technology needs have changed dramatically
since the current ERP solution was selected and implemented. Therefore, City desires to conduct a
comprehensive evaluation to determine a solution to reduce IT application and infrastructure support
costs, improve flexibility, increase user friendliness and intuitiveness of system, facilitate further
automation of business processes, improve quality and reliability of information for decision making.
A.3 Project Description
ERP consultant to perform an analysis of City’s current SAP environment, business processes and our
strategy; evaluate the ERP market place; and help the City determine a refreshed vision for our ERP
needs. Utilities billing and a Human Resources Information System is included in scope of this project.
Project Objectives
By the end of FY14, an ERP consultant will present a comprehensive evaluation report to the City with
the following information:
Gap analysis of current application capability against business and technology needs and best
practices.
o Identify present and future needs
o Identify wins and successes (strengths)
o Identify pain-points and challenges (weaknesses)
o What are the risks and opportunities
Identify areas where the current application is capable of meeting needs.
o Identify the pros and cons of using the current application to fulfill these needs
o Estimate the time and costs to implement and support
o Compare these costs to alternatives
Conduct an overall evaluation to determine if the City should solicit proposals from other ERP
solution providers.
o Benchmark support and maintenance costs (i.e. to similar sized cities and municipalities.)
o Determine if the current application allows the ability to respond quickly and cost-
effectively to changing business and technical needs
A.4 Project Scope & Deliverables
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In Scope
Selecting an ERP evaluation consulting firm.
Perform an analysis of our current SAP environment.
Perform gap analysis of current application.
Deliver a comprehensive evaluation report.
Out of Scope
Selecting a new ERP solution for the City.
A.5 Flexibility Matrix
Most Flexible Moderately Flexible Least Flexible
Scope X
Schedule X
Cost X
A.6 Milestones
Milestone Description
Charter (this document)
Kickoff Meeting
RFP
Contract with Vendor
Business Impact Assessment (BIA)
Project Management Plan
Assessment Report and Recommendation
A.7 Deliverables
Deliverable Description
Gap analysis of current application capability against business and technology needs and best
practices.
o Identify present and future needs
o Identify wins and successes (strengths)
o Identify pain-points and challenges (weaknesses)
o What are the risks and opportunities
Identify areas where the current application is capable of meeting needs.
o Identify the pros and cons of using the current application to fulfill these needs
o Estimate the time and costs to implement and support
o Compare these costs to alternatives
Conduct an overall evaluation to determine if the City should solicit proposals from other ERP
solution providers.
o Benchmark support and maintenance costs (i.e. to similar sized cities and municipalities.)
o Determine if the current application allows the ability to respond quickly and cost-effectively
to changing business and technical needs
A.8 Success Criteria
Completion of the ERP evaluation before June 2014.
The ability for City leaders to determine the ERP strategy going forward.
Initial Assumptions and Constraints
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ID Type2 Description
1 A Consultant can provide clear path to the appropriate solution
2 A Identified consultant is within budget
3 C CoPA personnel are available when needed
4 A Consultant performs analysis as expected and within allowed time
A.9 Initial Risks and Issues
ID Type3 Description Owner Importance4
1 R Consultant is unable to identify current application
gap against business and technology needs
Michael 4
2 R Consultant knowledge not at expected level Michael 4
3 R Overall project costs are higher than budgeted Michael 2
4 I Consultant is unable to deliver the final evaluation
report on time
Michael 3
A.10 Sponsor Communication
A.11 Initial Communication Plan
Communication Description Frequency Format Recipients
Technology & The
Connected City
Committee
High Level Project
Overview
Once Regular
Scheduled
Meeting
Committee members
GRB Committee High Level Project
Overview
Once Regular
Scheduled
Meeting
Committee members
Information
Security Steering
Committee
High Level Project
Overview
Once Regular
Scheduled
Meeting
Committee members
GIS Steering
Committee
High Level Project
Overview
Once Regular
Scheduled
Meeting
Committee members
Utility Technology
Committee
High Level Project
Overview
Once Regular
Scheduled
Meeting
Committee members
A.12 Team and Communication
Initial Communication Plan
Communication Description Frequency Format Recipients
Kick-off Meeting Initial project
meeting
Once Meeting PM
Sponsor
SAP Core team
SAP Steering Committee
SAP PMO Team
Stakeholder/Liaisons
Status Updates Project Status,
Risk Status,
Milestone, Issue
Review, etc.
Weekly Email PM
Sponsor
SAP PMO Team
2 A: assumption; C: constraint
3 R: risk; I: issue
4 4: critical; 3: high; 2: medium; 1: low
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Consultant
Meeting
Regular meeting
for status and
review
Weekly Meeting PM
SAP PMO Team
Consultant
Project Team
Meeting
Regular meeting
for status and
review
Monthly Meeting PM
Sponsor
SAP PMO Team
Consultant
SAP End Users: See Appendix A
A.13 Project Authority
Title Resources Needed (Names)
Sponsor: Jonathan Reichental
Project manager: Michael Tsao
PMO Governance: PM, Sponsor, SAP Steering Committee
Business Process Owner: Finance: Laura Kuryk, Walter Rossmann, Greg Pustelnik,
Scott O’Neill;
Revenue Collection: Josie Stokes;
HR: Grace Castor;
Utilities CS: Anthony Enerio, Raveen Maan, Dave Yuan;
PW Refuse: Matt Krupp, Matt Raschke;
Project System: Sharon Macway, Anna Vuong;
Sales and Distribution and Plant Maintenance : Anna
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Vuong;
Steering committee PM, Sponsor, SAP Steering Committee
Core Team PM, TBD
Extended Team Plante & Moran, PLLC.
A.14 Purchase Request Information
Budget (First Year) $ 150,000
CIP or Cost Center: G/L number: 30050002-
31290
Multi-year yes/no NO
Procurement Method: RFP
SAP End Users by Department
Administrative Services
Accounting
Laura Kuryk
Budget
Christine Paras
Purchasing
Greg Pustelnik
Store
Scott O’Neill
Revenue Collection
Nichol Banks
Rick Claeys
City Attorney
Stacy Lavelle
City Auditor
Deniz Tunc
City Clerk
Beth Minor
City Manager
Katie Whitley
Danille Rice
Community Services
Budget/Position
Rob De Geus
Rhyena Halpern
Daren Anderson
Procurement
Sally Camozzi
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Marieke Gaboury
Catherine Bourquin
Time Entry
Erin Perez
Amy Johnson
Fire
Jeany Clattenburg
Information Technology
Sherri Wong
Library
Karol Gallucci
People Strategy & Operations
Elizabeth Egli
Planning & Community Environment
Budget/CIP
Alicia Spotwood
Robin Ellner
Procurement
Lisa Green
Rosemary Morse
Time Entry
Zariah Betten
Aline Eskandari
Police
Dana Lamberson
Barb Teixeira
Public Works
Karen Mitchell
Tatiana Pham
Utilities
Billing Management
Lissa Rendon – Customer Service Specialist - Lead
Eric Keniston – Resource Planner
Customer Service and Customer Relationship Management
Renee Ruiz – Customer Service Representative
Device Management
Barclay Rush - Customer Service Specialist - Lead
Financial Contract Accounts
Leon Timmons- Utilities Credit and Collections Specialists
Lissa Rendon - Customer Service Specialist - Lead
Utilities Customer Electronic Services
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Preet Maan - Customer Service Specialist
Work Management
Kelly Haruta – Coordinator Utilities Project
Melissa Smart – Coordinator Utilities Project
Business Intelligence
Lissa Rendon - Customer Service Specialist – Lead
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6.2 APPENDIX B: APPLICATION INVENTORY
As part of the Enterprise application analysis, an inventory of all key current software systems has been developed to support the areas in scope
for the project, as defined in the project charter. For each current system, the analysis categorizes the level of availability of that software from
other ERP vendors which sell their products to similar size governments. Additionally the analysis identifies a recommended preliminary migration
plan for the current application based on all factors. .
*Application Availability in the ERP Market
Legend Code Description
G Generally
Available
The module is generally available from most / many providers of ERP solutions to similar size entities
B Best of
Breed
The module is not generally available from most / many providers of ERP solutions to similar size entities and is typically
selected and implemented as a separate best of breed system, then later integrated to ERP, as feasible, based on
available funding and skills.
E Expanded
ERP
The module is available from certain, select providers of ERP solutions to similar size entities and if not selected and
implemented as part of the integrated ERP system, would need to be obtained by the City from a separate best of breed
system, then later integrated to ERP, as feasible, based on available funding and skills.
#
Current ERP
Application Application Notes-Description Functional Area(s)
Supported
ERP
Availability in
Marketplace
Expected ERP Module
1 SAP – BI Business Intelligence for reporting Utilities
Management G Ad-Hoc Reporting Tool
2 SAP FI-AA Asset Accounting (FI-AA) Asset Management G Fixed/Capital Assets
3 SAP –PS Project Systems (PS) Project
Management G Project Accounting
Contract Accounting
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#
Current ERP
Application Application Notes-Description Functional Area(s)
Supported
ERP
Availability in
Marketplace
Expected ERP Module
4 SAP PSM-FM
Funds Management Integration
(PSM-FM)
Integration of Project/Contract
Accounting with Funds Management
(Budgeting) and General Ledger to
match actuals vs. costs and keep
track of budgets and spending
Project Accounting
General Ledger
Budgeting
G
General Ledger
Budgeting
Project Accounting
5 SAP-FI
Financial Accounting (FI)
General Ledger (FI-GL)
Accounts Receivable (FI-AR)
Accounts Payable (FI-AP)
Bank Accounting (FI-BL)
Special Ledger (FI-SL)
Cost Controlling (CO)
General Ledger
Cost Accounting
Financial Reporting
G
General Ledger
Miscellaneous Billing and
Accounts Receivable
Account Payable
Project Accounting
6 SAP-FIN Financial Supply Chain Mgmt (FIN-
FSCM) Treasury G Purchasing
Contracts Management
7 SAP-HR
Human Resource Management (HR)
Active Directory (HR-AD)
Organizational Management (HR-
OM)
Benefits (HR-BEN)
Time Management (HR-TM)
Payroll (HR-PY)
Talent Management (HR-COM)
PSO and Payroll G
Human Resources
Payroll
Time and Attendance
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#
Current ERP
Application Application Notes-Description Functional Area(s)
Supported
ERP
Availability in
Marketplace
Expected ERP Module
8 SAP-IS-U/CCS
Utility Billing (CCS-BM)
Device Management (CCS-DM)
Customer Service (CCS-CS)
Financial Contracts Accounting
(CCS-FICA)
Customer E-Services (SAP-UCES)
Customer Relationship Mgmt (CRM-
CS)
Web Portal Interface (IC Web)
Utilities Customers E-Services
(UCES)
My Utilities Account (MUA)
Utilities
Management B Utilities Management
9 SAP-MM Logistics Materials Management Inventory
Management G Inventory Management
10 SAP-PM Plant Maintenance
Maintenance &
Inspections
Management
G & B
11 SAP-SD
Sales and Distribution
Price/Rates Calculation; Prod or
Service Availability Check; Customer
Credit Management; Material
Determination; Tax Determination;
etc.
Sales and
Distribution B Utility Billing
12 Accela Permits and inspection data Permits and
Inspections B N/A
13 Advanced Micro
Solutions (AMS)
1099-ETC software for generating
1099's Accounts Payable G Accounts Payable
14 Autodesk Utility Design
(AUD)
Estimating software used by Electric
Engineering.
Utilities
Management B N/A
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#
Current ERP
Application Application Notes-Description Functional Area(s)
Supported
ERP
Availability in
Marketplace
Expected ERP Module
15 BMI
Document management vendor for
planning and purchasing (contract
management)
Purchasing B Document Management
16 Checkfree Online Payments for Utilities Utilities
Management B N/A
17 Civica IT Web Development Toolset IT B Purchasing
18 CLASS Parks and Rec system Parks and Rec B N/A
19 Commerce bank e-Payables Accounts Payable G N/A
20 CORE (Ipay) Web based parking citation payment
and collection. Revenue Collections B Cash Receipting
22 Doc1/e2Vault Bill print extract module Utilities
Management B Utility Billing
23 Docusign Used to approve activities Purchasing B Purchasing
24 GIS Geodesy GIS mapping Utilities
Management B N/A
25 GoldMine CRM & Contact Management
Reporting
Utilities
Management G CRM
26 InTime/ISELINK Police Scheduling Software Payroll/Time Entry G & B
Human Resources
Payroll
Time & Attendance
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#
Current ERP
Application Application Notes-Description Functional Area(s)
Supported
ERP
Availability in
Marketplace
Expected ERP Module
27 I-Tron / MVRS
Collects move-in, move-out and
check reads for meters installed on
designated AMR meter reading
routes that fall under the fixed
network. Interface between SAP and
meter reading hand held device to
record meter reads.
Utilities
Management B N/A
28 JP Morgan Chase
Smart Data P-card system Accounts Payable G N/A
29 Maintenance
Connection Enterprise Asset Management Fixed Assets B Asset Management
30 MS Access Imports SAP data into Access for
reporting and analysis purposes
Utilities
Management G Utility Billing
31 MS Excel
Bid List - Vendor listing for
notification of competitive
solicitations
Purchasing G Purchasing
32 MS Excel IT Vendor File (shadow system) Purchasing G Purchasing
33 MS Excel
IT and Fire Department Contract
Tracking/Management (shadow
system)
Contract
Management G Contract Management
34 MS Excel
LOA absence tracking
Payment Calculations for leave
Workers compensation Claims
Budget Changes
Tracking incoming PAF's
PSO G
Human Resources
Payroll
Time & Attendance
35 MS Excel Calculate holdback percentages
Sales tax capture spreadsheet Accounts Payable G Accounts Payable
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#
Current ERP
Application Application Notes-Description Functional Area(s)
Supported
ERP
Availability in
Marketplace
Expected ERP Module
36 MS Excel - Meter
Reading Calendar
Provides the work plan for the meter
reading group and shows which
meter reading routes will be read and
when.
Utilities
Management B Utility Billing
37 MS Excel - Meter
Testing Results Meter testing/proofing results Utilities
Management B Utility Billing
38 MS Excel - Rate
Modeling Used for refuse rate modeling Utilities
Management B Utility Billing
39 MS Excel - Refuse
Notes
All customer account notes for refuse
billing
Utilities
Management B Utility Billing
40 MS Project Project Management/Task Tracking Project Accounting B N/A
41 NeoGov Recruitment and hire PSO B N/A
42 OpenGov Transparency/Dashboard Tool Financial Reporting B N/A
43 Outage Management Tracks power outages Utilities
Management B N/A
44 PatternStream Budget Publications Budgeting G Budgeting
45 Pitney Bowes Prints and archives bills (utilities) Utilities
Management B Utility Billing
46 Questica Budget system Budgeting B
47 Quick Serve
Will be used to process payments
once the City gets the application to
work.
Revenue Collections Cash Receipting
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#
Current ERP
Application Application Notes-Description Functional Area(s)
Supported
ERP
Availability in
Marketplace
Expected ERP Module
47 Sales tax shadow
system
Calculates sales tax for P-Card
purchases Accounts Payable G Accounts Payable
48
Segal Waters
Compensation
Database
Salary and benefit survey information
(rollout in August 2014) PSO B N/A
49 SharePoint
Logs of customer service,
grievances, discipline, project
documents, purchasing approval
documents
Various B N/A
50 Skillsoft eLearning system (rollout in July
2014) PSO B N/A
51 Spinifex
Payroll and HR reporting tool for the
state controllers report from SAP
data
PSO G Human Resources
52 SymPro Used to manage investments Treasury B N/A
53 Topobase GIS and mapping software used by
Engineering
Utilities
Management B N/A
54 Training database Home-grown, used to sign up for
classes PSO G
Human Resources
Payroll
Time & Attendance
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6.3 APPENDIX C: RESPONSE SUMMARY FROM CITY-WIDE USER SURVEY
8
Key Report Findings
and
End-User Survey Results
9
Key Findings
Inefficiencies Exist Due to Redundant Data
Entry, Manual Processes and Unused
Functionality
Workflow within SAP is Not Fully Utilized
Unrealized Benefits from Current City SAP
Investments
Substantial Risk / Overhead/Effort Involved to
Support an Increasing Number of Interfaces
10
Survey Results
442%
17%
33%
8%
HOW WOULD YOU CLASSIFY YOUR USE OF SAP?
Standard End-User Approver Super User Functional/Technical Owner
11
Survey Results
443%
19%
35%
3%
EXISTING FUNCTIONALITY MEETS MY NEEDS EFFECTIVELY TO
COMPLETE MY DAILY TASKS
Agree Neither Agree nor Disagree Disagree Unknown/Not Applicable
12
Key Findings
Heavy Reliance on IT and Outside Consultants
for SAP Enhancement Requests
Limited Reporting Capabilities
Lack of an intuitive user interface
Limited use of some ‘best practices’ as per
technology limitations/loss of institutional
knowledge
Limited ongoing training available
13
Survey Results
229%
13%
45%
13%
REPORTING CAPABILITIES SUFFICIENTLY ALLOW ME TO
PERFORM MY JOB
Agree Neither Agree nor Disagree Disagree Unknown/Not Applicable
14
Survey Results
119%
21%51%
9%
SAP TRAINING IS SUFFICIENTLY AVAILABLE WITHIN MY
DEPARTMENT
Agree Neither Agree nor Disagree Disagree Unknown/Not Applicable
15
Key Findings
SAP complexities frustrate users and
discourage use of current systems to satisfy
business needs
Lack of Self Service Functionality
Loss of SAP institutional knowledge
HIGH cost of ownership
16
Survey Results
221%
17%
38%
24%
SAP SUFFICIENTLY HANDLES THE CITY'S CURRENT BUSINESS
NEEDS
Agree Neither Agree nor Disagree Disagree Unknown/Not Applicable
17
Survey Results
111%
20%
42%
27%
SAP SUFFICIENTLY HANDLES THE CIT Y'S FUTURE BUSINESS
NEEDS
Agree Neither Agree nor Disagree Disagree Unknown/Not Applicable
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The ERP Assessment Survey tabulated by Vovici EFM includes further statistical analysis from
respondents completing the survey during the period 9/09/2014 – 9/16/2014. If you are interested in
obtaining a complete copy of the survey results and analysis report please contact the City of Palo Alto
Information Technology Department.
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6.4 APPENDIX D: TOTAL COST OF OWNERSHIP DETAILS AND ASSUMPTIONS
Option 1 Option 2a Option 2b Option 3a Option 3b
Cost Category Assumptions
ON PREMISE
Status Quo
with Investment
ALL IN CLOUD
Upgrade SAP and
Retain Existing Best of
Breed Systems
MIXED ENVIRONMENTS
Upgrade SAP Core
Financials/HR/Payroll
Modules Only Keep Existing
Best of Breed Systems Obtain
Best of Breed Utility Billing
System
NEW ERP
Go to Market for a Fully
Integrated Public Sector
Focused ERP Solution and
Procure a Separate Utility
Billing Best of Breed Solution
NEW ERP
Go to Market for a Fully Integrated
Core Financials/Human Capital
Management Solution, Retain the
Current Best of Breed Systems and
Procure a Utility Billing Best of
Breed
All SAP Modules 8, 23 -$ 2,750,000$ 2,250,000$ N/A N/A
Other Existing Software
Licenses and Support -$ -$ -$ N/A -$
Planned Software Licenses
and Support 3 N/A 878,151$ 878,151$ N/A 762,880$
Utility Best of Breed 24 N/A N/A 263,000$ 263,000$ 263,000$
All ERP Modules 30 N/A N/A N/A 806,984$ N/A
Core Modules 35 N/A N/A N/A N/A 644,253$
Additional Hardware Costs 1 N/A N/A N/A N/A N/A
All SAP Modules 8 N/A -$ -$ N/A N/A
Other Existing Software 9 N/A 160,000.00$ 160,000$ N/A N/A
Planned Software 10, 44 N/A 429,350$ 429,350$ N/A 398,478$
Utility Best of Breed 25 N/A N/A 420,407$ 420,407$ 420,407$
All ERP Modules 31 N/A N/A N/A 1,721,620$ N/A
Core Modules 36 N/A N/A N/A N/A 1,519,390$
New System Implementation
Training 11, 26, 46, 45 N/A 566,850.00$ 686,850$ 120,000$ 250,850$
System Selection &
Implementation Planning Fees 20 N/A N/A 80,000$ 200,000$ 200,000$
Subtotal for External One-Time Costs -$ 4,784,351$ 5,167,758$ 3,532,012$ 4,459,258$
All SAP Modules 2 250,000$ N/A N/A N/A N/A
Other Existing Software
Support 13 417,910$ N/A N/A N/A N/A
Other Planned Software
Support N/A N/A N/A N/A N/A
Utility Best of Breed 28 N/A N/A 64,138$ 64,138$ 64,138$
All ERP Modules 32 N/A N/A N/A 177,537$ N/A
Core Modules 37 N/A N/A N/A N/A 141,736$
Consulting (if On-Premise)
Support Services
All SAP Modules 27 250,000$ N/A N/A N/A N/A
Other Existing Software
Support 3 -$ N/A N/A N/A -$
Other Planned Software
Support 38 N/A N/A N/A N/A -$
Utility Best of Breed 29 N/A N/A -$ -$ -$
All ERP Modules 33 N/A N/A N/A 80,698$ N/A
Core Modules 40 N/A N/A N/A N/A 64,425$
Training
Utility Best of Breed 21 N/A N/A 15,000$ 25,000$ 25,000$
All ERP Modules 34 N/A N/A N/A 50,000$ N/A
Core Modules 41 N/A N/A N/A N/A 40,000$
All SAP Modules 8, 23 N/A 2,750,000$ 2,250,000$ N/A N/A
Other Existing Software
Support 13 N/A 417,910$ 417,910$ N/A 417,910$
Other Planned Software
Support 14 N/A 253,529$ 253,529$ N/A 228,170$
Utility Best of Breed N/A N/A Cost not available Cost not available Cost not available
All ERP Modules N/A N/A N/A Cost not available N/A
Core Modules N/A N/A N/A N/A Cost not available
Training
All SAP Modules 4, 15 100,000$ 100,000$ 100,000$ N/A N/A
Existing Software Support 5, 16 12,500$ 25,000$ 25,000$ N/A 25,000$
Planned Software Support 5, 17 N/A 25,000$ 25,000$ N/A 25,000$
Subtotal for External Recurring Costs 1,030,410$ 3,571,439$ 3,071,439$ 322,373$ 966,379$
Current (If On-Premise)
Support FTE's 6, 42, 43 2,073,000$ N/A N/A 510,000$ 510,000$
Additional (If On-Premise)
Support FTE's
All SAP Modules N/A N/A N/A N/A N/A
Existing Software Support N/A N/A N/A N/A N/A
Planned Software Support N/A N/A N/A N/A N/A
Utility Best of Breed 22 N/A 400,000$ 400,000$ 400,000$ 400,000$
All ERP Modules N/A N/A N/A N/A N/A
Core Modules N/A N/A N/A N/A N/A
Current (if Cloud) ERP and
Existing Software Support 12 N/A 510,000$ 510,000$ -$ -$
All SAP Modules N/A N/A N/A N/A N/A
Existing Software Support N/A N/A N/A N/A N/A
Planned Software Support 18 N/A 130,000$ 130,000$ N/A 130,000$
Utility Best of Breed N/A N/A N/A N/A N/A
All ERP Modules N/A N/A N/A N/A N/A
Core Modules N/A N/A N/A N/A N/A
Internal Costs 2,073,000$ 1,040,000$ 1,040,000$ 910,000$ 1,040,000$
EXTERNAL COSTS
One-Time Cost Summary (External)
Software License Fees
Consulting Implementation (Configuration / Data Conversion / Interface Development)
Additional (if Cloud) Support FTEs
Recurring Cost Summary (Internal)
Recurring Cost Summary (External)
Annual Software License and Solution Support (if On-Premise)
INTERNAL COSTS
Includes Licensing, Support & Consulting Services (if Cloud)
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Assumptions Option 1
1
2
3
4
5
6
7
13
27
Assumptions Option 2a
8
9
10
11
12
13
14
15
16
17
18
22
44
Assumptions Option 2b
8
9
10
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
28
29
Assumptions Option 3a
20
21
22
24
25
28
29
30
31
32
33
34
42
46
Assumptions Option 3b
3
9
10
13
14
16
17
18
20
21
22
24
25
28
29
35
36
37
38
40
41
43
45
Average Tier 1.5 (Infor) and Tier 2 (Tyler) ERP systems core financial recurring training fees
Average Tier 1.5 (Infor) and Tier 2 (Tyler) ERP systems core financial recurring consulting fees at 10% of license fees
Assumed to retain the following positions for Tier 1.5 or Tier 2 ERP core financial applications : 2 SAP Technical at $250,000 / per year and 2 SAP Functional at
$260,000 / per year.
Plus Utilities Best of Breed System training at $120,000 + Planned Applications Training ($130,850)
Assumed NO Best of Breed Utilities system recurring consulting fees between NorthStar, Cogsdale and Advanced Utility Systems (CO)
Average Tier 1.5 (Infor) and Tier 2 (Tyler) ERP systems core financial licenses and support
Average Tier 1.5 (Infor) and Tier 2 (Tyler) ERP systems core financial consulting implementation fees
Average Tier 1.5 (Infor) and Tier 2 (Tyler) ERP systems core financial recurring license fees
Other Planned Software recurring consulting fees
Assumed 15 users/year for 10h at $ 1000 / user trained by rotation for Utilities Best of Breed application
Assumed 3 Utilities Business Analysts at $400,000/year for Best of Breed Utilities system
Utilities Best of Breed average license costs between NorthStar, Cogsdale and Advanced Utility Systems (CO)
Utilities Best of Breed average consulting costs between NorthStar, Cogsdale and Advanced Utility Systems (CO)
Average Best of Breed Utilities system recurring license and maintenance fees between NorthStar, Cogsdale and Advanced Utility Systems (CO)
Estimated annual maintenance cost for other planned applications per third party vendor quotes
Assumed 25 users/year for 10h at $ 1000 / user trained by rotation for other existing applications
Assumed 25 users/year for 10h at $ 1000 / user trained by rotation for other planned applications
Per EAMS project recommendation to add 1 Asset Management Program Managers @ $130,000/year
Plante Moran estimated fees for system selection projects for Utilities Best of Breed software
Plus Utilities Best of Breed System training at $120,000
Assumed to be supported by a combination of external services (for hosted applications) and City's IT staff only for on-premise applications
Integrations with the planned applications including the AUD, Maintenance Connect, Core, NeoGov, etc. are assumed to require 100 hrs each at $400 per hour
Consulting Implementation with the planned applications including the E-Procurement Solution, Asset Management, SAP SRM; 50k for E procurement ; See
Maintenance Connect and SRM tabs
As per City provided annual maintenance cost for other existing applications
Average Tier 1.5 (Infor) and Tier 2 (Tyler) ERP systems implementation consulting costs
Average Tier 1.5 (Infor) and Tier 2 (Tyler) ERP systems recurring license and maintenance fees
Average Tier 1.5 (Infor) and Tier 2 (Tyler) ERP systems recurring consulting fees
Assumed average trained costs for Tier 1.5 (Infor) and Tier 2 (Tyler) ERP systems
Assumed to retain the following positions for Tier 1.5 or Tier 2 ERP applications: 2 SAP Technical at $250,000 / per year and 2 SAP Functional at $260,000 / per
Utilities Best of Breed average license costs between NorthStar, Cogsdale and Advanced Utility Systems (CO)
Utilities Best of Breed average consulting costs between NorthStar, Cogsdale and Advanced Utility Systems (CO)
Average Best of Breed Utilities system recurring license and maintenance fees between NorthStar, Cogsdale and Advanced Utility Systems (CO)
Assumed NO Best of Breed Utilities system recurring consulting fees between NorthStar, Cogsdale and Advanced Utility Systems (CO)
Average Tier 1.5 (Infor) and Tier 2 (Tyler) ERP systems licenses and support
Average Best of Breed Utilities system recurring license and maintenance fees between NorthStar, Cogsdale and Advanced Utility Systems (CO)
Assumed NO Best of Breed Utilities system recurring consulting fees between NorthStar, Cogsdale and Advanced Utility Systems (CO)
Plante Moran estimated fees for system selection projects for Utilities Best of Breed software
Assumed 15 users/year for 10h at $ 1000 / user trained by rotation for Utilities Best of Breed application
Assumed 3 Utilities Business Analysts at $400,000/year for Best of Breed Utilities system
Assumed 3 Utilities Business Analysts at $400,000/year for Best of Breed Utilities system
SAP upgrade excluding Utilities Modules cost, which was assumed to be approximately $500,000
Utilities Best of Breed average license costs between NorthStar, Cogsdale and Advanced Utility Systems (CO)
Utilities Best of Breed average consulting costs between NorthStar, Cogsdale and Advanced Utility Systems (CO)
Users and admins training for SAP Upgrade and HANA Platform hybrid cloud plus Planned Software. Assumed 50 people for 40 hours at $200/hr. Plus Utilities
Assumed 25 users/year for 10h at $ 1000 / user trained by rotation for other planned applications
Per EAMS project recommendation to add 1 Asset Management Program Managers @ $130,000/year
Users and admins training for Utilities Best of Breed at implementation time Assumed 15 people for 40 hours at $200/hr
Plante Moran estimated fees for system selection projects for Utilities Best of Breed software
Assumed 15 users/year for 10h at $ 1000 / user trained by rotation for Utilities Best of Breed application
Assumed to retain the following positions if maintaining a core ERP applications in a Tier #1 hosted environment with complete support services. 2 SAP
As per City provided annual maintenance cost for other existing applications
Estimated annual maintenance cost for other planned applications per third party vendor quotes
Assumed 50 users/year for 20h at $ 2,000 / user trained by rotation for ERP modules
Assumed 25 users/year for 10h at $ 1000 / user trained by rotation for other existing applications
Assumed 3 Utilities Business Analysts at $400,000/year for Best of Breed Utilities system
Estimated implementation costs for planned software (HR, E-Procurement, Maintenance Connection)
Per SAP presentation on April 2014 it is assumed that HANA Enterprise Cloud with hybrid hosting and management between SAP and the City will be the chosen
solution
Integrations with the planned applications including the AUD, Maintenance Connect, Core, NeoGov, etc. are assumed to require 100 hrs each at $400 per hour
Consulting Implementation with the planned applications including the E-Procurement Solution, Asset Management, SAP SRM; 50k for E-procurement ; See
Estimated annual maintenance cost for other planned applications per third party vendor quotes
Assumed 50 users/year for 20h at $ 2,000 / user trained by rotation for ERP modules
Assumed 25 users/year for 10h at $ 1000 / user trained by rotation for other existing applications
Assumed 25 users/year for 10h at $ 1000 / user trained by rotation for other planned applications
Per EAMS project recommendation to add 1 Asset Management Program Managers @ $130,000/year
Integrations with the planned applications including the AUD, Maintenance Connect, Core, NeoGov, etc. are assumed to require 100 hrs each at $400 per hour
Consulting Implementation with the planned applications including the E-Procurement Solution, Asset Management, SAP SRM; 50k for E procurement ; See
Users and admins training for SAP Upgrade and HANA Platform hybrid cloud plus Planned Software. Assumed 50 people for 40 hours at $200/hr for HANA
Assumed to retain the following positions if maintaining a core ERP applications in a Tier #1 hosted environment with complete support services including: 2 SAP
Technical at $250, 000 / per year and 2 SAP Functional at $260,000 / per year.
As per City provided annual maintenance cost for other existing applications
2014 Fully Loaded Salaries for 12.5 FTEs in the City's SAP Support team
Assumed the City will not move to the Cloud services in the Option 1
As per City provided annual maintenance cost for other existing applications
Sierra Infosis annual consulting fees, as per City provided contract
Per SAP presentation on April 2014 it is assumed that HANA Enterprise Cloud with hybrid hosting and management between SAP and the City will be the chosen
solution
Additional Hardware Costs* - Materially insignificant for this analysis - Based upon our environmental assessment the City has plenty of capacity.
SAP Enterprise Support Contract - As provided by the City of Palo Alto, CA July 22, 2002 and updated for the calendar years 2013-2015
Assumed to be supported by a combination of external services (for hosted applications) and City's IT staff only for on-premise applications
Assumed 50 users/year for 20h at $ 2,000 / user trained by rotation for ERP modules
Assumed 25 users/year for 10h at $ 1000 / user trained by rotation for other existing applications
{Thank You!}
For more information contact:
Adam Rujan, Partner
248-223-3328
adam.rujan@plantemoran.com
plantemoran.com