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2015-09-22 Finance Committee Agenda Packet
Finance Committee 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. Tuesday, September 22, 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. Approval of Fiscal Year 2015 Reappropriation Requests to be Carried Forward Into Fiscal Year 2016 2. Recommendation to Direct Staff to Develop and Plan for Election to Authorize New Storm Drain Fees to Continue Appropriate Storm Drain Funding After Current Fees Sunset in 2015, Including Appointment of a Citizen Advisory Committee and a Potential 2016 Property Owner All- Mail Election 3. Amendment of Municipal Code Section 2.28.080 Regarding City Council Budget and Table of Organization Amendment Approvals 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. 2 September 22, 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. Status of Items Requested by the Finance Committee Referral Date Item Title Status 2013 Police Services Utilization and Resources Study (PD) Pending 2014 Utilities Department Organizational Assessment (UTL/ASD) Pending Return with an update on the status of organizational assessment recommendations 2015 Review and Discussion of the Public Art Ordinance (CSD) Pending Discussion of Usage and Replacement of Pool Vehicles (Public Works) Finance Committee Items Tentatively Scheduled Meeting Date Item Title 10/20/2015 GASB 68 (ASD) 11/3/2015 New Renewable Energy Power Purchase Agreement (Utilities) Update to the Utilities Department Organization Assessment (Utilities) 11/17/2015 Close Budget and Approve CAFR for FY 2015 City of Palo Alto (ID # 5940) Finance Committee Staff Report Report Type: Action Items Meeting Date: 9/22/2015 City of Palo Alto Page 1 Summary Title: Approval of Fiscal Year 2015 Reappropriation Requests to be Carried Forward into Fiscal Year 2016 Title: Approval of Fiscal Year 2015 Reappropriation Requests to be Carried Forward Into Fiscal Year 2016 From: City Manager Lead Department: Administrative Services Recommendation Staff recommends that the Finance Committee approve the Fiscal Year 2015 reappropriations to be carried forward into Fiscal Year 2016 and direct staff to forward the Finance Committee’s recommendation to the City Council. Background As a part of the fiscal year-end process, staff reviews the City’s unencumbered and unspent appropriations of the fiscal year just ended, along with the City’s spending plans. Encumbered amounts are those subject to the legal claims of other parties due to contractual obligations (for example, commitments made through purchase orders), which are carried forward from one fiscal year to the next. However, each year there are a small number of important projects which staff was not able to complete or encumber funds for. The reappropriation process allows staff to bring forward funding recommendations to the Finance Committee and City Council to continue these projects. On September 22, 2014, the City Council approved a recommendation to amend Chapter 2.28, Section 2.28.090 of the Municipal Code, reducing the previous two-step reappropriations process (preliminary and final reappropriation authorization) to one step as long as the Administrative Services Director certifies that sufficient unencumbered and unexpended funds are available in the current Fiscal Year to be carried forward to the subsequent Fiscal Year. Additionally, the City Council amended the Municipal Code to eliminate the provision allowing for the automatic reappropriation of capital project funds. Previously, the Municipal Code stated that appropriations of capital project funds should continue until the project was completed or no funds had been expended for two years. Effective Fiscal Year 2016, the City of Palo Alto Page 2 Finance Committee reviewed and the Council approved a capital budget which includes all active projects. Since capital projects may be delayed for various reasons, unexpended funds are carried forward in two ways from the outgoing to the new fiscal year. As part of the approval of the Fiscal Year 2016 budget, based on estimates, the majority of unexpended and unencumbered funds were carried forward from Fiscal Year 2015 to Fiscal Year 2016. Now that the Fiscal Year 2015 has closed and staff has processed necessary accounting transactions any unexpended and unencumbered funds for each capital project are reviewed one more time. Based on that review, staff recommends that for some projects in various funds remaining Fiscal Year 2015 capital dollars are reappropriated to Fiscal Year 2016. Also, as part of this review, staff realized that for some projects too much funding was recommended for reappropriation as expenditures occurred in Fiscal Year 2015. Therefore, this staff report also recommends reversing a portion of previously authorized reappropriations. Discussion As noted above, the changes to the Municipal Code from last year allow for the reappropriation of unencumbered and unexpended funds in advance of the normal year-end closing ordinance as long as the Administrative Services Director certifies that sufficient unencumbered and unexpended funds are available in Fiscal Year 2015 to be carried forward to Fiscal Year 2016. Attachment A identifies those operating budget reappropriation requests that staff recommends for approval, while Attachment B lists recommended capital project reappropriations. With the submission of this report for Finance Committee consideration, the Administrative Services Director certifies sufficient unencumbered and unexpended funds are available in Fiscal Year 2015 to be carried forward to Fiscal Year 2016. The projects for which operating budget reappropriations are recommended can generally be grouped into the following categories: Timing and Workload Delays: Certain projects were delayed due to competing workload demands, appropriation of funds late in the fiscal year, or other unanticipated delays. Examples of projects in this category include Document Scanning and Management Services ($66,000), Temporary Staffing for the Purchasing division ($51,000), Business Registry Program ($99,050), Police Utilization Study ($70,000), Airport On-Call Consultant ($40,987), Storm Water Rebates ($55,710) and Santa Clara Valley Water District MOU ($400,000). Technology Services: Funding was approved in Fiscal Year 2015 for a number of technology system evaluation and upgrade projects but contracts were not awarded by the end of the fiscal year. Projects in this category include Geographic Information Systems (GIS) Evaluation of the City’s GIS solutions ($82,500), Palo Alto 3-1-1 implementation ($40,000), Mobile Device Management Solution ($75,000), and Police Interview Recording System ($40,000). City of Palo Alto Page 3 Residential Housing In-Lieu Fund: Due to the timing of Council’s action approving loans and staffing constraints, transactions with Palo Alto Housing Corporation (PAHC) were not completed in Fiscal Year 2015 for some projects. Continuation of the housing transactions will require reappropriation of Residential Housing In-Lieu Funds for the following properties: loan for PAHC purchase of 2811-2825 Alma Street ($600,000), loan for PAHC renovation of Stevenson House at 435 E. Charleston Road ($1,000,000), and loan for PAHC rehabilitation and deed restriction of Pine Street property at 110-130 El Dorado ($375,000). Staff expects to be able to execute and conclude the agreements with PAHC for these projects in Fiscal Year 2016. Library Donation and Grant: This action reappropriates $339,845 in revenue and offsetting expenses as a result of donations and grants received by the Library. In early Fiscal Year 2015 the Library was awarded two grants from the Pacific Library Partnership (PLP): one in the amount of $4,485 to offset delivery costs for LINK+, an interlibrary loan program for participating organizations; and a $15,000 grant for the Maker+: A Summer Maker Program to support STEAM (Science, Technology, Engineering, Art & Math) learning and to foster interdisciplinary exploration among sciences, art, and social sciences. In addition, in June 2015, the City received a $320,000 donation from the Palo Alto Library Foundation. The Library intends to use $100,000 for the purchase of additional technology, such as tablets, e-readers, and other devices for staff development and customer instruction; $112,100 for databases and digital services, such as Learning Express, Mango Languages, and online video, magazines, and music; and $107,900 on contractual services to improve workflow efficiency, provide staff training, and customer service improvements for the new facilities and new products. Teen Services Programs: At the June 2, 2014 City Council meeting, the City Council approved a recommendation from the Policy and Services Committee to use a portion of the net revenue collected from 455 Bryant Street in Fiscal Years 2009 through 2013 to fund Teen Programs for Fiscal Year 2015 (CMR #4776). Staff was to return to the City Council with another plan six months after the opening of the Mitchell Park Community Center where the Teen Center is located to discuss the best use of the facility and programming for Teen Services at the Teen Center and elsewhere throughout the City utilizing the Bryant Street funds. Staff is expecting to return to the City Council in the fall of 2015 with a funding plan for Fiscal Year 2016 and beyond. Teen Services programming includes but is not limited to: makeX, Project Enybody, Click PA, Ghost Bike, and Ceramics class drop-ins. As a result, this action will reappropriate $331,046 to continue supporting these programs as well as a sustainable, long-term approach for Teen Services utilizing Bryant Street funds. Management and Professional Development funds: A number of City employees, as part of their compensation plan, are eligible for certain self-improvement activities. These funds are available to certain employees for civic and professional association memberships, conference participation and travel, educational programs, certain tuition City of Palo Alto Page 4 costs, and professional and trade journal subscriptions. Unspent funds are recommended to be carried over to Fiscal Year 2016 to improve and supplement the job and professional skills of employees ($145,000). Establish Contingency Account – Planning, Community & Environment Department: To establish a contingency account for the Planning and Community Environment Department to set aside funds related to planning, parking, and transportation related funding needs ($500,000). In accordance with the Palo Alto Municipal Code, the use of contingency funding requires the approval of the City Manager. Capital Reappropriations: As discussed in the Background section of this report, starting with the Fiscal Year 2016 capital budget, all capital project reappropriations require City Council approval. The Adopted Budget included approximately $51.1 million in reappropriated funds, across all City funds based on estimates of anticipated spending in Fiscal Year 2015. Since the adoption of the capital budget, some adjustments and refinements to project reappropriations are required since Fiscal Year 2015 year end actuals and projects costs have been updated. For some projects, additional reappropriations are recommended, as project expenditures originally anticipated to occur before the end of Fiscal Year 2015 will now likely occur in Fiscal Year 2016. Additionally, some expenditures not anticipated to occur until Fiscal Year 2016 and therefore reappropriated in the budget document to Fiscal Year 2016 have been realized in Fiscal Year 2015, requiring downward adjustments for Fiscal Year 2016. The table on the following page summarizes the recommended net reappropriation adjustments as detailed in Attachment B. These Fiscal Year 2016 adjustments represent the final step in the City Council approved change to the reappropriation process. There are sufficient expenditure savings in Fiscal Year 2015 to support all recommended reappropriation adjustments. It should be noted that as a result of this revised process and active review of all project reappropriations, a reduced level of carryforward from one year to the next is recommended than by automatically carrying forward all unspent capital funding. As part of the detailed review of capital projects which started with the development of the Fiscal Year 2016 Capital Budget and is concluding with the recommendations contained in this CMR, a total of $10.8 million is being returned to reserves across several funds that otherwise would have been reappropriated under the prior model, including $4.7 million in the Capital Improvement Fund. City of Palo Alto Page 5 Fund Number of Projects Recommended Reappropriation Adjustment Capital Improvement Fund* 61 $5,099,421 Airport Fund 1 $34,359 Electric Fund 26 $703,741 Fiber Optics Fund 2 $35,319 Gas Fund 5 ($245,727) Storm Drainage Fund 4 ($40,606) Wastewater Collection Fund 6 $370,570 Wastewater Treatment Fund 3 ($2,387,156) Water Fund 13 $5,995,001 Technology Fund 11 $641,422 Vehicle Replacement and Maintenance Fund 4 $1,074,511 Total All Funds 136 $11,280,855 *Includes an increase of $32,692 for the Monroe Park Improvements project (PG-11002) due to higher than anticipated costs, as outlined in CMR 6025, to be considered by the City Council on 9/21/2015. Resource Impact The majority of requested items have been previously reviewed and approved by City Council as part of annual budget processes. The Director of Administrative Services has certified that sufficient funds exist for the recommended Fiscal Year 2015 Operating Budget reappropriations (Attachment A) and Capital Budget reappropriations (Attachment B). For Fiscal Year 2016, staff recommends $1.7 million in carryover funds in the General Fund, $0.5 million in Enterprise Funds, $0.2 in Internal Service Funds and $2.0 million in Special Revenue Funds. For capital projects staff recommends $5.1 million to be reappropriated in the Capital Improvement Fund, net $4.5 million in the various Enterprise Funds, and $1.7 million in the Internal Service Funds. Policy Implications This recommendation is consistent with adopted Council policy. Environmental Review (If Applicable) The action recommended is not a project for the purposes of the California Environmental Quality Act. Attachments: Attachment A - Operating Reapprop FY15 to FY16 (PDF) Attachment B- Capital Reappropriations (XLSX) Attachment C - BAO XXXX - FY15 to FY16 Reappropriation (PDF) Attachment A Fiscal Year 2015 Reappropriations 1 Finance Committee September 22, 2016 General Fund Department Fund Amount Recommended Reappropriation Justification Administrative Services Department General Fund $66,000 Document Scanning and Retrieval Services: In 2014, the Administrative Services Department (ASD) started on a pilot to scan existing documents and store them electronically. The pilot was successfully completed with the Purchasing and Accounts Payable sections. Based on the experience from the pilot, the City issued a citywide Request for Proposal for scanning paper documents and storing them electronically ASD, Planning and Community Environment, Utilities, and Public Works-Engineering. With reappropriating $66,000 ASD will be able to continue its efforts to easily retrieve scanned documents, especially for Information requests, free up limited office space, and have an organized cloud retrieval structure. ASD’s scanning for FY 2015 and FY 2016 is scheduled to be completed in FY 2016 with 253,000 total number of scanned images with an average cost per scan of $0.26. Administrative Services Department General Fund $51,000 Temporary Staffing: The Purchasing Division of the Administrative Services Department (ASD) is undergoing rapid change due to the eProcurement initiative. With this initiative, there is a parallel, heavy workload for the Division’s contract administrators. Temporarily adding a Management Specialist hourly position will help to balance the demands of the eProcurement process implementation and the workload of regular staff. Community Services Department General Fund $331,046 Teen Programs / Bryant Street Garage Rent Revenue: At the June 2, 2014 City Council meeting, the City Council approved a recommendation from the Policy and Services Committee to use a portion of the net revenue collected from 455 Bryant Street in Fiscal Years 2009 through 2013 to fund Teen Programs for Fiscal Year 2015 (CMR #4776). Staff was to return to the City Council with another plan six months after the opening of the Mitchell Park Community Center where the Teen Center is located to discuss the best use of the facility and programming for Teen Services at the Teen Center and elsewhere throughout the City utilizing the Bryant Street funds. Staff is expecting to return to the City Council in the fall of 2015 with a funding plan for Fiscal Year 2016 and beyond. Teen Services programming includes but is not limited to: makeX, Project Enybody, Click PA, Ghost Bike, and Ceramics class drop-ins. As a result, this action will reappropriate $331,046 to continue supporting these programs as well as a sustainable, long-term approach for Teen Services utilizing Bryant Street funds. Community Services Department General Fund $50,000 Human Services Resource Allocation Program (HSRAP) Reserve: At the June 9, 2014 City Council meeting, the Council established a $50,000 reserve for the Human Services Resource Allocation Process as part of the Budget Adoption for Fiscal Year 2015. Since the reserve was funded as a one-time appropriation and remains unspent, this action will reappropriate the reserve balance of $50,000 into Fiscal Year 2016. Development Services Department General Fund $99,050 Business Registry: As part of Council directive, the Development Service Department in coordination with the City Manager’s Officer began working on a two phase project to implement an online Business Registry Certificate program. To implement the program, the City Council authorized initial funding of $250,000 (CMR #5146) and a Fiscal Year 2015 reappropriation request of $35,000 (CMR #5647) for phase I of the Business Registry Program which included initial start-up costs for Accela integration, staffing, and outreach. Because the work on phase I is continuing, this action will reappropriate $99,050 for staffing and continued community outreach efforts. Human Resources Department General Fund $145,000 Management Development and Training: Funding will be used to continue the citywide management training program that began in Fiscal Year 2015. Training programs will focus on the following areas: Ethics, Civics and Citizen Engagement, Leadership and Management, Budget, Finance, Procurement, Interpersonal Communication, Presentation Skills, Business Writing, Time Management, Project Management, Change Management, SkillSoft (online based education), and Safety & Security. Approval of this action also requires approval of the Fiscal Year 2015 Year-End Budget Amendment Ordinance (scheduled for a November Finance Committee meeting), which recommends consolidating General Fund savings for training across various departments into the Human Resources (HR) Department in Fiscal Year 2015 in order to reappropriate the full amount into HR in Fiscal Year 2016. Library Department General Fund $339,985 Library Foundation Donation & Pacific Library Partnership Grant: This action reappropriates $339,845 in revenue and $339,845 in expenses as a result of donations and grants received by the Library. In early Fiscal Year 2015 the Library was awarded two grants from the Pacific Library Partnership (PLP): one to be used for a summer 2015 program with expenses incurred in Fiscal Year 2016, and one in the amount of $4,485 to offset delivery costs for LINK+, an interlibrary loan program for participating organizations. LINK+ is a union catalog of contributed holdings from participating libraries in California and Nevada. Patrons from member libraries electronically request an item not available in their own library and the item is delivered to the requested library for check‐out. A $15,000 grant was received from PLP for the Maker+: A Summer Maker Program to support STEAM (Science, Technology, Engineering, Art & Math) learning and to foster interdisciplinary exploration among sciences, art, and social sciences. By participating in the program, students will discover solutions for today's social issues through technology. The program includes opportunities for people of all ages to participate in a week long structured programming at the Rinconada and Mitchell Park libraries. In addition, in June 2015, the City received a $320,000 donation from the Palo Alto Library Foundation. The Library intends to use $100,000 for the purchase of additional technology, such as tablets, e-readers, and other devices for staff development and customer instruction; $112,100 for databases and digital services, such as Learning Express, Mango Languages, and online video, magazines, and music; and $107,900 on contractual services to improve workflow efficiency, provide staff training, and customer service improvements for the new facilities and new products. Planning and Community Environment Department General Fund $500,000 Establish Planning & Community Environment Contingent Account: This action reappropriates $500,000 of the $1,000,000 million shuttle reserve from the Fiscal Year 2015 Non-Departmental budget to be used as a contingency account for unanticipated expenses as a result additional City Council direction related to planning, parking, or transportation. Police Department General Fund $78,000 Police Utilization Study: In Fiscal Year 2013, funding was allocated for the Police Department to hire a consultant to conduct a utilization study of overall police operations; however, the study was not completed due to competing workload demands. The funds were reappropriated to Fiscal Year 2014 and Fiscal Year 2015; however, the Department was unable to conduct the utilization study due to other projects that took precedence (Tri-City Computer Aided Dispatch, Records Management System, Patrol Vehicle Mobile Audio Video, etc.). Reappropriation of these funds will allow Police Department staff to determine the scope of the study, integrate it into their workload, and hire a consultant to conduct the study. Police Department General Fund $40,000 Police Interview Recording System: The Interview Recording System that provides cameras, audio equipment and storage for interviewing suspects, witness and victims unexpectedly failed in Fiscal Year 2015 and needs to be replaced. The existing system has failed repeatedly and the Department attempted to replace it as quickly as possible in May and June 2015. The Department completed a Request for Proposal and no responses were received. Therefore, with thsi funding, the Department will issue a new RFP and increase its vendor outreach efforts with the hope of receiving viable proposals for the replacement of the system. $1,700,081 Total General Fund Reappropriations Attachment A Fiscal Year 2015 Reappropriations 2 Finance Committee September 22, 2016 Enterprise Funds Department Fund Amount Recommended Reappropriation Justification Public Works Department Airport Fund 530 $40,987 Airport On-Call Planning & Environmental Consultants: In October 2014 Council approved two on-call consultant contracts for airport related work: one for design and construction administration services and one for planning and environmental services. At the end of June three purchase requests submitted for the airports on-call planning and environmental consultant were inadvertently cancelled. Therefore, staff requests to reappropriate the funds so that the following projects can continue: 1. Development of an Extraordinary Circumstance Information Submittal (CATEX) for review by the Federal Aviation Administration’s (FAA) San Francisco Airport District Office (SF-ADO). The CATEX is being prepared for approval under the National Environmental Policy Act (NEPA) relative to a potential future apron rehabilitation project at Palo Alto Airport with possible future reimbursement under the FAA grant.2. Development of DBE goals for the airport as required by the FAA for inclusion in grant application submittals. 3. Planning, implementing and facilitation of a charrette with key community stakeholders to discuss a vision and goals for the Airport; share potential strategies to integrate sustainability into the Airport’s management, planning, operation, maintenance, and development; and generate/prioritize potential sustainability initiative ideas to be considered by the City. Public Works Department Storm Drainage Fund 528 $55,710 Storm Water Rebates: In April 2005, the majority of Palo Alto property owners voted to increase the Storm Drainage Fee (CMR 244:05). In addition to the seven proposed CIP projects to be completed by 2017, the fee increase provided an annual innovative projects budget. These funds have been utilized since Fall 2008 to fund a Stormwater Rebate Program that offers financial incentives to residents and businesses for the installation of measures that reduce stormwater runoff, including rain barrels, cisterns, permeable pavement, and green roofs. Staff proposes that these funds be reappropriated because they have been specifically earmarked for funding of innovative storm drain projects per the terms of the 2005 Storm Drainage Fee ballot measure approved by Palo Alto property owners. As the rebate program has not generated sufficient demand to spend the budgeted funds, we are researching alternatives that may garner the desired environmental result. Utilities Water Fund 522 $400,000 Santa Clara Valley Water District MOU: On February 10, 2015, Council approved a Budget Amendment Ordinance to appropriate $400,000 from the Water Fund Reserve to increase the 2014-2016 Memorandum of Understanding with the Santa Clara Valley Water District for the Administration and Funding of Water Conservation Programs (the “2014-2016 MOU”) to increase the City of Palo Alto’s (City) three-year $735,915 total cost obligation by $500,000 to $1,235,915. Inadvertently, the approved funds were not encumbered before the end of the year. Therefore, it is recommended to carry forward the funding to fiscal year 2016 in order to fund the contract. $496,697 Total Enterprise Funds Reappropriations Attachment A Fiscal Year 2015 Reappropriations 3 Finance Committee September 22, 2016 Internal Services Funds Department Fund Amount Recommended Reappropriation Justification Information Technology Department Technology Fund 682 $82,500 Geographic Information System Evaluation: The Geographic Information System (GIS) Evaluation Project was approved as part of the Fiscal Year 2015 Budget to contract with a consultant to perform an analysis of the City's current GIS environment and determine how updated GIS solutions align with the City's needs and goals. The City's current GIS solution has been in place for over 20 years and needs to be evaluated and updated to reduce IT application and infrastructure support costs, improve flexibility and offer GIS mobile services for field and remote staff. The IT Department planned to award the assessment to a vendor prior to the end of Fiscal Year 2015; however, a vendor was not selected before the June 30 deadline. Information Technology Department Technology Fund 682 $40,000 Palo Alto 3-1-1: The Palo Alto 3-1-1 Project was approved as part of the Fiscal Year 2015 Budget to route all 3-1-1 calls to the City's telephone system. The 3-1-1 service will allow the City to be more responsive to the needs of the residents, business owners, and visitors, and these groups will only need to know two numbers to access all City of Palo Alto services: 9-1-1 for emergencies and 3-1-1 for all non-emergency and other City services. The IT Department planned to award the project prior to the end of Fiscal Year 2015; however, a vendor was not selected before the June 30 deadline. Information Technology Department Technology Fund 682 $75,000 Mobile Device Management Security Solution: The Mobile Device Management (MDM) Security Solution Project was approved as part of the Fiscal Year 2015 Budget to secure, monitor, manage, and support mobile devices used by City staff. MDM software protects these devices from cyber security threats and allows designated staff to remotely erase data from a mobile device in the event it is lost or stolen. The Department planned to select a solution prior to the end of Fiscal Year 2015; however, a solution is still being evaluated and the deadline was not met. $154,000 was originally appropriated for this project in Fiscal Year 2015, however, after further evaluation by the IT Department, only $75,000 will be needed to award the project, and the remaining funding will be returned to the Technology Surcharge Reserve for future technology enhancement projects. $197,500 Total Internal Service Funds Reappropriations Attachment A Fiscal Year 2015 Reappropriations 4 Finance Committee September 22, 2016 Special Revenue Funds Department Fund Amount Recommended Reappropriation Justification Planning and Community Environment Department Residential Housing In-Lieu Fund 233 $600,000 Palo Alto Housing Corporation Loan for 2811 Alma: This action reappropriates $600,000 in the Residential Housing In-Lieu Fund for use by the Palo Alto Housing Corporation (PAHC) for a loan and promissory note for property located at 2811-2825 Alma Street (CMR #5197). In 2011, the Palo Alto Housing Corporation (PAHC) entered into negotiations with the owners of 2811-2825 Alma Street and submitted a $1.89 million offer for the purchase of these two parcels. The offer was accepted and escrow closed in December 2011. At that time, however, the City did not have sufficient fund balances in its housing funds to provide the $1.89 million loan, and was only able to provide $1.29 million. To make up the difference, the Opportunity Fund of Santa Clara County provided a two year, $600,000 short term loan for the project acquisition with the understanding that the City would repay the short term loan, which was set to expire in December 2014. With Council’s approval of this action, the City new $600,000 loan defeased the Opportunity Fund loan and the City is the sole lender on the project. However, due to staffing constraints, this transaction has not yet been executed. With this recommended action, staff expects to execute and conclude the agreement with PAHC in the fall of Fiscal Year 2016. Planning and Community Environment Department Residential Housing In-Lieu Fund 233 $1,000,000 Stevenson House Rehab Loan: Stevenson House, located at 435 E. Charleston Road, has been serving extremely low, very low, and low income Palo Alto seniors for 47 years. Built in 1968, Stevenson House consists of 120 studio and one bedroom units. In addition to providing affordable housing, it offers services, meals and social programs for its residents. This action reappropriates $1,000,000 in the Residential Housing In-Lieu Fund to effectuate the $1,000,000 City loan for the renovation of Stevenson House (CMR# 5526) and the consolidation of outstanding Community Development Block Grant (CDBG) loans consistent with the funding commitment previously approved by the City Council on November 5, 2012 (CMR #3176). However, due to staffing constraints, this transaction has not yet been executed. With this recommended action, staff expects to execute and conclude the agreement with PAHC in the fall of Fiscal Year 2016. Planning and Community Environment Department Residential Housing In-Lieu Fund 233 $375,000 Loan Associated with Pine Street Sale: This action reappropriates $375,000 in the Residential Housing In-Lieu Fund for use by the Palo Alto Housing Corporation (PAHC) to rehabilitate and deed restrict three units located at 110 - 130 El Dorado (CMR #5712). Due to the timing of Council’s action approving this activity and staffing constraints, this transaction has not yet been executed. With this recommended action, staff expects to execute and conclude the agreement with PAHC in the fall of Fiscal Year 2016. $1,975,000 Total Special Revenue Funds Reappropriations $4,369,278 Total - All Reappropriations Attachment B Capital Reappropriations Project ID Project Title Fund Reappropriation Adjustment AP-15003 Apron and Taxi Lane Repair Airport 34,359 PF-93009 Americans with Disabilities Capital Improvement Fund 200,853 AC-14000 Art Center Auditorium Audio, Visual, and Furnishings Capital Improvement Fund 19,802 AC-86017 Art in Public Places Capital Improvement Fund (55,550) OS-09002 Baylands Emergency A Capital Improvement Fund 602 PE-15029 Baylands Interpretive Center Improvements Capital Improvement Fund (26,859) PE-14018 Baylands Interpretive Center Improvements Capital Improvement Fund 2,205 PL-04010 Bicycle & Pedestrian Transportation Plan - Implementation Project Capital Improvement Fund (21,886) PE-13008 Bowden Park Capital Improvement Fund 1,053 PF-01003 Building Systems Improvements Capital Improvement Fund (129,236) PE-13020 Byxbee Park Trails Capital Improvement Fund 268,652 PL-11002 California Avenue Streetscape Improvements Capital Improvement Fund 183,613 PE-13011 Charleston Arastrade Capital Improvement Fund (33,391) PE-09003 City Facility Parking Capital Improvement Fund 286,310 PE-12017 City Hall 1st Floor Capital Improvement Fund 253,086 PE-13005 City Hall/King Plaza Capital Improvement Fund 7,020 PF-01002 Civic Center Infrastructure Capital Improvement Fund (434) PE-15020 Civic Center Waterproofing Study and Repairs Capital Improvement Fund (78,492) PF-14000 Cubberley Roof Replacements Capital Improvement Fund 1,442 PO-12001 Curb & Gutter Repair Capital Improvement Fund 186 PE-13017 EC Median Landscape Capital Improvement Fund (17,573) PE-13016 El Camino Park Expand Capital Improvement Fund 10,123 PL-14000 El Camino Real & Churchill Avenue Intersection Improvements - Design Capital Improvement Fund 8,652 PL-15001 Embarcadero Corridor Capital Improvement Fund 200,710 PF-15005 Emergency Facility Improvements Capital Improvement Fund (13,532) PF-02022 Facility Interior Finishes Replacement Capital Improvement Fund (27,828) PF-14002 Fire Station 1 Improvements Capital Improvement Fund 863 LB-11000 Furniture and Technology for Library Projects Capital Improvement Fund (5,711) PG-13003 Golf Reconfig & Bayland Athletics Center Capital Improvement Fund 34,954 PE-13010 Greer Park Renovatio Capital Improvement Fund 33,075 PE-11011 Highway 101 Pedestrian Capital Improvement Fund 943,638 PE-09010 Library & Community Center Capital Improvement Fund 2,277 PE-14015 Lucie Stern Building Capital Improvement Fund 7,130 PE-12013 Magical Bridge Playg Capital Improvement Fund 100,888 PE-11000 Main Library New Construction Capital Improvement Fund (14,079) PL-14001 Matadero Creek Trail Capital Improvement Fund 14,204 PE-09006 Mitchell Park Library Capital Improvement Fund 2,483,343 PG-11002 Monroe Park Improvements Capital Improvement Fund 270,996 OS-09001 Off-Road Pathway Resurfacing and Repair Capital Improvement Fund 1,033 OS-00001 Open Space Trails & Amenities Capital Improvement Fund (14,991) PE-15022 Palo Alto Community Gardens Irrigation System Capital Improvement Fund (47,296) PG-09003 Park Maintenance Sho Capital Improvement Fund 84,419 PE-13003 Parks Master Plan Capital Improvement Fund 6,725 PE-08001 Rinconada Park Improvements Capital Improvement Fund 1,271 PE-12003 Rinconada Park Master Capital Improvement Fund 4,833 PF-15000 Rinconada Pool Locker Capital Improvement Fund (23,068) PF-00006 Roofing Replacement Capital Improvement Fund (198,002) PF-07011 Roth Building Maintenance Capital Improvement Fund 3,201 PL-00026 Safe Routes to School Capital Improvement Fund (49,092) PG-12004 Sarah Wallis Park Improvements Capital Improvement Fund 65,000 PO-89003 Sidewalk Repairs Capital Improvement Fund (132,345) PO-11000 Sign Reflectivity Upgrade Capital Improvement Fund (40,542) PG-13001 Stanford / PA Soccer Turf Replacement Capital Improvement Fund 722,740 PG-12001 Stanford/Palo Alto P Capital Improvement Fund 47,198 PO-05054 Street Lights Improvements Capital Improvement Fund 21,841 PE-86070 Street Maintenance Capital Improvement Fund (471,182) PE-13014 Streetlights Conditi Capital Improvement Fund 78 PE-13012 Structural Assessment Capital Improvement Fund 1,143 PE-11012 Temporary Main Library Capital Improvement Fund 83,438 PO-11001 Thermoplastic Lane Marking and Striping Capital Improvement Fund (12,000) PL-05030 Traffic Signal and ITS Upgrades Capital Improvement Fund (30,043) PL-12000 Transportation and Parking Improvements Capital Improvement Fund 163,956 EL-02010 SCADA System Upgrades Electric (17,015) EL-02011 Electric Utility GIS Electric 75,000 EL-04012 Utility Site Securit Electric 33,719 EL-05000 El Camino Undergroun Electric (200,000) EL-06001 230 kV Electric Inte Electric (3,441) EL-06002 UG District 45 Electric 59,271 Attachment B Capital Reappropriations EL-09000 Middlefield Undergro Electric (282,906) EL-10006 Rebuild UG Dist 24 Electric 53,968 EL-10009 Street Light System Electric (23,259) EL-11003 Rebuild UG Dist 15 Electric (1,133) EL-11006 Rebuild UG Dist 18 Electric 164,587 EL-11008 Rebuild UG Dist 19 Electric 3,926 EL-11010 UG District 47 - Mid Electric (601,553) EL-11014 Smart Grid Technolog Electric 1,395 EL-12000 Rebuild UG Dist 12 Electric 9,028 EL-12001 UG District 46 - Cha Electric (976) EL-13006 Sand Hill / Quarry 1 Electric (25,028) EL-13008 Upgrade Estimating S Electric (20,000) EL-14004 Maybell 1&2 4/12kV C Electric (121,029) EL-14005 Reconfigure Quarry F Electric (61,119) EL-15001 Substation Battery R Electric 69,251 EL-89028 Electric Customer Co Electric 402,508 EL-89031 Communications Syste Electric (60,307) EL-89038 Substation Protectio Electric 18,713 EL-89044 Substation Facility Electric (55,640) EL-98003 Electric System Imp Electric 1,285,781 FO-10000 Fiber Optic Customer Fiber Optic (48,703) FO-10001 Fiber Optic Network Fiber Optic 84,022 GS-03009 Sys Extensions Operations - Unreimbursed Gas 726 GS-11002 Gas System Improvement Gas (67,511) GS-12001 Gas Main Replacement - Project 22 Gas (199,920) GS-13002 Gas Equipment and Tools Gas 17,869 GS-80019 Gas Meters and Regulators Gas 3,109 SD-06102 San Francisquito Creek Storm Water Pump Station Storm (631) SD-06101 Storm Drain System Replacement and Rehabilitation Storm 58,190 SD-13003 Matadero Creek Storm Water Pump Station and Trunk Lines Improvements Storm (110,762) SD-11101 Channing/Lincoln Storm Drain Improvements Storm 12,597 TE-00010 Telephone System Repair Technology (38) TE-01012 IT Disaster Recovery Technology 43,479 TE-05000 Radio Infrastructure Technology 1,000,000 TE-06001 Library RFID Implementation Technology 4,369 TE-09000 Public Safety Computer-Aided Dispatch Replacement Technology (292,044) TE-10001 Utilities Customer Bill System Improvements Technology 502 TE-11001 Library Computer System Software Technology (64,019) TE-12001 Development Center Blueprint Technology Enhancement Technology (117,312) TE-13004 Infrastructure Management Syste Technology 80,431 TE-14002 Library Virtual Branch Technology (20,000) TE-95016 Permit Information Tracking System Technology 6,054 VR-14000 Schedule Vehicle and Equipment Replacement - Fiscal Year 2014 Vehicle (30,395) VR-13000 Scheduled Vehicle and Equipment Replacement - Fiscal Year 2013 Vehicle 22,770 VR-15001 Emergency Repair and Replacement Vehicle 47,347 VR-15000 Scheduled Vehicle and Equipment Replacement - Fiscal Year 2015 Vehicle 1,034,789 WC-10002 Wastewater Collection System Rehabilitation/Augmentation Project 23 Wastewater Collection 758,010 WC-11000 Wastewater Collection System Rehabilitation/Augmentation Project 24 Wastewater Collection (90,474) WC-12001 Wastewater Collection System Rehabilitation/Augmentation Project 25 Wastewater Collection (80,641) WC-13001 Wastewater Collection System Rehabilitation/Augmentation Project 26 Wastewater Collection (66,657) WC-14001 Wastewater Collection System Rehabilitation/Augmentation Project 27 Wastewater Collection (51,716) WC-80020 Sewer System, Customer Connections Wastewater Collection (97,952) WQ-10001 Plant Master Plan Wastewater Treatment (66,000) WQ-14001 Dewatering and Loadout Facility Wastewater Treatment (2,301,219) WQ-04011 Facility Condition Assessment Wastewater Treatment (19,937) WS-02014 Water, Gas, Wastewater Utility GIS Data Water (9,500) WS-07000 Water Regulation System Improvements Water 785,585 WS-08001 Water Reservior Coating Improvements Water 2,160,306 WS-08002 Emergency Water Supply Project Water (6,919) WS-09000 Seismic Water System Upgrades Water 3,501,875 WS-11000 Water Main Replacement - Project 25 Water (282,944) WS-11003 Water Distribution System Improvements Water (49,710) WS-11004 Water System Supply Improvements Water (110,352) WS-12001 Water Main Replacement - Project 26 Water 27,995 WS-13004 Asset Management Mobile Deployment Water (1,652) WS-15004 Water System Master Plan Water (1,001) WS-80014 Water Service Hydrant Replacement Water 1,789 WS-80015 Water Meters Water (20,471) Total- All Funds 11,280,855 1 Ordinance No. XXXX ORDINANCE OF THE COUNCIL OF THE CITY OF PALO ALTO AUTHORIZING THE REAPPROPRIATION OF FISCAL YEAR 2015 FUNDS TO FISCAL YEAR 2016 The Council of the City of Palo Alto does ordain as follows: SECTION 1. The Council of the City of Palo Alto finds and determines as follows: A. Pursuant to the provisions of Section 12 of Article III of the Charter of the City of Palo Alto and as set forth in Section 2.28.070 of the Palo Alto Municipal Code, the Council on June 16, 2014 did adopt a budget for Fiscal Year 2015; and B. Fiscal Year 2015 has ended and the financial results, although subject to audit adjustment, are now available. C. The Administrative Services Director certifies that sufficient funds are available in Fiscal Year 2015 in applicable funds to be reappropriated to Fiscal Year 2016. SECTION 2. The Council hereby re-appropriates Fiscal Year 2015 appropriations in certain departments and categories, as shown in Attachment A for the operating budget and Attachment B for the capital budget, which were not encumbered by purchase order or contract, into the Fiscal Year 2016 budget. SECTION 3. The Fiscal Year 2016 General Fund Budget Stabilization Reserve is hereby decreased by the sum of One Million Seven Hundred Thousand Eighty One Dollars ($1,700,081) as described in Attachment A. SECTION 4. The Fiscal Year 2016 Airport Reserve is hereby decreased by the sum of Forty Thousand Nine Hundred Eighty Seven Dollars ($40,987) as described in Attachment A and decreased by the sum of Thirty Four Thousand Three Hundred Fifty Nine ($34,359) as described in Attachment B. SECTION 5. The Fiscal Year 2016 Electric Distribution Rate Stabilization Reserve is hereby decreased by the sum of Seven Hundred Three Thousand Seven Hundred Forty One Dollars ($703,741) as described in Attachment B. SECTION 6. The Fiscal Year 2016 Residential Housing In-Lieu Fund is hereby decreased by the sum of One Million Nine Hundred Seventy Five Thousand Dollars ($1,975,000) as described in Attachment A. Attachment C 2 SECTION 7. The Fiscal Year 2016 Fiber Optics Rate Stabilization Reserve is hereby decreased by the sum of Thirty Five Thousand Three Hundred Nineteen Dollars ($35,319) as described in Attachment B. SECTION 8. The Fiscal Year 2016 Gas Distribution Rate Stabilization Reserve is hereby increased by the sum of Two Hundred Forty Five Thousand Seven Hundred Twenty Seven Dollars ($245,727) as described in Attachment B. SECTION 9. The Fiscal Year 2016 Storm Drainage Rate Stabilization Reserve is hereby decreased by the sum of Fifty Five Thousand Seven Hundred Ten Dollars ($55,710) as described in Attachment A and increased by the sum of Forty Thousand Six Hundred Six Dollars ($40,606) as described in Attachment B for a net decrease to the reserve of Fifteen Thousand One Hundred Four Dollars ($15,104). SECTION 10. The Fiscal Year 2016 Technology Fund is hereby decreased by the sum of One Hundred Ninety-seven Thousand Five Hundred Dollars ($197,500) as described in Attachment A and decreased by the sum of Six Hundred Forty One Thousand Four Hundred Twenty Two Dollars ($641,422) as describe by Attachment B. SECTION 11. The Fiscal Year 2016 Wastewater Collection Rate Stabilization Reserve is hereby decreased by the sum of Three Hundred Seventy Thousand Five Hundred Seventy Dollars ($370,570) as described in Attachment B. SECTION 12. The Fiscal Year 2016 Wastewater Treatment Rate Stabilization Reserve is hereby increased by the sum of Two Million Three Hundred Eighty Seven Thousand One Hundred Fifty Six Dollars ($2,387,156) as described in Attachment B. SECTION 13. The Fiscal Year 2016 Water Rate Stabilization Reserve is hereby decreased by the sum of Four Hundred Thousand Dollars ($400,000) as described in Attachment A and decreased by the sum of Five Million Nine Hundred Ninety Nine Thousand and One Dollars ($5,995,001) as described by Attachment B. SECTION 14. The Fiscal Year 2016 Vehicle Replacement and Maintenance Fund Reserve is hereby decreased by the sum of One Million Seventy Four Thousand Five Hundred Eleven Dollars ($1,074,511) as described in Attachment B. SECTION 15. The Capital Projects Fund Reserve is hereby decreased by the sum of Five Million, Ninety Nine Thousand Four Hundred Twenty One Dollars ($5,099,421) as described in Attachment B. SECTION 16. As provided in Section 2.04.330 of the Palo Alto Municipal Code, this ordinance shall become effective upon adoption. SECTION 17. The Council of the City of Palo Alto hereby finds that this is not a Attachment C 3 project under the California Environmental Quality Act and, therefore, no environmental impact assessment is necessary. INTRODUCED AND PASSED: AYES: NOES: ABSTENTIONS: ABSENT: ATTEST: ________________________ ____________________________ City Clerk Mayor APPROVED AS TO FORM: APPROVED: ________________________ ____________________________ City Attorney City Manager ____________________________ Director of Administrative Service Attachment C City of Palo Alto (ID # 6082) Finance Committee Staff Report Report Type: Action Items Meeting Date: 9/22/2015 City of Palo Alto Page 1 Council Priority: City Finances Summary Title: Storm Drainage Fee Renewal Title: Recommendation to Direct Staff to Develop and Plan for Election to Authorize New Storm Drain Fees to Continue Appropriate Storm Drain Funding After Current Fees Sunset in 2015, Including Appointment of a Citizen Advisory Committee and a Potential 2016 Property Owner All-Mail Election From: City Manager Lead Department: Public Works Recommendation Staff recommends that the Finance Committee recommend that Council: 1. Direct staff to work towards a Fall 2016 property owner vote-by-mail election to authorize imposition of property-related fees to fund the Storm Drainage Enterprise Fund beyond the funding term of the previous storm drain measure, which property owners approved in 2005 and which sunsets in June 2017; and 2. Direct the City Manager to appoint a citizen advisory committee to assist staff with the development of the 2016 funding measure, including a list of operational programs and capital improvement projects to be funded by the fees. Executive Summary The City’s storm drain capital improvement, maintenance and water quality protection programs are funded by Storm Drainage Fees imposed on all developed properties in the City and collected through monthly utility bills. Before 1996, cities had the authority to establish reasonable storm drainage fees City of Palo Alto Page 2 as part of the annual budget process. In November 1996, however, California voters passed Proposition 218, which dictates that property-related fees (except fees to fund sewer, water and refuse collection services) cannot be imposed or increased without the approval of a majority of property owners subject to the fee or two-thirds of voters. Palo Alto property owners approved a ballot measure in 2005 that increased the Storm Drainage Fee to cover the cost of seven high-priority storm drain capital improvement projects, enhanced storm drain system maintenance and storm water quality protection programs, baseline staffing, and debt service payments for revenue bonds used to fund past storm drain capital improvements. These property owner-authorized storm drainage fees are due to sunset in June 2017, which will create a funding shortage for the Storm Drainage Fund. Unless a new ballot measure is approved, storm drain maintenance operations will be curtailed and necessary capital improvements will not be made. Staff believes that it is critical to begin planning now for the development and placement before property owners of a new measure authorizing updated storm drainage fees. This report contains information supporting staff’s recommendation that Council direct staff to convene a citizen advisory committee to assist with the creation of a ballot measure, including needed storm drain projects and programs, to be presented to property owners for approval in Fall 2016. Background The City’s storm drain capital improvement, maintenance and water quality protection programs are funded through the Storm Drainage Fund, an enterprise fund established by Council in 1989. Prior to 1989, storm drain system maintenance and a very limited capital improvement program were funded by the General Fund. Revenue to fund the Storm Drainage Fund’s programs and projects is currently generated by a Storm Drainage Fee assessed to all developed properties in the City on monthly utility bills. The Storm Drainage fee schedule is based upon the premise that a property’s use of the municipal storm drain system is dependent upon the amount of storm water runoff that it generates during storm events, which in turn is related to the amount of impervious surface (hardscape such as buildings, driveways, patios, City of Palo Alto Page 3 parking lots, etc.) on the property. The Storm Drainage fee schedule has three flat rates for single-family residential parcels based on lot size and a multi- family/commercial/industrial rate based on actual measured impervious surface on each parcel (see Attachment A: Utility Rate Schedule D-1 - General Storm and Surface Water Drainage; and Attachment B: Utility Rule and Regulation 25 - General Storm and Surface Water Drainage). The Storm Drainage rate schedule billing unit is the Equivalent Residential Unit (ERU), which equates to 2,500 square feet of impervious surface, the amount of hardscape on a typical Palo Alto single- family residential property. The Storm Drainage Fee was originally set with the establishment of the Storm Drainage Enterprise Fund in 1989 at a rate of $3.25 per month per ERU. Council increased the monthly rate to $4.25 per month per ERU as part of the FY 1994 budget approval process. Council traditionally had the authority to set the Storm Drainage rates as part of the annual City budget approval process. In November 1996, however, California voters passed Proposition 218, a comprehensive constitutional amendment that sets substantive and procedural requirements for many types of property-related fees, assessments, and taxes. Under Proposition 218, most property-related fees (with some exceptions) cannot be imposed or increased without the approval of a majority of property owners subject to the fee or a supermajority of voters. California courts have held that storm drainage fees like Palo Alto’s are property- related fees subject to Proposition 218’s procedural and substantive requirements. As a result, the City must obtain property-owner or voter approval before increasing Storm Drainage fees. After the rate increase in FY 1994, Storm Drainage Fund expenses continued to increase annually, and eventually put the Fund into a deficit situation wherein the Fund revenues could not cover the base operational costs of the storm drain program and all capital improvements were deferred. This led to the need for an annual General Fund subsidy to cover the Storm Drainage Fund’s operational funding shortfall. To eliminate the General Fund operational subsidy payment to the Storm Drainage Fund and generate funding for needed storm drainage capital improvements, the City conducted a property owner election in September 2000 per the requirements of Proposition 218, seeking approval to increase the Storm Drainage Fee from its then-current level of $4.25 per month per ERU up to $9.00 per month. The ballot measure was unsuccessful, with an approval rate of only 37 percent. City of Palo Alto Page 4 Staff analyzed the failed September 2000 Storm Drainage Fee election and concluded that it was not successful because it lacked adequate public vetting. Staff realized that the community would have been more responsive to a resident-driven, grass roots campaign and that it would be critical that the scope and size of any future fee increase proposal represent the desire of the majority of community members. Therefore, Council approved a staff recommendation that the City Manager convene a Blue Ribbon Committee of community and neighborhood leaders to assist in the development of a plan to fund storm drain improvements. The Blue Ribbon Committee, working cooperatively with staff from the Public Works and Administrative Services Departments, was tasked with making recommendations to Council on the scope, size, and timing of the next funding proposal. The Blue Ribbon Committee of fifteen residents, business representatives and community leaders led by former Mayor Larry Klein had its first meeting on May 3, 2002 and met 18 times for a total of 45 hours through mid-2004. At its final meeting on July 23, 2004, the committee voted on and approved a set of recommendations. The committee’s recommendations included a set of specific provisions and projects that resonated with property owners and resulted in approval of a fee increase. Key provisions in the ballot measure included a “sunset” on the higher fees, a cap on incremental annual fee increases subject to Council approval, and the creation of an oversight committee to ensure that the funds would be expended according to the terms of the ballot measure. Council gave final approval to the Blue Ribbon Committee’s recommendations on December 6, 2004 and authorized a property owner ballot-by-mail election to be held in April 2005. The City conducted a property owner election in April 2005 seeking approval of an increased Storm Drainage Fee to fund needed storm drain capital improvements and enhanced storm drain maintenance and storm water quality protection. The ballot measure included the following key elements: An initial Storm Drainage Fee of $10.00 per month per ERU (fee for the typical single-family residential property owner) Funding for seven high-priority storm drain capital improvements, estimated to cost approximately $17 million (2004 dollars) City of Palo Alto Page 5 Annual funding for innovative projects that reduce storm water runoff and pollutant levels Annual inflation-based adjustments to the proposed fee increase, subject to Council approval, with a maximum annual increase of 6% Twelve-year sunset provision for the proposed fee increase (ending in June 2017) Council appointment of a citizen oversight committee tasked with ensuring that the money raised from the increased Storm Drainage Fee is spent in accordance with the ballot measure The Storm Drainage 2005 ballot measure (see Attachment C for a complete copy of the ballot) was approved, with 58 percent of responding property owners voting in favor of the fee increase. Passage of the measure allowed for the elimination of what had grown to be annual subsidy funding of approximately $0.8 million from the General Fund in support of the Storm Drainage Fund in FY 2005. The successful 2005 Storm Drainage ballot measure has provided enhanced revenue for a fully self-sufficient Storm Drainage Fund, including funding for capital projects and ongoing operating expenses. Five of the seven storm drain capital improvement projects specified in the ballot measure have been completed to-date. The final one-third of the Lincoln Avenue Storm Drain Improvements is due to be constructed in FY 2016, and the final project – the Matadero Storm Water Pump Station Improvements – will be designed this fiscal year, with construction scheduled to start in FY 2017 (see Attachment D for a status update on the Storm Drainage Fund Capital Improvement Program). In addition to capital projects, the Storm Drainage Fund provides funding to comply with the City’s stringent storm water permit requirements. The Federal Clean Water Act requires the City to comply with a State-issued permit to discharge storm water. The Municipal Regional Storm Water Discharge Permit became effective in 2009, and a new version will be issued this fall. The main goals of the storm water permit are to avoid discharge of substances other than rain to the storm drain system. The Council-appointed Storm Drain Oversight Committee of local residents has performed annual reviews of the Storm Drainage Fund budget and expenditures to ensure compliance with the approved 2005 ballot measure. As authorized by property owners through the ballot measure, Council has City of Palo Alto Page 6 approved increases in the base single-family residential Storm Drainage rate of $10.00 per month per ERU each year based on the local rate of inflation. The base rate for FY 2016 is $12.63 per month per ERU, representing an average increase of 2.4 percent per year since 2005. If no action is taken to approve updated fees, the previously-approved fees will sunset in 2005. The fee will revert back to its pre-2005 level of $4.25 per month per ERU in June 2017. Revenue from the $4.25 per month fee will not support current operational costs for storm drain system maintenance and State-mandated storm water quality protection programs and will provide no funding for continuation of a storm drain capital improvement program. The seven high-priority storm drain capital improvement projects specified for funding in the 2005 Storm Drainage ballot measure were based on recommendations made in the 1993 Storm Drain Master Plan. During the Blue Ribbon Committee’s deliberations on the scope and size of the ballot measure, the committee acknowledged that there were a number of additional capital projects that would need to be funded after the June 2017 sunset date. Much of the City’s storm drainage infrastructure was constructed in a poorly coordinated manner as part of multiple individual residential subdivision developments during the high growth years between the mid-1940s and late-1960s. Many elements of the existing storm drain system do not meet the modern design standard of being able to convey the storm runoff from a 10% or 10-year recurrence storm event without street flooding. In preparation for a potential future Storm Drainage ballot measure, staff completed a Storm Drain Master Plan Update in June 2015 that rexamined and reprioritized the storm drain capital improvements needed to increase the flow capacity of the City’s storm drain system to bring it into conformance with current design standards. The Master Plan Update identifies an estimated $14 million in highest-priority storm drain capital improvement projects and $23 million in high- priority projects needed for flow capacity augmentation (see Master Plan Executive Summary, Attachment E). Discussion Staff believes that it is critical to begin planning for the development and presentation to property owners of a new Storm Drainage ballot measure seeking approval of increased storm drain funding before the 2005 measure sunsets in City of Palo Alto Page 7 June 2017. If the Storm Drainage Fee reverts back to its pre-2005 level of $4.25 per month per ERU, it will generate approximately $2.1 million per year. This amount of revenue would not fully support a minimum level of storm drainage service, which would cost approximately $3.5 million per year, as itemized below: Baseline staff and expenses $2.5 million Annual debt service (through FY 2024) $1.0 million (for past revenue bonds used to fund storm drain capital projects) In addition, the pre-2005 level of funding would preclude any further storm drain capital improvement projects. Furthermore, there are new or modified storm drain programs that will likely need additional funding in the future, including State-mandated storm water quality protection programs such as green infrastructure planning and implementation expected to be required in the next Municipal Regional Storm Water Discharge Permit and enhanced storm drain system maintenance. Approval of a new Storm Drainage Fee requires multiple steps, including specific procedures mandated by Proposition 218. The first step is the development of a detailed spending plan of storm drain capital improvement projects and operational programs to be paid for with the increased fees, along with the costs associated with the plan. Next, the specific monthly fee to be charged to each developed land parcel in the City would need to be tabulated. Public notices including a detailed description of the spending plan and parcel-specific monthly cost information would then be mailed to each property owner. The mailing of the public notices would initiate a 45-day comment period which would culminate with a majority protest hearing held during a regular Council meeting. Property owners would have the opportunity to appear before Council during the hearing to register their concerns and protest the proposed fee increase. Those opposed to the proposed fee increase would need to submit a written protest to the City Clerk in order to officially register their opposition. At the end of the hearing, the City Clerk would report the number of valid written protests so that the Council could determine whether a majority protest had been received. If Council were to determine, at the close of the public testimony portion of the public hearing, that written protests had been received from property owners representing a majority of the parcels subject to the proposed City of Palo Alto Page 8 fee increase, the Mayor would declare the proceedings closed, and the fee increase would not be approved. If, however, Council were to determine that less than a majority of property owners have submitted written protest, the Council could choose to move forward to the next stage of the Proposition 218 approval process, the mailing of ballots to eligible property owners. Assuming that Council were to decide to call for a mail ballot proceeding, the ballots would then be mailed to all eligible property owners. Ballots for the Storm Drainage Fee ballot proceeding would consist of a single question that requires a checkmark either for or against the proposed fee increase. The ballots would be supplemented with a summary of the balloting procedures and a description of the proposed fee and storm drain spending plan. Ballots would be due back to the City Clerk 45 days following the mailing of the ballots. The ballot measure would be approved if a simple majority of property owners returning ballots voted in favor of the measure. If the ballot measure were approved, Council could proceed to approve the new fee schedule consistent with the ballot measure. Staff recommends that the implementation of a Storm Drainage Fee increase proposal be timed such that the ballots are sent to property owners and received in Fall 2016. This schedule would ensure that timely financial information about the Storm Drainage Fund is available for preparation of the FY 2018 budget. A potential implementation schedule for a Storm Drainage ballot measure is provided in the Timeline section of this report. One of the key lessons learned from the year 2000 and 2005 Storm Drainage ballot measures is the importance of community engagement in the development of the scope and cost of the proposed storm drain spending plan and the associated user fee. Staff recommends that the Council direct the City Manager to appoint a Blue Ribbon Committee of community and neighborhood leaders to assist with a potential 2016 ballot measure. The Blue Ribbon Committee, working with staff from the Public Works and Administrative Services Departments, will make recommendations to Council on the scope, size, and timing of the funding proposal. Selection of the members of the Blue Ribbon Committee is an important first step in the process of developing a successful funding proposal. Staff recommends City of Palo Alto Page 9 that the Blue Ribbon Committee be comprised of members with a variety of backgrounds, areas of expertise, and perspectives in order to represent the diversity of the community. For example, as a group the committee should represent the following interests: • Various land uses (e.g. residential, commercial, etc.) • Various neighborhoods (including both north and south Palo Alto) • Technical expertise • Financial expertise • Various age groups • Various demographics (e.g. income level, renters, owners, families, seniors, etc.) On an individual basis, committee members should have the following traits in common: • Interested in storm drainage and/or watershed protection as a community issue • Able to make necessary time commitment to attend meetings • Able to listen and build consensus in a group setting • In touch with the “pulse of the community” • Respected in the community Staff recommends that the Blue Ribbon Committee be assigned to work with staff to develop a funding proposal for future storm drain improvements. Staff would meet with the committee members over a five-month period to provide information about the existing storm drain funding mechanism, the capital improvements recommended in the Storm Drain Master Plan Update, other non- capital storm drainage needs, and the requirements of Proposition 218. The committee would use this information to formulate a community-based recommendation to Council on the scope, size, and timing of the funding proposal. Specifically, the committee should address the following elements of a funding proposal: • Recommendations on the size, scope, and duration of a capital improvement program • Recommendations on the scope of enhancements to storm drain City of Palo Alto Page 10 maintenance, storm water quality protection program, and other program elements • Identification of appropriate funding mechanism • If property owner election is recommended: o Timing of election o Amount of monthly Storm Drainage Fee • Identification of the length of “sunset clause” that should be incorporated into a fee increase proposal and recommendation for what will happen to the rate at “sunset” • Identification of an appropriate annual fee escalation factor to apply to the proposed rate schedule • Determination of the make-up and mission of an independent oversight body to periodically monitor the implementation of the storm drain improvements Timeline The following is a potential timeline for implementation of a Storm Drainage ballot measure: 9/22/15 Recommendations to Finance Committee on future storm drain funding 10/19/15 Council authorization to appoint Blue Ribbon Committee to recommend storm drain funding strategy, scope, and cost 11/2/15 Convene Blue Ribbon Committee 4/4/16 Conclusion of Blue Ribbon Committee deliberations; final recommendations memo (5-month deliberation period) 5/9/16 Council review/approval of Blue Ribbon Committee recommendations 6/6/16 Council adoption of resolutions proposing a Storm Drainage Fee increase and establishing procedures for protest hearing/mail ballot proceeding City of Palo Alto Page 11 7/11/16 Legal notices mailed; start of 1st 45-day noticing period 8/25/16 Protest hearing (Need at least 45-day protest period) 9/19/16 Ballots mailed 11/3/16 Ballots due back to City Clerk (Need at least 45 days between protest hearing & final balloting day) 12/5/16 Council certification of election results 6/1/17 Effective date of new rate Resource Impact In order to maintain the self-sufficiency of the Storm Drainage Fund, the City must secure property owner approval of a ballot measure authorizing increased storm drain funding before the 2005 ballot measure sunsets in June 2017. If the Storm Drainage Fee reverts back to its pre-2005 level of $4.25 per month per ERU, it will generate approximately $2.1 million per year. This amount of revenue would not support a minimum level of storm drainage service, which would cost approximately $3.5 million per year. In addition, the pre-2005 level of funding would preclude any further storm drain capital improvement projects. If a new ballot measure is not approved, storm drain system operations would need to be significantly curtailed. Policy Implications Identification of funding for storm drain capital improvements is consistent with Policy N-24 of the Comprehensive Plan, which states that the City should “improve storm drainage performance by constructing new system improvements where necessary and replacing undersized or otherwise inadequate lines with larger lines or parallel lines.” Program N-36 further states that the City should “complete improvements to the storm drainage system consistent with the priorities outlined in the City’s 1993 Storm Drainage Master Plan, provided that an appropriate funding mechanism is identified and approved by the City Council.” City of Palo Alto Page 12 Environmental Review Establishment of a citizen's committee and development of a plan to propose updated storm drain fees does not constitute a project subject to California Environmental Quality Act (CEQA) review, and no environmental analysis is required at this time. The level of future CEQA review will depend on the scope of the storm drain capital improvement projects that may be funded by the updated storm drainage fees. Staff is exploring the level of CEQA review required prior to the election and will incorporate any such review into the implementation schedule. Courtesy Copies Storm Drain Oversight Committee Attachments: ATTACHMENT A - Utility Rate Schedule D-1 (PDF) ATTACHMENT B - Utility Rule and Regulation 25 (PDF) ATTACHMENT C - 2005 Storm Drain Ballot (PDF) ATTACHMENT D - Status of Storm Drainage Fund Capital Projects Listed in 2005 Ballot Measure (PDF) ATTACHMENT E - Storm Drain Master Plan Executive Summary (PDF) GENERAL STORM AND SURFACE WATER DRAINAGE UTILITY RATE SCHEDULE D-1 CITY OF PALO ALTO UTILITIES Issued by the City Council Effective 7-1-2015 Supersedes Sheet No.D-1-1 dated 7-1-2014 Sheet No.D-1-1 A. APPLICABILITY: This schedule applies to all storm and surface water drainage service, excepting only those users and to the extent that they are constitutionally exempt under the Constitution of the State of California or who are determined to be exempt pursuant to Rule and Regulation 25. B. TERRITORY: Inside the incorporated limits of the city of Palo Alto and land owned or leased by the city. C. RATES: Per Month: Storm Drainage Fee per Equivalent Residential Unit (ERU) .......................................................$12.63 D. SPECIAL NOTES: 1. An Equivalent Residential Unit (ERU) is the basic unit for computation of storm drainage fees for residential and non-residential customers. All single-family residential properties shall be billed the number of ERUs specified in the following table, based on an analysis of the relationship between impervious area and lot size for Palo Alto properties. RESIDENTIAL RATES (Single-Family Residential Properties PARCEL SIZE (sq.ft.) ERU <6,000 sq.ft. 0.8 ERU 6,000 - 11,000 sq.ft. 1.0 ERU >11,000 sq.ft. 1.4 ERU All other properties will have ERU's computed to the nearest 1/10 ERU using the following formula: No. of ERU = Impervious Area (Sq. Ft.) 2,500 Sq. Ft. 2. For more details on the storm drainage fee, refer to Utilities Rule and Regulation 25. {End} SPECIAL STORM AND SURFACE WATER DRAINAGE UTILITY REGULATIONS RULE AND REGULATION 25 CITY OF PALO ALTO UTILITIES Issued by the City Council Effective 6-13-2000 Supersedes Sheet No. -1 dated 7-1-98 Sheet No. 1 A. GENERAL: For the purpose of CPAU Rate Schedule D-1 and this Rule and Regulation, the following words and terms shall be defined as follows, unless the context in which they are used clearly indicates otherwise. The definitions of words and terms set forth in Titles 12 and 13 of the Palo Alto Municipal Code shall also apply herein to the extent that they are not inconsistent herewith: 1.“Developed Parcel”shall mean any lot or parcel of land altered from its natural state by the construction, creation, or addition of impervious area, except public streets and highways. 2.“Equivalent Residential Unit (ERU)” shall mean the basic unit for the computation of storm drainage fees. The ERU’s for all parcels other than single-family residential properties shall be computed to the nearest 1/10 ERU using the following formula: Number of ERU = Impervious Area (Sq. Ft.) 2,500 Sq. Ft. The ERU's for single-family residential properties shall be computed as set forth in CPAU Rate Schedule D-1. 3. “Impervious Area”shall mean any part of any developed parcel of land that has been modified by the action of persons to reduce the land’s natural ability to absorb and hold rainfall. This includes any hard surface area which either prevents or retards the entry of water into the soil mantle as it entered under natural conditions pre-existent to development, and/or a hard surface area which causes water to run off the surface in greater quantities or at an increased rate of flow from the flow present under natural conditions pre-existent to development. By way of example, common impervious areas include, but are not limited to roof tops, walkways, patios, driveways, parking lots or storage areas, concrete or asphalt paving, gravel roads, or any cleared, graded, paved, graveled, or compacted surface or packed earthen materials, or areas covered with structures or other surfaces which similarly impede the natural infiltration of surface water into the soil mantle. SPECIAL STORM AND SURFACE WATER DRAINAGE UTILITY REGULATIONS RULE AND REGULATION 25 (Continued) CITY OF PALO ALTO UTILITIES Issued by the City Council Effective 6-13-2000 Supersedes Sheet No. -2 dated 7-1-98 Sheet No. 2 4.“Non-Single-Family Residential Property”shall include all developed parcels zoned or used for multi-family, commercial, industrial, retail, governmental, or other non-single family residential purposes and shall include all developed parcels in the City of Palo Alto not defined as single-family residential property herein. 5 “Parcel”shall mean the smallest separately segregated lot, unit or plot of land having an identified owner, boundaries, and surface area which is documented for property tax purposes and given a tax lot number by the Santa Clara County Assessor. 6.“Primary CPAU Account”shall mean that CPAU account, as determined below, that will be assessed the storm drainage fee for a given developed parcel: (A) If there is only one CPAU account associated with a developed parcel, then that account is the Primary CPAU Account. (B) If there is more than one CPAU account associated with a developed parcel, then the Primary CPAU account shall be the account listed below, in order of preference: (1) The CPAU account designated as the “house account” or, if none or more than one, then; (2) The CPAU account in the name of the owner of the parcel, or if none, then; (3) The CPAU account(s) in the name of the occupier(s) of the parcel. (4) If more than one account, then the CPAU account that includes the most CPAU services. 7. “Single-Family Residential Property” shall include all developed parcels with either one or two single-family detached housing units or one two-unit attached dwelling structure commonly known as a “duplex.” 8.“Storm and Surface Water Control Facilities” shall mean all man-made structures or natural water course facility improvements, developments, properties or interest therein, made, constructed or acquired for the conveyance of storm or surface water runoff for the purpose SPECIAL STORM AND SURFACE WATER DRAINAGE UTILITY REGULATIONS RULE AND REGULATION 25 (Continued) CITY OF PALO ALTO UTILITIES Issued by the City Council Effective 6-13-2000 Supersedes Sheet No. -3 dated 7-1-98 Sheet No. 3 of improving the quality of, controlling, or protecting life or property from any storm, flood, or surplus waters. 9.“Storm Drainage Facilities” shall mean the storm and surface water drainage systems comprised of storm and surface water control facilities and any other natural features which store, control, treat and/or convey storm and surface water. Storm Drainage Facilities shall include all natural and man-made elements used to convey storm water from the first point of impact with the surface of the earth to the suitable receiving body of water or location internal or external to the boundaries of the City of Palo Alto. Such facilities include all pipes, appurtenant features, culverts, streets, curbs, gutters, pumping stations, channels, streams, ditches, wetlands, detention/retention basins, ponds, and other storm water conveyance and treatment facilities whether public or private. See CPAU Rule and Regulation No. 8 “Access to Premises.” 10.“Storm and Surface Water”shall mean water occurring on the surface of the land, from natural causes such as rainfall, whether falling or flowing onto the land in question. 11.“Undeveloped Parcel” shall mean any parcel which has not been altered from its natural state by the construction, creation, or addition of impervious area. B. STORM DRAINAGE FEES: 1. There is hereby imposed on each and every developed parcel of land within the City of Palo Alto, and the owners and occupiers thereof, jointly and severally, a storm drainage fee. This fee is deemed reasonable and is necessary to pay for: (A) Improving the quality of storm and surface water; (B) The operation, maintenance, improvement and replacement of the existing City storm drainage facilities; and (C) The operation, maintenance, and replacement of future such facilities. It is the intent of the City of Palo Alto, and the City has calculated the storm drainage fee in such a manner, that the amount of the fee imposed upon any parcel shall not exceed the proportional cost of the service attributable to the parcel. It is the further intent of the City SPECIAL STORM AND SURFACE WATER DRAINAGE UTILITY REGULATIONS RULE AND REGULATION 25 (Continued) CITY OF PALO ALTO UTILITIES Issued by the City Council Effective 6-13-2000 Supersedes Sheet No. -4 dated 7-1-98 Sheet No. 4 that revenues derived from the fee shall not exceed the funds required to provide the property-related services described in this Rule and Regulation 25, and that revenues derived from the fee shall not be used for any purpose other than those described in this Rule and Regulation 25. 2. All of the proceeds of these fees are deemed to be in payment for use of City storm drainage facilities by the developed parcel on, and with respect to, which the fee is imposed, and the owners and/or occupiers thereof. 3. The storm drainage fee shall be payable monthly and shall be paid to CPAU, as billed by CPAU, for each and every developed parcel in the City by the owner or occupier responsible for the Primary CPAU account for other CPAU services for the subject parcel, unless otherwise agreed in writing by CPAU. The method of billing described in this Rule and Regulation 25 has been designed for administrative efficiency. However, because the storm drainage fee is a "property-related fee" as defined by Article XIIID, Section 6 of the California Constitution, a property owner may in writing request that the storm drainage fee for a parcel owned by the property owner be billed directly to the owner, notwithstanding the typical method of billing. Because the storm drainage fee is a "property-related fee," the parcel owner shall be responsible to pay all unpaid or delinquent storm drainage fees. For administrative efficiency, the storm drainage fee for condominium and townhouse-style developments is typically billed to the CPAU account of the Homeowners' Association. 4. If a developed parcel does not have a CPAU account on the effective date of this Rule and Regulation, a new account shall be established for that parcel and billed to the owner as shown on the latest County Assessor's property tax rolls until such time as a Primary CPAU account is established for other CPAU services. 5. When an undeveloped parcel is developed, a new account shall be established and billed to the owner of that parcel as shown on the latest property tax rolls of the Santa Clara County Assessor until such time as a Primary CPAU account is established for other CPAU services. 6. BASIS FOR CALCULATION SPECIAL STORM AND SURFACE WATER DRAINAGE UTILITY REGULATIONS RULE AND REGULATION 25 (Continued) CITY OF PALO ALTO UTILITIES Issued by the City Council Effective 6-13-2000 Supersedes Sheet No. -5 dated 7-1-98 Sheet No. 5 (A) The storm drainage fee shall be based on the relative contribution of storm and surface water from a given developed parcel to City storm drainage facilities. (B) The relative contribution of storm and surface water from each developed parcel shall be based on the amount of impervious area on that parcel and shall determine that parcel’s storm drainage fee. (C) For administrative efficiency, the impervious area of condominium and townhouse- style developments is typically calculated for the entire development rather than on a per-parcel basis. (D) The extent of impervious area will be established to the nearest square foot by any of the following methods: (1) Computation of the impervious area using on-site measurements of the apparent outside boundaries of the impervious area in or on such developed parcels made by CPAU or on its behalf; or (2) Computation of the impervious area using the dimensions of the impervious area in or on the developed parcels which are set forth and contained in the records of the office of the County Assessor. (3) Estimation, calculation and computation of the impervious area using aerial photography or photogrammetry, or using the information and data from on- site measurements of like or similar property or features or as contained in City or County records. (4) Computation of the impervious area using information submitted by building permit Applicants on forms provided by the City, subject to review and correction by the City. 7. CALCULATION OF MONTHLY FEE Monthly fees for all developed parcels shall be computed in accordance with the following formula: SPECIAL STORM AND SURFACE WATER DRAINAGE UTILITY REGULATIONS RULE AND REGULATION 25 (Continued) CITY OF PALO ALTO UTILITIES Issued by the City Council Effective 6-1-2005 Supersedes Sheet No. -6 dated 6-13-2000 Sheet No. 6 Number of ERU’s x Rate per ERU as set forth in CPAU Rate Schedule D-1. 8. APPLICATION (A) Developed Parcels: Storm drainage fees shall apply to all developed parcels within the City, including those classified as non-profit or tax-exempt for ad valorem tax purposes. The fees shall apply to all government properties, to the full extent permitted by the constitutions of the United States and the State of California, including developed parcels of the City of Palo Alto, City-owned buildings and parks, but excluding public streets and highways. (B) Undeveloped Parcels: Storm drainage fees shall not be levied against undeveloped parcels that have not been altered from their natural state as defined herein under “Impervious Areas.” (C) Proportional Reduction of Fees: Developed parcels that have their own maintained storm drainage facility or facilities, and which do not utilize City facilities or which make no substantial contribution of storm or surface water to the City’s storm drainage facilities shall be liable to pay only that portion of the storm drainage fee attributable to the generic discharge of storm runoff (e.g. coordination with the Santa Clara Valley Water District on regional flood control projects, administration of the City's flood hazard regulations, and implementation of the urban runoff pollution prevention program) and shall not be liable to pay for the portion of the fee attributable to the actual usage of (i.e. drainage into) the City's storm drain system (e.g. storm drain system capital improvements and maintenance). Developed parcels that have a portion of their impervious area within City of Palo Alto shall be charged only for that portion of impervious area which is in the City of Palo Alto. Developed parcels that drain totally or partially into an area outside the City of Palo Alto shall be liable to pay only that portion of the storm drainage fee attributable to the generic discharge of storm runoff (e.g. coordination with the Santa Clara Valley Water District on regional flood control projects, administration of the City's flood hazard regulations, and implementation of the urban runoff pollution prevention program) and shall not be liable to pay for the portion of the fee attributable to the actual usage of (i.e. drainage into) the City's storm drain system (e.g. storm drain system capital improvements and maintenance). The City of Palo Alto has calculated the storm drainage fee for each parcel based on information available to the Public Works Department as to the amount of SPECIAL STORM AND SURFACE WATER DRAINAGE UTILITY REGULATIONS RULE AND REGULATION 25 (Continued) CITY OF PALO ALTO UTILITIES Issued by the City Council Effective 6-1-2005 Supersedes Sheet No. -7 dated 6-13-2000 Sheet No. 7 impervious area for the parcel, as well as other relevant information regarding the parcel. However, it is the intent of the City of Palo Alto that no fee shall exceed the proportional cost of services attributable to the parcel. Therefore, a parcel owner has the right, through Administrative Review, to request a proportional reduction in the storm drainage fee if the owner believes that the parcel contributes less water to the City's storm drainage facilities or uses fewer storm or surface water treatment services, notwithstanding the amount of the parcel's impervious area. 9. ADMINISTRATIVE REVIEW (A) Any person who owns or pays the storm drainage fee for a developed parcel and who disputes the amount of any storm drainage fee for the parcel, or who requests a deferred payment schedule therefor may request a revision or modification of such fee from the City Engineer. (B) The person seeking Administrative Review shall make such request in writing pursuant to Rule and Regulation 11 Section F. The request for Administrative Review must be signed by the property owner. The City Engineer shall conduct the review. (C) The City Engineer shall review the request and all data and documentation deemed by the City Engineer to be relevant to the request, and shall make a written determination as to whether the fee for the parcel exceeds the proportional cost of the service attributable to the parcel. If the City Engineer determines that the fee is proportional to the cost of service, no adjustment shall be made. If the City Engineer determines that the fee exceeds the proportional cost of service, the fee shall be adjusted accordingly. {End} April 4, 2005 Dear Property Owner: On March 7, 2005, the City Council held a public hearing on a proposed Storm Drainage Fee increase for properties within the City of Palo Alto. In January, you were mailed a notice and informational flyer regarding this public hearing and the specific fee increase proposed for your property. After receiving public testimony, the City Council took action to submit the proposed fee increase to property owners for approval. Enclosed with this letter is an official City of Palo Alto Property Owner Ballot and an official postage paid Return Envelope. Please mark your ballot “yes” or “no” and return it in the Return Envelope to the City Clerk by no later than 8:00 p.m. on April 26, 2005, to 250 Hamilton Avenue, Palo Alto. The City must receive mailed ballots by April 26, 2005. Postmarks do no count. The votes cast as “yes” or “no” will determine the fate of this fee increase. Ballots that are not returned or are returned late cannot be counted, so please return your ballot. Two items are enclosed with these ballot materials for your information. First, a summary of the procedures for the ballot proceeding is provided on the back of this letter. The complete procedures for this process are on file at the City Clerk’s office and are posted on the City’s web site (www.cityofpaloalto.org/stormdrain). The second enclosure is a copy of Resolution 8483, which the City Council passed on December 6, 2004, to formally establish the terms and amount of the proposed fee increase, and the projects/programs on which funds will be spent if property owners approve the fee increase. If you have any questions about the ballot proceeding, or if you are disabled and need special accommodation to vote, please call City Clerk Donna Rogers at (650) 329-2571. If you have questions regarding the fee increase, please call Matt Raschke in the Public Works Department at (650) 617-3183, or visit the City’s web site at www.cityofpaloalto.org/stormdrain. Please Vote! 4/4/2005 Page 1 RESOLUTION NO. 8483 RESOLUTION OF THE COUNCIL OF THE CITY OF PALO ADOPTING THE AMOUNT OF THE PROPOSED STORM DRAINAGE FEE INCREASE, DESCRIBING THE STORM DRAIN CAPITAL IMPROVEMENTS AND PROGRAM ENHANCEMENTS ON WHICH THE PROPOSED FEE WILL BE SPENT IF APPROVED, AND ADOPTING A SCHEDULE FOR THE PROTEST HEARING AND MAIL BALLOT PROCEEDINGON THE PROPOSED FEE INCREASE [Approved By Palo Alto City Council on December 6, 2004] EXHIBIT “A” Description Of Amount Of The Proposed Storm Drainage Fee Increase A. Summary of current storm drainage fee system The City’s current storm drainage billing system is based on Equivalent Residential Units (“ERU”), which are generally determined by the square footage of impervious surface area on a property. One ERU equals 2500 square feet of impervious surface area on a property, and the current fee for one ERU is four dollars and twenty-five cents ($4.25). The ERU calculation was based on a sampling of single-family and duplex properties in the City, in which the typical impervious surface area was 2500 square feet. Thus, all single-family and duplex residential properties in the City are presumed to have one ERU of impervious surface area and are currently charged $4.25 per month for that ERU, regardless of the actual impervious surface area of their property. Commercial, industrial, institutional, government, and multi-family residential properties are charged for their actual amounts of impervious surface area, at a rate of one ERU per 2500 square feet of impervious area. B. Proposed storm drainage fee increase 1. New residential rate structure and increased fee The proposal to increase storm drainage fees involves two components. First, the charge per ERU would be raised from four dollars and twenty-five cents ($4.25) to ten dollars ($10). Second, the impervious surface area would no longer be presumed to be one ERU for all single- family and duplex properties. Instead, those properties would be placed into one of three ERU tiers based on the size of the property. Commercial, industrial, institutional, government, and multi-family residential properties would continue to be charged based on actual impervious surface area, but at the increased rate of $10 per ERU. The following tables describe the changed rate structure and proposed fee increase: RESIDENTIAL RATES (Single-Family & Duplex) PARCEL SIZE (sq.ft.) ERU PROPOSED RATE < 6,000 sq.ft. .8 ERU $8.00 6,000-11,000 sq.ft. 1 ERU $10.00 > 11,000 sq.ft. 1.4 ERU $14.00 COMMERCIAL RATES (Commercial, industrial, multifamily res.) $10.00 per 2,500 square feet of impervious surface area (ERU), rounded to the nearest 0.1 ERU. 4/4/2005 Page 2 2. Annual inflation adjustments to proposed fee increase In order to offset the effects of inflation on labor and material costs, the proposed fee increase would be subject to annual increases beyond the initial $10.00 per ERU rate as of July 1 of each year, starting in 2006. Inflation adjustments would be based on the lesser of the local rate of inflation (based on the change in the Consumer Price Index [CPI] for the San Francisco- Oakland-San Jose CSMA, published by the United States Department of Labor, Bureau of Labor Statistics) or 6 percent. The City Council would have the authority and discretion to implement inflation adjustments on an annual basis as part of the City budget process. 3. Twelve year sunset provision for proposed fee increase The proposed storm drainage fee increase would sunset twelve (12) years from the date the fee increase is implemented, as the storm drain capital improvements to be funded by the increase would be completed by that time. 4. Oversight provision for proposed fee increase The City Council would appoint an oversight committee to monitor and review the proposed storm drain capital improvements and insure that the money raised from the increased Storm Drainage Fee is spent in accordance with this resolution. The oversight committee would report its findings to the City Council at least annually. 5. Applicability of the Rate Assistance Program The City’s existing Rate Assistance Program, which provides a 20% discount to qualified low- income utility customers, would apply to the Storm Drainage Fee. 6. Pay-as-you-go funding of capital improvements The storm drain capital improvements to be funded through the proposed Storm Drainage Fee increase would be paid for on a pay-as-you-go basis, without debt financing. 7. Up-front payment of Storm Drainage Fees by City of Palo Alto In order to accelerate the construction of the proposed storm drain capital improvements, the City of Palo Alto would pre-pay in advance the Storm Drainage Fees attributable to City-owned properties for a period of twelve years, upon approval of the increased Storm Drainage Fee. 4/4/2005 Page 3 EXHIBIT “B” List Of Storm Drain Capital Improvements And Program Enhancements To Be Completed With Funding From The Proposed Fee Increase A. Seven proposed storm drain capital improvement projects 1. Construct pump station at 96” storm drain outfall to San Francisquito Creek (estimated cost = $4.5 million) 2. Install new storm drain pipelines to increase drainage capacity on Channing and Lincoln Avenues (from Channing/Heather to Lincoln/Alma) (estimated cost = $4.6 million) 3. Install Southgate neighborhood storm drain system (estimated cost = $2.0 million) 4. Extend Gailen Avenue/Bibbits Drive storm drain outfall to the Adobe Storm Water Pump Station (estimated cost = $650 thousand) 5. Connect the Clara Drive storm drains to the Matadero Storm Water Pump Station (estimated cost = $900 thousand) 6. Construct improvements to the Matadero Storm Water Pump Station and install new storm drain pipelines to increase drainage capacity leading to the Matadero Storm Water Pump station (estimated cost = $3.0 million) 7. Install storm drainage improvements along southbound Alma Street (estimated cost = $1.5 million) A map of the proposed projects is included in this exhibit. B. Proposed funding for enhanced maintenance of the City’s storm drain system 1. $500,000 budgeted annually (subject to annual adjustment for inflation) to replace and/or rehabilitate deteriorated components of the City’s storm drain system, including pipelines, catch basins, and manholes. 2. $90,000 budgeted annually (subject to annual adjustment for inflation) to fund additional storm drain maintenance resources, including staff and/or contract services, to perform services including, but not limited to, storm drain cleaning, minor storm drain repairs, video inspection of storm drain pipelines, and/or curb and gutter repairs. C. Funding of innovative projects 1. $125,000 budgeted annually (subject to annual adjustment for inflation) for innovative projects to reduce the amount of storm water runoff and environmental pollutants that enter storm drains and creeks. D. Funding of storm water quality protection activities 1. $100,000 budgeted annually (subject to annual adjustment for inflation) to pay for existing services related to storm water quality protection currently funded through the Wastewater Treatment Fund. E. Funding of additional engineering staff 1. $115,000 budgeted annually (subject to annual adjustment for inflation) for an additional staff engineer to assist with implementation of the recommended storm drain capital improvements. 5. EXTEND CLARA DRIVE STORM DRAIN TO MATADERO PUMP STATION 1. NEW PUMP STATION @ SAN FRANCISQUITO CK 6. IMPROVE MATADERO PUMP STATION& FEEDER STORM DRAINS 4. EXTEND GAILEN/BIBBITSSTORM DRAIN TOADOBE PUMP STATION 3. SOUTHGATE NEIGHBORHOODSTORM DRAINS 7. ALMA STREET STORM DRAINS (EXACT LIMITS OF PIPINGTO BE DETERMINED) 2. CHANNING/LINCOLN TRUNK LINE ($3 MILLION) ($1.5 MILLION) ($900 THOUSAND) ($650 THOUSAND) ($2 MILLION) ($4.5 MILLION) ($4.6 MILLION) Oregon Expressway C h a r l e s t o n R o a d E ast B a y s h o re W est B a y s h o r e 1 0 1 S e r ra Bo ulev a r d San Antoni o Av e n u e P a ge M i l l Road University Avenue Middlefield Road El Camino Real E m barca dero R oad E mb a r c a d e r o R o a d El Ca m i no R eal Palm Drive F o o t hil l Expr e s s 0'3000' Proposed Storm Drain Capital Improvements This map is a product of the City of Palo Alto GIS This document is a graphic representation only of best available sources. CITY O F PALO A L TO I N C O R P O RAT E D C ALIFOR N IA P a l o A l t oT h e C i t y o f A P RIL 16 1 894 The City of Palo Alto assumes no responsibility for any errors. ©1989 to 2004 City of Palo Alto mraschk, 2005-03-10 11:00:53PROPOSED PROJECTS - MRICS (\\cc-maps\gis$\gis\admin\Personal\mraschk.mdb) City of Palo Alto Proposed Storm Drainage Fee Increase The information in this notice and the accompanying materials were compiled and are distributed at public expense by the City of Palo Alto in compliance with Article XIIID of the California Constitution, the Proposition 218 Omnibus Implementation Act and procedures adopted by the City of Palo Alto Resolution No. 8484. This information is presented in the public interest. It is not intended to influence or attempt to influence the actions of the voters to vote “yes” or “no” on the enclosed ballot. SUMMARY OF BALLOTING PROCEDURES If you are the owner of the property described on the enclosed Return Envelope, or a voting representative designated according to the City’s procedures for this ballot proceeding, you may submit the enclosed ballot to the City to support or oppose the proposed Storm Drainage Fee increase. Please follow the instructions below to complete and return your ballot. The full text of the procedures governing the fee increase proceedings is available on the City’s website at www.cityofpaloalto.org/stormdrain/docs/2005-voting-procedure.pdf. 1. Register your vote on the enclosed ballot in favor of or against the proposed fee increase by placing an “X” in the corresponding box. Mark your ballot in ink, not pencil. 2. Place the marked ballot in the official Return Envelope, and seal the envelope. 3. Mark, sign and date the Return Envelope in ink. Do not use pencil. Ballots received in a Return Envelope without a signature will not counted. 4. Mail or personally deliver your ballot to the City Clerk’s office at P.O. Box 51470, 250 Hamilton Avenue, Palo Alto, CA 94303 (The Return Envelope provides postage prepaid). The City must receive all ballots by April 26, 2005. Postmarks do not count. 5. Ballots must be received by the City Clerk prior to 8:00 p.m. on Tuesday, April 26, 2005. Any ballots received after this time cannot legally be counted (ballots may be hand-delivered to the City Clerk any time prior to this date and time). 6. After 8:00 p.m., the City Clerk and her designees will tabulate the ballots. Only one ballot may be submitted for each property. 7. If the results of the balloting indicate that a majority of the property owners voting upon the fee increase voted in favor of the increase, the City Council may adopt the fee increase. Shall the monthly Storm Drainage Fee for developed residential and non- residential properties be increased to $10.00 per Equivalent Residential Unit (ERU) for a period of 12 years, subject to an annual adjustment for inflation up to a maximum of six percent per year? The storm drainage fee will be used to improve local drainage and prevent street flooding by funding: • high-priority storm drain system capacity upgrades, • drainage system repairs, • enhanced storm drain maintenance, and • storm water quality protection activities □ YES □ NO Status of Storm Drainage Fund Capital Projects Listed in 2005 Ballot Measure Project Name Project Status Project Expenditure 1. San Francisquito Creek Pump Station Complete $ 9,135,000 2. Gailen Ave/Bibbits Ave SD Improvements Complete $ 650,000 3. Alma Street Storm Drain Improvements Complete $ 785,000 4. Clara Drive Storm Drain Improvements Complete $ 750,000 5. Southgate Neighborhood SD Improvements Complete $ 2,026,000 6. Channing Ave/Lincoln Ave SD Improvements 2 of 3 Phases Complete* $ 6,415,000 (est.) 7. Matadero Creek Pump Station Upgrade Design Stage Initiated $ 6,060,000 (est.) TOTAL $ 25,821,000 * Construction is completed along Channing Avenue (Heather Lane to Lincoln Avenue) and Lincoln Avenue (Channing Avenue to Middlefield Road. Phase 3 (Lincoln Avenue – Middlefield Road to Alma Street will be constructed starting in Spring 2016. Design of the Matadero Creek Pump Station Upgrade will begin in June 2015; construction is scheduled to start in Fall 2016. All seven projects will be substantially completed prior to the sunset of the Storm Drainage Fee in June 2017. S Pub torm blic Wor Drai rks Depa S C in Ma Ma artment DRA Pre Schaaf CONSULTING aster rch 2015 t/Engine AFT FINA epared by & Wh G CIVIL ENG r Plan 5 eering S AL eeler GINEERS n Upd ervices date Division n Palo Alto Storm Drain Master Plan Table of Contents Schaaf & Wheeler (i) June 2015 Table of Contents List of Appendices .......................................................................................................................... iii Table of Tables ............................................................................................................................... iv Table of Figures ............................................................................................................................... v Executive Summary .................................................................................................................... ES-1 ES.1 Study Objectives .................................................................................................................... ES-1 ES.2 Sources of Flooding ................................................................................................................ ES-1 ES.3 Work Products ....................................................................................................................... ES-1 ES.4 Capital Improvement Projects.................................................................................................. ES-2 ES.5 Conclusion ............................................................................................................................. ES-3 Chapter 1. Introduction ............................................................................................................... 1-1 1.1 Overview ................................................................................................................................... 1-1 1.2 Setting ...................................................................................................................................... 1-1 1.3 Soils .......................................................................................................................................... 1-2 1.4 Climate ..................................................................................................................................... 1-2 1.5 Flood Protection Facilities ............................................................................................................ 1-2 1.6 References ................................................................................................................................ 1-4 Chapter 2. Data ............................................................................................................................ 2-1 2.1 Overview ................................................................................................................................... 2-1 2.2 Data Sources ............................................................................................................................. 2-1 2.3 Data Quality ............................................................................................................................ 2-11 2.4 Modeled Data Assumptions ....................................................................................................... 2-11 Chapter 3. Methodologies ............................................................................................................ 3-1 3.1 Overview ................................................................................................................................... 3-1 3.2 Evaluation Criteria ...................................................................................................................... 3-1 3.3 GIS Based Modeling ................................................................................................................... 3-1 3.4 Surface Runoff Calculations ......................................................................................................... 3-7 3.5 Pipe Flow Calculations .............................................................................................................. 3-10 3.6 Comparison to Previous Reports ................................................................................................ 3-13 Chapter 4. Storm Drain Collection Systems ................................................................................. 4-1 4.1 Overview ................................................................................................................................... 4-1 4.2 Evaluation of the Storm Drain Capacity Criteria ........................................................................... 4-1 4.3 Condition Assessment of Storm Drain .......................................................................................... 4-3 4.4 Palo Alto Systems ....................................................................................................................... 4-5 4.5 Pump Stations ......................................................................................................................... 4-18 Palo Alto Storm Drain Master Plan Table of Contents Schaaf & Wheeler (ii) June 2015 Chapter 5. Regulatory Guidelines and Requirements .................................................................. 5-1 5.1 Overview ................................................................................................................................... 5-1 5.2 FEMA Regulations ...................................................................................................................... 5-1 5.3 City of Palo Alto Policy ................................................................................................................ 5-2 5.4 Construction General Permit (CGP) .............................................................................................. 5-2 5.5 Municipal Regional Permit (MRP) ................................................................................................ 5-2 5.6 SCVWD ..................................................................................................................................... 5-3 5.7 USACE ...................................................................................................................................... 5-3 5.8 BCDC ........................................................................................................................................ 5-4 5.9 Low Impact Development ........................................................................................................... 5-4 Chapter 6. Capital Improvements ................................................................................................ 6-1 6.1 Overview ................................................................................................................................... 6-1 6.2 Capital Improvement Priorities .................................................................................................... 6-1 6.3 Alternative Construction Method .................................................................................................. 6-2 6.4 Capital Improvement Program ..................................................................................................... 6-4 6.5 Sea Level Rise ........................................................................................................................... 6-8 6.6 LID Incorporation ....................................................................................................................... 6-8 Palo Alto Storm Drain Master Plan Table of Contents Schaaf & Wheeler (iii) June 2015 List of Appendices Appendix A – Modeled Pump Curves Appendix B – Model Calibration Technical Memorandum Appendix C – Detailed CIP Appendix D – Improvement Project Sheets Appendix E – City Drainage Standards Technical Memorandum Appendix F – Rainfall data Appendix G – Creek and Tidal Hydrographs Appendix H – Condition Assessment Program Recommendations Appendix I – Storm Drainage Condition Assessment Palo Alto Storm Drain Master Plan Executive Summary Schaaf & Wheeler ES-1 June 2015 Executive Summary ES.1 Study Objectives A significant planning effort has been undertaken to help guide the City of Palo Alto to establish a prioritized Capital Improvement Program to mitigate the impacts of stormwater runoff in Palo Alto. This document identifies capital improvement projects needed to provide a 10-year level of service throughout Palo Alto. The main objective of this master plan document is to provide an analysis of capacity restrictions within the storm drain networks of Palo Alto, and list the recommended projects necessary to provide a 10 year level of service. The following list presents a summary of steps taken: 1. The City’s existing storm drain model was updated. Updated features include: manhole invert and rim elevations, pipe diameter, pump stations, and watershed runoff characteristics. 2. Storm drainage analysis methodologies and criterion were established with City staff. 3. The City’s regulatory requirements were reviewed and proposed actions have been outlined. 4. A hydrologic and hydraulic analysis of the existing storm drain facilities throughout Palo Alto was performed for a 10-year storm event. System deficiencies are categorized in terms of the risk to private property and public safety. 5. Pump stations that impact the City’s storm drain system are analyzed. Localized pump station located within the City but that do not impact the City’s system, such as pump stations that serve underpasses, were not analyzed. 6. Projects that will improve storm drain performance have been identified. 7. A condition assessment was completed on previously unmapped CMP culverts located south of Highway 280. Condition related improvements are identified. 8. A prioritized Capital Improvement Program (CIP) is outlined. 9. Projected capital improvement costs have been summarized. ES.2 Sources of Flooding Runoff generated within the study boundary is conveyed through storm drain systems that outfall to creeks and ultimately San Francisco Bay. Capacity deficiencies within the storm drainage network can contribute to flooding within Palo Alto. For the purposes of this report, flooding is defined as the surcharge of water above ground surface at a drainage inlet or manhole. The primary objective of the Storm Drain Master Plan is to determine the cause of flooding and identify mitigation measures. Because Palo Alto is located near the Bay, the capacity of these drainage systems may be linked to the tides and influence of the surrounding waters. Flooding caused by creek spills, tidal action, or other such events have not been addressed in this report. ES.3 Work Products This master plan is intended to function at several levels. City planners and engineers responsible for capital improvements should find that this document contains sufficient background information and data to serve as a basis for future improvement implementation and/or modification. For those City staff and other parties interested in a more in-depth examination of storm drain facilities within Palo Alto, the companion Palo Alto Storm Drain Master Plan Table of Contents Schaaf & Wheeler ES-2 June 2015 GIS-based PCSWMM hydraulic model is available. PCSWMM uses the US EPA SWMM5 engine to model hydrology and hydraulics of urban drainage and sewer systems. As discussed in supporting reports and documents, the following information is available via the GIS: 1. Inventory of Drainage Facilities. Drainage pipes 12-inches in diameter and larger in the study area have been imported into the storm drain model. Information pertaining to each system component may be accessed graphically or through database spreadsheets which have been provided electronically. 2. Tributary Drainage Areas. Land areas used to generate local runoff are also available graphically in the storm drain model, which catalogs tributary area, factors related to land use and soil conditions and other basin morphology. 3. Storm Drain Capacities Evaluation. Storm drain capacities are documented in the model. For each drainage system component, peak discharge and maximum hydraulic grade line are computed. Based on hydraulic grade calculations, the degree of surcharge and depth (based on theoretical HGL) of water above ground are also determined. This determination is then used to assign priorities for system remediation. 4. Drainage System Profiles. Those interested in viewing drainage system profiles may do so graphically using software features specifically designed for this purpose. Real-time animations of water surface profiles and corresponding surface ponding depths for design storm events are also available. ES.4 Capital Improvement Projects Palo Alto was divided into three drainage areas: Part 1 which drains west to San Francisquito Creek; Part 2 is mainly the Matadero Creek watershed with sections draining north and west to San Francisquito Creek and east to Barron Creek; and Part 3 includes the Adobe Creek watershed, the majority of the Barron Creek watershed, and the area that drains to the Airport Pump Station; (Figure ES-1). Results of the drainage analyses and recommended improvements for each of these drainage areas are presented in Chapter 4. A condition assessment of the previously unmapped CMP culverts located south of Highway 280 was performed. The culverts are rated and condition related improvements are recommended. A Capital Improvement Program has been developed using the recommended capacity and condition related improvements. This program is presented in Chapter 6, and detailed costs are available in Appendix C. A summary of CIP costs are presented in Table ES-1. A breakdown of these costs by drainage region is presented in Table ES-2. Table ES-1: Summary of CIP Costs Based on Priority Level Priority Level Cost Highest Priority Capital Improvements $14,102,000 High Priority Capital Improvements $23,139,000 Moderate Priority Capital Improvements $22,233,000 Low Priority Capital Improvements $53,900,000 Total Capital Improvement Program $113,054,000 Palo Alto Storm Drain Master Plan Table of Contents Schaaf & Wheeler ES-3 June 2015 Table ES-2: Summary of Prioritized 10-Year CIP Project Costs Priority Part 1 Part 2 Part 3 Condition Imps. Total Highest Length (ft) 0 0 702 470.5 1,172 Cost 0 $11,530,000 $2,420,000 $152,000 $14,102,000 High Length (ft) 0 17,073 3,117 580.7 20,356 Cost 0 $20,330,000 $2,640,000 $169,000 $23,139,000 Moderate Length (ft) 0 16,592 3,829 580.1 21,001 Cost 0 $16,470,000 $5,650,000 $113,000 $22,233,000 Low Length (ft) 0 31,877 26,425 0 58,324 Cost 0 $26,070,000 $27,720,000 0 $53,790,000 ES.5 Conclusion Reducing existing drainage limitations by improving those portions of the drainage system that are the City’s responsibility is a worthy goal. This Master Plan provides a tool for Palo Alto citizens and officials to use in their efforts to reduce both nuisance flooding, and the likelihood of more serious flood related hazards to private and/or public property, and to maintain the drainage network in good working condition. This study and proposed CIP is merely the starting point. It is anticipated that City staff and/or their consultants will perform a more detailed study or alternatives analysis to find more affordable or effective improvements with information gathered as part of the design process (detailed topography, utility conflicts, easements, etc). Palo Alto Storm Drain Master Plan Executive Summary Schaaf & Wheeler ES-4 June 2015 Figure ES-1: Palo Alto Drainage Areas City of Palo Alto (ID # 6089) Finance Committee Staff Report Report Type: Action Items Meeting Date: 9/22/2015 City of Palo Alto Page 1 Summary Title: City Council Budget and Table of Organization Amendment Approval Title: Amendment of Municipal Code Section 2.28.080 Regarding City Council Budget and Table of Organization Amendment Approvals From: City Manager Lead Department: Administrative Services Recommendation Staff recommends that the Finance Committee recommend to the City Council to amend Municipal Code Section 2.28.080 titled Amendments after Adoption which would change the City Council budget and Table of Organization amendment approval from an ordinance to a motion. Recommended Motion The Finance Committee recommends to the City Council to amend Municipal Code Section 2.28.080 titled Amendments after Adoption which would change the City Council Budget and Table of Organization amendment approval from an ordinance to a motion. Executive Summary Annually the City Council adopts the City’s budget and the Table of Organization. Throughout the fiscal year, primarily due to unforeseen circumstances, staff requests that the budget for various funds be amended. Less frequently, the Table of Organization is amended. Palo Alto Municipal Code section 2.28.050, titled Amendments after Adoption, states, in part, that during the fiscal year the City Council may amend the City’s budget and the Table of Organization by ordinance through approval of Budget Amendment Ordinances. Staff recommends that the City Council approve Budget and Table of Organization amendments by motion versus ordinance. This change would avoid duplicative work and add the specific budget and Table of Organization amendment recommendations to the recommendation language of the staff report versus to an attachment to the report. In instances where a multitude of amendments are recommended, such as the Midyear Budget Review, amendments would be detailed in an attachment referenced in the motion. City of Palo Alto Page 2 Staff presented the attached report (Attachment A) on June 16 to the Finance Committee. The Committee expressed concerns regarding the historical record of budget changes approved throughout the year by the City Council (see Attachment B for the June 16 Finance Committee minutes) and the ability of future Council members, commissioners, or the public to find historical information. Currently, all ordinances including Budget Amendment Ordinances are listed in chronological order in the ordinance section of the City Clerk’s website. To address these concerns, staff has launched a new section on the City’s website titled “Budget Adjustments and Monitoring.” At this site, staff has listed by fund type all Council approved budget changes for Fiscal Year 2015 and linked the respective City Manager Reports (CMRs). Going forward, as budget changes are approved, they will be listed by fiscal year and fund type and linked to the approved CMR. In contrast to the City Clerk’s website, which includes all Council approved ordinances by calendar year and residents have to scroll through the website to find the budget related ordinances, the Budget Adjustments and Monitoring section of the City’s website provides one location for all budget changes organized by fiscal year. Further, this new site also links the quarterly financial reports as heard by the Finance Committee and approved by the City Council. Although the Finance Committee approved the June 16 City Manager’s Report (two yeas, one abstain, one absent), staff felt it to be a more prudent approach to return to the Committee to address the Committee’s concern before taking the item to the City Council. Background Annually the City Council adopts the City’s budget and the Table of Organization. Throughout the fiscal year, primarily due to unforeseen circumstances, staff requests that the budget for various funds be amended. Less frequently, the Table of Organization is amended. Reasons for budget amendments include the acceptance of grants and the related expenditure, requests for funding to support Council initiatives, insufficient funding of capital projects due to higher construction costs, or corrections to the approved budget. In Fiscal Year 2015, the Table of Organization was amended as part of outsourcing the street sweeping service, the addition of a Principal Attorney position as part of approval of the Fiscal Year 2015 Midyear Budget review, and technical adjustments as part of approval of the Management and Professional Compensation Plan. In accordance with Palo Alto Municipal Code section 2.28.050 titled Amendments after Adoption states in part that during the fiscal year, the City Council may amend the City’s budget and the Table or Organization by ordinance. Staff presented the attached report (Attachment A) on June 16 to the Finance Committee. In discussion with the Committee the Committee expressed concerns regarding the historical record of budget changes approved throughout the year by the City Council and the ability of future Council members, commissioners, or the public to find historical information. Although the Finance Committee approved the June 16 City Manager’s Report (two yeas, one abstain, City of Palo Alto Page 3 one absent), staff felt it to be a more prudent approach to return to the Committee with a recommendation to address the Committee’s concern before taking the item to the City Council. Discussion As outlined in more detail in the June 16 report (Attachment A), when staff brings forward a report with a recommendation to amend the budget or the Table of Organization, a separate Budget Amendment Ordinance (BAO) is prepared and attached to the report. The separate Budget Amendment Ordinance is required, since Palo Alto Municipal Code Section 2.28.050 states in part that the City Council is required to amend the budget or Table of Organization by ordinance. The BAO contains the same information in summary form as the staff report, such as the background, discussion of the staff report, and a California Environmental Quality Act statement. The recommended budgetary transactions or specific Table of Organization changes are the only additional information provided in the BAO. In order to ensure consistency between the staff report and the BAO, staff spends significant time to write the BAO. In general, the Office of Management and Budget spends about an hour for preparation, coordination, review, and final processing for each BAO. After Council approval, staff circulates the approved ordinance for signature, at minimum, to the Mayor as well as staff in the City Clerk, City Attorney, City Manager, and Administrative Services Department. In Fiscal Year 2015, over 30 BAOs and Table of Organization amendments were written and routed for signature. In order to increase efficiencies in the preparation of staff reports which include budget and Table of Organization amendment recommendations, staff proposes that the Council adopt budget and Table of Organization amendment recommendations by motion instead of by ordinance. The attached draft ordinance identifies the recommended Municipal Code changes (Attachment C). If these changes in the Municipal Code are recommended for approval by the Finance Committee and approved by the Council, staff will include the specific budget and Table of Organization amendment recommendations in the recommendation language of the staff report versus creating a separate BAO and attaching the BAO to the staff report. Further, this change would streamline the staff report preparation process and save staff time. In discussion with the Committee on June 16, the Committee expressed concerns regarding the historical record of budget changes approved throughout the year by the City Council and the ability of future Council members, commissioners, or the public to find historical information. Currently, all ordinances including Budget Amendment Ordinances are listed in chronological order by calendar year in the ordinance section of the City Clerk’s website. In order to identify ordinances related to Council approved budget changes, residents are required to know the calendar year of the approved change and find the change among all other ordinances approved by the Council. Therefore, to address the Committee’s concerns, improve the residents’ access to Council approved budget changes by fiscal year, and build a historical summary staff has launched a City of Palo Alto Page 4 new section on the City’s website titled “Budget Adjustments and Monitoring.” At this site, staff has listed by fund type all Council approved budget changes for Fiscal Year 2015 and year- do-date for Fiscal Year 2016 and linked the respective City Manager Reports (CMRs). Going forward, as budget changes are approved, they will be listed by fiscal year and fund type and linked to the approved CMR. Further, this site also links the quarterly financial reports as heard by the Finance Committee and approved by the City Council. Staff appreciates the Committee’s discussion regarding the proposed Municipal Code changes during the June 16 meeting and hopes that with the new website, the Committee’s concerns are addressed and the City improved in documenting budget changes in an accessible way for our residents. Timeline If the Finance Committee approves this change in the Municipal Code, staff will bring forward the recommendation to the City Council in October 2015. Resource Impact If approved by the City Council, this change in the budget amendment process will allow staff to spend its time on higher value activities. Environmental Review This is not a project under the California Environmental Impact Report. Attachments: Attachment A: City Council Budget and Table of Organization Amendment Approval CMR Finance Committee June 16 2015 (PDF) Attachment B: Finance Committe Minutes June 16 2015 (PDF) Attachment C: Draft Ordinance Amending Section 2.28.080 of Chapter 2 Fiscal Procedures (PDF) City of Palo Alto (ID # 5692) Finance Committee Staff Report Report Type: Action Items Meeting Date: 6/16/2015 City of Palo Alto Page 1 Summary Title: City Council Budget and Table of Organization Amendment Approval Title: Amendment of Municipal Code Section 2.28.080 regarding City Council Budget and Table of Organization Amendment Approvals From: City Manager Lead Department: Administrative Services Recommendation Staff recommends that the Finance Committee recommend to the City Council to amend Municipal Code Section 2.28.080 titled Amendments after Adoption which would change the City Council budget and table of organization amendment approval from an ordinance to a motion. Recommended Motion The Finance Committee recommends to the City Council to amend Municipal Code Section 2.28.080 titled Amendments after Adoption which would change the City Council budget and Table of Organization amendment approval from an ordinance to a motion. Executive Summary Annually the City Council adopts the City’s budget and the Table of Organization. Throughout the fiscal year, primarily due to unforeseen circumstances, staff requests that the budget for various funds be amended. Less frequently, the Table of Organization is amended. Palo Alto Municipal Code section 2.28.050, titled amendments after adoption, states, in part, that during the fiscal year the City Council may amend the City’s budget and the Table of Organization by ordinance through approval of budget amendment ordinances. Staff recommends that the City Council approve budget and table of organization amendments by motion versus ordinance. This change would avoid duplicative work and add the specific budget and Table of Organization amendment recommendations to the recommendation language of the staff report. In instances where a multitude of amendments are recommended, such as the Midyear Budget Review, amendments would be detailed in an attachment referenced in the motion. Attachment A City of Palo Alto Page 2 Background Annually the City Council adopts the City’s budget and the Table of Organization. Throughout the fiscal year, primarily due to unforeseen circumstances, staff requests that the budget for various funds be amended. Less frequently, the Table of Organization is amended. Reasons for budget amendments include the acceptance of grants and the related expenditure, requests for funding to support Council initiatives, insufficient funding of capital projects due to higher construction costs, or corrections to the approved budget. In Fiscal Year 2015, the Table of Organization was amended as part of outsourcing the street sweeping service, the addition of a Principal Attorney position as part of approval of the Fiscal Year 2015 Midyear Budget review, and technical adjustments as part of approval of the Management and Professional Compensation Plan. Palo Alto Municipal Code section 2.28.050 titled Amendments after Adoption states in part that during the fiscal year, the City Council may amend the City’s budget and the Table or Organization by ordinance. Discussion When staff brings forward a report with a recommendation to amend the budget or the Table of Organization, a separate Budget Amendment Ordinance (BAO) is prepared and attached to the report. The separate budget amendment ordinance is required, since Palo Alto Municipal Code Section 2.28.050 states in part that the City Council is required to amend the budget or Table of Organization by ordinance. After approval, the BAO is assigned a number by the Clerk’s Office and routed for signature to the Mayor, the City Manager, the City Attorney’s Office, the Administrative Services Director, and to the department director whose budget was amended. Unlike most ordinances, a BAO becomes effective upon adoption and does not require a second reading. The BAO contains the same information in summary form as the staff report, such as the background, discussion of the staff report, and a California Environmental Quality Act statement. The recommended budgetary transactions or specific Table of Organization changes are the only additional information provided in the BAO. In order to ensure consistency between the staff report and the BAO, staff spends significant time to write the BAO. In general, the Office of Management and Budget spends about an hour for preparation, coordination, review, and final processing for each BAO. In order to increase efficiencies in the preparation of staff reports which include budget and Table of Organization amendment recommendations, staff proposes that the Council adopt budget and Table of Organization amendment recommendations by motion instead of by ordinance. The attached draft ordinance identifies the recommended Municipal Code changes (Attachment A). If these changes in the Municipal Code are recommended for approval by the Finance Committee and approved by the Council, staff will include the specific budget and Table of Attachment A City of Palo Alto Page 3 Organization amendment recommendations in the recommendation language of the staff report, versus creating a separate BAO or Table of Organization Ordinance. Further, this change would streamline the staff report preparation process and save staff time. Attachment B provides an example (first page only) of a recently approved staff report (CMR #5558, Approval of a Residential Curbside Compostable Collection Program) and attached BAO with the relevant budget amendment section highlighted in the BAO. Attachment C exemplifies how the recommendation language for the same staff report would be written, if Finance Committee approves staff recommendation to adopt budget amendments by motion. As another step to provide relevant budgetary information, staff will include available reserve balances in the Recommendation and Resource Impact sections of the staff report. This will occur after the issuance of the Fiscal Year 2015 Comprehensive Annual Financial Report (CAFR), as the audited financial statements provide staff with the Fiscal Year 2015 ending fund balances for all funds, which become the Fiscal Year 2016 beginning fund balances. Once the actual fund balances are known, staff can determine available fund balances and the impact of recommended actions on these fund balances. Timeline If the Finance Committee approves this change in the Municipal Code, staff will bring forward the recommendation to the City Council in August 2015. Resource Impact If approved by the City Council, this change in the budget amendment process will allow staff to spend its time on higher value activities. Environmental Review This is not a project under the California Environmental Impact Report. Attachments: Attachment A: Draft Ordinance Amending Section 2.28.080 of Chapter 2 Fiscal Procedures (PDF) Attachment B: CMR 5558, Approval of Residential Curbside Compostable Collection Program (first page only) and Budget Amendment Ordinance (PDF) Attachment C: New Budget Amendment Recommendation Language for CMR 5558 (PDF) Attachment A NOT YET APPROVED 150325 jb 0131328 1 Ordinance No. _____ Ordinance of the Council of the City of Palo Alto Amending Section 2.28.080 (Amendments after Adoption) of Chapter 2.28 (Fiscal Procedures) of the Palo Alto Municipal Code to __________________ The Council of the City of Palo Alto does ORDAIN as follows: SECTION 1. Section 2.28.080 Amendments after Adoption of Chapter 2.28 (Fiscal Procedures) of the Palo Alto Municipal Code is amended to read as follows: 2.28.080 Amendments after adoption. During the fiscal year, the city manager shall amend the budgetary accounts of the city to reflect the following: (a) Additional Appropriations. By a two‐thirds vote, the council may make additional appropriations of receipts that are in excess of the total estimated receipts and appropriations contained in the adopted budget. (b) Additional Positions. By a majority vote, the council may add positions to the table of organization. (c) Transfer of Appropriations. (1) By a majority vote, the council may transfer part or all of the unencumbered balance of any appropriation from one fund, department, office, or capital project to another; (2) By written authorization, the city manager may direct the redistribution, within any department or office, of the unencumbered balance of appropriations within the departments or offices, provided that he or she shall not make transfers from the classification of utilities purchased for resale to any other object or make transfers between funds or transfers between departments without the affirmative vote of a majority of the council; (3) By written authorization, the city manager may authorize a transfer of appropriation from the unallocated balance of the contingent account to any department, office or capital project. Funds shall not be transferred between the general fund and the enterprise funds, nor between operating and capital funds. (d) Transfer of Positions. By written authorization, the city manager may transfer positions or assign personnel from any department or office under the control of the city manager to another in accordance with Article IV, Section 6(n) of the Charter. (e) Inter‐fund Transactions. In the event that appropriations and equivalent offsetting credits for allocated inter‐fund services or transfers are affected by amendments to appropriations for Deleted: by ordinance Deleted: by ordinance Deleted: by ordinance Attachment A NOT YET APPROVED 150325 jb 0131328 2 direct expenditures or estimated revenue, the city manager may make corresponding adjustments to the inter‐fund accounts so affected. (f) Salaries and Benefits. Amendments to the Employee Classification and Compensation Plan adopted by the council pursuant to Article III, Sections 12, 18 and 21 of the Charter. (g) Prior year Encumbrances. Appropriations that were encumbered by properly executed, but uncompleted, purchase orders or contracts at the close of the previous fiscal year may be carried forward and incorporated with appropriations of the current year. (h) Municipal Fee Schedule. By a majority vote, the council may, by ordinance, add or change fees in the municipal fee schedule. SECTION 2. The City Council finds that this ordinance is exempt from the provisions of the California Environmental Quality Act pursuant to Section 15061(b)(3) of the California Environmental Quality Act Guidelines, because it can be seen with certainty that there is no possibility of significant environmental effects occurring as a result of the adoption of this ordinance. SECTION 3. This ordinance shall become effective upon the commencement of the thirty‐first day after the date of its adoption. INTRODUCED AND PASSED: AYES: NOES: ABSENT: ABSTENTIONS: ATTEST: __________________________ _____________________________ City Clerk Mayor APPROVED AS TO FORM: APPROVED: ___________________________ _____________________________ Senior Asst. City Attorney City Manager ____________________________ Director of Administrative Services Attachment A City of Palo Alto (ID # 5558) City Council Staff Report Report Type: Action Items Meeting Date: 3/23/2015 City of Palo Alto Page 1 Council Priority: Environmental Sustainability Summary Title: Approval of a Residential Curbside Compostable Collection Program Title: Approval of a Residential Curbside Compost Collection Program and Adopting a Budget Amendment Ordinance for $387,000 for the Purchase of Kitchen Buckets and New Outreach Materials From: City Manager Lead Department: Public Works Recommendation Staff recommends that Council: 1.Approve a new residential curbside collection and composting program of food scraps commingled with yard trimmings in the green carts, effective July 1, 2015; and 2.Adopt the attached Budget Amendment Ordinance in the amount of $387,000 to fund the purchase of kitchen buckets and outreach materials that are needed as part of the implementation of the new residential curbside compost collection program. Executive Summary The implementation of the GreenWaste Contract in 2009 added several zero waste programs that boosted the City’s diversion rate (from landfills) from 62% in 2008 to approximately 78% in 2013. While this diversion rate is one of the highest in the state, it has not increased as desired over the past few years to help the City meet its Zero Waste Goal by 2021. The next big step in the City’s efforts to attain its zero waste goals is getting food scraps out of the landfill, as they make up 50% of residential garbage – over 5,000 tons landfilled annually. Attachment A 1 Revised December 08, 2014 5238/eb Ordinance No. XXXX ORDINANCE OF THE COUNCIL OF THE CITY OF PALO ALTO AMENDING THE BUDGET FOR FISCAL YEAR 2015 TO PROVIDE ADDITIONAL APPROPRIATION OF $387,000 IN THE REFUSE FUND FOR THE RESIDENTIAL FOOD SCRAPS PROGRAM. The Council of the City of Palo Alto does ordain as follows: SECTION 1. A. Pursuant to the provisions of Section 12 of Article III of the Charter of the City of Palo Alto, the Council on June 16, 2014 did adopt a budget for Fiscal Year 2015; and B. Staff is recommending a new residential food scraps collection and composting program that would be implemented July 1, 2015 as part of the City’s efforts to meet its goal of zero waste to landfills by 2021; and C. Food scraps comprise nearly fifty percent of the material found in single-family residential garbage in Palo Alto. Currently, these food scraps can only be disposed in garbage cans. Other residents send food scraps down the drain, which is not recommended due to additional water usage and the potential for sewer blockages. Neither of these methods is appropriate for meat, cheeses, eggs, or other foods high in protein or oil; and D. In April 2013, the City implemented a year-long Two Cart Pilot Program in the Green Meadow neighborhood that eliminated garbage carts completely and redirected food scraps to compostable bags and into the yard trimming cart. Residents in the pilot were asked to bag any remaining garbage and place it in the recycling carts; and E. While the Two Cart Pilot Program did increase diversion of food scraps and additional recyclables from the landfills, staff is not recommending a citywide roll-out of the two-cart collection system at this time, as many participants felt that the program was too complicated. City intends to continue the pilot for calendar year 2015; and F. Under the new program, the city-wide collection of residential food scraps would be commingled with yard trimmings. There are several regional composting facilities that are permitting compost being commingled with food scraps and yard trimmings. The food scraps collection program will likely divert and recover over half of the food scraps in the residential garbage, which is equivalent to a four percent increase in the City’s overall diversion rate; and G. An initial investment of $387,000 will be needed to purchase kitchen pails and provide the outreach and training materials needed for implementation. Outreach and training materials will include cart tags, program brochures, stickers for collection carts, stickers for the kitchen pails, how-to-video, and informational postcards with program Attachment A 2 Revised December 08, 2014 5238/eb information. The annual net costs associated with the new residential food scraps collection and composting program are currently anticipated to be $532,000, and are expected to be recovered through an increase in the single-family residential refuse rate pending City Council approval as part of the Fiscal Year 2016 budget process. SECTION 2. Therefore, the sum of Three Hundred Eighty Seven Thousand Dollars ($387,000) is hereby appropriated in the Refuse Fund for the residential food scraps program, offset by a corresponding reduction to the ending fund balance ($387,000). SECTION 3. As provided in Section 2.04.330 of the Palo Alto Municipal Code, this ordinance shall become effective upon adoption. SECTION 4. The Council of the City of Palo Alto hereby finds that this is not a project under the California Environmental Quality Act and, therefore, no environmental impact assessment is necessary. INTRODUCED AND PASSED: Enter Date Here AYES: NOES: ABSENT: ABSTENTIONS: NOT PARTICIPATING: ATTEST: ____________________________ ____________________________ City Clerk Mayor APPROVED AS TO FORM: APPROVED: ____________________________ ____________________________ Senior Assistant City Attorney City Manager ____________________________ Director of Administrative Services ____________________________ Director of Public Works Attachment A Recommendation Staff recommends that Council: 1. Approve a new residential curbside collection and composting program of food scraps commingled with yard trimmings in the green carts, effective July 1, 2015; and 2. Approve an amendment to the Fiscal Year 2015 Adopted Budget for the Refuse Fund by: a. Increasing the budget by $387,000 to fund the purchase of kitchen buckets and outreach materials that are needed as part of the implementation of the new residential curbside compost collection program; and b. Decreasing the Rate Stabilization Reserve by $387,000. Executive Summary The implementation of the GreenWaste Contract in 2009 added several zero waste programs that boosted the City’s diversion rate (from landfills) from 62% in 2008 to approximately 78% in 2013. While this diversion rate is one of the highest in the state, it has not increased as desired over the past few years to help the City meet its Zero Waste Goal by 2021. The next big step in the City’s efforts to attain its zero waste goals is getting food scraps out of the landfill, as they make up 50% of residential garbage – over 5,000 tons landfilled annually. Staff proposes to start residential curbside compost (e.g., food scraps and food soiled paper) collection in July 2015. The new program will allow residents to place loose food scraps and food soiled paper directly into the ‘green’, yard trimmings cart. Residents will also be given a kitchen bucket to store a few days’ worth of food scraps in the house before depositing it in the green cart. This program will reduce community greenhouse gas emissions by over 1,140 metric tons of CO2 equivalent each year. The program will incur annual (net) cost increases of approximately $532,000 to compost and/or anaerobically digest food scraps commingled with yard trimmings. The resulting increase in costs to residents would be approximately 6.1% (about a $2.63 per month increase for a 32 gallon‐sized garbage service). Staff is also requesting a one‐time Budget Amendment Ordinance (BAO) for $387,000 to fund the purchase of the kitchen buckets and print new program outreach materials. Attachment A FINANCE COMMITTEE MINUTES Page 1 of 28 Special Meeting Tuesday, June 16, 2015 Chairperson Schmid called the meeting to order at 6:15 P.M. in the Council Chambers, 250 Hamilton Avenue, Palo Alto, California. Present: Filseth, Kniss, Schmid (Chair) Absent: Scharff Oral Communications None Agenda Items 1. Staff Recommendation that the City Council Adopt Two Resolutions Effective September 1, 2015: 1) 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) to Increase Rates 4 Percent and Add Drought Surcharges; and 2) Activating Drought Surcharges at the 20 Percent Level in Response to Mandatory Potable Water Use Restrictions Imposed by the State Water Resources Control Board. Jon Abendschein, Senior Resource Planner: Good evening, Council Members. My name's Jon Abendschein. I'm a Senior Resource Planner with the Resource Management Division. I'm here to talk to you tonight about the four percent Water Rate increase and Drought Surcharges. The recommendation that we have for you tonight is to adopt two Resolutions, one to amend Water Rates, to raise rates by four percent, and add Drought Surcharges effective September 1, 2015. The second is to activate those Drought Surcharges. We're putting three levels of Drought Surcharge on the rate schedule, and we're recommending that you activate the 20 percent reduction level surcharge effective September 1, 2015. We're trying to achieve three objectives with these ... Attachment B MINUTES Page 2 of 28 Finance Committee Special Meeting Minutes 6/16/2015 Chair Schmid: Could I ask a question? You're asking us to activate or to recommend to Council to activate. Mr. Abendschein: To recommend to Council to activate. I'm sorry. This is our recommendation to the City Council we're asking you to recommend to the City Council. Chair Schmid: Pass it on, yes. Mr. Abendschein: Our objectives with these two Resolutions. We have three objectives. First off, we want to complete the 12 percent rate increase that we discussed with you last week, which we recommended be broken into two parts, an eight percent effective July 1st and four percent effective September 1st. Last night you approved the first part of that two-part rate increase. This would be the second part. We're also, as I said, adding Drought Surcharges and activating the Drought Surcharges. On June 3rd, the Utilities Advisory Commission (UAC) unanimously recommended the Council approve the recommended action. We don't' unfortunately have the minutes of the discussion in the report, because their meetings were too close together. We do have Chair Foster, Jonathan Foster, here to talk about the UAC's discussion. I'll just go over the background. It's important just to remind everyone how we got here. Last fall as we were getting into the drought, the Finance Committee discussed a set of Rate Design Guidelines to be used in designing Drought Surcharges. We started a Cost of Service analysis. In March and April, we started our usual financial forecasting process. We recommended a 12 percent rate increase. That was adopted by the UAC and the Finance Committee. I'm reiterating some discussion we had at the Council Member meeting. In late April when we were mailing our Prop 218 notice, there was a court decision. We asked our Water Rate Consultant to take a look at our rate design methodology. We came to you last week to incorporate some recommended adjustments effective July 1st. I don't think I need to necessarily reiterate this. You've already heard this earlier in the week. If you have any questions on it, I'm happy to answer them. This slide, Slide Number ... Council Member Kniss: Could I interrupt with that one? Given that court decision, even though you've discussed tiers in here, help me out with that. Perhaps I didn't understand the court decision. Mr. Abendschein: I can go into this in a little more depth then. The court decision did address tiers. The court decision did not say—I'll defer to the City Attorney on this—that tiers were something cities couldn't use; they just had to be cost justified. Our Water Rate Consultant took a look at ... Attachment B MINUTES Page 3 of 28 Finance Committee Special Meeting Minutes 6/16/2015 Council Member Kniss: That's a big thing, to cost justify it. That's what it hung on, as I understand it. Mr. Abendschein: That's right. When we adopted our Two-tier rate system back in 2012, we had a methodology for justifying that two-tier system. In the wake of the court decision, we wanted to take a look at it and say, "Do we still feel comfortable with it?" The consultant said, "We do still feel comfortable with it." It has to do with the way that system capacity is allocated to year-round and seasonal uses. I'm happy to go into that in more depth, if you would like to. Council Member Kniss: As I said, this is the crux of the whole thing. It's why we're debating this. It's why, as I understand it, we're doing one right now and we're going to add more at the end of the summer. If I'm wrong on that, I'd like to know it. That was my understanding as I looked at this and realized what our objectives are and so forth. Mr. Abendschein: You're absolutely right. Council Member Kniss: If I'm not in the right direction then ... What people are asking us now is, "How are you setting the rates?" Someone said, "Here's what Mountain View anticipates." What is your limit? What are you telling people they can use or not use? What are you telling them about if they use more water, it's going to cost them more? We need to be very exact when we are explaining to the public this very scarce resource becoming scarcer unless the Niño does hit, which certainly one hopes will. This may be a long term and really important resource that we have to deal with. Molly Stump, City Attorney: Jon, perhaps I can wade in a little bit? Mr. Abendschein: Please do, yes. Ms. Stump: Molly Stump, City Attorney. Thanks for the question. There's been a fair amount of confusion about this, since the Court of Appeal issued the San Juan Capistrano decision. As you know, Proposition 218 has some significant, substantive requirements in it. One of them is that when a local agency adopts rates to assess property-related fees or charges that those fees need to be based on the cost of providing service to those payers. Although the language of Prop 218 says the cost needs to be proportional to the service to the parcel, courts have said it's legitimate for agencies to group customers into similarly situated clusters and to figure out the cost of serving based on those groupings. It's very common, state of the art, to put residential customers together, commercial customers and then perhaps agricultural or industrial. We do that. The court in Southern California Attachment B MINUTES Page 4 of 28 Finance Committee Special Meeting Minutes 6/16/2015 looked at one rating agency's decisions to create a tiered rate structure. San Juan Capistrano had four tiers in their residential rates. They were very steep tiers. Every rating agency does this different. Palo Alto has two tiers, and they're relatively close together. The court found that San Juan Capistrano did not have evidence that their rate structure was supported by the cost of providing service to the people in those various tiers. Our situation is different. The Utilities Department has worked with Raftelis, and they have developed a methodology that measures the usage including the base usage and also what's called the peaking factor. This is something that the utility has to design for, the regular usage and then usage that will rise up and peak typically on very hot days in the summer. There's an expert methodology for assessing what it costs to build for that peaking capacity and then allocating that to the customers that generate those costs. When the new decision came down, there have been several on tiered rates. This is one of several. We took that opportunity to look at the guidance from this panel of the Court of Appeal and go back to the expert and say, "This is the methodology that you've recommended before, that you believe allows us to charge people based on the cost of serving them. In light of the court's newest comments, are we still good?" They said, "Yes. The methodology is fundamentally sound." They did update it and recommend some minor adjustments which, if I'm correct, had the effect of bringing our tiers a little closer together. Because of those changes, the City needed to put the rate increases that are needed to fund the full cost of the system in place in two steps. This is the second step. To answer your question, unfortunately the media reporting on the San Juan Capistrano decision was very high level. "Court says tiered rates are unconstitutional." What they actually said was this particular jurisdiction's rates did not meet the constitutional standard. If court challenges are filed in other jurisdictions, it's going to depend on the work that those jurisdictions have done to establish what is the cost of serving, what is their rate structure and what kind of evidentiary basis do they have to support it. We feel we're in a very different position, and these tiered rates are well supported by our expert. Does that help? Council Member Kniss: That's very reassuring. It'll be very reassuring to the public. Those of us will accept them, but it's about what we're saying to the public as to why this is happening when the San Juan Capistrano case was so visible and so well-discussed. Thank you. Mr. Abendschein: Slide 5 illustrates why we had to break the rate increase into two parts. As Molly said, the adjustments that the consultant recommended we make to the methodology flattened the tiers slightly. We had sent out a Prop 218 notice with rates at this level. If we were to have a 12 percent increase and incorporate the methodology changes, it would have resulted in tiered rates at this level which means the Tier 1 rate would have Attachment B MINUTES Page 5 of 28 Finance Committee Special Meeting Minutes 6/16/2015 been above what we sent out in the Prop 218 notice. What we did was we said, "We'll have an eight percent increase instead." As you can see, that sets the Tier 1 rate for July 1st at the Prop 218 notice level. We're going to have a second Prop 218 notice to do an additional 4 percent to get us to the total 12. We don't like to send out two Prop 218 notices, but fortunately we were in the process of developing Drought Surcharges and we knew we would have to have a second Prop 218 notice of the Drought Surcharges anyway, so we were able to combine those two efforts into one Prop 218 notice. That's ready to go out assuming you recommend approval tonight. Slide 6 and Slide 7 are for reference. If you'd like to speak to any of those slides, I can put them back up for the public. I'm not going to go into them in-depth; they're covered in the report. Council Member Kniss: One more question on this, if I might. If I'm looking at my Tier 2 rates... Chair Schmid: Can you read what slide? Council Member Kniss: I'm on Slide 6. I'm looking at the tiered rates. They go up, but it's not a great deal. It's not a huge amount. When I get my water bill, and that is the big discussion lately. "Have you gotten your water bill? What did your water bill look like?" What am I going to see? What is the average water bill? I don't actually know. Mr. Abendschein: It's in the ballpark of 12 to 14 Centum Cubic-feet (CCF) annually. Valerie Fong, Utilities Director: Slide 10. Council Member Kniss: Am I jumping ahead of you? Ms. Fong: Yeah. Council Member Kniss: Why don't you hold on for a minute and then we'll see. Mr. Abendschein: These are the billing (crosstalk) Drought Surcharges. Ms. Fong: This is the Drought Surcharge (crosstalk). Mr. Abendschein: I have a backup slide. If you're able to turn and take a look, I can show it to you. If you want to open your report to Page 5. Council Member Kniss: Packet Page 5? Attachment B MINUTES Page 6 of 28 Finance Committee Special Meeting Minutes 6/16/2015 Lalo Perez, Administrative Services Director and Chief Financial Officer: Or Page 5 of the Report? Mr. Abendschein: Page 5 of the report itself. Mr. Perez: Packet Page 7. Mr. Abendschein: Packet Page 7. It looks like the table is cut off across pages unfortunately. It's at the very bottom of Page 5, the top of Page 6, Report Page 5 and 6. The annual median, I'm sorry, is 9 CCF. The summer median is 14 CCF. The winter median is 7 CCF. The impact of the 4 percent increase is between $2 and $4 to the average residential bill, or the median residential bill that is. That's in addition to what you'd see for the July 1, 2015 8 percent rate increase which is unfortunately not in your report. If you want to look at the backup slide that I've put up here, you can see that as well. Chair Schmid: If I could ask a question there. Tier 1 and Tier 2 are separated at 6 CCF. Mr. Abendschein: That's right. Chair Schmid: Yet, you say here that your median is—you have a winter median, an annual median, a summer median. How does that fit into Tiers 1 and 2? Mr. Abendschein: I'm going to have to take a look at the winter median again, because last time I checked it was at 6. I don't know why our table is showing 7 here. We checked that over with the consultant as well. Chair Schmid: At six. Mr. Abendschein: Six is the breakpoint, if you think of that as the winter median ... Chair Schmid: If the annual median is nine, I would assume that in six you have 20-25 percent of the residents. Mr. Abendschein: Six CCF, for most residential customers it represents their year-round usage, their base load usage. It's their winter usage and it's the portion of the system that gets used year-round. Anything above six generally is seasonal. Chair Schmid: Everybody is in both Tiers 1 and 2. Attachment B MINUTES Page 7 of 28 Finance Committee Special Meeting Minutes 6/16/2015 Mr. Abendschein: Correct. It's actually not everybody. We do have a significant subset of customers who do stay within six. Is this helpful as far as the bill impacts of the normal year rate increases? This doesn't address the bill impacts of the Drought Surcharges, which we'll get to in a moment. If there are no more questions on that, I'm happy to move onto the Drought Surcharges. This is Slide 8. This is a challenging part of this proposal. We would have preferred to have presented the Drought Surcharges entirely separately from the normal year four percent rate increase, but we weren't able to do that this year. The Drought Surcharges are different from normal year rate increases. We present them differently. They're only intended to recover lost revenue due to lower sales during a drought. They're not intended to raise additional revenue. The four percent and the eight percent increases are intended to raise additional revenue. Council Member Kniss: If I might. That is what has people so puzzled. Why is it that you're charging me more when I'm using less? Mr. Abendschein: That's right. It's a good question and it goes to the issue that you're paying for the transportation rather than the water itself. You're paying for the pipes and the maintenance and all of those things that we have to do every year, rather than the water itself. Council Member Filseth: Is it as simple as the fixed costs being amortized over a smaller volume of water or is there more than that? Mr. Abendschein: That's exactly it. That's all there is. Council Member Filseth: That's all there is. There's nothing more. Mr. Abendschein: That's all there is to it. We're proposing rate schedules to deal with three different levels of water use reductions. We have a 10 and 15 percent level, a 20 percent and a 25 percent level. You might ask why the 10 and 15 percent level are the same. It has to do with the way water is allocated during a drought under our contract with the San Francisco Public Utilities Commission (SFPUC) We have a high—I'm sorry, what's the...The supply guarantee, that's the word I’m looking for. We have a higher supply guarantee relative to our usage, contractual supply guarantee with the SFPUC relative to our normal year usage than other agencies do. That benefits us during a drought. We end up seeing very similar water use reduction requirements under 10 percent and 15 percent system-wide Hetch Hetchy water use reductions. That's why those are the same. We want these surcharges to be on the rate schedules all the time, updated every time we update the regular rate schedules. When we get into a drought, they could be activated by separate Council action. I'm moving on to Slide 9 here. Because of the Governor's requested mandate that we cut water use Attachment B MINUTES Page 8 of 28 Finance Committee Special Meeting Minutes 6/16/2015 24 percent from calendar year 2013, we're recommending activation of the surcharges at the 20 percent reduction level. You might ask why 20 percent instead of 25 percent. The answer is these are calculated as a reduction from a normal year, a 20 percent reduction from a normal year. Calendar year 2013 was an above average year. It was very dry. We sold a lot more water than we normally would have sold. Activating them at the 20 percent level, which is a little bit confusing, recovers exactly the revenue that we need to recover. Because we would be activating these in September rather than July, we would be drawing down reserves to recover some of the lost revenue. We're comfortable that we can accommodate that within the financial forecast. Moving on to Slide 10, unless there are any questions on Slides 8 or 9. When we look at the bill impacts of Drought Surcharges, you have to think about three different customers. When we activate these Drought Surcharges, there are three different types of customers you need to think about. There are customers who are not conserving and then choose to start conserving. Those customers will see a bill reduction, even with the Drought Surcharges. You see customers who have not conserved and choose to continue not to conserve. Those customers will see a bill increase. There are customers who are already conserving, and we have a lot of those. Those customers will see an increase in their bills. This is where the public communication gets very complicated. Essentially these customers are going to be doing better than customers who are not conserving, but they're not going to be doing as well as they were before. Council Member Filseth: I have a question. I'm sure this is fiendishly complicated and that's why (inaudible). Did you guys look at the possibility of somehow taking that into account and normalizing it for cubic feet per head in household? I don't know; something like that. Just for that case of the person who says, "Now wait a second. I've had three bricks in my toilet, and I only shower every other day. Meanwhile, my neighbor with the swimming pool, with the two swimming pools, is going to get a rate cut, and I'm going to have to pay more." I assume there's no simple way around that. Mr. Abendschein: There isn't a simple way, but we did take that into account. When we did the Drought Rate Design Guidelines, we said we're going to ask for lower levels of conservation from smaller users. That's built into these Rate Schedules. You can see it's exhibited in the Drought Surcharges as well. The surcharge for Tier 1 is a lot lower than the surcharge for Tier 2. Council Member Filseth: That's a very important message. If you're already conserving, you're being asked to do less than somebody who is not. I hope that comes out in the communications. Attachment B MINUTES Page 9 of 28 Finance Committee Special Meeting Minutes 6/16/2015 Mr. Abendschein: Absolutely. We have examples here. Our Communications Manager couldn't be here tonight, but we have some examples of communication pieces that we've been developing. We're happy to share that with you. Council Member Kniss: That you're going to put in the bill? Mr. Abendschein: Yeah. We'll have it available online as well. That's it. We're preparing a communications plan. We have some examples; this isn't all the collateral that we're going to have put together. As part of the communications, one of the things that we do hear from customers is that there isn't any economic incentive right now for people to conserve. There are people who feel like they're doing their part, but others have not faced an economic incentive. They may be paying a higher bill, but they may be glad to see those surcharges in place. Council Member Filseth: From a macro level, it's hard to think that anybody's going to be surprised to see water getting more expensive, given the context of everything we've heard in all this (inaudible). Mr. Abendschein: No, I don't think so. Council Member Filseth: I wanted to ask another question. The way that I read this, the Drought Surcharge and the rate increases don't completely cover the cost, and we're going to make up some of that from reserves. Mr. Abendschein: That's correct. Council Member Filseth: Why would we not increase it so it covers (inaudible) reserves? Mr. Abendschein: This year it's a practicality. We're adopting the surcharges starting September 1st. We want them to be at a level where we're only going to be recovering our revenues if the drought extends on year after year after year. We would have had to try and set them above our long-term revenue recovery level to make up for those two months. It's perfectly reasonable, we thought, to take a little out of reserves. Ms. Fong: The reserves are covering a couple of high-use months, what would normally be high water use months because we're not starting the surcharge until September 1. Mr. Perez: You're expecting it to cover the minimum anyway, right? Mr. Abendschein: Yes. Attachment B MINUTES Page 10 of 28 Finance Committee Special Meeting Minutes 6/16/2015 Chair Schmid: I wondered if before we got into detailed questions, it might be good to hear from Chair Foster to share where the UAC was on this. Jonathan Foster, Utilities Advisory Commission Chair: I'll just say a couple of things. Happy to answer any questions that arise. The UAC has looked at Water Rates over an extended period of time. It is a subject that keeps coming back unfortunately. I would say the UAC, all of us, would like to do anything we can to avoid rate increases in general. The reality of life here is we're getting hit with a double whammy. We've got the reality of the increasing costs coming to us from the San Francisco PUC, leading to the underlying rate increases, and then the drought mandates as well. None of us like to do this. We were, for example, very pleased that last year we were able to avoid rate increases in any of our utilities. Obviously this is not the year with respect to the Water Utility. We certainly looked at it; we asked the kind of questions you're asking, and then unanimously endorsed the Staff recommendation. It's painful, but we think it is the right choice. To the point for the conserving customers, they will be largely shielded from the Drought Surcharge increases. Chair Schmid: Were there any particular issues that you spent time on, going back and forth? Mr. Foster: To be honest, we went through it in the detail of the underlying rate increase, the drought increase. I do not recall anyone saying—our heads were getting around it. It is complex, but I do not recall anybody saying we ought to do it a different way. At the end of the day after you've absorbed what is being recommended here, it did appear to us that it was the best approach possible. Nobody on the UAC said, "Aha! Here's a better way to do it." Chair Schmid: That's important given the fact that, as you say, you've been doing this for years. Mr. Foster: We have. We would love to come up with a better approach, but we couldn't. Chair Schmid: If there are questions about the UAC. Herb Borock: Thank you, Chair Schmid. I have two concerns about whether these rates are proper under Proposition 218. The first has to do with the separation of the potable water service being proposed for these rates and the recycled water service that the City's currently using for some irrigation and that a couple of private companies are using and then selling for a profit to others. The court decision discussed this in the factual context of capital expenses for recycling. I believe that it applies whether there isn't any Attachment B MINUTES Page 11 of 28 Finance Committee Special Meeting Minutes 6/16/2015 additional expenses on a recycling program or whether there are. The City has both factual situations. First, let me read what the court decided. It said, "The trial court assumed that providing recycled water is a fundamentally different kind of service from providing traditional potable water. We think not. When each kind of water is provided by a single local agency that provides water to different kinds of users, some of whom can make use of recycled water, for example cities irrigating parkland, while others such as private residences can only make use of traditional potable water, providing each kind of water is providing the same service. Both are getting water that meets their needs. Non-potable water for some customers frees up potable water for others. Since water service is already immediately available to all customers of city water, there is no contravention of Subdivision (b)(4) in including charges to construct and provide recycled water to some customers." In fact, that's what we do for the Capital Improvement Programs that we have for considering for future recycled program. It's in the water fund Budget, and it comes out, those expenses, in these rates. We are also currently providing recycled water separately as if it is a separate service. What that means is that those using that service, such as the City irrigating the Golf Course or Greer Park or some private company getting it, are not paying their share of the water service fixed expense for the potable water. That doesn't comply with Prop 18. It is one water service. The second concern I have is that you seem to be trying to do three different things with these Drought Surcharges. Under Proposition 218, the fees are charges imposed on a parcel shall not exceed the proportional cost of the service attributable to the parcel. What we're also doing is something that the court said not to do, which is to try and figure out your rates by saying, "We have to get this much money," and then try and have a rate structure that does that. The third thing is we're talking about conservation. There's nothing in 218 about that. In fact, the court case rejected the argument made by the City in this case and that I was making myself earlier that the constitutional requirement for conservation could be balanced with Prop 218. They went through the history of that part of the constitution. They said, "No." We are saying, on the one hand, we need to charge a Drought Surcharge because people are not going to be using as much water and, therefore, aren't incurring the fixed expenses. If you do use exactly the same amount as you did before, we're going to give you a higher surcharge. You're going to be paying a bigger surcharge, whereas, before if you used that amount you were covering the fixed charges. We're also saying to others that we're going to motivate you to use less and if everyone uses less, maybe those surcharges wouldn't be high enough. I have some problem with how this surcharge complies with Prop 218 and how we're trying to sell it to the ratepayers in terms of conservation when that is not how you go about setting rates Attachment B MINUTES Page 12 of 28 Finance Committee Special Meeting Minutes 6/16/2015 including with the decision in this court case that conservation is not something to do. Thank you. Council Member Kniss: Mine, as I said, is a wind back question. I remember when we began this a couple of years ago. The discussion was about where were we in the drought and where were we as far as Hetch Hetchy. As we look toward the future, what do we have, what have we contracted for and how long can we go on in this drought? Is it year 4 or year 5? Mr. Abendschein: It depends on where you look at it. A lot of people would say year 4. One of the ways to look at this is how many years do we have left in storage. We have 3 1/2 years of storage. We would expect to be able to use that for substantially longer because of conservation measures. Council Member Kniss: Maybe we can stretch it out 4 1/2 or 5 years? Mr. Abendschein: If not longer. Council Member Kniss: Herb's point is interesting. The more our group conserves water, literally long term, we will have to charge more. It's just what you said earlier. There's a fixed cost and if you're not using enough, then long term you will get, I would think, penalized. There must be a better word to use than that. The less you use, the more it is going to cost long term. Mr. Abendschein: I'll say two things about it. Number one, when we as a City use less, it frees up more capacity for other users in the Bay Area. If those other cities build out, they're going to be taking on more of the cost of the Hetch Hetchy water system. We actually will save some money. If we as a City... Council Member Kniss: I hadn't thought of that. That's even taking it a step further than I certainly would have thought. Mr. Abendschein: You have to look at those long-term trends when you're thinking about this. In the short term, yes, when we cut usage by quite a bit, we end up having to add surcharges back to recover our fixed costs. Council Member Filseth: Your rate goes up, but your bill doesn't go up (crosstalk). Mr. Abendschein: Right. That's another key—yeah. The other thing I'd say though is that we've had some challenges recently with communicating these things. People see themselves as conserving either through water Attachment B MINUTES Page 13 of 28 Finance Committee Special Meeting Minutes 6/16/2015 efficiency or because of the drought, then their bills continue to go up. They believe that that's happening because they conserved. The problem is we're asking them to conserve at the same time as our costs are going up. Even if they hadn't conserved, their bills would have gone up. Trying to communicate that is something we have to also work on. Council Member Kniss: One other thing. I don't remember how much of our waste water goes to Mountain View. What is it roughly? Ms. Fong: Our recycled water? Council Member Kniss: Yeah, recycled. Mr. Abendschein: The vast majority. They paid to build that recycled water pipeline. Council Member Kniss: One of the things Herb talked about is people who are getting the recycled water, is there an increase in their cost? Mr. Abendschein: We have very few recycled water customers. It's almost entirely City usage. Council Member Kniss: That's what I meant. It's Mountain View, so do we charge them any more as our rates are going up for the infrastructure? It's their infrastructure I realize. Mr. Abendschein: We have very few costs associated with recycled water. We've recovered those directly from the customers who are using the recycled water. When we eventually build out our recycled water system, we're going to have to give a lot of thought to our Recycled Water Rates. We don't have recycled... Chair Schmid: I think Herb was making the point that water itself is a value, and that there's no difference to the user whether it's recycled or Hetch Hetchy. Shouldn't they be charged the same rates? Including our Recreation Department. Mr. Abendschein: Given that these costs are not associated with the Water Utility, we don't... Ms. Fong: You can't double recover the same water. Ms. Stump: If I may, just on that point. The San Juan Capistrano discussion is very specific to what was going on in that jurisdiction. It's difficult to generalize. Again, very fact specific these questions. What was happening there is that they had a recycled water system that was available Attachment B MINUTES Page 14 of 28 Finance Committee Special Meeting Minutes 6/16/2015 to some customers and not to others. Some customers who didn't receive recycled water said that system was not a cost of serving them. The Court said in that particular case, because in that system the provision of recycled water to one group of customers freed up additional potable water that was provided to others, the constitutional requirement was met. The court was looking at some very specific language in Prop 218 that said that Cost of Service only can include facilities that are immediately available to the user. This was intended to prevent charging for when you don't have a hook-up at all, when you're not on the system. The court said that was not intended in this particular situation. It did support some flexibility for development of infrastructure and charging that to the rate base when it benefits all. Council Member Kniss: If I could just push on it a little more. We know that there are a number of wells in the City. How are we addressing water use from the wells? Or aren't we? Ms. Fong: What we've been informed by the Santa Clara Valley Water District is there are about 200 wells in the City. The Santa Clara Valley Water District charges pump fees to those well owners who pump. Groundwater here is managed by the Santa Clara Valley Water District. Chair Schmid: Let me raise a couple of issues. As came out in the discussion, the messaging is complicated and how you use words around it. The Drought Surcharge, people associate that with not maintaining the fixed revenue, but rather we need to cut back and this is a Drought Surcharge. Maybe using a different term for that would make the messaging clearer. We have to pay for the Hetch Hetchy rebuild for seismic safety. We have to cover what we're losing. Council Member Filseth: Calling it a Drought Surcharge is a really simple message. It's a drought; water costs more. Everybody's going to get that. Although, the mechanics are more complex. Ms. Fong: Jon, you're going to correct me if I’m wrong here. The fixed costs that we're covering are our own, not SFPUC's. The SFPUC costs are recovered in the SFPUC rates. For us, it isn't about recovering Hetch Hetchy costs; it's about recovering our own distribution costs. Chair Schmid: Our own distribution costs are 25 percent of the SFPUC number. Mr. Abendschein: About 50 percent. Half of our costs are distribution. In the total rate, about half the costs are distribution related; half are Hetch Hetchy system related. Attachment B MINUTES Page 15 of 28 Finance Committee Special Meeting Minutes 6/16/2015 Chair Schmid: I guess I saw a different number. Council Member Filseth: There's been a lot of publicity in the last couple of years about seismic upgrades to Hetch and Hetchy and the costs of those. Mr. Abendschein: Maybe where the confusion is coming is that most of the increase in our rates, almost all the increase in our rates, is related to the Hetch Hetchy upgrade. That may be where that's coming from. Chair Schmid: I'm concerned about the next step. The State and the PUC have said there might be fines associated with not meeting the targets that have been handed out. That is a drought penalty, and the message there is if we don't meet the 25 percent, we will be fined substantial amounts. That's a clear message, but we haven't got that yet. To use up the drought message on something that is not this mandated fine might bind us when the squeeze comes. Mr. Abendschein: The squeeze is on already. From June 1st until next February we will be measured against that 24 percent, and we may be fined. (crosstalk) Chair Schmid: That's what I’m talking about. We haven't had a fine yet. Ms. Fong: Correct. What the State will look at, the Water Resources Control Board, is whether or not we did a bona fide effort to try to achieve the reductions that were assigned to us. We've been aggressive in everything we've been doing including our rates. Beyond all that, all of our programs, all of our messaging, our enforcement of the two days per week watering, we've been very much out in front of a lot of other agencies. That will weigh in if we don't hit the 24. Our customers have been just amazing, and we're trying to be optimistic that we will hit the 24 percent target. If we don't, the State will look at what we've done. Chair Schmid: I was struck by the Sunday Chronicle article where the San Francisco PUC, when the Governor cut back water allocations, said if you had a claim by 1904 you were grandfathered in and the PUC has a 1902. They then interviewed the head of the PUC who said, "We're going to fix that in the summer and that date will no longer be protective." I don't want to be a pessimist, but I assume that there will be a ruling in the next couple of months saying that Hetch Hetchy water is not protected. That was the clear implication (inaudible). Ms. Fong: These legal actions—maybe Molly might know a little bit more. Maybe it's so fresh she hasn't had a chance to look into it yet—are going to Attachment B MINUTES Page 16 of 28 Finance Committee Special Meeting Minutes 6/16/2015 be ongoing. That's for certain. I wouldn't want to speculate on what's going to happen there at this point. Chair Schmid: That's not what we're talking about tonight. It is out there in terms of the messaging, that we've got to be prepared for the next steps. One other thing that flows from that is the Plan Bay Area. Does the City have an attitude toward the impact of the drought on planning for the future of the Bay Area and having that as a critical input to how fast California grows, how big California can be, how many new ... Mr. Abendschein: We probably want to have the Planning Director weigh in on regional planning issues. Ms. Fong: Exactly. We're probably not the right folks to answer that question. Mr. Abendschein: We know what our water allocations are. We know what our water rights are. We know how that fits into our development. Regionally, I'm not sure we're prepared to comment on that. Council Member Filseth: You're asking the question of what's the relationship between water consumption and population growth. I assume Plan Bay Area is like, "We don't worry about that." Ms. Fong: I don't know. Mr. Abendschein: I think they do. Chair Schmid: The Santa Clara Valley Water District has announced that they will participate in the Plan Bay Area discussions. Ms. Fong: I don't know that we're necessarily tied into that right now. For every development that is brought forward, we do a water supply assurance study. We are part of the development impact assessment. Chair Schmid: As we go down the drought road though, that might be an issue that comes out. Ms. Fong: That gets considered. Chair Schmid: Plan Bay Area is especially significant because they start the process this summer. The question is will water be a part of the discussions. It would be helpful to have it there. One last question, you say that we will draw a little bit on reserves. I did not see any financial numbers in here. What are the reserves we have, and how much would be drawn? Attachment B MINUTES Page 17 of 28 Finance Committee Special Meeting Minutes 6/16/2015 Mr. Abendschein: It would take me a minute or two to bring up the total reserves numbers. Right now, they're well above the minimum. The $600,000 doesn't take us all that close to the minimum. In fact, we have a fair amount of reserves that are set aside for Rate Stabilization and Capital Improvement Reserves as we finish up this water system master planning study in case there are some additional projects that we have to fund as a result of that. We're comfortable with our reserves right now. What it may result in is a slight acceleration of future rate increases, because we don't have as much available for Rate Stabilization. We'll be very comfortable with our Operational Reserves. Chair Schmid: Given we're the Finance Committee, it would be nice if, when it goes to the Council, you could have a paragraph on the amount of the reserves. Ms. Fong: Okay. Mr. Abendschein: Not a problem. Chair Schmid: Are we ready for a Motion. Council Member Kniss: I think we are. Do you want me to read the whole thing or would you ... I'm on Page 3 and under the recommendation: “That's to adopt a Resolution, Attachment A, amending rate schedules and so forth, and adopt a Resolution, Attachment C, activating the Drought Surcharges”—I guess we're staying with that word—“at the 20 percent reduction level effective in September.” Is there a second? Chair Schmid: I will second that. MOTION: Council Member Kniss moved, seconded by Chair Schmid to recommend the City Council: 1. Adopt 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) to add Drought Surcharges and increase rates four percent effective September 1, 2015; and 2. Adopt a Resolution activating the Drought Surcharges at the 20 percent reduced level effective September 1, 2015. Chair Schmid: As the UAC said, we're coming out of a period of time where we've had very low utility increases. We have seen substantial increases on Attachment B MINUTES Page 18 of 28 Finance Committee Special Meeting Minutes 6/16/2015 the wastewater and the refuse and certainly on this. Now we're asking for three separate increases, an 8, a 4, and a 20 percent surcharge. It is important and significant and likely to have some questions coming in on that. Appreciate very much the background material. Council Member Kniss: Did we vote? Chair Schmid: No. Just putting a word in. The communications is important. It's good to see you preparing the way for that. We'll get some public input when these rate bills start coming in. We're aiming for a discussion of the surcharge in August. There'll be a public ... Mr. Abendschein: On August 17th, there'll be a public hearing. Chair Schmid: All in favor? That passes three to nothing. MOTION PASSED: 3-0, Scharff absent 2. Amendment of Municipal Code Section 2.28.080 Regarding City Council Budget and Table of Organization Amendment Approvals. Walter Rossmann, Office of Management and Budget Director: Good evening, Walter Rossmann, Budget Director. Just a short presentation to summarize the item in front of you. As you know, we just adopted the Budget yesterday. Thank you for your support during the last few weeks to get the Budget through Finance Committee. Then what we do is once we adopt the Budget, we have a midyear Budget review which it comes to you usually in February. We make some major adjustments to some funds as it may be in order to update you where we stand after six months of the Budget being passed, how much expenditure, how the revenues are coming in. Throughout the year, we do have Budget Amendment Ordinances. They could be to any kind of Fund, the General Fund, Special Revenue Funds or Enterprise Funds. The reasons are primarily unexpected events. It could be a housing development which gets negotiated by the Planning Department. It could be a grant we receive; we want to recognize those funds and we want to expend those the same fiscal year. It could be something which we sometimes forget to put in the Budget, something we didn't realize we needed to do. The way we do this currently is through a Budget Amendment Ordinance. That means that we produce a separate document attached to the City Manager Report (CMR). Then this Ordinance gets routed after it gets produced. If it reflects the same information in the actual CMR, it's duplicative work. Then what we do is, once the Council approves the Ordinance, it gets routed for signature and it gets filed. What other cities do, and that's what I'm here proposing to you today, instead of adopting a change to the Budget and to the Table of Organization, which Attachment B MINUTES Page 19 of 28 Finance Committee Special Meeting Minutes 6/16/2015 reflects authorized positions, we do it by Ordinance or by Motion, which doesn't mean any change from the Council's perspective, your vote. However, it does make a change for us at the Staff level that we have to produce one document less and we don't have to route it for signatures. I request your support for this item. Thank you. Chair Schmid: The goal is just efficiency, of being able to operate and having top-level time available for other things than doing duplicate reports. Council Member Kniss: You're skipping a step that expedites it. Mr. Rossmann: That's correct. We are skipping a step; it's efficiency. It's taking City Staff time towards more higher level work. Council Member Filseth: Any reason not to do this? Any downside? Mr. Rossmann: Not from my side. I checked with the Attorney's Office; they're always in support for that. The cities who do this, the City of Santa Monica, the City of San Jose, the City of San Diego. They do this type of work by Motion. Herb Borock: Thank you. I oppose this proposal. As the Staff Report indicates, you'll be saving a trivial amount of Staff time. In exchange, making it harder to find out what the historical record is of what City actions are. All that's going to be in the record, if you find the right Action Minutes or look at the right videotape, then you'll know this action has been taken, as opposed to having a numbered Ordinance that's kept as historical record that are easily accessible for the public. Sometimes I get the feeling in bureaucracies that there are two tendencies which I believe are bad. The first is that when an action is taken, such as the Council voting on it, then that's the end of the story and you should forget about what's happened. In government, the responsibility to the public is keeping an easily accessible historical record of what you've done. The second tendency in some bureaucracies is if somebody comes up and asks for something, some document, then the assumption is they must have done something wrong as opposed to someone just wanting information. If you make things harder to find, you have that attitude, these are one way. Those of you who haven't been on the Council for the past 15 years have not noticed this change until you come to some Agenda item and ask the City Staff for the history of what's been going. Unless they went to Bob Moss' house and looked in his file cabinets, they wouldn't know about the single-story overlay. Since you've made the change in minutes, you've not had the Action Minutes on your Agenda for approval. What is someone supposed to do? Go to the Clerk's website and look for a specific one if it's been posted yet and it's not signed by anyone as being official. This is part of the same pattern. In Attachment B MINUTES Page 20 of 28 Finance Committee Special Meeting Minutes 6/16/2015 terms of calling this a trivial amount of Staff hours saved, I'll give you an example of some positions that have not been filled for a period of time in the organization. The two Assistant City Manager positions were approved in the Budget last year. It went on for about ten months before there were appointments made. I believe the only reason they were made when they were made was because it was just before the new Budget coming out. Can you imagine someone coming to you at your first Budget hearing with those positions both being vacant and saying why are these two even in the Budget? Look at how much money we can save. We saved it all year already. Other examples. I think it's been about five years since we've had a permanent Assistant Chief of Police, yet it's in the Budget. One of the two Captains has been serving as an Acting Assistant Chief of Police. A position in the Planning Department, in advanced planning which now is called long range planning, was vacant for a long time because the Director was not given the authority to fill the position even though it was in the Budget and authorized by the Council. That's just examples. It's throughout the organization. To come in here and say, "It's an hour of time we're going to save," it doesn't make sense that that's even the reason why it's being done. It's one more step in making it harder to find out what the Council is doing. Not just for the public but for future Council Members. The only way you can have a historical record is if there is a written record that's easily accessible and a Staff that is able to access that history. I would suggest that you reject this proposal. Council Member Kniss: I'd be interested in Walter's response to Herb's comments. Chair Schmid: Let me make a point. I was going to bring up the same thing. I can recall being concerned about the parking district and the parking rules. I went to the City website and put in—someone had told me that the original thing had been done in 1998 or something. I entered that into the website. It took me back to a couple of Ordinances that were very clearly decisions by the Council about the parking district and about traffic that became very important in my thinking. The question is if we shift to, and we give some examples here. Mr. Rossmann: Attachment C on Packet Page 58. Chair Schmid: Of shifting from an Ordinance that Google categorizes by title and you end up with that. Would I be able to find it, with the track backwards 5 years, 10 years, 15 years, being good enough to get me to that Page? Attachment B MINUTES Page 21 of 28 Finance Committee Special Meeting Minutes 6/16/2015 Mr. Rossmann: That probably depends on how you search for information. The way I do it, I go to the City Manager Reports and I pull it up through the CMR. What the City Manager Report shows you is the actual transaction right as it's proposed here in Attachment C. The actual financial transaction is included in the recommendation language. The historical record would be the City Manager Report with the recommendation language as approved by the Council. That also becomes the record for the City Clerk's Office. Versus having the same information of the recommendation language and have an Ordinance as well. Lalo Perez, Administrative Services Director and Chief Financial Officer: One of the things that we started recently, Chair Schmid, is also listing the Budget changes or amendments that we made in our quarterly reports. What we could do is expand the data that is there, if that's something that is needed. I'm trying to think out loud with you as to what else we would need. That way there's a chronological listing of all the Budget amendments in our financial reporting that could be looked at. Chair Schmid: Something like that that can become a tracking device; you would know where to go. Mr. Perez: I would guess, given that we don't have the tagging mechanisms in our systems as of yet, that that would be probably an easier search because you can say, "I'm going to look for Fiscal Year 2014, see what Budget changes were made." Chair Schmid: You would have that on an annual basis, quarterly? Mr. Perez: It would be quarterly and then the annual one would have the summary of the year by fund. It would not just be one fund; it would be all funds. You could go look there and we could reference the CMR maybe, because there won't be an Ordinance anymore. We would reference the CMR, and the person that is looking for the infrastructure could get the information. Chair Schmid: You would need a date to do that effectively. Mr. Perez: We could add the date Suzanne Mason, Assistant City Manager: Chair Schmid, Council Members, Suzanne Mason, Assistant City Manager. I do want to share from an administrative perspective our world has changed. The electronic world we're in is very different than when we started with hard record Ordinances. Our search capabilities are open government approach. It's transparent. From my experience in the past, having individual Ordinances sometimes are Attachment B MINUTES Page 22 of 28 Finance Committee Special Meeting Minutes 6/16/2015 not as easily accessible as the Staff Reports in the Council meeting. In our City, we're trying to make everything accessible, but we're also trying to take out manual process where we've implemented electronic approaches to managing data. We're crossing over from one world to another. From a legal perspective, this is an adequate way to record the change. From an electronic perspective, we should be able to find those changes readily. Chair Schmid: I'm just taking it from the perspective of a Council Member, and there's continual change on the Council. People come without that historical experience and background. It took me five years to find some of these things, when you finally get enough searchable information that you can go back and find it. I'm trying to think of how to facilitate that process, whether a new Council Member or a new Member of a Commission or a citizen who is concerned about something can find an easily searchable path to answer the question of where did this come from. Mr. Rossmann: If I may add one more thing. It's actually easier for the recommended process to search information because the Budget Amendment Ordinance number is assigned after the Council adopts the Budget Amendment Ordinance. If you were to know that number, which we currently reference in the report, you couldn't find it online. You'd have to find the title of the CMR. With the process which Lalo is recommending, by listing the title to the CMR which reflects the item, the CMR number immediately creates a link to the website, where we can more easily find the information. The new process will enhance your idea. Chair Schmid: I'll make a suggestion that we—I'm not sure who the right person is to do it—just draw up a page about that issue of online searching for public, Council Members, Commission Members, trying to track and state what you're asking for might improve or help those types of searches, so that we enter this with a clearer notion in mind that what we're trying to do is open up the process and make it more available rather than make it more difficult. Mr. Rossmann: If the Chair agrees with that, we could as a recommendation to the full Council provide a summary of that as part of the Staff Report. Would that work for you? Chair Schmid: Okay. Council Member Kniss: It's such a good conversation. I hear what you're saying, but I've already noticed that I'm missing the minutes. Either we're getting verbatim minutes which take that much to get through or we're just getting Action Minutes which just says this is what you did. We're also going to be missing the discussion of why we did the Budget amendment, if there Attachment B MINUTES Page 23 of 28 Finance Committee Special Meeting Minutes 6/16/2015 is any discussion in our minutes. Maybe Suzanne is right. Maybe all this is going to be electronic and be easily found. It isn't always the case so far. Maybe in the future everything is going to fall into place. Chair Schmid: The minutes are a different issue. That involves the Clerk's Office. Council Member Kniss: They're a different issue but the same issue, because we're talking about history. Chair Schmid: Yeah, about finding things. Council Member Kniss: We're trying to find out what went on and what was said. I don't want to lose any of the history that's in here because we want to be expedient. Council Member Filseth: Herb is basically asking a question, if I understand it right, about transparency. It's a very low level transparency issue, but it's finite. I was waiting for you to suggest implementing the recommendation here and implementing the process that Lalo is suggesting be one thing. Is that where you were going? Chair Schmid: Yeah. Mr. Rossmann: We can do that. That will be fine. We could provide you a sample as part of the next Staff Report, which will document that for you. Council Member Filseth: Am I allowed to ask members of the public what they think? Chair Schmid: Sure. Council Member Filseth: Herb, what do you think? I was talking about proceeding with this, but increasing the transparency. Mr. Borock: You can start by removing the robot exclusion from the City's website so the internet archive can again make available both what it has, crawl through and did have when the current contractor started working for the City, Civica. I use that and I made the mistake of accessing the City's address rather than the cached one that was at the internet archive. Somebody, I assumed it was the technologist at the City but it could have been the contractor, decided in response to getting requests for addresses that no longer were being serviced, they put a robot's exclusion and that didn't just stop the internet archive from archiving current and future, but also stopped access to everything prior. Make stuff available on the internet archive, we can find it. We don't have access to the same computer Attachment B MINUTES Page 24 of 28 Finance Committee Special Meeting Minutes 6/16/2015 systems you do when you go search for things. That's what I would suggest. If you want to be transparent and figure out a way, happy to work with Information Technology to see what is the easiest way and what kind of help you may need. I would support funding for it to make those prior internet addresses that the City had used in various formats to access material in the past. They're not doing it now. The archive website is still available if you know how to access it, but it's not being supported. That still doesn't go back and cover all the things that were on the way-back machine, the internet archive. That's a level of transparency. Chair Schmid: Yeah, I think that is a broader issue. Mr. Borock: Let us see it. There'll be someone who has a business of doing that and is in the business of that. That's many years where that hasn't been available. It was stopped when somebody tried to use it to access a City document. Chair Schmid: You're asking for one particular piece, the Budget Amendment Ordinances (BAO), to be made more efficient. In a way you've opened up an issue. It would be helpful if you could take that piece, the BAO piece, and try and help us sort through what issues arise from this. That might be helpful. Suzanne, it might be helpful from your perspective to take a look at that and see if there's other steps that we could think about. Mr. Perez: In general terms of transparency, I see us improving. One of the things that we've done for example—I don't want to digress from the Agenda item too much—to give you and the public some assurances that we're working on that and that's our target is that we have, for example, OpenGov which we had our proposed Budget available for the community to look at online if they wanted to and look at the historical and do comparisons and trending and download the data. Our salary, there's four years of salary. You can look up any individual that's employed by the City of Palo Alto or has been employed over the four years. In the big picture, we're heading there. Its work in progress, as Suzanne mentioned. Unfortunately with some of the older documents, it's hard because of the way they were archived. They're not searchable, because they're not tagged. Technology is improving, and we're able to get there. It's going to get better. The way I look at is we're working with the people's money, and we want to be transparent about how we manage those funds and how people find it. That was the reason why we went with OpenGov because we wanted people to see the Budget at the lowest possible level. If anything, we're fine with additional transparency. We're trying to find the vehicle to do it in a good efficient manner. Attachment B MINUTES Page 25 of 28 Finance Committee Special Meeting Minutes 6/16/2015 Chair Schmid: We want to help you be more efficient. At the same time, it's raised some very interesting questions. Kim, you might note that the Clerk's Office should be aware of the issue as well, because you are in charge of archives and how they're accessed. Can we make a Motion then? Council Member Kniss: I like the Ordinances, I have to confess. I'm not sure I'm in favor of making this change at this point. I'm not supporting it, but we could send it forth and see what the rest of the Council thinks. They might not have this wonderful deliberation time we've had. Chair Schmid: If we do have a dissent, that is not unanimous and would not go on Consent, but would allow you to write a broader memo and give the context and the benefits of having a different type of searchable archive of these Budget changes. It would be for full Council to make any decision. Council Member Kniss: I have to confess that Herb bringing up the single- story overlay, that we certainly missed some clues on, really troubled me. Why wasn't that pulled up easily? That has nothing to do with your Ordinance. It has to do with why couldn't we find something when we needed it. That's my issue. Council Member Filseth: We're verging in new territory here, which is broader than the Finance Committee. It does deserve more. As I think of it, when I was listening to Council Member Kniss, that's right. We're outside the domain of this group. It's worth a discussion in front of the Council, particularly with the Information Technology (IT) organization involved. What I was envisioning was it would come and there would be this explanation of we proposed to move away from using the Ordinance to track this. Here's what we're going to replace that with that's going to improve accessibility and transparency in this way. That's worth a discussion including more than Finance. Chair Schmid: If you feel comfortable putting that on the Council's Agenda, that's what we're looking for. If you've captured Eric's Motion. Council Member Filseth: I'd rather you made the Motion. You'll get the words (crosstalk) and I won't. Chair Schmid: Let me put down the recommended Motion that the Finance Committee recommends the City Council to amend the Municipal Code which would change the City Council Budget and Table of Organization Amendment approval from Ordinance to Motion. With that will come a description of the consequences for search and transparency of material for future Council Members, the public and Commissioners in the City. Attachment B MINUTES Page 26 of 28 Finance Committee Special Meeting Minutes 6/16/2015 MOTION: Chair Schmid moved, seconded by Council Member Filseth to recommend the City Council amend Municipal Code Section 2.28.080 titled “Amendments after Adoption” which would change the City Council Budget and Table of Organization Amendment approval from an Ordinance to a Motion, with that will come a description of the consequences for a search and availability transparency of material for future Council Members, the public and Commissioners. Council Member Filseth: I hope it's clear that it shouldn't come just as is and say, "Transparency has gone down." There should be ... Chair Schmid: Some description. Mr. Perez: Some examples. Council Member Filseth: What's the replacement? Mr. Perez: We know. Chair Schmid: Any help that you need from the City Manager's Office or the Clerk's Office, you could feel free (inaudible) intern. All in favor of that Motion? All opposed? Council Member Kniss: I'm going to abstain, because I want to hear this full discussion. Anyone else voting? MOTION PASSED: 2-1 Kniss abstain, Scharff absent Chair Schmid: I want to make sure it goes to the Council (crosstalk). Council Member Kniss: It will. Mr. Perez: It would, yes. Council Member Kniss: There are two of you with one abstention. It goes on. Chair Schmid: Greg Scharff has made the point before that you need a negative vote in order to go on the Action Agenda. I want to make sure it gets on the Action Agenda. Ms. Mason: The Committee can recommend, even with a unanimous vote, that it be placed on the Action. That's what the Staff understands. Chair Schmid: Yeah, I think your point is correct. Attachment B MINUTES Page 27 of 28 Finance Committee Special Meeting Minutes 6/16/2015 Mr. Lalo: It's an Action item to us. Council Member Kniss: One of the things you could do, if I might say so, is do a demo for us. Just as interesting, you put it all in writing, do a demo, show us how it changes. Pull it up. Do the ... Mr. Rossmann: Do a dog and pony show. Council Member Kniss: Yeah. It helps to do the dog and pony show. It really does. Future Meetings and Agendas Lalo Perez, Administrative Services Director and Chief Financial Officer: You have your break, as you know, so we do not have a meeting in July. Our next scheduled meeting is August 18th. At that point, we'll be bringing you the third quarter Financial Report, which will include the listing of the Budget Amendment Ordinances (BAO). We're going to bring to you a more expansive City Debt Policy. Currently, we have a City Debt Policy, but it's pretty narrow, pretty simple. As we are talking about expanding the issuance of debt, we believe that it's important and something that the Finance Committee had asked us to. We're finally ready to do that. We'll be bring that to you on August 18th. Currently there's nothing on the Agenda for September 1st. Chair Schmid: You have the pension and retiree. Mr. Perez: Sorry, let me correct myself. We had pension and retiree on September 1st, but City Manager Keene will be absent that day, so we're moving those items to September 15th. We believe that you would probably want to make sure that he's here for that discussion. Suzanne Mason, Assistant City Manager: He wants to be here for that discussion. Mr. Perez: Thank you. He wants to be here for that discussion. We also will have Mr. John Bartel joining us. The Council has found it very useful to have Mr. Bartel share his experience California-wide on these two issues. We're preparing documentation internally. We anticipate being able to meet that date of September 15th with a bit of a caveat that it is the summer break and some of us are gone. We're going to try our best to make sure we have the discussion. Personally I see it that this is the beginning of multiple discussions about this subject obviously. Attachment B MINUTES Page 28 of 28 Finance Committee Special Meeting Minutes 6/16/2015 Chair Schmid: It has been brought up numerous times. It's great to have this well before you get into the Long Term Financial Forecast because it's such an important piece of thinking about our future. Mr. Perez: That's as far as I’m going right now. As we get more Agendas, we'll report on them in August at our first meeting. Council Member Kniss: I missed it. You're moving the pension to the 15th, but what is on the 1st? Mr. Perez: Right now there's nothing else scheduled on the 1st. Council Member Kniss: Right now, the 1st is not scheduled or it is scheduled but nothing's on it? Mr. Perez: Correct. Let's leave it on the calendar. Council Member Kniss: Cancel if necessary. Mr. Perez: In August, we'll cancel if necessary unless there's a scheduling conflict that the committee is aware of. Chair Schmid: After May, we've earned a couple of weeks off. Council Member Kniss: I am gone September 1st, if that (crosstalk). Mr. Perez: You are? That helps. Council Member Kniss: That's why I was pushing on that. Mr. Perez: That's another reason why to move it to the 15th. Chair Schmid: We are looking forward to summer break. Mr. Perez: Thank you and enjoy your break. Chair Schmid: Thank you. Meeting is closed. ADJOURNMENT: Meeting was adjourned at 7:37 P.M. Attachment B NOT YET APPROVED 150325 jb 0131328 1 Ordinance No. _____ Ordinance of the Council of the City of Palo Alto Amending Section 2.28.080 (Amendments after Adoption) of Chapter 2.28 (Fiscal Procedures) of the Palo Alto Municipal Code to __________________ The Council of the City of Palo Alto does ORDAIN as follows: SECTION 1. Section 2.28.080 Amendments after Adoption of Chapter 2.28 (Fiscal Procedures) of the Palo Alto Municipal Code is amended to read as follows: 2.28.080 Amendments after adoption. During the fiscal year, the city manager shall amend the budgetary accounts of the city to reflect the following: (a) Additional Appropriations. By a two‐thirds vote, the council may make additional appropriations of receipts that are in excess of the total estimated receipts and appropriations contained in the adopted budget. (b) Additional Positions. By a majority vote, the council may add positions to the table of organization. (c) Transfer of Appropriations. (1) By a majority vote, the council may transfer part or all of the unencumbered balance of any appropriation from one fund, department, office, or capital project to another; (2) By written authorization, the city manager may direct the redistribution, within any department or office, of the unencumbered balance of appropriations within the departments or offices, provided that he or she shall not make transfers from the classification of utilities purchased for resale to any other object or make transfers between funds or transfers between departments without the affirmative vote of a majority of the council; (3) By written authorization, the city manager may authorize a transfer of appropriation from the unallocated balance of the contingent account to any department, office or capital project. Funds shall not be transferred between the general fund and the enterprise funds, nor between operating and capital funds. (d) Transfer of Positions. By written authorization, the city manager may transfer positions or assign personnel from any department or office under the control of the city manager to another in accordance with Article IV, Section 6(n) of the Charter. (e) Inter‐fund Transactions. In the event that appropriations and equivalent offsetting credits for allocated inter‐fund services or transfers are affected by amendments to appropriations for Deleted: by ordinance Deleted: by ordinance Deleted: by ordinance Attachment C NOT YET APPROVED 150325 jb 0131328 2 direct expenditures or estimated revenue, the city manager may make corresponding adjustments to the inter‐fund accounts so affected. (f) Salaries and Benefits. Amendments to the Employee Classification and Compensation Plan adopted by the council pursuant to Article III, Sections 12, 18 and 21 of the Charter. (g) Prior year Encumbrances. Appropriations that were encumbered by properly executed, but uncompleted, purchase orders or contracts at the close of the previous fiscal year may be carried forward and incorporated with appropriations of the current year. (h) Municipal Fee Schedule. By a majority vote, the council may, by ordinance, add or change fees in the municipal fee schedule. SECTION 2. The City Council finds that this ordinance is exempt from the provisions of the California Environmental Quality Act pursuant to Section 15061(b)(3) of the California Environmental Quality Act Guidelines, because it can be seen with certainty that there is no possibility of significant environmental effects occurring as a result of the adoption of this ordinance. SECTION 3. This ordinance shall become effective upon the commencement of the thirty‐first day after the date of its adoption. INTRODUCED AND PASSED: AYES: NOES: ABSENT: ABSTENTIONS: ATTEST: __________________________ _____________________________ City Clerk Mayor APPROVED AS TO FORM: APPROVED: ___________________________ _____________________________ Senior Asst. City Attorney City Manager ____________________________ Director of Administrative Services Attachment C