HomeMy WebLinkAbout2016-09-20 Finance Committee Agenda PacketFinance 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.
September 20, 2016
Regular Meeting
Community Meeting Room
7:00 PM
Agenda posted according to PAMC Section 2.04.070. Supporting materials are available in
the Council Chambers on the Thursday 10 days preceding the meeting.
PUBLIC COMMENT
Members of the public may speak to agendized items; up to three minutes per speaker, to be determined by the
presiding officer. If you wish to address the Council on any issue that is on this agenda, please complete a speaker
request card located on the table at the entrance to the Council Chambers, and deliver it to the City Clerk prior to
discussion of the item. You are not required to give your name on the speaker card in order to speak to the
Council, but it is very helpful.
Call to Order
Oral Communications
Members of the public may speak to any item NOT on the agenda.
Action Items
1. Adoption of an Ordinance Updating and Standardizing the Procedure
for Collection of Impact Fees by Amending Palo Alto Municipal Code
(PAMC) Title 16 (Building Regulations), Chapters 16.45 (Transportation
Impact Fee for New Nonresidential Development in the Stanford
Research Park/El Camino Real CS Zone), 16.46 (Approval of Projects
With Impacts on Traffic in the San Antonio/West Bayshore Area),
16.47 (Approval of Projects With Impacts on Housing), 16.57 (In-Lieu
Parking Fee for new Nonresidential Development in the Commercial
Downtown (CD) Zoning District), 16.58 (Development Impact Fees),
16.59 (Citywide Transportation Impact Fee), 16.60 (Charleston
Arastradero Corridor Pedestrian and Bicyclist Safety Impact Fee),
16.61 (Public Art for Private Developments), 16.64 (Development Fee
and In-Lieu Payment Administration), and Title 21 (Subdivisions and
Other Divisions of Land), Chapter 21.50 (Parkland Dedication or Fees
In-Lieu Thereof), and Finding the Action Exempt From Review Under
the California Environmental Quality Act
2. Staff and Utilities Advisory Commission Recommend That the Finance
Committee Recommend the City Council Approve the Proposed Low
Carbon Fuel Standard Credit Program, Including the Use of Revenues
From the Sale of Low Carbon Fuel Standard Credits
2 September 20, 2016
MATERIALS RELATED TO AN ITEM ON THIS AGENDA SUBMITTED TO THE CITY COUNCIL AFTER DISTRIBUTION OF THE AGENDA
PACKET ARE AVAILABLE FOR PUBLIC INSPECTION IN THE CITY CLERK’S OFFICE AT PALO ALTO CITY HALL, 250 HAMILTON AVE.
DURING NORMAL BUSINESS HOURS.
Future Meetings and Agendas
Adjournment
AMERICANS WITH DISABILITY ACT (ADA)
Persons with disabilities who require auxiliary aids or services in using City facilities,
services or programs or who would like information on the City’s compliance with the
Americans with Disabilities Act (ADA) of 1990, may contact (650) 329-2550 (Voice) 24
hours in advance.
Finance Committee Items Tentatively Scheduled
Meeting
Date
Line
No. Item Title Referral
Date
10/4/2016 Meeting Cancelled
10/18/2016 1 Carbon Neutral Gas Portfolio (Utilities)
11/15/2016
2 Year End Financial Report (ASD)
3 Comprehensive Annual Financial Reports (CAFR) (ASD)
4 FY18 General Fund Budget - Preliminary Budget
Balancing Outline
Finance Committee Items to be Scheduled
Referral
Date
Line
No. Item Title Status
2015
5
Consideration of Stronger Encroachment Fees for
Construction that Impact Portions or all of a City Street
or Sidewalk (Public Works)
To be
scheduled in
2016
6
Cubberley Center Master Plan: Additional Information
and a Timeline for the Site (requested by the FC) (City
Manager)
City of Palo Alto (ID # 7151)
Finance Committee Staff Report
Report Type: Action Items Meeting Date: 9/20/2016
City of Palo Alto Page 1
Summary Title: Impact Fee Muni Code Update
Title: Adoption of an Ordinance Updating and Standardizing the Procedure
for Collection of Impact Fees by Amending Palo Alto Municipal Code (PAMC)
Title 16 (Building Regulations), Chapters 16.45 (Transportation Impact Fee for
New Nonresidential Development in the Stanford Research Park/El Camino
Real CS Zone), 16.46 (Approval of Projects with Impacts on Traffic in the San
Antonio/West Bayshore Area), 16.47 (Approval of Projects with Impacts on
Housing), 16.57 (In-Lieu Parking Fee For New Nonresidential Development in
the Commercial Downtown (CD) Zoning District), 16.58 (Development Impact
Fees), 16.59 (Citywide Transportation Impact Fee), 16.60 (Charleston
Arastradero Corridor Pedestrian and Bicyclist Safety Impact Fee), 16.61
(Public Art for Private Developments), 16.64 (Development Fee and In-Lieu
Payment Administration), and Title 21 (Subdivisions and Other Divisions of
Land), Chapter 21.50 (Parkland Dedication or Fees In-Lieu Thereof), and
Finding the Action Exempt from Review under the California Environmental
Quality Act
From: City Manager
Lead Department: Planning and Community Environment
Recommendation
Staff recommends that the Finance Committee recommend the City Council adopt the attached
draft ordinance which implements 2015 Parking Funds Audit recommendations and updates
and standardizes collection of impact fees by amending Palo Alto Municipal Code (PAMC) Titles
16, 18 and 21 (Attachment A).
Executive Summary
This report transmits a draft ordinance containing proposed amendments to the Palo Alto
Municipal Code (PAMC) Titles 16, 18 and 21. These changes represent an effort to update the
code to:
• Provide uniformity amongst impact fees for rate calculations
• Provide uniformity amongst impact fees to annual inflationary adjustments
City of Palo Alto Page 2
• Improve administration
• Create uniform payment timing
• Clarify ambiguous code language
• Implement uniform protest procedures
As each impact fee was approved, new municipal codes were adopted. This has resulted in an
overly complicated impact fee calculation and update process. The proposed ordinance strives
to simply the process and to align the calculation and annual inflationary adjustments for as
many impact fees as possible. The actual fees being charged would not change, although some
fees would be collected at a different point in the application process, so the amount due could
be affected by separately enacted changes to the fee schedule.
Background
Impact fees are designed to offset the impact of new development and resulting additional
residents on the City's infrastructure and services. The City has four transportation impact fees:
Citywide Transportation Impact Fee, Stanford Research Park/El Camino Real impact fee, San
Antonio/West Bayshore Area impact fee, and the Charleston Arastradero Corridor Pedestrian
and Bicycle Safety impact fee. Other development impact fees include: Parks or Parkland,
Community Centers, Libraries, Public Safety Facilities, and General Government Facilities. The
City also has in-lieu fees when required parking, housing, or public art are not provided as part
of a development project.
As impact and in-lieu fees were considered and approved by Council, new municipal codes were
adopted. Each code has specific, but separate instructions for calculation rates, annual
adjustments, and requirements for when and where fees were to be paid. This has resulted in
overly complicated impact fee calculation, administration, and update processes.
The action recommended by Staff will standardize the collection of impact and in lieu fees and
simplify the process for determining and adjusting fees. The attached ordinance (Attachment
A) reflects recommended changes.
Discussion
The attached ordinance includes several modifications to the Municipal Code. Although a few
of the amendments are administrative in nature, meaning they correct typographical errors,
correct cross section references, or omit staff titles no longer in existence, the majority of the
changes bring uniformity to the procedures for collecting our impact fees.
Fee Calculation Date
The calculation date for impact fees is currently inconsistent. Although the rates are set in the
Municipal Code, the date the fees are calculated needs clarification. Depending on the fee,
current code sets the calculation date at entitlement, building permit application, or is silent to
the date to be used. Given the number of impact fees, uniformity of calculation date is
important to reduce the possibility of errors, reduce confusion, and make it easier to program
City of Palo Alto Page 3
the impact fees into the automated permitting system. Staff recommends a calculation date at
the time of fee payment. (See new Section 16.64.020.)
Due Date
Current code requires that some fees are to be paid at building permit issuance some are to be
paid prior to building permit issuance and the code is silent as to time of payment for others.
Staff recomends the payment of fees on or before first building permit issuance, whenever
possible. If there is no building permit for the project, the fee will be based upon issuance of
the first city permit or change in use. In accordance with State law, the Code allows payment of
residential development impact fees to be deferred until the date of the final builiding
inspection. (See new Section 16.64.030.)
Location of Payment
Utilizing our Accela permitting system, fees are paid at the Development Center. When funds
are taken in to cover items not included in the Accela system, those payments are made at
Revenue Collections in the lobby. Current code requires some payments to be made in the
Transportation Division. Since Transportation is not set up to receive payments, staff requests
the removal of that requirement from the Municipal Code. This change will allow these fees to
be collected across the counter, in the same manner as other impact fees.
Rate Adjustments
Current rate adjustment procedures are inconsistent amongst fees. Some fees are to be
adjusted by the change in the San Francisco Construction Cost Index from the prior year.
Others are to be adjusted by the change in the San Francisco Construction Cost Index from the
year the fee was enacted. Still others are to be adjusted by the change in the Consumer Price
Index from the prior year. The Municipal Code for a few impact fees is silent on the method for
annual adjustment. Staff recommends uniformly changing the code to adjust fees by the
change in the San Francisco Construction Cost Index from the prior year, wherever possible.
(See new Section 16.64.110.)
Responsibility
The Municipal Code section for the Parking In Lieu fee currently requires the Chief
Transportation Official (CTO) to annually adjust the fee. Staff recommends changing the code so
that fee adjustment is consistent with other impact and in-lieu fees. This corrects a problem
identified during the 2015 Parking Funds Audit.
Citations
Three of the Transportation impact fees authorize certain City officials to issue citations. The
listed position titles are outdated. Since staff positions change over time, Staff recommends
broadening this language to give authority to the Directors of Planning and Community
Environment and Development Services, or their designees.
Exemption Loophole
City of Palo Alto Page 4
Residential Subdivision developments are subject to Quimby Act parkland dedication fees
rather than park impact fees. Accordingly, residential subdivisions are exempt from park impact
fees. The new ordinance clarifies that this exemption only applies to park impact fees and not
to other impact fees. (See Section 16.58.030.)
Reporting
The Parking In Lieu fee currently requires the Chief Transportation Official (CTO) to annually
review the estimated cost of parking, the continued need for parking, and the reasonable
relationship between need and pending or anticipated development. Staff recommends
removing this language so the process is similar to other impact fee reporting, which is included
as part of the City Manager’s annual review of impact fees. This also addresses a problem
identifed in the 2015 Parking Funds Audit.
Protest Rights
This section is an addition to the code and covers the rights and processes for protest. The
Mitigation Fee Act, the State law governing impact fees, requires the City to provide a protest
procedure. In the past, this has been handled on an ad hoc basis. The new ordinance provides a
multi-step appeal process designed to address any mis-calculation errors at the Director or City
Manager level without the need for unnecessary litigation. (See new Sections 16.64.070 and
16.64.080.)
Calculation of Parking In Lieu Fee
The parking in lieu fee is based on the design and construction costs of the most recent parking
structure. In the event a new parking garage is constructed, the new ordinance allows the
eligible design and construction costs to also include bond financing costs, if applicable. (See
Section 16.57.030.)
Resource Impact
Budget implications will be minimal. Revenues may increase slightly if impact fees at building
permit issuance are higher than they would be at entitlement due to separately adopted
changes to the fee schedule. There would be no impact on expenses.
Environmental Impact
This action is exempt from environmental review under Sections 15061 of the California
Environmental Quality Act Guidelines.
Timeline
Since the changes suggested could impact some fee calculations because of the time those
calculations take place (i.e. later in the process), the proposed ordinance will become effective
60 days after adoption.
Attachments:
Attachment A: Ordinance Amending Fee Procedures (PDF)
NOT YET APPROVED
160802 jb 0131541 1 Sept. 1, 2016
Ordinance No. ____
Ordinance of the Council of the City of Palo Alto Amending Palo Alto Municipal
Code (PAMC) Title 16 (Building Regulations), Chapters 16.45 (Transportation
Impact Fee for New Nonresidential Development in the Stanford Research Park/El
Camino Real CS Zone), 16.46 (Approval of Projects with Impacts on Traffic in the
San Antonio/West Bayshore Area), 16.47 (Approval of Projects with Impacts on
Housing), 16.57 (In-Lieu Parking Fee For New Nonresidential Development in the
Commercial Downtown (CD) Zoning District), 16.58 (Development Impact Fees),
16.59 (Citywide Transportation Impact Fee), 16.60 (Charleston Arastradero
Corridor Pedestrian and Bicyclist Safety Impact Fee), 16.61 (Public Art for Private
Developments), and Title 21 (Subdivisions and Other Divisions of Land), Chapter
21.50 (Parkland Dedication or Fees In-Lieu Thereof) and Adding 16.64
(Development Fee and In-Lieu Payment Administration),
The Council of the City of Palo Alto does ORDAIN as follows:
SECTION 1. Subdivision (d) of Section 16.45.060 Calculation of Transportation
Impact Fee of Chapter 16.45 (Transportation Impact Fee for New Nonresidential Development
in the Stanford Research Park/El Camino Real CS Zone) of the Palo Alto Municipal Code is
amended to read as follows:
16.45.060 Calculation of Transportation Impact Fee.
***
(d) Payment. The fee shall be paid as set forth in Chapter 16.64 of this Codein full to the city
building inspection division prior to issuance of the building permit for the development. If no
building permit is required for a change of use, the fee shall be paid in full prior to issuance of a
certificate of use and occupancy.
***
SECTION 2. Subdivision (e) of Section 16.45.070 Penalties of Chapter 16.45
(Transportation Impact Fee for New Nonresidential Development in the Stanford Research
Park/El Camino Real CS Zone) of the Palo Alto Municipal Code is amended to read as follows:
16.45.070 Penalties
***
(e) Persons employed in the following designated employee positions are authorized to
exercise the authority provided in the California Penal Code Section 836.5 and are authorized to
NOT YET APPROVED
160802 jb 0131541 2 Sept. 1, 2016
issue citations for violations of this chapter: development services director, director of planning
and community environment and their designees.chief building official, assistant chief building
official, and ordinance compliance inspector.
SECTION 3. Subdivision (d) of Section 16.46.040 Calculation of Transportation
Impact Fee of Chapter 16.46 (Approval of Projects with Impacts on Traffic in the San
Antonio/West Bayshore Area) of the Palo Alto Municipal Code is amended to read as follows:
16.46.040 Calculation of Transportation Impact Fee.
***
(d) Payment. The traffic impact fee shall be paid as set forth in Chapter 16.64 of this Codein
full to the city of Palo Alto before the first grading or building permit for a project is issued. If no
grading or building permit is required for a conversion of use, the fee shall be paid in full before
a certificate of use and occupancy permit is issued.
***
SECTION 4. Subdivision (e) of Section 16.46.060 Penalties of Chapter 16.46
(Approval of Projects with Impacts on Traffic in the San Antonio/West Bayshore Area) of the
Palo Alto Municipal Code is amended to read as follows:
16.46.060 Penalties
***
(e) Persons employed in the following designated employee positions are authorized to
exercise the authority provided in the California Penal Code Section 836.5 and are authorized to
issue citation for violations of this chapter: development services director, director of planning
and community environment and their designeeschief building official, assistant chief building
official and ordinance compliance inspector.
SECTION 5. Subdivision (e) of Section 16.47.040 Housing Requirements of Chapter
16.47 (Approval of Projects with Impacts on Housing) of the Palo Alto Municipal Code is
amended to read as follows: [Note: This section will be deleted if Council adopts a pending
ordinance consolidating the housing fees into a new Chapter.]
16.47.040 Housing Requirements.
***
(e) The in-lieu payment shallmust be paid as set forth in Chapter 16.64 of this Codeprior to
issuance of the first grading or building permit for a project. Any permit issued prior to payment
NOT YET APPROVED
160802 jb 0131541 3 Sept. 1, 2016
shall be null and void. For a phased project, payments may be made for each portion of a
phased project prior to issuance of the first grading or building permit for that phase.
***
SECTION 6. Subdivision (e) of Section 16.47.050 Penalties of Chapter 16.47
(Approval of Projects with Impacts on Housing) of the Palo Alto Municipal Code is amended to
read as follows:
16.47.050 Penalties
***
(e) Persons employed in the following designated employee positions are authorized to
exercise the authority provided in the California Penal Code Section 836.5 and are authorized to
issue citation for violations of this chapter: development services director, director of planning
and community environment and their designeeschief building official, assistant chief building
official, and ordinance compliance inspector.
SECTION 7. Section 16.57.030 Calculation of In-Lieu Payment, 16.57.040 Timing of
Payments and Section 16.57.070 Fee Review of Chapter 16.57 (In-Lieu Parking Fee For New
Nonresidential Development in the Commercial Downtown (CD) Zoning District) of the Palo Alto
Municipal Code are amended to read as follows:
16.57.030 Calculation of in-lieu payment.
(a) Initial Fee. The fee for each two hundred fifty square feet of gross floor area in a
development shall equal the sum of the construction, land acquisition, if any, and
administrative costs attributable to the provision of one new parking space, as established by
the city council on the basis of calculations made under this chapterby the chief transportation
official. The fee shall be $30,250.00 per two hundred fifty square feet of gross floor area, and
has been calculated based upon the feasibility study.
(b) Recalculated Fee. In the event the city council approves the construction of a public
parking structure or structures, the citychief transportation official shall adjust the fee as
follows:
(i) At the time the construction contract is awarded, the fee shall be adjusted to reflect the
actual "design costs" incurred by the city for the construction project as of the date the
construction contract is awarded, plus "construction costs" based on the construction contract
award.
(ii) At the time the final payment is made upon completion of the construction project, the
fee shall be adjusted to reflect the actual "design costs" and "construction costs" incurred by
the city for the construction project.
NOT YET APPROVED
160802 jb 0131541 4 Sept. 1, 2016
(iii) The fee as recalculated pursuant to subsection (b)(i) or (b)(ii) may be higher or lower
than the initial fee.
(iv) In the event that a construction project involves the construction of more than one
parking structure, the recalculation of the fee shall be based on the structure with the highest
cost per net new parking space.
(c) The rate of the fee shall be subject to annual adjustment for inflation pursuant to Section
16.64.110.
The fee, whether calculated in accordance with subsection (a) or subsection (b) shall be
adjusted annually by the chief transportation official, by an amount equal to the change in the
construction cost index for the preceding year, as determined for the San Francisco Bay Area by
the "Engineering News Record," the McGraw Hill Construction Weekly.
If the fee is recalculated during the year, the next annual adjustment shall be prorated
based on the change in the construction cost index between the date the fee was recalculated
and the date of the annual adjustment.
(d) For the purposes of this section, the following definitions shall apply:
(i) "Construction costs" shall mean and include the construction costs, as bid, including any
authorized contingency or as paid, based upon actual construction. "Construction costs" shall
not include bond financing costs, if applicable.
(ii) "Design costs" shall mean and include architect fees, engineering fees and other
consultant fees, as proposed or as paid, based upon actual performance. "Design costs" shall
not include bond financing costs, if applicable.
(iii) "Feasibility study" shall mean and refer to the study entitled "Downtown Parking
Structure Feasibility Study, dated January 16, 1997.
(iv) "Net new parking space" cost shall mean the cost to provide one new parking space in a
public parking structure, and shall equal the sum of the construction, land acquisition, if any,
and administrative costs of the structure attributable to each space in the structure.
16.57.040 Timing of Payments.
The fee shall be paid as set forth in Chapter 16.64 of this Code. In accordance with the
provisions of Section 16.57.010, the obligation to pay the fee established by this chapter shall
accrue as of the date the first discretionary approval is given for the development, or if no
discretionary approval is required, as of the date a complete application is submitted for a
building permit for the development. Fees shall be due and payable to the City of Palo Alto at
the transportation division prior to issuance of a building permit for the development, and shall
be calculated at the rate of the fee in effect as of the date the obligation to pay the fee accrued.
Payment of the fee may be deferred to the date of final building inspection approval of the
development, provided the owner of the real property for which the fee has been required
enters into an agreement with the city prior to issuance of the building permit for the
development.
NOT YET APPROVED
160802 jb 0131541 5 Sept. 1, 2016
The agreement shall provide that the amount of the fee shall be calculated at the rate of the
fee in effect on the date the deferred payment is actually made. The agreement shall further
provide that final occupancy approval shall not be given until the fee is paid. The agreement
shall also provide that in any action to collect the fee or any portion thereof the city shall be
entitled to all of its costs of enforcement and collection, including reasonable attorneys fees.
The director of planning and community environment shall be authorized on behalf of the city
to execute the agreement described in this section, in a form acceptable to the city attorney
16.57.070 Fee review.
The uses proposed for expenditure of the moneys in the fund shall be reviewed annually by the
city council along with its review of the city's capital improvement program, and the moneys
from the fund shall be appropriated for such expenditure in the manner provided by the Palo
Alto City Charter and Municipal Code for adoption of the annual budget.
On an annual basis following the enactment of this chapter, the chief transportation official
shall review the estimated cost of the described parking, the continued need for that parking
and the reasonable relationship between such need and the impacts of pending or anticipated
nonresidential development within the assessment district. The chief transportation official
shall report his or her findings to the city council at a noticed public hearing and recommend
any adjustment to these requirements as may be needed.
SECTION 8. Section 16.58.030 Exemptions and 16.58.040 Timing of Payments of
Chapter 16.58 (Development Impact Fees) of the Palo Alto Municipal Code is amended to read
as follows:
16.58.030 Exemptions.
The provisions of this chapter shall not apply to the following:
* * *
(g) Any residential subdivision for which land dedication or fees in lieu thereof are required
pursuant to Chapter 21.50 of the Palo Alto Municipal Code. This exemption shall only apply to
the park development fee described in Section 16.58.020(a).
16.58.040 Timing of Payments.
The fee shall be paid as set forth in Chapter 16.64 of this Code. (a) The obligation to pay the
fees established by this chapter shall accrue as of the date the first discretionary approval is
given for the development, or if no discretionary approval is required, as of the date a complete
application is submitted for a building permit for the development. Fees shall be due and
payable as of the date a complete application is submitted for a building permit for the
development. Fees shall be due and payable to the City of Palo Alto prior to issuance of a
building permit for the development, and shall be calculated at the rate of the fees in effect as
of the date the obligation to pay the fees accrued.
NOT YET APPROVED
160802 jb 0131541 6 Sept. 1, 2016
(b) Payment of the fees may be deferred, for residential development only, to the date of
final building inspection approval of the development, provided the owner of the real property
for which the fees are required enters into a recordable agreement with the city prior to
issuance of the building permit for the development, which from the date of recordation, shall
constitute a lien on the property and shall be enforceable against successors in interest to the
property owner. The agreement shall provide that final occupancy approval shall not be given
until the fees are paid. The agreement shall also provide that in any action to collect the fees or
any portion thereof the city shall be entitled to all of its costs of enforcement and collection,
including reasonable attorneys fees. The director of planning and community environment shall
be authorized on behalf of the city to execute the agreement described in this section, in a form
acceptable to the city attorney.
SECTION 9. Section 16.58.090 Annual Rate Adjustment is added to Chapter 16.58
(Development Impact Fees) of the Palo Alto Municipal Code to read as follows:
16.58.090 Annual Rate Adjustment.
The rate of the fee shall be subject to annual adjustment for inflation pursuant to Section
16.64.110.
SECTION 10. Section 16.59.050 Timing of Payments of Chapter 16.59 (Citywide
Transportation Impact Fee) of the Palo Alto Municipal Code is amended to read as follows:
16.59.050 Timing of Payments.
(a) The fee shall be paid as set forth in Chapter 16.64 of this CodeExcept as otherwise
required by Government Code Section 66007, the fee shall accrue when the first discretionary
approval is given for a new development after the effective date of this section, or if no such
discretionary approval is required subsequent to the effective date of this section, when an
application is submitted for a building permit for that new development. In either case, the fee
shall be payable when an application is submitted for a building permit for the new
development. A fee shall be calculated at the rate in effect when the fee accrues.
(b) Payment of the fee may be deferred, for residential development only, to the date of
final building inspection approval of the development, provided the owner of the real property
for which the fees are required enters into a recordable agreement with the city prior to
issuance of the building permit for the development, which from the date of recordation, shall
constitute a lien on the property and shall be enforceable against successors in interest to the
property owner. The agreement shall provide that final occupancy approval shall not be given
until the fees are paid. The agreement shall also provide that, in any action to collect the fees or
any portion thereof, the city shall be entitled to all of its costs of enforcement and collection,
including reasonable attorney's fees. The director of planning and community environment may
execute the agreement on behalf of the city in a form acceptable to the city attorney. Any
NOT YET APPROVED
160802 jb 0131541 7 Sept. 1, 2016
deferral granted pursuant to this paragraph (b) shall be consistent with the requirements of
Government Code Section 66007.
(cb) A credit against the fee may be given for dedications of eligible citywide transportation
capacity enhancements constructed or provided at private expense and for the value of land
dedicated to the city that is necessary or useful to an eligible citywide transportation capacity
enhancement. Such credit will be granted only if the city council determines that: (i) the city will
experience a substantial cost savings or service quality improvement as a result of private
construction or provision of the capacity enhancement or the dedication of land, (ii) the
capacity enhancement can be expected to immediately and significantly relieve citywide traffic
congestion, and (iii) the grant of the credit, in lieu of the fee, will not cause the city to delay the
implementation of elements of the city's transportation plan that are of higher priority, in the
judgment of the city council, than the land or capacity enhancement that will be dedicated. The
credit shall be applied at the time the city accepts the land or capacity enhancement. Where
the city council has made the determinations required by this subdivision, payment of a portion
of the fee equal to the amount of an expected credit against the fee may be deferred to the
date of final building inspection approval of the development, provided the owner of the real
property for which the fees are required enters into a recordable agreement with the city prior
to issuance of the building permit for the development, which from the date of recordation,
shall constitute a lien on the property and shall be enforceable against successors in interest to
the property owner. The agreement shall provide that final occupancy approval shall not be
given until the fees are paid or the credit issued. The agreement shall also provide that, in any
action to collect the fees or any portion thereof, the city shall be entitled to all of its costs of
enforcement and collection, including reasonable attorney's fees. The director of planning and
community environment may execute the agreement on behalf of the city in a form acceptable
to the city attorney. Any deferral granted pursuant to this paragraph (b) shall be consistent with
the requirements of Government Code Section 66007. Where a credit is given for the provision
of a service that is an eligible capacity enhancement, the deferral of the fee, and the application
of the credit, may be according to a schedule set forth in the recorded agreement, which
schedule shall be designed to ensure that no credit is applied in advance of the provision of
services for which the credit is made.
SECTION 11. Section 16.59.060(f) Calculation of Fee of Chapter 16.59 (Citywide
Transportation Impact Fee) of the Palo Alto Municipal Code is amended to read as follows:
16.59.060 Calculation of Fee.
***
(f ) The rate of the fee shall be subject to annual adjustment for inflation pursuant to Section
16.64.110. Beginning July 1, 2005, and on each July 1 thereafter, the rate of the fee shall be
automatically adjusted according to the following formula:
Council-Approved Rate = Most Recent ENR / ENR at Council-Approval
NOT YET APPROVED
160802 jb 0131541 8 Sept. 1, 2016
Where the "Council-Approved Rate" is the rate most recently set by resolution or ordinance
of the city council, "Most Recent ENR" is the most recently published construction cost index
when the calculation is made and "ENR at Council-Approval" is the construction cost index
published for the month in which the council approved the "Council-Approved Rate."
***
SECTION 12. Section 16.59.090(e) Penalties of Chapter 16.59 (Citywide
Transportation Impact Fee) of the Palo Alto Municipal Code is amended to read as follows:
16.59.090 Penalties
***
(e) Persons employed in the following designated employee positions are authorized to
exercise the authority provided in the California Penal Code Section 836.5 and are authorized to
issue citation for violations of this chapter: development services director, director of planning
and community environment and their designeeschief building official, assistant chief building
official, and ordinance compliance inspector.
SECTION 13. Section 16.60.050 Timing of Payments of Chapter 16.60 (Charleston
Arastradero Corridor Pedestrian and Bicyclist Safety Impact Fee) of the Palo Alto Municipal
Code is amended to read as follows:
16.60.050 Timing of Payments.
(a) The fee shall be paid as set forth in Chapter 16.64 of this CodeExcept as otherwise
required by Government Code Section 66007, the fee shall accrue when the first discretionary
approval is given for a new development after the effective date of this section, or, if no such
discretionary approval is required subsequent to the effective date of this section, when an
application is submitted for a building permit for that new development. In either case, the fee
shall be payable when an application is submitted for a building permit for the new
development. A fee shall be calculated at the rate in effect when the fee accrues.
(b) Payment of the fee may be deferred, for residential development only, to the date of final
building inspection approval of the development, provided the owner of the real property for
which the fees are required enters into a recordable agreement with the city prior to issuance
of the building permit for the development, which from the date of recordation, shall constitute
a lien on the property and shall be enforceable against successors in interest to the property
owner. The agreement shall provide that final occupancy approval shall not be given until the
fees are paid. The agreement shall also provide that, in any action to collect the fees or any
portion thereof, the city shall be entitled to all of its costs of enforcement and collection,
including reasonable attorney's fees. The director of planning and community environment may
execute the agreement on behalf of the city in a form acceptable to the city attorney. Any
deferral granted pursuant to this paragraph (b) shall be consistent with the requirements of
Government Code Section 66007.
NOT YET APPROVED
160802 jb 0131541 9 Sept. 1, 2016
(c) A credit against the fee may be given for dedications of eligible safety enhancements
constructed or provided at private expense and for the value of land dedicated to the city that
is necessary or useful to an eligible safety enhancements. Such credit will be granted only if the
city council determines that: (i) the city will experience a substantial cost savings or service
quality improvement as a result of private construction or provision of the eligible safety
enhancements or the dedication of land, (ii) the eligible safety enhancements can be expected
to immediately and significantly improve bicyclist or pedestrian safety, and (iii) the grant of the
credit, in lieu of the fee, will not cause the city to delay the implementation of elements of the
Program that are of higher priority, in the judgment of the city council, than the land or eligible
safety enhancement that will be dedicated. The credit shall be applied at the time the city
accepts the land or eligible safety enhancement. Where the city council has made the
determinations required by this subdivision, payment of a portion of the fee equal to the
amount of an expected credit against the fee may be deferred to the date of final building
inspection approval of the development, provided the owner of the real property for which the
fees are required enters into a recordable agreement with the city prior to issuance of the
building permit for the development, which from the date of recordation, shall constitute a lien
on the property and shall be enforceable against successors in interest to the property owner.
The agreement shall provide that final occupancy approval shall not be given until the fees are
paid or the credit issued. The agreement shall also provide that, in any action to collect the fees
or any portion thereof, the city shall be entitled to all of its costs of enforcement and collection,
including reasonable attorney's fees. The director of planning and community environment may
execute the agreement on behalf of the city in a form acceptable to the city attorney. Any
deferral granted pursuant to this paragraph (b) shall be consistent with the requirements of
Government Code Section 66007. Where a credit is given for the provision of a service that is an
eligible safety enhancement, the deferral of the fee, and the application of the credit, may be
according to a schedule set forth in the recorded agreement, which schedule shall be designed
to ensure that no credit is applied in advance of the provision of services for which the credit is
made.
SECTION 14. Section 6.60.060(e) Calculation of Fee of Chapter 16.60 (Charleston
Arastradero Corridor Pedestrian And Bicyclist Safety Impact Fee) of the Palo Alto Municipal
Code is amended to read as follows:
16.60.060 Calculation of Fee.
***
(e) The rate of the fee shall be subject to annual adjustment for inflation pursuant to Section
16.64.110. Beginning July 1, 2006, and on each July 1 thereafter, the rate of the fee shall be
automatically adjusted according to the following formula:
Council-Approved Rate = Most Recent ENR / ENR at Council-Approval
Where the "Council-Approved Rate" is the rate most recently set by resolution or ordinance of
the city council, "Most Recent ENR" is the most recently published construction cost index
NOT YET APPROVED
160802 jb 0131541 10 Sept. 1, 2016
when the calculation is made and "ENR at Council-Approval" is the construction cost index
published for the month in which the council approved the "Council-Approved Rate."
***
SECTION 15. Section 16.60.090(e) Penalties of 16.60 (Charleston Arastradero
Corridor Pedestrian and Bicyclist Safety Impact Fee) of the Palo Alto Municipal Code is amended
to read as follows:
16.60.090 Penalties
***
(e) Persons employed in the following designated employee positions are authorized to
exercise the authority provided in the California Penal Code Section 836.5 and are authorized to
issue citation for violations of this chapter: development services director,chief building
inspector, chief transportation official, and director of, planning and community environment
director and their designeeschief building official, assistant chief building official, and ordinance
compliance inspector.
SECTION 16. Section 16.61.090 Developer’s Option to Pay Fees to Public Art Fund
In-Lieu of Providing On-Site Art of Chapter 16.61 (Public Art for Private Developments) of the
Palo Alto Municipal Code is amended to read as follows:
16.61.090 Developer’s option to pay fees to public art fund in-lieu of providing on-site art.
In lieu of installation of on-site public art, the developer may elect to make a monetary
contribution to the Palo Alto Public Arts Fund. The amount of the contribution shall be the cost
of the public art required by Section 16.61.040. A developer who elects to satisfy the
requirements of this chapter through a contribution to the Fund must complete the payment
in-lieu prior to the issuance of any building permit for the development project. The payment
shall be made as set forth in Chapter 16.64 of this Code.
SECTION 17. Chapter 16.64 (Development Fee and In-Lieu Payment Administration)
is added to the Palo Alto Municipal Code to read as follows:
CHAPTER 16.64 DEVELOPMENT FEE AND IN-LIEU PAYMENT ADMINISTRATION
Sections:
16.64.010 Applicability
16.64.020 Due Date
16.64.030 Deferred Payment
16.64.040 Calculation of Fees
16.64.050 Adoption of Fee Schedule
16.64.060 Notice of Protest Rights
NOT YET APPROVED
160802 jb 0131541 11 Sept. 1, 2016
16.64.070 Informal Hearing
16.64.080 Appeal of Director’s Determination
16.64.090 Cost of Protest
16.64.100 Administration
16.64.110 Inflation Adjustment
Section 16.64.010 Applicability
This Chapter 16.64 applies to any fee or in-lieu payment imposed under any provision of this
code that states that that payment of the fee or in-lieu payment shall be made pursuant to this
Chapter 16.64. For purposes of this chapter the term “fee” shall be used to refer to any such
fee or in-lieu payment, regardless of how denominated elsewhere in this code.
Section 16.64.020 Due Date
A fee shall be paid on or before the issuance of the first building permit for the project. For a
phased project, payments may be made for each portion of a phased project prior to issuance
of the first building permit for that phase. If there is no building permit for the project, the fee
shall be paid upon issuance of the first city permit or other approval. If no city permit or other
approval is required, and the obligation to pay the fee is triggered by a change in use, payment
of the fee must be made before the change in use occurs.
Section 16.64.030 Deferred Payment
For residential development only, payment of a fee may be deferred to the date of final
building inspection approval of the development, provided the owner of the real property for
which the fees are required enters into a recordable agreement with the city prior to issuance
of the building permit for the development, which from the date of recordation, shall constitute
a lien on the property and shall be enforceable against successors in interest to the property
owner. The agreement shall provide that final occupancy approval shall not be given until the
fees are paid. The director of planning and community environment may execute the
agreement on behalf of the city in a form acceptable to the city attorney.
Section 16.64.040 Calculation of Fee
A fee shall be payable at the rate specified in the council-adopted Municipal Fee Schedule in
effect on the date the fees are paid, except that the applicant for a vesting tentative map for a
development project shall pay the fees in effect on the date the application for the vesting
tentative map is deemed complete.
Section 16.64.050 Adoption of Fee Schedule
The City Council can revise the rate of any fee by amending, by ordinance or resolution, the rate
set forth in the Municipal Fee Schedule. Any inflation-adjustment provided in this code with
respect to a fee shall go into effect upon approval by the city council of a change to the
Municipal Fee Schedule reflecting the adjusted amount of the fee.
NOT YET APPROVED
160802 jb 0131541 12 Sept. 1, 2016
Section 16.64.060 Notice of Protest Rights
(a) Each applicant is hereby notified that, in order to protest the imposition of any impact fee
required by this chapter, the protest must be filed in accordance with the requirements of this
chapter and the Mitigation Fee Act. Failure of any person to comply with the protest
requirements of this chapter or the Mitigation Fee Act shall bar that person from any action or
proceeding or any defense of invalidity or unreasonableness of the imposition.
(b) On or before the date on which payment of the fee is due, the applicant shall pay the full
amount required by the city and serve a written notice to the director of planning and
community environment with all of the following information: (1) a statement that the required
payment is tendered, or will be tendered when due, under protest; and (2) a statement
informing the city of the factual elements of the dispute and the legal theory forming the basis
for the protest.
(c) The applicant shall bear the burden of proving, to the satisfaction of the director,
entitlement to a fee adjustment.
Section 16.64.070 Informal Hearing
(a) The director shall schedule an informal hearing regarding the protest, to be held no later
than 60 days after the imposition of the impact fees upon the development project, and with at
least 10 days’ prior notice to the applicant (unless either dates are otherwise agreed by the
director and the applicant).
(b) During the informal hearing, the director shall consider the applicant’s protest, relevant
evidence assembled as a result of the protest, and any additional relevant evidence provided
during the informal hearing by the applicant and the city. The director shall provide an
opportunity for the applicant to present additional evidence at the hearing in support of the
protest.
(c) The Director shall issue a written determination regarding the protest. The director’s
determination shall support the fee imposed upon the development project unless the
applicant establishes, to the satisfaction of the director, entitlement to an adjustment to the
fee.
Section 16.64.080 Appeal of Director’s Determination
(a) Any applicant who desires to appeal a determination issued by the director shall submit a
written appeal to the director and the city manager. A complete written appeal shall include a
complete description of the factual elements of the dispute and the legal theory forming the
basis for the appeal of the director’s determination. An appeal received by the city manager
more than 10 calendar days after the director’s determination may be rejected as late. Upon
receipt of a complete and timely appeal, the city manager shall appoint an independent hearing
officer to consider and rule on the appeal.
(b) The independent hearing officer shall, in coordination with the applicant and the director,
set the time and place for the appeal hearing, and provide written notice thereof. The
NOT YET APPROVED
160802 jb 0131541 13 Sept. 1, 2016
independent hearing officer shall consider relevant evidence, provide an opportunity for the
applicant and the city to present additional noncumulative evidence at the hearing, and
preserve the complete administrative record of the proceeding.
(c) Within 30 days after the independent hearing officer closes the hearing and receives post-
hearing briefs (if any), the independent hearing officer shall issue a written decision on the
appeal hearing which shall include a statement of findings of fact in support of the decision. The
independent hearing officer’s discretion shall be limited to a determination that either supports
the director’s determination or orders the city to refund all or a portion of the impact fees to
the applicant. The applicant shall bear the burden of proving entitlement to a fee adjustment.
The decision of the hearing officer is final and conclusive, and is subject to judicial review.
Section 16.64.090 Cost of Protest
The applicant shall pay all city costs related to any protest or appeal pursuant to this chapter, in
accordance with the fee schedule adopted by the city. At the time of the applicant’s protest,
and at the time of the applicant’s appeal, the applicant shall pay a deposit in an amount
established by the city to cover the estimated reasonable cost of processing the protest and
appeal. If the deposit is not adequate to cover all city costs, the applicant shall pay the
difference within 20 days after receipt of written notice from the director.
Section 16.64.100 Administration
The City Manager, or her/his designee, is authorized to adopt administrative regulations or
guidelines that are consistent with and that further the terms and requirements set forth in this
Code. All such administrative regulations or guidelines must be in writing. Such regulations or
guidelines may interpret any provision of this chapter, as well as any provision of this code
relating to the calculation of a fee.
Section 16.64.110 Inflation Adjustment
Where it is indicated in this code that a fee is subject to inflation adjustment pursuant to this
section, on each July 1, the amount of the fee shall be recalculated according to the following
formula:
Adjusted Rate = Prior Rate * Most Recent ENR / ENR for Prior Rate
Where the "Prior Rate" is the rate in effect prior at the time this adjustment is calculated,
"Most Recent ENR" is the most recently published construction cost index when the adjustment
is calculated and "ENR at Council-Approval" is the construction cost index (i) used to calculated
the Prior Rate when it was set pursuant to this section or (ii) published for the month in which
the council approved the "Prior Rate." "Construction cost index" means the construction cost
index for the San Francisco Bay Area set forth in the Engineering News Record published by
McGraw Hill and Associates. In the event the Engineering News Record ceases to calculate and
publish this index, then the city manager may designate a comparable, alternative index to
serve as the construction cost index.
NOT YET APPROVED
160802 jb 0131541 14 Sept. 1, 2016
The existing rate for a fee shall remain in effect until the recalculated rate is made adopted and
effective pursuant to Section 16.64.050.
SECTION 18. Sections 21.50.060 Procedure and 21.50.070 Calculation of fair
market value of Chapter 21.50 (Parkland Dedication or Fees In-Lieu Thereof) of the Palo Alto
Municipal Code are added to read as follows:
21.50.060 Procedure.
(a) Payment of fees: Any fee due under this Chapter shall be paid as set forth in Chapter
16.64 of this Code.
(b) Land dedications. At the time of the filing of the final or parcel map, the subdivider
shall dedicate the land to the City by a grant deed or other form acceptable to the City
Attorney.The director of public works, director of planning and community environment or city
council as appropriate, shall, upon approving a subdivision map, determine the conditions
necessary to comply with the requirements for parkland dedication or fees in lieu thereof as set
forth in this chapter, and said conditions shall be attached as conditions of approval.
21.50.070 Calculation of fair market value.
. . .
(c) The rate of the fee shall be subject to annual adjustment for inflation pursuant to
Section 16.64.110. Beginning July 1, 2009, and on each July 1 thereafter, the dollar amount set
forth in this section shall increase without further action by the city according to the following
formula:
Most Recent ENR
Council-Approved Rate*
ENR at Council Approval
*Where the "Council-Approved Rate" is the rate set forth in subsection (b).
SECTION 19. Severability. If any section, subsection, sentence, clause, phrase or
word of this Ordinance is for any reason held to be invalid by a court of competent jurisdiction,
such decision shall not affect the validity of the remaining portions of this Ordinance. The City
Council hereby declares that it would have passed and adopted this Ordinance, and each and all
provisions hereof, irrespective of the fact that one or more provisions may be declared invalid.
SECTION 20. 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.
NOT YET APPROVED
160802 jb 0131541 15 Sept. 1, 2016
SECTION 21. This ordinance shall become effective upon the commencement of
the sixtieth day after the date of its adoption.
INTRODUCED:
PASSED:
AYES:
NOES:
ABSENT:
ABSTENTIONS:
ATTEST:
__________________________ _____________________________
City Clerk Mayor
APPROVED AS TO FORM: APPROVED:
___________________________ _____________________________
Senior Asst. City Attorney City Manager
_____________________________
Director of Administrative Services
_____________________________
Director of Planning and Community
Environment
City of Palo Alto (ID # 7128)
Finance Committee Staff Report
Report Type: Action Items Meeting Date: 9/20/2016
City of Palo Alto Page 1
Council Priority: Environmental Sustainability
Summary Title: Approval of Low Carbon Fuel Standard Program
Title: Staff and Utilities Advisory Commission Recommend that the Finance
Committee Recommend the City Council Approve the Proposed Low Carbon
Fuel Standard Credit Program, Including the Use of Revenues from the Sale of
Low Carbon Fuel Standard Credits
From: City Manager
Lead Department: Utilities
Recommendation
Staff and Utilities Advisory Commission (UAC) request that the Finance Committee recommend
that the City Council approve the proposed Low Carbon Fuel Standard (LCFS) program
(Attachment A), including the use of revenues from the sale of LCFS credits.
Executive Summary
The California Air Resources Board (CARB) developed the LCFS program in compliance with AB
32 (the Global Warming Solutions Act of 2006) to reduce the carbon intensity of transportation
fuels used in California by 10% by 2020. Electric utilities that provide electricity to charge
electric vehicles (EVs) are eligible to receive LCFS credits. Since April 2014, when the City began
participating in the program, CARB has been allocating LCFS credits to the City. The credits
accumulated in the past two years are currently valued at about $600,000. The value of future
credits is expected to be $500,000 to $1 million per year through 2020 as the number of EVs
increase in Palo Alto.
These credits are intended to be sold to providers of transportation fuel in the state. The
regulations require the City to use all proceeds from the sale of LCFS credits received for EVs to
benefit current or future EV customers, educate the public on the benefits of EV transportation,
and provide rates that encourage off-peak charging to minimize grid impacts. The City must
also provide CARB an annual compliance report.
City of Palo Alto Page 2
The CARB regulations also allow dispensers of compressed natural gas (CNG) to earn LCFS
credits. Since the City dispenses CNG at the Municipal Service Center, it is eligible to receive
LCFS credits worth about $30,000 per year.
The City’s proposed LCFS program complies with CARB’s regulatory requirements and is
designed to direct revenues from the sale of the LCFS credits for the benefit of EV and CNG
vehicle owners. The program includes rebates for EV chargers, discounts to utility connection
fees, the exploration of discounts for off-peak charging, encouragement of flexible charging,
education and outreach.
At its June 1, 2016 meeting, the UAC unanimously supported staff’s recommendation and made
additional suggestions regarding ways to use the LCFS funds, which staff has incorporated into
the proposed program.
Background
CARB’s LCFS program aims to reduce the carbon intensity of transportation fuels used in
California by 10% by 2020. The primary method for reducing the carbon content of
transportation fuels is by blending standard fuels with fuels such as cellulosic ethanol or
biodiesel which have lower carbon intensities than traditional fuels. Electricity and CNG are also
recognized as low carbon intensive transportation fuels.
CARB adopted the most recent version of LCFS regulations in September 2015, effective
January 1, 2016. Electric utilities that provide electricity to charge EVs are eligible to receive
LCFS credits based on the number of EVs registered in their service territory and the amount of
electricity dispensed.1 CARB approved the City of Palo Alto Utilities’ (CPAU’s) application to
participate in the LCFS program in April 2014, and has been allocating LCFS credits to the CPAU
since then. Under CARB’s formula, Palo Alto received 1,855 credits in 2014, 3,311 credits in
2015, and anticipates receiving 4,500 credits in 2016. As of March 2016, approximately 1,300
EVs were registered in Palo Alto.
CNG related credits are based on the amount of CNG actually dispensed at the City’s CNG
fueling station. In 2016 the City anticipates dispensing approximately 12 million cubic feet of
CNG and receiving about 270 credits.
At the prevailing market price of $116 per credit, the sale of credits allocated in 2014 and 2015
is expected to yield $600,000. Revenues from the sale of 2016 credits are expected to be
$500,000. With projections of 3,000 to 5,000 EVs in Palo Alto by 2020, the revenue from LCFS
sales credit could range from $800,000 to $1.2 million per year by 2020. The value of credits
related to CNG is projected to be $30,000 per year and projected to stay relatively flat through
2020.
1 CARB’s LCFS program overview is provided here: http://www.arb.ca.gov/fuels/lcfs/lcfs.htm
City of Palo Alto Page 3
In March 2016 Council approved a master agreement template to enable the City to sell LCFS
credits to transportation fossil fuel providers in California (Staff Report #6489). Staff anticipates
using this template to make the first credit sale in late spring 2016 in order to fund the
programs described in this report. These projected revenues and costs are included in the fiscal
year (FY) 2017 budget request.
Discussion
Use of EV Related LCFS Funds
Electric distribution utilities like CPAU that receive LCFS credits must comply with the regulatory
requirements outlined in California Code of Regulations Sec. 95483(e)(1) in order to receive
credits, including:
(A) Use all credit proceeds to benefit current or future EV customers;
(B) Educate the public on the benefits of EV transportation (including
environmental benefits and costs of EV charging, or total cost of
ownership, as compared to gasoline);
(C) Provide rate options that encourage off-peak charging and minimize
adverse impacts to the electrical grid; and
(D) Include in annual compliance reporting the following supplemental
information: an itemized summary of efforts to meet requirements (A)
through (C) above and costs associated with meeting the requirements.
After engaging with industry and community stakeholders, staff explored a number of
programs for using the LCFS funds, and screened the options based on the following criteria:
Cost and simplicity of program administration;
Breadth of EV customer segments to which program would be applicable;
Impact on the rate of EV adoption; and
Potential funds that could be utilized in the program option.
Outlined below is a list of the program options identified and their relative merits based on the
criteria. A presentation of the relative merits of the options is provided in Attachment C.
The following options may be considered in the future, but were determined to be not ready
for implementation in the initial phase of the program:
1. Discount Development Center permit fees related to EV charger installations. Such a
program would waive or discount the permit fee related to EV chargers which currently
range from $160 for residential chargers to $560 for commercial Level 3 chargers. This
option was initially found to be administratively burdensome.
2. Provide cash rebates to EVs registered in Palo Alto. This would likely require EV owners to
apply online with their vehicle registration information. The rebate could be one-time or
annual. The large investor-owned utilities in California and the Sacramento Municipal Utility
District are contemplating this type of a program. Since this option was administratively
City of Palo Alto Page 4
burdensome and could consume the bulk of the funds available, it is not recommended at
this time. Staff feels that the funds could be better utilized in other LCFS program options
and that such a rebate would not be a significant influence for those contemplating an EV
purchase.
3. Discount or provide free charging at public EV charging stations. This option was found to
be suboptimal for Palo Alto because free charging may attract EV owners that casually take
the opportunity since charging is free, an impact that crowds out EVs that need to charge
and are willing to pay for the service.
The following options were determined to be the best ones for CPAU’s initial LCFS program:
1. Rebates for the installation of Electric Vehicle Supply Equipment (EVSE, or chargers). Staff
determined that providing rebates for EVSE installations at underserved segments of the
market would be valuable. Those market segments include public and non-profit buildings
as well as at private buildings with multiple tenants, such as multi-family or mixed use
buildings or on corporate campuses. The landlord, property owner, or tenant would own
the EVSE, not the City of Palo Alto.
2. Discount electric utility fees associated with upgrading electric services due to the
installation of EV chargers. The utility connection fees are periodically required if the
installation of chargers at homes requires a utility service upgrade2. Such upgrades have
been triggered a dozen times the past year. The related fees ranged from $400 to $9,000,
with an average fee of $1,300. This use of the LCFS funds was identified as a preferred
option. Utility Rate E-15 and related Utility Rules and Regulations may have to be modified
to reflect this discount.
3. Discount off-peak electric rates for residential customers to encourage off-peak EV
charging. Though this option has many implementation hurdles, the option was identified
as an option that merits further investigation for possible implementation in the future.
4. Provide a payment to customers who provide CPAU access to their EV charging patterns via
the telematics in their EV or their charging equipment. This information will assist CPAU
better assess impacts of such charging systems on the distribution grid and seek EV
customer interest in various EV-related Utilities programs. This was identified as a preferred
option, though all elements related to harnessing the information provided are not yet fully
defined.
5. Fund programs designed to lower the cost of electric utility services for EV charging or to
enable EVs owner to modulate charging patterns to lower charging cost. Support pilot scale
programs to expedite EVSE installation and EV adoption.
2 When a customer wishes to install EVSE at home, an upgrade to their home’s electric service may be required.
Per CPAU Utilities Rule and Regulation 18: “The Customer is responsible for all costs associated with relocation or
modification of Utility Service.” The costs are determined based on Utility Rate Schedule E-15 and periodically
EVSE projects require the preparation of a cost estimate. Customers are invoiced for the labor and material costs,
excluding the cost of the transformer itself.
City of Palo Alto Page 5
6. Fund education and outreach efforts. This is a key element to enable EV adoption at a rapid
clip and was identified as a preferred program to fund. This may include the cost of
temporary staff resources, a third-party program manager or administrator, or direct
marketing to support program implementation.
Initial EV Related LCFS Program Details
Based on staff’s analysis of program options, the following rebate/discount amounts are
proposed for inclusion in CPAU’s initial LCFS program. The City Manager will determine the final
details and make any modifications, as necessary, to respond to changes in technology, funds
available and costs for various program components. Detailed eligibility and guidelines for each
of the programs will be provided on the City’s website. The initial program and designation of
funds by program area is summarized below and more detail is provided in Attachment B.
LCFS Program Area Funds
Expended
Annually
Rebate of up to $3,000 for the installation of EVSE at non-single family
residential buildings and parking areas.
To ensure that funds are dispersed over many locations, a limit of 3 EVSEs per
location is recommended for non-public locations.
Similarly, allocation to all Palo Alto Unified School District (PAUSD) locations is
recommended to be limited to $30,000 per fiscal year for EVSE installations.
$225,000 to
$375,000
Discount the Utilities Connection fee related to the installation of EVSE in single
family and multi-family residential applications for up to $3,0003.
$30,000 to
$60,000
Discount off-peak electricity rate of residential customers with registered EVs
who elect to be on the time-of-use electricity rate.
$40,000 to
$150,000
Rebate of $300 for EV owners who provide CPAU access to information related
to their EV charging patterns.
<$30,000
Fund programs designed to lower the cost of electric utility services for EV
charging or to enable EVs owner to modulate charging patterns to lower their
charging cost. Support pilot-scale City, Utility, and Community programs to
expedite EVSE installation and EV adoption.
$50,000
Fund educational and outreach activities to facilitate early adoption of EVs at
$20,000/year, $20,000/year to fund related staffing needs, and additional direct
$40,000/year for marketing cost to promote EVSE installations in multi-family
homes.
$80,000
Use of CNG Related LCFS Funds
While EV related LCFS credits account for more than 90% of the funds, LCFS credits related to
dispensing CNG will generate approximately $30,000 annually. CARB’s regulations do not
3 Modifications to the Utility connection fee schedule (Utilities Rate Schedule E-15) are needed to incorporate this
program.
City of Palo Alto Page 6
impose specific requirements for how regulated parties must use revenues earned from the
sale of CNG-related LCFS credits, but staff’s proposal is to use the funds to expand the use of
CNG vehicles. Staff’s primary recommended use of these funds in FY 2017 is for the installation
of a credit card reader at the pump to expand the number of CNG vehicle owners that could
use the station. In subsequent years, the funds could be used for annual service and
maintenance costs for the public CNG station, and if funds remain, they could be used to
explore purchasing carbon neutral CNG (e.g. using certified environmental off-sets or
renewable natural gas supplies) or reduce the CNG retail rate charged.
Reporting Requirements
The current LCFS regulation extends through 2020, but it is expected to be extended. Hence,
staff recommends revisiting the LCFS Program in 2020. As required by the regulations, staff will
file various quarterly reports to CARB to claim credits, and annually report on the use of funds.
Staff will report to Council annually on the progress and impact of the LCFS and may request
changes to the LCFS Program if additional or alternative uses of funds are identified. A
balancing account will be maintained to smooth out short-term fluctuations in annual revenue
and expenses.
City Manager to Manage Program
The City Manager may change the rebate amounts annually or suspend them based on funds
available. Under the program, the City Manager may make changes to the programs and
implementation details to optimally utilize the revenues to benefit EV and CNG vehicle owners.
Commission Review and Recommendation
The UAC reviewed the proposed LCFS program at its June 1, 2016 meeting. Commissioners
generally supported the proposed program and noted that schools would be an ideal place for
EV chargers since teachers would have an incentive to purchase EVs if they could charge them
while at work. Another idea discussed was to provide funds for research and development or a
pilot program to provide an incentive for direct DC charging or for new vehicle-to-grid
technologies. The UAC also expressed support for educational and outreach activities.
The UAC voted unanimously (6-0 with Chair Cook, and Commissioners Ballantine, Forssell,
Johnston, Schwartz and Trumbull voting yes and Vice Chair Danaher absent) to recommend that
the Council approve the proposed LCFS program and the use of revenues from the sale of LCFS
credits and requested that staff explore the suggestions the UAC discussed for the program.
Subsequently, staff modified the proposed program to add the fifth initial program element
(pilot programs to expedite EVSE installation and EV adoption) and to make additional funds
available for marketing the program, espeically to multi-family homes. The draft minutes of the
UAC’s June 2016 meeting are provided as Attachment D.
Timeline
Upon Council approval of the Program, the Program is expected to be implemented by January
2017. Systems installed after July 1, 2016 will be eligible for the program’s rebates and
City of Palo Alto Page 7
incentives since Utilities customers have already started installation projects in anticipation of
the availability of these incentives.
Resource Impact
The revenue generated by participating in the State’s LCFS program is estimated to be $500,000
to $1,000,000 per year. Staff time of approximately 0.25 FTE will be required to administer this
program; existing staffing resources will be utilized for this effort. Funds from the program
revenues may be allocated to hire temporary staff to manage tasks related to encouraging EV
adoption.
Policy Implications
The City’s proposed LCFS program complies with CARB’s regulatory requirements and is
designed to direct revenues from the sale of the LCFS credits for the benefit of EV and CNG
vehicle owners. The program meets the State’s objective of reducing the carbon intensity of
transportation fuels and the City’s Sustainability and Climate Action Plan goal of reducing the
City’s carbon footprint by 80% by 2030. The recommendation is also consistent with City’s 2011
Electric Vehicle Infrastructure Policy.
Environmental Review
Approving a program to utilize LCFS revenues does not meet the California Environmental
Quality Act’s definition of a “project” under Public Resources Code Section 21065, thus,
environmental review is not required.
Attachments:
Attachment A: Proposed Palo Alto LCFS Program (PDF)
Attachment B: Outline of Proposed LCFS Program Implementation Details (PDF)
Attachment C: Analysis of the Relative Merits of Options (PDF)
Attachment D: Excerpted Final Minutes from the UAC Meeting of June 1, 2016 (PDF)
Attachment A
1
CITY OF PALO ALTO PROGRAM FOR USE OF REVENUES FROM THE SALE OF LOW CARBON
FUEL STANDARD CREDITS
Low Carbon Fuel Standard (LCFS) credits are allocated to the City of Palo Alto by the California
Air Resources Board (CARB) based on the estimated amount of electricity used by electric
vehicles (EVs) served by City of Palo Alto Utilities (CPAU) and Compressed Natural Gas (CNG)
dispensed at the Municipal Service Center for CNG-fueled vehicles. The City’s Program for the
use of revenues from the sale of LCFS credits outlines the types of programs the City intends to
promote to meet state’s objective of reducing the carbon intensity of transportation fuels, in
compliance with the state’s LCFS regulations1.
A. Use of Revenues from the Sale of LCFS Credits for Electric Vehicles
The City may use revenues from the sale of LCFS credits to provide customer rebates,
discounts or funding for the following purposes:
1. Provide rebates for the installation of Electric Vehicle Supply Equipment (EVSE) at non-
single family residential buildings and parking areas.
2. Discount the Utilities Connection fee related to the installation of EVSE in single-family
and multi-family residential buildings.
3. Discount off-peak time electricity rate of residential customers, with registered EVs, who
elect to be on the time-of-use electricity rate.
4. Pay EV owners who provide CPAU access to information related to their EV charging
patterns and are willing to be part of CPAU’s voluntary demand response program.
5. Fund CPAU programs designed to lower the cost of electric utility services for EV
charging or to enable EVs owner to modulate charging patterns to lower charging cost.
Support pilot-scale programs to expedite EV adoption.
6. Educational and Program implementation outreach activities to accelerate EVSE
installation and EV adoption.
B. Use of Revenues from the Sale of LCFS Credits for CNGVs
The City may use the LCFS credit sales revenues to facilitate CNG vehicle adoption in the
following order of preference:
1. Fund capital and maintenance costs associated with the CNG station at the Municipal
Service Center to facilitate expanding the CNG vehicle customer base.
2. Fund activity to dispense carbon neutral CNG (e.g. use of certified environmental off-
sets or renewable natural gas supplies).
3. Reduce the CNG retail rate charged for vehicles.
1 Currently set forth in Title 17 of CA Code of Regulations, Section 94580, et. seq.
Attachment A
2
C. City Manager Authority
1. The actual rebate and discount amounts and individual program budgets shall be based
on funds available and shall be determined by the City Manager. The CNG retail rate,
including the discount offered based on available LCFS sales revenue available, shall be
determined by the City Manager.
2. The City Manager is authorized to:
a. Annually make changes to the programs and implementation details to optimally
utilize the revenues to benefit of EV and CNG vehicle owners.
b. Suspend the rebates if funds are depleted or if a program is found to be ineffective
at meeting stated program goals or regulatory requirements.
D. Program Term and Reporting Requirements
1. This Program shall be in place until December 31, 2020, unless revised by Council.
2. The Council shall be provided annual reports on the sale revenues and expenditures
associated with the LCFS program and this policy.
3. The rebate amounts and related detailed guidelines shall be published on the City’s
website.
Attachment B
1
Outline of Palo Alto’s Initial (FY 2017) LCFS Program Implementation
(To be updated annually by the City Manager as appropriate)
1. Rebate for the installation of EVSE
A. Multi-family residential, mixed use, and commercial building garages and parking
areas
(1) EVSE must be installed in a shared parking location not assigned or dedicated to
particular tenants or owners, but available to any tenant, owner, employee or
guest.
a) Service panel upgrade and cost of installing conduits will be rebated,
irrespective of the location of the EVSE.
b) In a rental apartment building, assigning a space to an EV owner is allowed.
(2) Information about EVSEs receiving a rebate shall be posted on public EV station
locaters on the internet, and to the extent possible, made available to the public.
(3) Rebates may cover up to 75% of the total cost of the installation including the
cost of the EVSE, electrical wiring, and all capital costs related to the installation.
(4) Rebate limited to $3,000 per EVSE installed up to a maximum of 3 chargers per
service address.
B. Public buildings and not-for-profit organizations
(1) Information about EVSEs receiving a rebate shall be posted on public EV station
locaters on the internet and made available to the public.
(2) Rebates may cover up to 100% of the total cost of the installation including the
cost of the EVSE, electrical wiring, and all related capital cost.
(3) A rebate shall be $3,000 per EVSE installed, with a maximum rebate of $9,000
per service address with the installation of 3 chargers. This limit may be waived
for large apartment buildings (> 10 units) depending on funding availability.
C. Palo Alto Unified School District (PAUSD) Facilities
(1) Allocate up to $30,000 per fiscal year towards EVSE installations in PAUSD
facilities.
(2) Rebates may cover cost of electrical wiring, cost of EVSEs and all related cost for
up to 100% of the total cost.
(3) The anticipated reimbursement per EVSE is $3,000, but in no event shall it
exceed $5,000 per EVSE installed.
(4) If networked EVSEs are installed, PAUSD shall provide access to the EVSE
charging information to CPAU.
D. Additional requirements for EVSE receiving rebates:
(1) All EVSE rebates above are based on Level 2 EVSEs with 30A circuits or larger. In
the event Level 2 EVSE is suboptimal for a location, to claim a $3,000 EVSE
rebate, the City requires the installation of two units of Level 1 EVSE with 20 A
circuits. All EVSEs for which rebates are requested are encouraged to be
equipped with a J1772 plug.
(2) Physical signage for easy identification of EVSE location.
Attachment B
2
(3) The three EVSEs per service address limit may be increased for a publicly
accessible parking location if applicant can demonstrate need.
(4) The rebates for EVSEs may not be provided to install EVSEs already required by
the City’s Building Code.1
2. Rebate for Utilities Connection Fee
A. Provide a rebate on the utility connection fee to residential single- and multi-family
customers, when the installation of an EVSE triggers the need for a utility service
upgrade.
B. The rebate could cover the full cost of the fee2 for up to $3,000 per utility service
address.
3. Discount night-time electricity rates
A. Investigate the merits of providing a night-time electricity use rate discount of
about 5 cents per kWh for EV customers, with the objective of lowering the adverse
impact of EV charging on the distribution grid and lowering the charging cost to the
EV owners.
B. If found feasible and desirable, bring a time-of-use electricity rate proposal to
Council for consideration and approval.
4. Rebate for EV owners who provide CPAU access to their EV’s charging system
A. Provide a rebate to EV owners who are willing and able to provide CPAU access to
their networked charging systems and are qualified to participate in CPAU’s
Voluntary Demand Response (DR) programs3.
B. The rebate this activity shall be a one-time payment of $3004.
1 Palo Alto Municipal Code Section 16.14.420, Ordinance 5324
2 Utility Service Connection Fee is in accordance with Council approved Utility Rate Schedule E-15. Historically, such
fees, when triggered, average $1300, but the actual fee could vary widely.
3 Conditions to be qualified to participate in the Voluntary DR program: a) the EV must primarily charge within City
of Palo Alto; b) ability for EV owner to communicate and control vehicle charging system remotely; c) EV owners
must agree to provide connectivity to the charging system via the EV owner’s charging system service provider;
and d) CPAU must have agreements with charging system’s service provide. Access to the connected and
communicating charging system may be provided either through vehicle onboard telematics or through the
customer EVSE system. Note: CPAU’s voluntary DR programs are and will be designed to reduce the adverse
impacts of EV charging on the electrical grid and assist California better integrate intermittent renewable
resources.
4 In return for the $300 payment, the expectation is that the EV owner will participate in CPAU’s DR program on a
voluntary basis over a 3 to 5 year period. The participation is limited to no more than 15 days per year. Notification
will be provided to the EV owner to voluntarily reduce or stop EV charging during specified time periods between
noon and 6pm on hot summer days. For details see: Staff Report 3454 of February 2013
Attachment B
3
5. Support related projects:
A. Support programs designed to lower the cost of electric utility services such as
enabling EVs owner to modulate charging patterns to lower the cost of charging.
B. Support pilot-scale programs, including those designed to test new and emerging
technologies, to expedite EVSE installation and EV adoption.
6. Fund educational and outreach activities to facilitate early adoption of EVs
A. Support community and stakeholder generated initiatives to advance goals of the
LCFS program
B. Utilize up to $20,000 per year to fund educational and outreach activities related to
facilitating early adoption of EVs. An additional $20,000 may be used per year to
fund staffing needs related to the programs.
C. Funds may be utilized to pay CPAU’s efficiency service contractors who directly
enable the installation of EVSEs in multi-family homes and cross promote efficiency
programs and EVSE installation.
Attachment C
1
Relative Merits of Program Options to Return LCFS Credit Value to Current & Future EV Owners in Palo Alto
Annual LCFS credit value of $500,000 in 2016 and increasing to $1 million by 2020 (CY 2014 & 2015 credits worth $600,000)
Objective of Programs: To encourage EV adoption by residents and commuters, and minimize adverse impacts on the electrical grid
Criteria for Evaluating →
Customer Program Options
↓
[A]
Simple
and Easy
to
Admin?
[B]
Serve large
segments
of EV
customers?
[C]
Spur
new EV
Buyers?
[D]
# of EV or
EVSE owners
served/year
[E]
Cost per
Customer
Served/
year
[F]
Anticipated
Cost/
year
[G]
Merit of
Program
through
2020
[H]
Segment
of current
and future
EV owners
served
Notes
1. Rebate installation of EVSE
at public & non-profit
buildings and at private
buildings with multiple
tenants (multifamily, mixed
use)
25 -50 EVSE
per year $3000/EVSE $75 to $150k Mainly
commuters
Public and non-profits are
an underserved segment
of the EVSE market
50 -75 EVSE
per year $3000/EVSE $150k to
$225k
Multi-
family
residents,
commuters
Multi-family buildings
are an underserved
segment of the EVSE
market
2. Discount CPAU fees for
upgrading customer’s
electrical service
connection, triggered by
EVSE installation
10-20 $3k $30-$60k
Easy to
administer;
valued by
customer
Single- and
Multi-
family
residential
Small number of
customers; but reduce
uncertainty
3. Use LCFS funds to
lower/rebate off-peak
electric rates for EV-TOU
customers
250 to 1000
@5¢/kWh
discount,
$150/yr
$40k to
$150k
Long lead
time to set-
up
Mainly
Single-
family
residential
Attractive long term
solutions, requires
smart meters to
implement
4. EV owners provide CPAU
access to their charging
system
50-100 $300, one
time < $30k
Residential
and
commuters
Assist CPAU manage
electrical loads through
Demand Response
5. Fund related pilot scale
projects - - - $40k TBD TBD
6. Education/Outreach and
staffing N/A N/A $80k
All
Education & outreach:
key to program success
Attachment C
2
Criteria for Evaluating →
Customer Program Options
↓
[A]
Simple
and Easy
to
Admin?
[B]
Serve large
segments
of EV
customers?
[C]
Spur
new EV
Buyers?
[D]
# of EV or
EVSE owners
served/year
[E]
Cost per
Customer
Served/
year
[F]
Anticipated
Cost/
year
[G]
Merit of
Program
through
2020
[H]
Segment
of current
and future
EV owners
served
Notes
1. Discount EVSE Permit Fee
for homes, schools &
businesses
100-300 $400 $40 to $120k
Residents,
businesses
Difficult to implement;
long term option
2. Annual or one-time rebate
for EVs registered in Palo
Alto
1,200
existing, 500
new EVs per
year
$200 to
$500
$100k to
$300k
High Admin
residents
Preferred option for CA
utilities; not supported
by most PA community
EV advocates, high
admin
3. Discounted or free EV
charging at public chargers
in Palo Alto
20-40 EV
chargers
$1,500
/charger if
made free
$30-60k
Would not
make big
difference
Mainly
commuters
Do not recommend
making EV charging free
long term, perhaps
discounted by 50%.
Level of merit denoted by
Recommended programs highlighted in green
EXCERPTED FINAL MINUTES OF THE JUNE 1, 2016
UTILITIES ADVISORY COMMISSION MEETING
ITEM 3. ACTION: Staff Recommendation that the Utilities Advisory Commission Recommend
the City Council Approve the Proposed Low Carbon Fuel Standard Credit Program, Including the
Use of Revenues From the Sale of Low Carbon Fuel Standard Credits
Senior Resource Planner Shiva Swaminathan summarized the written report. He said the overall
proposal is to reduce greenhouse gas (GHG) emissions by increasing the use of Electric Vehicles
(EVs) both by residents and by commuters. He noted that the majority of the City’s GHG
emissions are related to transportation. He said the Low Carbon Fuel Standard (LCFS)
regulations emanate from the Global Warming Solutions Act, AB32 in 2006 and aims to reduce
the carbon intensity of transportation fuels. Staff projects that the electricity used to charge
EVs in Palo Alto is less than 1% of the total electricity used in the City currently, but is expected
to grow to about 5.5% of total citywide use. These projections are based on the 1,300 EVs
currently in the City (or 3% of the City’s vehicles) and the expectation that EVs will comprise 30-
60% of the total number of vehicles by 2030.
Commissioner Schwartz asked if the City gets the numbers of EVs from the Department of
Motor Vehicles (DMV). Swaminathan replied that the City gets the numbers from the California
Air Resources Board (CARB), which gets them from the DMV so the City gets a total number of
EVs registered in the City, but does not know where they are located. Swaminathan said that
the number can also be obtained from the number of vehicles that got rebates from the State
and that this is public information and available on the web.
Commissioner Forssell asked if the number of EVs includes both plug-in hybrids and all electric
(battery) vehicles. Swaminathan said that the numbers include all EVs that plug in.
Swaminathan says that the value of the LCFS credits for EVs is about $500,000 in 2016 and is
estimated to grow to $1 million per year in 2020. The credits for CNG use is expected to stay
flat at about $30,000 per year. Swaminathan showed the usage of the City-owned 30 EV
chargers noting that they are used by 4 to 6 charging sessions per year per charger and that the
total cost to the City for the electricity is about $40,000 per year, but that the charging is
currently provided for free.
Commissioner Ballantine noted that the 30 City-owned chargers do not serve very many EVs.
Swaminathan agreed and added that there are about 400-600 privately-owed chargers at
businesses and other locations in addition to all the chargers in private residences.
ATTACHMENT D
Commissioner Forssell asked if there is a time limit for parking at the City-owned charging
stations. Swaminathan confirmed that there is a time limit.
Swaminathan stated that the revenues from the sale of LCFS credits must be used to benefit
current and future EV owners. He discussed the options examined for using the revenues.
Several options were evaluated and the ones that are not preferred include providing a
discount for permit fees for chargers, cash rebates to EV owners, and providing free electricity
at the City’s charging stations. He noted that most of the investor-owned utilities including
PG&E and also the Sacramento Municipal Utilities District are planning to provide one-time
cash rebates directly to EV owners.
Commissioner Schwartz said that she did not support providing a rebate to EV owners and
asked if there was any justification for such a proposal. Swaminathan said that justification used
by those utilities who are planning to provide rebates is that the credits were generated by
those EV owners. Assistant Director Jane Ratchye added that the proposal is not to provide
these rebates, but the regulations require that the funds be used to benefit EV owners and
rebates do exactly that, which is why PG&E plans to do—a one-time rebate to EV owners who
generated the credits. Commissioner Schwartz said that more EV chargers would benefit EV
owners and it doesn’t make sense to give the money to those who already have made a
decision to buy an EV. Swaminathan added that the community stakeholders also did not
support the proposal to provide rebates.
Chair Cook clarified that the money is supposed to benefit both current and future EV owners
so there is some reason to consider rebates. Chair Cook doesn’t necessarily support the idea,
but understands that it is a viable option.
Swaminathan stated that each EV owner generates 2 credits per year and that each credit is
worth from $100 to $120 so about $200 per year is generated by each EV registered in Palo
Alto. He said that another idea evaluated, but determined not be the best way to use the
proceeds, is to provide the energy at City-owned chargers for free.
Swaminathan described the items that are being proposed for the implementation in the near
term. These include providing rebates for Electric Vehicle Supply Equipment (EVSEs, or
chargers) for locations other than single-family residences, discounted Utilities fees related to
any required service upgrades, discounting off-peak rates, incentives to EV owners that provide
access to charging information, and education and outreach programs.
Chair Cook asked if the City would be eligible for these rebates for EVSEs since it would benefit
EV owners to have more chargers and noted that employment locations such as the schools
would be good places for charger installations since employees would be able to charge while
at work and that would encourage them to purchase an EV. Swaminathan said that these
would eligible and that the initial program restricts the rebates to 3 chargers per site, but that
for schools, since they have many campuses, the initial program would allow schools to get
EVSE rebates of up to $30,000 per year. He said that the schools indicated that EV chargers are
viewed by the schools as a way of attracting good teachers since they may not live in Palo Alto.
Swaminathan described the proposal to provide discounted Utilities fees related to any
required service upgrades since sometimes, a new transformer may be required in a
neighborhood as a result of a new EV charger being installed.
Commissioner Ballantine asked if this would apply when the next EV charger installation would
require a transformer upgrade. Swaminathan confirmed that this is exactly the situation that
would trigger this upgrade and the proposal is to partially fund the additional cost. He agreed
that this situation may be more prevalent in the future as the number of EVs rise.
Swaminathan described the idea to use LCFS funds to give a larger off-peak price discount for
EVs to charge at night. He said that there are billing issues with this, but it is an idea that will be
explored more in the future.
Commissioner Schwartz asked why we would want to discount non-solar electrons to
encourage charge EVs at night since the carbon content of the electricity should be a
consideration. Swaminathan said that the “off-peak” timing may change over time, but there
could also be impacts on the distribution system that call for encouraging off-peak charging. He
noted that the last customer installing a charger may trigger the need for a distribution system
upgrade that could be avoided by shifting charging to night-time, or off-peak hours. He said
that energy storage is also coming and could assist in effectively moving solar energy to off-
peak hours.
Commissioner Johnson said that if a discount for off-peak energy use was provided, how would
the utility know if the energy used off peak was for EV charging, or for any other energy use
such as a clothes dryer used at night. Swaminathan acknowledged that the utility would not
know that, or try to determine that, and it would consider the point when designing the
discount. Swaminathan said that the utility does not want to install a separate meter for EV
chargers.
Swaminathan said that another idea is to provide an incentive to EV owners who are willing to
share information about their EV charger profile.
Commissioner Schwartz asked if interval meters would be provided to access that type of data.
Swaminathan said that the information would come directly from the charger itself and interval
meters would not be needed.
Commissioner Johnston asked if a rebate would be provided for those buildings that are
required to install EVSE. Swaminathan said that those would not be eligible for rebates.
Commissioner Johnston asked if a building owner was required to put in 10 chargers, but
decided to put in more, could the owner get the rebate for the additional chargers.
Swaminathan said that additional chargers beyond what is required would be eligible.
Commissioner Ballantine asked if there was any consideration to providing an incentive to
direct DC charging, or at least providing some funds for research and development for such
activities as vehicle-to-grid infrastructure. Swaminathan said that staff has not considered this
for these funds, but there may be some funds for that type of work in the evaluation of storage
alternatives that is currently being done. He added that there are a number of storage systems
being installed at residences with the potential to use DC power.
Swaminathan said that LCFS credits are also available for compressed natural gas (CNG)
vehicles. Staff proposes to use those funds to fund improvements at the City’s CNG station or
subsidize the CNG dispensed.
Commissioner Johnston said that there is the potential to dramatically increase EV adoption
with more chargers available.
Commissioner Ballantine said that he likes the idea of supporting infrastructure build-out and
providing more EV chargers where employees are.
Commissioner Forssell supports the rebates for the EVSEs, especially for multi-family, mixed-
use and commercial buildings. She asked if a requirement for receiving a rebate for chargers be
that they be communication enabled to allow collection of data since it is important to
understand EV charging patterns. Swaminathan noted that the cost for a “dumb” charger is
about $200 and the cost for “smart” (communication-enabled) chargers is $2000 so we didn’t
want to require them. Also dumb chargers, or even Level 1 chargers, may be very appropriate
in some situations such as a workplace or school where employees park and can charge all day
and do not need Level 2 chargers. Commissioner Forssell said that discounting night-time rates
for charging may not be the best message if off-peak times change since people have a
tendency to learn a behavior once and there may be difficulty if the message about the optimal
time to charge changes. She added that she supports educational and outreach activities.
Commissioner Schwartz said that the rebate offered for providing information may be
unnecessary as most people would volunteer that information to the City to be helpful. She
said that people will most likely do this if asked and would not be motivated to do so by a
rebate and that the City can just appeal for the information and likely would receive it. She said
that the money could be better spent on additional chargers for schools and non-profits
organizations that could use them for their fleet vehicles.
Chair Cook said that it may be difficult to spend all the money in a year’s time and expects that
staff will return with additional ideas to spend the money generated. He suggested a group-buy
could be used to reduce the cost of chargers for multi-family facilities, schools, etc.
Swaminathan said that the underlying assumption is that the Utility will take a hands-off
approach and does not intend to buy or own the chargers, unlike what PG&E plans to do by
using ratepayer money to get into the business of building charger infrastructure. Chair Cook
agreed that the City could facilitate the purchase of EVs without owning them.
ACTION:
Commissioner Trumbull made a motion that the UAC recommend that Council LCFS program
and the use of revenues from the sale of LCFS credits and requested that staff explore the
suggestions the UAC discussed for the program. Commissioner Johnston seconded the motion.
The motion passed unanimously (6-0) with Chair Cook, and Commissioners Ballantine, Forssell,
Johnston, Schwartz and Trumbull voting yes and Vice Chair Danaher absent.