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HomeMy WebLinkAbout2014-05-12 City Council Agenda PacketCITY OF PALO ALTO CITY COUNCIL Special Meeting Council Chambers May 12, 2014 6:00 PM Agenda posted according to PAMC Section 2.04.070. Supporting materials are available in the Council Chambers on the Thursday preceding the meeting. 1 May 12, 2014 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. 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. TIME ESTIMATES Time estimates are provided as part of the Council's effort to manage its time at Council meetings. Listed times are estimates only and are subject to change at any time, including while the meeting is in progress. The Council reserves the right to use more or less time on any item, to change the order of items and/or to continue items to another meeting. Particular items may be heard before or after the time estimated on the agenda. This may occur in order to best manage the time at a meeting or to adapt to the participation of the public. To ensure participation in a particular item, we suggest arriving at the beginning of the meeting and remaining until the item is called. HEARINGS REQUIRED BY LAW Applications and/or appellants may have up to ten minutes at the outset of the public discussion to make their remarks and up to three minutes for concluding remarks after other members of the public have spoken. Call to Order Closed Session 6:00-6:30 PM Public Comments: Members of the public may speak to the Closed Session item(s); three minutes per speaker. 1.CONFERENCE WITH LABOR NEGOTIATORS City Designated Representatives: City Manager and his designees pursuant to Merit System Rules and Regulations (James Keene, Lalo Perez, Joe Saccio, Sandra Blanch, Kathy Shen, Melissa Tronquet, Brenna Rowe, Khashayar Alaee) Employee Organization: Service Employees International Union, (SEIU) Local 521; Hourly Unit Authority: Government Code Section 54957.6(a) Special Orders of the Day 6:30-6:50 PM 2.Community Partner Presentation by Stanford Arts 3.Proclamation - National Police Week 4.Appointment of Candidates to the Public Art Commission and the Planning and Transportation Commission REVISED 2 May 12, 2014 MATERIALS RELATED TO AN ITEM ON THIS AGENDA SUBMITTED TO THE CITY COUNCIL AFTER DISTRIBUTION OF THE AGENDA PACKET ARE AVAILABLE FOR PUBLIC INSPECTION IN THE CITY CLERK’S OFFICE AT PALO ALTO CITY HALL, 250 HAMILTON AVE. DURING NORMAL BUSINESS HOURS. Agenda Changes, Additions and Deletions HEARINGS REQUIRED BY LAW: Applications and/or appellants may have up to ten minutes at the outset of the public discussion to make their remarks and put up to three minutes for concluding remarks after other members of the public have spoken. OTHER AGENDA ITEMS: Public comments or testimony on agenda items other than Oral Communications shall be limited to a maximum of three minutes per speaker. City Manager Comments 6:50-7:00 PM Oral Communications 7:00-7:15 PM Members of the public may speak to any item NOT on the agenda. Council reserves the right to limit the duration of Oral Communications period to 30 minutes. Consent Calendar 7:15-7:20 PM Items will be voted on in one motion unless removed from the calendar by three Council Members. 5. Approval of Second Contract Amendment to Contract No. S13149754, for Labor Negotiations Services with Renne Sloan Holtzman Sakai LLC to add $90,000 for a Total Amount not to Exceed $180,000 and Extend the Contract Term by One Year 6. Policy & Services Committee Recommends Adoption of an Ordinance for the Use of Online or Electronic Filing of Campaign Statements Action Items Include: Reports of Committees/Commissions, Ordinances and Resolutions, Public Hearings, Reports of Officials, Unfinished Business and Council Matters. 7:20-7:35 PM 7. PUBLIC HEARING: to Hear Objections to the Levy of Proposed Assessments on the Palo Alto Downtown Business Improvement District and Adoption of a Resolution Confirming the Report of the Advisory Board and Levying Assessment for Fiscal Year 2015 on the Downtown Palo Alto Business Improvement District 7:35-9:00 PM 8. Information Follow up to Recommendation to Cancel Request for Proposals for Energy/Compost or Export Option Proposals for Food Scraps, Yard Trimmings and Biosolids and Begin Implementing the Organics Facilities Plan, including pursuing use of the Measure E Site for Composting (ITEM WAS CONTINUED BY COUNCIL MOTION ON APRIL 29, 2014 TO MAY 2014) 9:00-10:00 PM 9. Discussion and Council Direction Regarding Potential November 2014 Charter Amendments Related to Council Seats, Including Term Limits, Beginning/End of Council Terms and Annual Reorganization Meeting, and Other Matters 3 May 12, 2014 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. 10:00-10:15 PM 10. Policy and Services Committee Recommendation to Council on Moving Agreements with Avenidas and Palo Alto Community Child Care out of the Human Services Resources Allocation Process 10:15-10:30 PM 11. Consideration of Finance Committee Referral to the Human Relations Commission Regarding Additional Funding for Human Resource Allocation Process Agencies Inter-Governmental Legislative Affairs 10:30-10:45 PM 12. Adoption of a Resolution Supporting Proposition 13 Reform Council Member Questions, Comments and Announcements 10:45-11:00 PM Members of the public may not speak to the item(s) Adjournment AMERICANS WITH DISABILITY ACT (ADA) Persons with disabilities who require auxiliary aids or services in using City facilities, services or programs or who would like information on the City’s compliance with the Americans with Disabilities Act (ADA) of 1990, may contact (650) 329-2550 (Voice) 24 hours in advance. 4 May 12, 2014 MATERIALS RELATED TO AN ITEM ON THIS AGENDA SUBMITTED TO THE CITY COUNCIL AFTER DISTRIBUTION OF THE AGENDA PACKET ARE AVAILABLE FOR PUBLIC INSPECTION IN THE CITY CLERK’S OFFICE AT PALO ALTO CITY HALL, 250 HAMILTON AVE. DURING NORMAL BUSINESS HOURS. Additional Information Supplemental Information Standing Committee Meetings Policy and Services Committee May 13, 2014 at 6:00 PM Finance Committee May 13, 2014 at 6:00 PM Finance Committee May 15, 2014 at 6:00 PM Tentative Agenda Tentative Agenda Schedule of Meetings Schedule of Meetings Informational Report Informational Report: Spring 2014 Off-street and On-street Downtown Parking Occupancy/Inventory Data and the status of the Lot R Valet- Assist Program Public Letters to Council SET 1 City of Palo Alto (ID # 4751) City Council Staff Report Report Type: Special Orders of the Day Meeting Date: 5/12/2014 City of Palo Alto Page 1 Summary Title: Special Orders of the Day Title: Community Partner Presentation by Stanford Arts From: City Manager Lead Department: Community Services Matthew Tiews, Executive Director of Arts Programs for Stanford University, will briefly highlight the dynamic and diverse arts programming taking place at Stanford University. Stanford has partnered with the City of Palo Alto’s Public Art Program to initiate a temporary art installation by artist Ala Ebtekar in the University Avenue tunnels linking downtown Palo Alto to Stanford’s iconic Palm Drive. Ebtekar has proposed to engage students and the public through an interactive light and sound installation that will activate the space and radically change the experience of traversing those tunnels. The artist is in design development currently and fundraising is underway to implement the installation. Attachments:  Fact Sheet-Stanford Arts and Stanford Arts Institute (PDF)  Stanford Arts Brochure 2012-13 (PDF)  AlaEbtekar (PDF) About Stanford Arts Stanford University is placing creativity at the heart of a twenty-first-century education. The breadth and depth of the arts on campus are manifest in the academic departments and distinguished programs, as well as in the signature arts presenters on campus: Cantor Arts Center and Stanford Live. Stanford’s unique interdisciplinary investigation of the arts combines innovation and entrepreneurship that is the hallmark of Silicon Valley with academic leadership in art theory and practice. Only at Stanford University • The Cantor Arts Center, hosting major art exhibitions from around the world as well as displaying a remarkable encyclopedic permanent collection, is one of the most visited university art museums in the country and one that is free to students and the community. • Stanford Live, the university’s performing arts presenter, schedules over 40 events each year representing a wide range of genres—including chamber, symphonic, jazz and world music, as well as newly commissioned works—and offers free programs for students. • There are dozens of exhibition and performance spaces on campus utilized by over 100 student arts groups in addition to a robust residential arts program throughout the dorms. • The developing arts district at the entrance to campus will include Cantor Arts Center, Thomas Welton Stanford Art Gallery, Bing Concert Hall, Anderson Collection at Stanford University, and the McMurtry Building for the Department of Art & Art History. • The Stanford Arts Institute is the nexus for interdisciplinary campus-wide arts programming and provides support for faculty and student arts activities. Arts Initiative and Art 2016 Stanford Arts Initiative, launched in 2006 as part of The Stanford Challenge and successfully concluded in 2011, was a university-wide effort to enhance strengths in existing arts programs, create new arts facilities and opportunities for students and faculty, and integrate the arts throughout the life of the university. Art 2016 is the immediate legacy of The Stanford Challenge and it will map the next four years of the arts and imagine the course for future generations. By 2016, the 125th anniversary of the opening of Stanford University, students, alumni, parents, friends, faculty, staff and the larger community will be experiencing the arts on campus in new ways and in new facilities. A new arts district at the entrance to campus will provide state-of-the-art resources for arts programs and teaching and will increase opportunities for collaboration and connection. Three major building projects will be completed in the next several years: • Bing Concert Hall (2013) • Anderson Collection at Stanford University (2014) • McMurtry Building (2015), home of the Department of Art and Art History About the Stanford Arts Institute We focus on promoting cross-disciplinary approaches to the arts—in teaching, research, and art-making. Drawing on Stanford’s strengths in collaboration and innovation, the Arts Institute exists to integrate the values and skills found in the arts throughout a Stanford University education. What drives us? We believe that the arts reflect cultural values and transmit ways of being in the world, such as the experience of depth, differences of perspective, uncertainty, estrangement, and also a sense of belonging. They impart skills of collaboration, observation, abstraction, creativity, and representation. Such values and skills transcend individual artistic disciplines and can be applied to every facet of a university education. In our rapidly changing digital age, we are creating ways for these values to persist even as the forms of art, media environments, and habits of consumption undergo significant transformation. What we do The Stanford Arts Institute forges arts connections across the university, gives grants for faculty, staff, and students; presents arts events, incubates new projects and promotes artists and cultural groups across our campus. Since its founding in 2006, the Stanford Arts Institute has been a catalyst helping the Stanford arts community to grow. Stanford Arts Institute Mission and History: Blurb The Stanford Arts Institute* was founded in 2006 as the administrative and strategic center of the Stanford Arts Initiative, a main focus of the Stanford Challenge. Under the inaugural Arts Initiative faculty directors Bryan Wolf and Jonathan Berger, the Stanford Arts Institute was founded to raise the arts to a new level of prominence at the university and to place creativity at the center of a twenty-first- century Stanford education. Stanford Arts Institute has developed new programs to support the arts at Stanford, including grant programs for faculty, staff, and students; undergraduate internship and graduate fellowship programs; Your Art Here, a student curatorial and display program; lecture series; Spring Break Arts Immersion program; and much more. Stanford Arts Institute has also developed centralized communications to support the arts community and subcommunities, including the annual Arts Guide, distributed to all prospective freshmen; the weekly ArtsUpdate e-mail reaching over 4,000 arts-interested students across campus; arts.stanford.edu; and a host of various lists targeted to serve and be useful to arts subcommunities across the university. Through enriching the arts in student life, strengthening the core arts departments, creating new programs, expanding partnerships, and building world-class arts facilities, the Stanford Arts Institute is transforming the arts at Stanford. Through partnership with organizations and programs across the university, Stanford Arts Institute has established a network of communication and collaboration, facilitating community and innovation. As of 2010, Stanford Arts Institute is now housed in the School of Humanities and Sciences, and continues to work to place the arts at the heart of a twenty-first-century Stanford education. *formerly known as Stanford Institute for Creativity and the Arts. Bing Concert Hall is an amazing new resource. It’s a place for Stanford students, faculty, staff and community to come together to experience performances in an incredible acoustic and aesthetic environment. It’s a place for Stanford student performers to rehearse and perform to a new level of professionalism. And it’s a place for the university to welcome artists of the highest caliber in a facility that befits their stature. In the few months it has been open it has transformed the performing arts on campus, and we look forward to experiencing its impact in the many years to come. To celebrate the opening of Bing Concert Hall, arts organizations across the university created programs inspired by the new facility. Cantor Arts Center hosted its first exhibition of video work: Christian Marclay’s Video Quartet. The Architectural Design Program coordinated a series of programs around the history of Stanford architecture – including a student-designed app. The Department of Music and the Stanford Arts Institute organized a campus-wide project on Beethoven that featured performances in Bing Concert Hall, classes, and scholarly conferences and exhibitions. And the Department of Theater and Performance Studies hosted the world’s foremost gathering of performance artists and scholars: Performance Studies International (PSi). In the midst of it all, Creative Writing faculty member Adam Johnson won the Pulitzer Prize for fiction for his novel The Orphan Master’s Son. an INCREDIBLE YEAR for the arts at Stanford!2012-2013 was The focus for the year was the opening of Bing Concert Hall in January 2013. Excitement built with preview events in the fall as construction was nearing completion. The grand opening the weekend of January 11 featured campus performers and the San Francisco Symphony on Friday night, followed by multiple events for different audiences throughout the weekend – welcoming a total of 5,000 people to the hall over three days! This was followed by a marvelous inaugural season (see pg. 5). Throughout the year, planning was also underway for the future. In October 2012, ground was broken for the Anderson Collection at Stanford University, which is scheduled to open in fall 2014. And in May 2013, ground was again broken, this time for the McMurtry Building for the Department of Art and Art History, which is scheduled to open in fall 2015. These new facilities will be accompanied by new curricular programs: a freshman residential arts program, ITALIC; an honors program in the arts, open to students from any major; and a new breadth requirement for all Stanford students in “creative expression,” all of which launched in the fall of 2013. Perhaps the spirit of the arts at Stanford was best captured by The Symphonic Body: Stanford, a performance choreographed by visiting artist Ann Carlson that took place May 29 and June 26 in Bing Concert Hall (see pg. 15). The piece represented something uniquely Stanford – innovative and unusual; playful and significant; forward-looking and welcoming. This is what we are aspiring to in the arts at Stanford. I invite you to experience some of that spirit in the pages to follow, and to visit arts.stanford.edu for more stories about the creative vitality permeating the university. Best, Matthew Tiews Executive Director of Arts Programs Anderson Collectionat Stanford University Rendering of the McMurtry Building for the Department of Art and Art History next to Cantor Arts Center courtesy of Diller Scofidio + Renfro Stanford's developing arts district Cantor Arts Center McMurtry Building Bing Concert Hall Frost Ampitheater Memorial Auditorium BING CONCERT HALL OPENED TO RAVE REVIEWS IN JANUARY 2013. MORE THAN 700 STUDENT, FACULTY, COMMUNITY AND PROFESSIONAL PERFORMERS PARTICIPATED IN OPENING WEEKEND AND 5000 PATRONS ENJOYED THE NEW HALL. HAPPENING AT STANFORD Seven concerts in three days, most with multiple performers, made for a very busy hall on opening weekend. Echoing remarks made by master of ceremonies Anna Deavere Smith at the opening night celebration, Wiley Hausam, Executive Director of Stanford Live and Bing Concert Hall, said, “We are now launched into the world and the truly exciting experience of discovering how the performances in the hall change us and our relationship to each other begins.” 2 ARTS.STANFORD.EDU Chair of the Department of Music Stephen Sano described the weekend's opening events as the beginning of a truly transformative time for music performance at Stanford. "From the time our large ensembles moved into the Bing in early November and started rehearsing, it has been clear that the hall is an incredible game changer for us," he said. "In the brief time since then, the amount of musical growth experienced by our students has confirmed what we hoped we could achieve in the space – their musical acuity has already grown by leaps and bounds." 2012-2013 3 STANFORD ARTS EMBODY THE PURSUIT OF EXCELLENCE — CROSSING TRADITIONAL BOUNDARIES AND ASKING NEW QUESTIONS. HAPPENING AT STANFORD Artist Terry Berlier, an associate professor of art and art history, brings her environmental concern into the gallery. The collaborative and interactive nature of her work is germane to her artistic purpose: “I consider site and audience while producing sculptures that often incorporate sound, kinetics, installation or video.” Following a 2012 artist residency at Recology, the San Francisco solid waste and recycling facility, Berlier marked 2013 with a solo exhibition at the Thomas Welton Stanford Art Gallery titled Sounding Board, and her work was featured in an exhibition at the San Francisco International Airport Museum. 4 ARTS.STANFORD.EDU STANFORD LIVE PRESENTED AN INAUGURAL SEASON OF CLASSICAL, CONTEMPORARY, JAZZ AND WORLD MUSIC, DEMONSTRATING THE DIVERSE RANGE OF PERFORMANCE AND EDUCATION THAT ARE POSSIBLE IN THE STATE-OF-THE-ART BING CONCERT HALL. HAPPENING AT STANFORD Performances in the inaugural season highlighted Stanford's distinguished resident ensemble, the St. Lawrence String Quartet, along with internationally renowned soloists. New works were commissioned especially for Bing Concert Hall, including a work for chamber orchestra and choir by faculty composer Jonathan Berger and conducted by Stephen Sano on Bing opening night (pictured), two chamber operas, a landmark collaboration between the Kronos Quartet and Laurie Anderson, and a 14-performance Beethoven Project, featuring the Stanford Symphony Orchestra and Stanford Philharmonia Orchestra. Building upon a legacy of more than four decades of artistic presentation, Stanford Live is committed to sharing, celebrating, and advancing the art of live music, dance, theater, and opera. Stanford Live unites celebrated and emerging artists with the Stanford campus and greater Bay Area communities in a broad range of experiences to engage the senses and emotions, stimulate minds and enrich lives. 2012-2013 5 HAPPENING AT STANFORD STANFORD FOSTERS CROSS-DISCIPLINARY COLLABORATION TO CREATE SYNERGIES AMONG RESEARCH, TEACHING AND PERFORMANCE. The Chocolate Heads movement band is an example of the best of interdisciplinary collaboration. It is composed of student dancers, musicians, and visual and spoken- word artists, under the direction of Dance Division instructor and choreographer Aleta Hayes. In 2012-13, the band collaborated with jazz great William Parker, held a workshop with neuroscientists, staged an underground performance at Cantor Arts Center, dazzled an audience at Bing Concert Hall, partnered with the a cappella group Talisman on an original composition, and finished the year with a performance at San Francisco’s Yerba Buena Center for the Arts. All this while pursuing studies in medicine, architecture, engineering and fiction writing, to name just a few of their fields. 6 ARTS.STANFORD.EDU The Chocolate Heads performed for a capacity crowd at Cantor Arts Center and the audience joined the troupe in the lobby for the grand finale. 2012-2013 7 HAPPENING AT STANFORD THE STANFORD ARTS INSTITUTE SUPPORTS INNOVATION, CAMPUS ENGAGEMENT AND INTERDISCIPLINARY COLLABORATION. When he was in first grade, Daniel Wong was obsessed with cephalopods, a class of marine animals that includes squid and octopuses. Wong '13, who majored in studio art and minored in biology, received a Spark! grant from the Stanford Arts Institute for Cephalo-Pod. The project consisted of a series of four sets of hand- painted shoes paired with traditional flat canvas paintings. "I don't think I've ever done a project that was this much of an exposition of my own inner psychological goings-on," said Wong. The Stanford Arts Institute fosters a creative community, bringing world-renowned artists to campus for research, performance and student engagement. It ignites creative thinking and learning through an interdisciplinary honors program, offers grants to facilitate bringing artists into the classroom and creates new curricular programs. The Arts Institute promotes professional experiences in the arts through internships, a student curatorial program, career panels and Arts Immersion trips to cultural centers. 8 ARTS.STANFORD.EDU CANTOR ARTS CENTER PLAYS A KEY LEADERSHIP ROLE IN THE ARTS ON CAMPUS AND THE GREATER COMMUNITY OF SCHOLARS AND PATRONS. HAPPENING AT STANFORD Cantor presented 26 exhibitions and attendance topped 180,000 visitors this year, while the docent corps provided tours for more than 22,500 individuals ranging in age from K-12 students to adults. Cantor Arts Center engages students through a variety of academic, social, and creative activities, including class visits, student-only evenings and free studio classes. Students also work in many museum departments such as curatorial, education, registration and publicity. 2012-2013 9 10 ARTS.STANFORD.EDU ..................................................................................................................................................................................................................................................................................................................................................... 170 student rehearsals in 2012-2013, 118 performances, 5000 opening weekend visitors, 842 seats, 75-foot maximum distance from seat to conductor, 3190 square foot stage, 6 moving platforms, 10 acoustic sails, 5.5 acres of land, 1022.3 tons of steel, 3100 pieces of stone in lobby floor, 32 restroom stall occupancy lights, 1064 square feet of movable glass doors, 67 new trees, 4550 new shrubs, 1,085 construction workers, 80 design professionals, 4000 Stanford staff hours logged during construction. A 3-MINUTE SOUNDSCAPE FANFARE HERALDED THE OPENING OF BING CONCERT HALL AT 8PM ON 1/11/13. BING CONCERT HALL BY THE NUMBERS ..................................................................................................................................................................................................................................................................................................................................................... 2012-2013 11 12 ARTS.STANFORD.EDU ARCHITECTURAL DESIGN PROGRAM The Architectural Design program seeks to integrate engineering and architecture in ways that blend innovative architectural design with cutting-edge engineering technologies. CENTER FOR COMPUTER RESEARCH IN MUSIC AND ACOUSTICS (CCRMA) The Stanford Center for Computer Research in Music and Acoustics (CCRMA) is a multidisciplinary facility affiliated with the Department of Music, where composers and researchers work together using computer-based technology both as an artistic medium and as a research tool. CREATIVE WRITING PROGRAM Established at Stanford in 1946 by Wallace Stegner, the Creative Writing Program has expanded over the years into a vibrant graduate and undergraduate community that offers a unique interaction between even the newest students and the talented pool of Stegner Fellows and lecturers, all of whom are working writers with a passion for good writing and a real ability to teach it. DANCE DIVISION Stanford Dance is a division of the Department of Theater and Performance Studies (TAPS). Dance Division offers a range of broadly diverse approaches to dance as a performing art, cultural practice, political act and embodiment of ideology and beliefs. DEPARTMENT OF ART AND ART HISTORY The Department of Art & Art History, comprised of 22 core faculty as well as numerous adjunct faculty and post- doctoral fellows, is an interdisplinary department offering undergraduate and graduate degrees in art history, art practice, film studies, documentary filmmaking and design. The department’s courses offer myriad opportunities to engage with the visual arts, and to explore their historical development, their role in society and their relationship to other artistic disciplines. DEPARTMENT OF MUSIC A pillar of the Stanford community since the university’s founding and its formalization as a department in 1947, the Department of Music offers a broad variety of musical experiences to all members of the Stanford community with its 18 faculty members, 72 lecturers and consulting professors, and large and small ensembles. The department welcomes approximately 1,000 students every quarter for academic or performance opportunities and presents over 150 concerts each year. INSTITUTE FOR DIVERSITY IN THE ARTS (IDA) This interdisciplinary program in the humanities involves students in the study of culture, identity and diversity through artistic expression. Its mission is to create, support and advance powerful, collaborative and transformative arts practice and arts leadership. Academic Arts Departments & Programs ............................................................................................................................................................. ................................. ................. 2012-13 2012-2013 13 NOVEMBER 2012 International mural artist Juana Alicia attends the inauguration ceremony for her latest mural at the Chicano/ Latino student center El Centro. US Poet Laureate Natasha Trethewey is on campus to guest lecture and read her work. ............................................................................................................................................................. ................................. ................. MECHANICAL ENGINEERING DESIGN GROUP The Design Group’s philosophy combines an emphasis on creativity, technology and design methodology with a concern for human values and the needs of society. HASSO PLATTNER INSTITUTE OF DESIGN (D.SCHOOL) The d.school is thinkers, learners, doers and teachers defining a new kind of organization at Stanford. They are research faculty who love implementation, practitioners who love to study new ideas, experts who take classes from their students, and staff members who mentor senior faculty. THE DEPARTMENT OF THEATER AND PERFORMANCE STUDIES (TAPS) Theater and Performance Studies (TAPS) integrates theory, criticism and performance. The interdisciplinary department welcomes students from across the university who want to be involved in intensive, innovative and intellectual work. The department fosters student engagement with performance in multiple modes. Students acquire analytic skills through research-based scholarship. SEPTEMBER 2012 September Studies Arts Intensive takes place on campus. Green Library presents an exhibition of Western European medieval manuscripts and fragments titled Scripting the Sacred. CCRMA’s Transitions concerts under the stars. OCTOBER 2012 Anderson Collection at Stanford University groundbreaking ceremony (pictured above). “Another Look” book club focusing on the best short masterpieces that you’ve never read launches with Tobias Wolff discussing William Maxwell’s So Long, See You Tomorrow. DECEMBER 2012 Chocolate Heads movement band works with jazz luminary William Parker exploring improvisation and optimization. Photographer and aeronautics graduate student Ved Chirayath shoots NASA Ames Director Dr. Simon P. Worden as a space Viking as part of an ongoing project Physics in Vogue. (left) Jesse Rodin, assistant professor of music, and students rehearse for a performance of Renaissance choral music in Memorial Church. (center) Asian American Theater Project performs Death of a Salesman. (right) Stephen Hinton, music professor and faculty director of the Stanford Arts Institute, surrounded by Arts Immersion students in New York. Mary Margaret "Moo" Anderson, Provost John Etchemendy, Harry "Hunk" Anderson and Mary Patricia "Putter" Anderson Pence break ground on the Anderson Collection at Stanford University. 14 ARTS.STANFORD.EDU ........................................................................................ ............ ......................................................................................................................................................................... ANDERSON COLLECTION AT STANFORD UNIVERSITY The Anderson Collection at Stanford University (opening fall 2014) is an outstanding collection of 20th-century American art presented in a new 33,000 square-foot facility. The group is anchored in the work of the New York School and key modern and contemporary artists collected in depth. Major movements represented include Abstract Expressionism, Color Field Painting, Post-Minimalism, California Funk Art, Bay Area Figurative Art, Light and Space and contemporary painting and sculpture. ARTS INTENSIVE, A SEPTEMBER STUDIES PROGRAM The Arts Intensive program, led by the Office of the Vice Provost for Undergraduate Education (VPUE), offers students the opportunity to study intensively with Stanford arts faculty and small groups of other Stanford students passionate about art. The AI program takes place over three weeks in September before the start of fall quarter. IRIS & B. GERALD CANTOR CENTER FOR VISUAL ARTS Cantor Arts Center’s diverse collections span continents, cultures and 5,000 years of art history and include one of the largest presentations of Rodin bronzes outside Paris. The Cantor offers a wide range of special exhibitions, docent tours, lectures, gallery talks, symposia and special events. HUMANITIES CENTER The Humanities Center is an interdisciplinary research institute at Stanford dedicated to advancing knowledge about culture, philosophy, history and the arts. PRODUCT REALIZATION LAB The Product Realization Lab provides the expertise, tools and mentoring to provide more than 1,000 students each year with the skills to create tangible examples of their creative potential. RESIDENTIAL ARTS PROGRAMS The new ResArts program in Residential Education aims to bring arts to the students and students to the arts. It works to enhance and build places for students to create their own art, as well. STANFORD ARTS INSTITUTE Drawing on Stanford’s strengths in interdisciplinary collaboration and innovation, the Stanford Arts Institute aims to integrate the values and skills found in the arts throughout a Stanford University education. STANFORD LIVE Stanford Live supports multi-disciplinary performing arts on the Stanford campus. The organization is committed to sharing, celebrating and advancing the art of live music, dance, theater and opera. It unites celebrated and emerging artists with the Stanford campus and greater Bay Area communities. STANFORD STORYTELLING PROJECT This new arts program at Stanford explores the power of stories told through sound. The project sponsors courses, workshops, live events, grants, a radio program and a new quarterly journal, Epiphony. Campus Arts Organizations JANUARY 2013 Bing Concert Hall opening. President Obama nominates Professor Ramón Saldívar and Bruce R. Sievers to the National Endowment for the Humanities advisory board. FEBRUARY 2013 Cantor Arts Center launches Family Sundays with tours and art projects. CCRMA and the Department of Art and Art History collaborate on Icons of Sound, recreating the aesthetics and acoustics of Hagia Sophia in Bing Concert Hall. MARCH 2013 Adam Johnson wins the Pulitzer Prize for fiction for The Orphan Master’s Son. Cantor Arts Center partners with Google Art Project and makes more than 100 artwork images available for in-depth research and examination. APRIL 2013 McMurtry Building for the Department of Art and Art History groundbreaking ceremony. Digital musician and Mohr Visiting Artist Robert Henke begins his Stanford residency and teaches “Sound, Structure, and Machines” at CCRMA. ........................................................................................ ............ ......................................................................................................................................................................... MAY 2013 Ann Carlson has been animating the Stanford campus for several years as a visiting artist in dance and performance with the Department of Theater and Performance Studies. Carlson’s work mines the ephemeral and the commonplace and creates extraordinary results. Her 2013 project, titled The Symphonic Body: Stanford, was a movement-based orchestral work performed in silence at Bing Concert Hall. The performance event was made entirely from gestures. The 70 participants were Stanford faculty, staff and students – including the entire men’s volleyball team. Instead of playing instruments, they performed gestural portraits – a series of individual dances custom-made for each person and choreographed from their everyday movements. Commissioned by the Stanford Arts Institute and performed at the end of the academic year, it was the capstone to a remarkable season at Bing Concert Hall. HAPPENING AT STANFORD EXPERIENCING THE ARTISTRY EMBEDDED IN THE EVERYDAY. 2012-2013 15 16 ARTS.STANFORD.EDU A transformation in the arts at Stanford is well under way. Through the generosity of many alumni, parents and friends, the new arts district is poised for completion by 2016. Stanford donors have made key commitments to lay the foundation for new buildings, as well as curricular and programmatic offerings, to support integration of the arts into each student’s life. With the Cantor Arts Center as an anchor for the arts district, ground broken on the McMurtry Building, the Anderson Collection at Stanford University set to open in fall 2014, and a second season of remarkable performances at Bing Concert Hall, the revitalization of the arts on campus is palpable. With a new breadth requirement for all students in creative expression beginning in the 2013-14 academic year and a new interdisciplinary honors program in the arts, campus leaders are stepping up and supplementing the curriculum with new ways to maximize usage of existing facilities close to student residences. For example, the Roble Gym and Elliot Program Center are undergoing renovations to ensure they are well-equipped for collaboration, practice, and performance. It is thrilling to watch the presence of heightened creativity grow on campus each day. As Stanford enters the next phase of its commitment to the arts, additional support will solidify the university as a premier place to study, create and experience creativity across disciplines. PRIORITIES INCLUDE: »Building support for the Anderson Collection at Stanford University and the McMurtry Building »Endowed and expendable support for the Stanford Arts Institute, Bing Concert Hall and Cantor Arts Center »Endowed support for scholars, including fellowships, professorships, curatorships and directorships »Gifts of art for the Cantor Arts Center 2012-2013 ARTS ADVISORY COUNCIL ROBERTA BOWMAN DENNING, CHAIR STAFF STEPHEN HINTON DENNING FAMILY DIRECTOR OF THE STANFORD ARTS INSTITUTE; AVALON FOUNDATION PROFESSOR IN THE HUMANITIES AND PROFESSOR OF MUSIC MATTHEW TIEWS EXECUTIVE DIRECTOR, ARTS PROGRAMS MAUDE BREZINSKI DIRECTOR OF DEVELOPMENT, ARTS PROGRAMS Support for Stanford Arts Front: Tracy Martin Inside front cover: L.A. Cicero Page 1: Diller Scofidio + Renfro Pages 2–3: Jeff Goldberg Page 4: L.A. Cicero Page 5: Steve Castillo Pages 6–7: Tamer Shabani Page 8: Yuto Watanabe Page 9: Harrison Truong Page 11: Jeff Goldberg Page 12 (clockwise): Ge Wang, Alexis Lucio, Toni Gauthier, L.A. Cicero Page 13 (left to right): Yuto Watanabe, L.A Cicero Page 15: Toni Gauthier Page 16: Ennead Architects Back: Stanford Land, Buildings, & Real Estate webcam, Ennead Architects Krystina Tran Amy Larimer Robin Wander Photo Credits Design and Editorial Team Rendering of Anderson Collection at StanfordUniversity courtesy of Ennead Architects DIANE CHRISTENSEN HARRY ELAM MELISSA FETTER DORIS FISHER NANCY FORSTER ANDREA HENNESSY LESLIE HUME MARY ITTELSON RON JOHNSON ROBERTA KATZ BURT MCMURTRY DEEDEE MCMURTRY BILL MEEHAN NANCY MOHR MARGRIT MONDAVI WENDY MUNGER DAILEY PATTEE KIRK RADKE VICKI SANT JOY SIMMONS 2012-2013 17 Arts Within the Liberal Arts Last year I wrote in this space about the changing landscape of the arts at Stanford in terms of two defining features. One of those features is cross-disciplinary collaboration. The other is the trend toward greater curricular integration. The two can go hand in hand, as evidenced by a number of changes that I eagerly anticipated last year and which have now become reality. With the Beethoven Project, last season's centerpiece of the programming for the new Bing Concert Hall, students, faculty and members of the community participated in a variety of events that included performances (orchestral and choral), classes (both undergraduate and Continuing Studies), a conference (with speakers from near and far) and two exhibitions (one physical, the other digital). As a sequel project for next year, the Stanford Arts Institute is in the process of planning a similar campus-wide amalgam of performance and scholarship with a focus on the music of Haydn under the general theme of "Patronage and Enlightenment." The current academic session ushered in two more important developments. Beginning in September 2013, the new undergraduate breadth requirement took effect mandating that students enroll in a minimum of two course units in creative expression. Many classes formerly taken as extracurricular activities in the arts (in theater, music, studio art, creative writing and design) have now become an integral part of the undergraduate curriculum. The Breadth Governance Board, formed to oversee the implementation of this significant reform, has approved over 150 courses, among them a number of new classes that instructors have designed specifically to meet the new requirement. At the same time, many existing syllabi were refined, in some cases quite substantially, so that they align with the guidelines and realize the learning goals of the program. The Honors in the Arts program, administered by the Stanford Arts Institute, also began in fall 2013. The 12 students who formed the inaugural cohort are meeting in workshops throughout the year to work on individual interdisciplinary honors projects conceived to combine aspects of their respective majors with one or more art forms. The enthusiasm and creativity that the honors students have brought to their capstone work, not to mention the sheer variety of the group's artistic inventiveness, have been remarkable to witness. They bode well for the future of the program. All of these curricular activities are taking place against the backdrop of a lively national discourse about the value of the arts in higher education. Scarcely a week goes by without another op-ed piece appearing in the national press arguing for the central role that the arts and humanities have to play, while at the same time observing how increasing numbers of students are favoring STEM disciplines, such as computer science, for their majors. At Stanford, we will continue to address the challenges of delivering a broad and balanced liberal arts education for our students in spite of these national trends. (Of particular interest here is the proposal currently being discussed to develop joint degrees that bring together humanities and arts disciplines with the study of computer science.) The many arguments to be made in support of the indispensable value of the arts in the formation of the whole person have been well rehearsed. I cannot recall reading an op-ed that makes the case against their value. Imagine life without them! Life without the arts, to paraphrase a maxim of the philosopher Friedrich Nietzsche, would indeed be an error. STEPHEN HINTON DENNING FAMILY DIRECTOR OF THE STANFORD ARTS INSTITUTE arts.stanford.edu ANDERSON COLLECTION AT STANFORD UNIVERSITY Opening Fall 2014 121 modern and contemporary American paintings and sculpture | 86 Artists (top left) Stanford Land, Buildings, & Real Estate webcam image taken of Anderson Collection at Stanford University construction project on October 9, 2013 (above) Second floor gallery plan courtesy of Ennead Architects UNIVERSITY AVENUE TUNNEL TITLE: PASSAGE (OR TUNNEL) ARTIST: ALA EBTEKAR IN COLLABORATION WITH BINTA AYOFEMI APRIL 2014 APRIL 2014 PASSAGE 1 VISION PASSAGE  is  an  interactive  light  and  sound   installation  by  Palo  Alto  based  artist  Ala  Ebtekar  in   collaboration  with  Binta  Ayofemi.  The  newly   commissioned  installation  will  activate  Palo  Alto's   University  Avenue  tunnels  with  a  soft  gradient  of   color,  light,  and  sound.  The  project  aims  to   transform  the  188  foot  long  University  Avenue   Tunnel  with  energy-­‐efficient  LED  lights  that   produce  glimmering  arches  of  light  along  the   tunnel’s  walls  and  ceiling  and  a  sound  narrative   that  evokes  the  diverse  populations  of  residents,   commuters,  students  and  community  members   that  travel  the  tunnel  every  day.     The  project  will  highlight  the  significance  of  the   space  as  both  a  physical  and  metaphoric  gateway,   connecting  points  of  city  pride  including   downtown  Palo  Alto,  Stanford  University,  Silicon   Valley  and  the  broader  community.   The  PASSAGE  project  evokes  the  daily  use  of  the   pedestrian  tunnels  and  the  Caltrain  platform   connecting  Palo  Alto  with  San  Francisco  and   Silicon  Valley.  Simultaneously  playful  and  ethereal   color  schemes  will  enhance  and  enliven  the  city’s   more  human  qualities  by  activating  a  space  where   the  sharing  of  ideas  and  an  immersive  art   experience  can  be  enjoyed  in  a  public  space.     Technology  plays  a  key  role  in  the  creation  of   PASSAGE.  One  layer  is  an  algorithm  responding  to   nuanced  shifts  in  variables  including  weather  and   foot  traffic  while  the  other  layer  is  a  social   sampling  of  sounds.  These  ever-­‐changing  waves   of  sound  and  arching  light  are  meant  to  evoke   connection  and  discussion  around  community,   ideas,  experiences  and  the  way  individuals   experience  everyday  life.       2   LIGHT  +  SOUND     The  tunnel  is  further  illuminated  by  a  sound   installation  component,  allowing  participants  to   experience.  The  tunnel  will  be  experience  both   visually  and  acoustically  in  an  immersive,  largely   immaterial  environment.  Context  is  fundamental   to  how  the  installation  will  be  aesthetically   perceived.     By  utilizing  interactive  sound  elements,  the   PASSAGE  project  invites  the  visiting  public  to   engage,  linger  to  contemplate  the  work  and  stay  a   longer  time  due  to  curiosity  and  engagement  with   sound  in  the  tunnel.     The  audience  will  experience  occasional  soundings   –  from  the  shimmer  of  chimes  to  sampled  music  to   ambient  sound  loops,  all  in  a  public,  urban  space.   Heard  as  pedestrians  walk  or  bike  through  the   tunnel,  the  sound  is  luminous  and  acoustic,  with   intervals  of  sampled  music  and  simple  chimes   played  during  peak  commute  hours.  An  interactive   app  to  be  developed  as  part  of  the  project  assures   that  the  public  experiences  the  project  as  an  open   form  that  encourages  the  audience  to  explore  the   space.     . Place Logo Or   “It’s  a  type  of  public  musical   score.  We’re  creating  a  slow   pour  of  light  and  sounds   into  the  tunnel,  activated  by   pedestrian  flow  and  shared   experiences.”       -­‐Ala  Ebtekar       "We  see  Palo  Alto  as  this   interesting  juncture   between  connected  worlds,   between  Palo  Alto  and  San   Francisco,  between  Palo   Alto  and  Stanford,  between   Palo  Alto  and  Silicon  Valley.   Our  installation  explores  the   creativity  and  cross   pollination  of  ideas  implied   by  a  shared  platform."       -­‐Binta  Ayofemi     TRANSFORMING  THE  TUNNEL   SIGNIFICANCE  +  TRANSFORMATIVE  USER  EXPERIENCE   Paying  homage  to  Palo  Alto’s  role  as  a  technology  leader,  PASSAGE  is  both  an  art  installation  as  well  as  a  mobile  app,   allowing  for  a  social  component  to  the  creation  of  the  work.  By  using  song  fragments,  crowd-­‐sourced  from  the  public.     Technology  sound  sources  will  be  heard  though  sound  points  (like  speakers)  placed  in  different  areas.  Palo  Alto  has  long   been  a  place  for  “Big  Ideas”  with  ambitions  to  connect  communities  of  diverse  people.  PASSAGE  celebrates  this  point  of   pride  by  bringing  together  technology  with  human  elements  of  connectivity  and  shared  experiences.     PASSAGE  aims  to  transform  the  commuter  experience  by  turning  the  dark  passageways  into  a  popular  destination.  The   use  of  LED’s  for  this  ambitious  project  is  a  nod  to  Palo  Alto’s  focus  on  energy  efficiency.       PASSAGE ARTIST  BIOS:   Ala  Ebtekar     Ala  Ebtekar  is  an  American-­‐based  visual  artist  who  lives  in  the  San  Francisco  Bay  Area.  Ebtekar  is  known  primarily  for  his   work  in  painting,  drawing,  and  installation  that  explores  the  juncture  between  history  and  myth,  forging  a  multi-­‐faceted   project  that  melds  Persian  mythology,  science,  philosophy  and  pop  culture  together.  As  a  young  teenager  he  joined  the   seminal  group  K.O.S.  (Kids  of  Survival),  working  with  artist  Tim  Rollins  on  collaborative  artworks  involving  groups  of   urban  youth.  Ebtekar  received  his  BFA  from  the  San  Francisco  Art  Institute  in  2002  and  his  MFA  degree  from   Stanford  University  in  2006.  His  work  has  been  exhibited  internationally  and  throughout  the  United  States  in  such  shows   as  "Migrating  Identities"  at  the  Yerba  Buena  Center  for  the  Arts,  “One  Way  or  Another:  Asian  American  Art  Now”,  a   touring  exhibition  originating  at  the  Asia  Society,  NYC,    the  2006  California  Biennial  at  the  Orange  County  Museum  of   Art,  “The  Global  Contemporary:  Art  Worlds  After  1989”  at  the  ZKM  –  Museum  for  Contemporary  Art  in   Germany,    "cylindr.us"  at  the  Asian  Art  Museum,  as  well  as  in  "The  Beginning  of  Thinking  is  Geometric"  at  the  Maraya   Art  Centre  in  Sharjah,  UAE.  He  is  currently  a  visiting  lecturer  in  the  Department  of  Art  &  Art  History,  and  the  Institute  for   Diversity  in  the  Art  at  Stanford  University.   Binta  Ayofemi   Binta  Ayofemi  is  a  San  Francisco-­‐based  artist  fascinated  by  open-­‐source  systems,  including  pattern  language,  urban   gardens,  and  pop  music.     Ayofemi's  series  Software,  a  rehearsal  of  utopian  forms  mined  from  the  Shakers  to  Soul  Train,  is  currently  featured  in   the  exhibition  The  Possible  at  the  Berkeley  Art  Museum.  Ayofemi  presented  her  work  Voids/Latencies,  an  anthology  of   urban  landscapes,  at  Theaster  Gates’  Huguenot  House,  part  of  Documenta  13.  Her  Garden/Score  is  a  series  of  urban   gardens  and  tactile  landscapes  across  adjacent  lots  in  Chicago’s  South  Side  neighborhood.  Ayofemi  has  presented  her   work  at  the  Kadist  Art  Foundation,  SFMOMA,  Southern  Exposure,  the  Carpenter  Center,  the  Rebuild  Foundation,  and  the   Wattis  Institute.    Ayofemi  received  her  MFA  from  Stanford  and  was  awarded  a  Harvard  Design  Fellowship  for  her  work   on  urban  landscape,  Islamic  architecture,  and  surface  material.  In  2013,  Ayofemi  won  Yahoo’s  hackathon  for  most   creative  hack,  collaborating  on  original  code  that  turns  cascades  of  Tumblr  images  into  music.               PASSAGE City of Palo Alto (ID # 4752) City Council Staff Report Report Type: Special Orders of the Day Meeting Date: 5/12/2014 City of Palo Alto Page 1 Summary Title: Proclamation - National Police Week Title: Proclamation - National Police Week From: City Manager Lead Department: Police Attachments:  Attachment A: National Police Week (DOC) CITY OF PALO ALTO PROCLAMATION National Police Week May 11th thru May 17, 2014 WHEREAS, the President of the Unites States and Congress have designated May 15th as Peace Officers’ Memorial Day, and the week in which May 15th falls as National Police Week; and WHEREAS, it is important that all citizens know and understand the duties, responsibilities, hazards, and sacrifices of their Police Officers, and that members of our Police Department recognize their duty to serve the people; to safeguard lives and property; to protect the innocent against deception, the weak against oppression or intimidation and the peaceful against violence or disorder; and to respect the constitutional rights of all to liberty, equality and justice; and WHEREAS, one Law Enforcement Officer, on average, is killed in the line of duty somewhere in the United States every 58 hours; since the first known line-of-duty death in 1791, more than 20,000 U.S. law enforcement officers have made the ultimate sacrifice; and WHEREAS, there are more than 900,000 sworn Law Enforcement Officers now serving in the United States, which is the highest figure ever with around 12 percent of those are female. WHEREAS, the men and women of the Palo Alto Police department unceasingly provide a vital service with integrity and respect; and to honor Officers Lester Cole, Gene Clifton, and Theodore Brassinga who have made the ultimate sacrifice in service to our community and let us recognize and pay respect to the survivors of our fallen heroes. NOW, THEREFORE, I, Nancy Shepherd, Mayor of the City of Palo Alto, on behalf of the City Council, do hereby proclaim and call upon all citizens of Palo Alto to observe the week of May11th – May17th, 2014, as Police Week with appropriate ceremonies and observances in which all of our people may join in commemorating law enforcement officers, past and present. Presented: May 12, 2014 ______________________________ Nancy Shepherd Mayor CITY OF PALO ALTO OFFICE OF THE CITY CLERK May 12, 2014 The Honorable City Council Palo Alto, California Appointment of Candidates to the Public Art Commission and the Planning and Transportation Commission The City Council is scheduled to interview two candidates for the Public Art Commission (PAC) and six candidates for the Planning and Transportation Commission (PTC) on Wednesday, May 7, 2014. Public Art Commission On Monday, May 12, 2014 the Council will vote to appoint 1 three-year term on the Public Art Commission, expiring on April 30, 2017. The 3 PAC Candidates are as follows: Christine Miller Kelly Jim Migdal Jeanine (Savannah) Murphy Voting will be by paper ballot. The first candidate to receive at least five votes (required) will be appointed. Planning and Transportation Commission On Monday, May 12, 2014 the Council will vote to appoint 2 unexpired terms ending October 31, 2016 and October 31, 2017. The 6 PTC Candidates are as follows: Sea Reddy Przemek Gardia Eric Rosenblum Brian Hamachek Freda Manuel Voting will be by paper ballot. Voting will occur in two rounds. Round 1: the first candidate to receive at least five votes (required) will be appointed to the term ending October 31, 2017. Round 2: the first candidate to receive at least five votes (required) will be appointed to the term ending October 31, 2016. Copies of all applications are attached. Some applications may be redacted at the request of the Page 2 applicant. A full set of non-redacted applications will be emailed to Council Members directly. ATTACHMENTS:  Kelly, Christine Miller PAC - Redacted (PDF)  Migdal, Jim PAC - Redacted (PDF)  Murphy, Jeanine PAC - redacted (PDF)  Reddy, Seelam (Sea) Prabhaka PTC (PDF)  Gardias, Przemek PTC (PDF)  Rosenblum, Eric PTC (PDF)  Hamachek, Brian PTC (PDF)  Manuel, Freda PTC (PDF) Department Head: Donna Grider, City Clerk Page 3 i>~~~~n~Ph~l~~~ipn •.. ' .. Name: Address: Phone 1: Phone 2: E-mail: Are you Do you have any relatives 01' members of your household who are employed by the City of Palo Alto, who are currently serving on the City Council, or who are Board or Commission Members? NO Are you available and committed to complete the term applied for? 'i ~~ California state law requires awolnted .Board and Commission Members to file a detailed disclosure of their financial interests, Fair Political Practices Commission, Conflict of Interest, Form 700, 00 you have an investment ·In, or do you servees an officer or director of, a company doing business in Palo Alto which voubelleve is likely to; 1) engage In business with the City, 2) provide products or services for City . "'" .~ ..... " .... ' ...... , ..... ' ..... ,...... .., .......... " I'l0 '._.;-.'.yi.F.~!! !l.! V!.IJ.!! V! H 1'_·!V-:'1.! ! t_-=;:'!I.!l .• ! !f._t:=, i31•1 yi.H.! '.n!¥!! !C_."t.!! tJP.'pr.:! q; !!! r t.Hl.1 !"\ltl.' ~ NO Community Group · Email from city Clerk • 6iO Alto Week~ , Dally Post · Other: V:U, ,. b()\.\L -A 11c,'t.1Nl <M4!I ~t Co~iS"S'I'f?1IleV, . ·~~nt~~~~~'i&#~;~~IS!~~:.~~~~~~~r~~,..t9~~!~~~f~R,~ct~~~~~!Ht~~~~~i:0:~.#~~t~~~!:o.ral:r~~I,~t~c'.. . ~ '8yA ~M W~~-\"II) U.VlA~ i1Y iA S+ LolA"S I ?~+\~~ \~or2- .; ~yf\-iVoM ~~D\ C.DU~ of M if' SA4l\~Cl'SO/V\i\~G'V I~c;~ ~ ~ .. 2a>T .. rw.velO~J ()..s ~ 4.v<h'yt iM,.J. Jt~:~e.r foV'~.Lt-t UJ"trs. (lO£O)t.oyt~~~) II> :c UA.Vv~ ~ tl~ il\ 'Dtt* of w-t··t:ues i~ ~ ~ 'J"ose S'\'dt ~ve..ts'fc:l. . li~l~~!;;~~~,i~~iA~G.\~h~I'~~\:.~~~~f2I~~~.wt' f\-s. Present or Last Employer: csrs (.t Se,koo, If !Jrv+ + 'De S ; ~V\ : Occupation: LevhlY~ -:t. ~~ \1\. -+W ~stv i/U 'Ot~ i &" t>~" \r~~~1~.~~~~i~t.\;.~~.~~~ ... ll le~s, . -r. V~tur fuy II\N1 S-Ol;ltS 'Pdo ~ L..\~ ~ -\u.w1s-'l. ~ itc.cz... ~S,~~ t19o~",,~ ~ (Q~ ~~ . . ;I: cf..M ~ t.o-c..L~~ of ~+s~ l>rAwl-·S'1V\LfS'e·~" :r: ~~ ~ wet:> V1>D~'.~) ~'1-~ltV--1-~~,iF California Government Code Section 6254.21 states, in part, "No state or local agency shall post the home address or telephone number of any elected or appointed official on the Internet without first . obtaining the written permission of that individual." The full code is attached .. This consent form wIll not . be redacted and will be attached to the Application and posted to the City's website. The full code can be read here: LINK Read the code, and check only ONE option below: I give permission for the City of Palo Alto to post to the City's website the attached Board and Commission Application intact. I have read and understand my rights under Government Code Section 6254.21. I may revoke this permission at any time by providing written notice to the Palo Alto City Clerk. OR I request that the City of Palo Alto redact my home address, phone numbers, and email address from the attached Board and Commission Application prior to posting to the City's website. I am ornvlrlinn thA followinn AltArn~tA informAtion Ann rFlnllFl~t thAt thAV II~A thA followinn 1".1'1l1tl'lnt 11SN~R,{. p~~ CI9 q~3{)3 Address: 13/3 IJ~ YlJ." pu,~ U1 "'(3i3 Phone 1: "t IS', 7bf, .. t;1?f"'I Phone 2: E-mail: Date:dJ~ a{, '-I E·mail: Are you a Palo Alto Resident? Yes Do you have any relatives or members of your household who are employed by the City of Palo Alto, who areaurrently serving on the City Council, or who are Board or Commission Members? No Are you available and committed to complete the term applied for? Yes California state law requires appointed Board' and Commission Members to file a detailed disclosure of their financial Interests, Fair Political Practices Commission, Conflict of Interest, Form 700. Do you have an Investment In, or do you serve as an officer or director of, a company doing business in Palo Alto which you believe Is likely to; 1) engage In business with the City, 2) provide products or services for City projects, or 3) be affected by decisions of the board you are applying for? No. Excluding your prinCipal residence, do you own real property in Palo Alto? No. : Community Group ~ Email from City Clerk : Palo Alto Weekly article in weekly about 1% \ Dally Post .Other: ______________________________ ...- . Grew up surrounded by art, raised by a sculptor in Chicago, a city with rich tradition of pubJic art. Have built small private collection of sculpture, paintings. drawings and photographs. Enthusiast who regularly attends : museum and gallery exhibits in and outside of the US. Am familiar with the different models for acquisition, : stipends, artists in residence etc. Degrees in History (BA, al1d International Relations, MA). Career : in tech creating'and negotiating partnerships with a wide variety of companies in consumer Imobile internet. ; Present or Last Employer: FacebooJe. Inc. ,Occupation: Director of Business Development. Responsible for negotiating partnerships with Facebook's most strategic relationships. Volunteer coach, For the past 4 years have coached teams for YBall, NJB Basketball. A Y SO youth soccer. ¢lassroom volunteer for 3rd grade math at Addison ,~ctiveparent in fundraising, planning for events at Addison. co-managing the school's fall event -the Hoe-Down and Guns and Whiskey ~ most sought after auction event. Sponsor' a college .student via Meritus a non-profit that provides funding for college .. Also support Bay Area youth educationalopportunities·through·philanthropic-commitments·toSummerSearchan d-KIPP·Bay-Area;-·-----, .. i Public art enriches the community and helps to defirie it. I grew up very familiar with the works of Picasso, ! Chagall,Miro, Noguchi and others in Chicago. Art in public places calls for us to think differently, and calls , for dialogue and discussion. Relocating from SF to Palo Alto in 2007, 1 have become a fan of some pieces \ and have been less enthusiastic about others. but feel we are lucky to have art here as a vibrant part of the city. The : adoption of the 1% for art policy is the beginning of an exciting period here and I would like to be part of the team !I think that the I % for art decision is an interesting issue in that it provides a new funding model (that has iworked well in other places) at a time when municipal funding is tight, and when we're seeing a lively !debate in the city about conversion of properties to higher density/higher $ value per square foot. While the !Cominission and the city wiD attract critics about the use of funds (public funds for art always does), the long ; ! I would like to work toward engag~ng a mix of artists in projects that would increase broad-base of support : and enthusiasm for public art and optimizing the communications to ensure the smoothest landing for, i projects in the community. 'I would see a mix of high school, young and established /highly regarded artists, : and would work to engage business peopJe with means to get involved as advocates. • Municipal Arts Plan LINK : The plan looks exciting ... I have extensive experience in partnerships realm. and contacts in the business ~ community through career working in tech (Facebook, eBay, WebTV). I don' have direct experience : in art realm. but would hope to create value based on experience/network in this context. I like the idea : of working with other cities to create programs. For many artists the idea of placing a piece for a year and then • needing to find a new home for it is, a challenge. ' : California Government Code Section 6254.21 states, In part, "No state or local agency shall post the , home address or telephone number of any elected or appOinted official on the Internet without first : obtaining the written permission of that Individual." The full code Is attached. This consent form will not • be redacted and will be attached to the Application and posted to the City's website, , T.he full code can be read here: LINK Read the code, and check only ONE option below: x I give permission for the City of Palo Alto to post to the City's website the attached Board and Commission Application intact. I have read and understand my rights under Government Code Section 6254.21. I may revoke this permission at any time by providing written notice to the Palo Alto City Clerk. OR I request that the City of Palo Alto redact my home address, phone numbers, and email address from the attached Board and Commission Application prior to posting to the City's website. I am providing the following alt$rnate Information and request that they use the fOllowing contact Information Instead. Address: Phone 1: Phone 2: e-mail: 1 uu.J JD ..Af~ Date: 312412014 Signature:_.L~ ______ --,(I-(J-________ _ Jim Migdal Experience FRcebook. -Inc. Palo Alto. CA. 2007-2011 Director, Business 'Development Worked closely with product and engineering leadership to build successful relationships with Facebook's strategic partners. Selected accomplishments: - • Led music-related initiatives, driving negotiations with the labels, Apple, and ultimately closing platform/monetization deal with Spotify - • Closed advertising-related deal with Nielsen to create a new standard for online ad measurement, leading teams to term~ and a signed deal In 19 days • Closed deals with Hotmall and Yahoo to ensure ongoing access to non-Face book social graphs and email deliverability that were both critical to Facebook's user growth and retention _ • Closed platform related deals with Amazon, HP, Comcast, Microsoft Outlook and Windows Live, Yahoo • Oversaw search and advertising relationship with Microsoft, closing several deals that generated significant portion of Facebook's revenue In '07, 'oa • Led platform-related discussions with Apple around iOS, Mac OS • Managed acquisition of various assets, including technology infrastructure _with HP and Intel, licenses for face recognition technology, copyrights, and FB.com • Supported various product initiatives including Maps, Local Deal~, Beacon, Japan-related growth efforts eBRY. Inc. San Jose. CA. 2004-2006 Director, Toys and Sporting Goods (promoted from senior manager) GM with three reports responSible for accelerating the growth of the US $1.7 -B Toys and Sporting Goods businesses. Oversaw strategy, product, PR, financial planning, marketing and business development. • Doubled bid-through rates and increased natural search traffic by 40% through development and irr:Jplementation of kids' toys strategy fo'cused on the gIft buying experience and the eBay Toy Finder • Generated media coverage in 150+ newspapers and several network TV outlets through holiday marketing • Improved manufacturer relationships (e.g., LEGO, Bratz, Lionel, Mattei, Hasbro) through eBay Exclusives and charity auctions Ingenlo. Inc. (acqyired by AT&T) San Francisc9. CA. 1999-2004 Director, Program Management (2001-2004), Director, Business Development (1999-2000) Managed all elements of voice experience for online advisor platform; drove distribution related deals and built out team as first business development hire for Benchmark-backed start-up eventually acquired by AT&T for $2aOMM. . • Grew aOO-number element of business from 0 to 35% of total revenue • Reduced launch time for new service implementations from 24 hours to 15 minutes through partner platform • Increased revenue per customer by 175% and reduced expenses by 40% by optimizing acquisition flows • _ For Match.com, managed end-to-end implementation of subscription-based voice personals service • Developed requirements for telephony and tracking components of Pay-Per-Call business, implementing low-cost solution for number procurement and assessing opportunities for VOIP; cited on two US patents • Closed deals with MSN,Encarta, Office, CNET, Infospace, Inktomi, AT&T, First Date, Global Crossing WebTV Networks. Inc. (acquired by MicrosoID Mountain View. CA. 1997-1999 Senior Manager, Strategic Partnerships Managed four reports responsible for distribution partnerships on the WebTV platform. • Exceeded revenue targets for distribution deals with eBay, Amazon, CTW, Classifieds 2000, and Infoseek • Managed RFP process and closed multi-million dollar deal with First USA for credit card marketing • Implemented plan to improve customer experience and create new monetization stream fOr email • Managed Interactive TV relationships with USA Networks, WarnerBro~, CTW Arthur D. Little. Inc. San Francisco. CA 1995-1997 Manager, promoted from Consultant Led engagement teams with technology clierts, representing $1.8 million in last 12 months at firm. Developed sales presentations, scoped and budgeted projects and delivered findings to executive management. • For Pacific Bell, developed strategy for ISP business, modeling investment requirements and revenues for different options; sold follow-on strategy for delivery of value-added services • For Hutchison Whampoa, valued market opportunities and ROI for a Canadian wireless license acquisition • For Smart Valley, led engagement to assess performance of one of first Public Access Networks • Wrote and published articles in trade publications to generate marketing San Francisco Consulting Group (acquired by KPMG) San Francisco. CA 1991-1994 Consultant, promoted from Analyst Conducted business strategy and market assessments for network operators and technology companies. • For PacTel Video Services, developed requirements for billing, customer care, and provisioning. • For France Telecom, led business process benchmarking effort, conducting client work in French • For NEC and Pac Bill Information Services, drove efforts to optimize of customer support operations Baln & Company Boston. MA. 1989-1990 Associate Consultant Conducted financial, competitive and operational analysis for Fortune 100 companies, including Anheuser- Busch, Sara Lee and Emerson Electric. Education Yale University, New Haven, CT. 1987-1989 MA, International Relations Teaching Assistant In Comparative Politics. SUmmer Intem in Deutscher Bundestag, conducting research on labor relations policy . Macalester College, Saint Paul. MN 1982-1986 BA, History, magna cum laude Phi Beta, Kappa; awarded Highest Honors for senior thesis, written in French Other Languages: fluent in French, good knowledge of German, conversational Spanish Honors: Fulbright Scholar, Relms, France 1986-87 . Interests: Daughters (8,11) and related volunteering, swimming, tennis, surfing, photography, K-12 education . (investors In KIPP, SummerSearch and Meritus) Do you have any your are are currently serving on the City Council, or who are Board or Commission Members? Are you available and committed to complete the term applied for? California state law requires appointed Board and Commission Members to file a detailed disclosure of their financial interests, Fair Political Practices Commission, Conflict of Interest, Form 700. Do you have an investment in, or do you serve as an officer or director of, a company dOing business in Palo Alto which you believe is likely to; 1) engage in business with the City, 2) provide products or services for City projects, or 3) be affected by decisions of the board you are applying for? Excluding your principal residence, do you own real property in Palo Alto? Community Group Email from City Clerk Palo Alto Weekly . :~:;o.tili~ ~ . California Government Code Section 6254.21 states, in part, "No state or local agency shall post the home address or telephone number of any elected or appointed official on the Internet without first : obtaining the written permission of that individual." The full code is attached. This consent form will not i be redacted and will be attached to the Application and posted to the City's website. : The full code can be read here: LINK Cf(fP. ead the code, and check only ONE option below: I give permission for the City of Palo Alto to post to the City's website the attached Board and :'" Commission Application intact. I have read and understand my rights under Government Code , Section 6254.21. I may revoke this permission at any time by providing written notice to the Palo , Alto City Clerk. , OR ~' , I request that the City of Palo Alto redact my home address, phone numbers, and email address , from the attached Board and Commission Application prior to posting to the City's website, I am . providing the following alternate information and request that they use the following contact , information instead. E-mail: March 10, 2014 Subject: Application to serve on the Public Art Commission To the appointment committee: My Name is Jeanine (Savannah) Murphy and I am writing this to you because of my strong desire to serve on the Public Art Commission. Whilst I might not possess all of the requirements that you would outline as requirements to fulfill the position, let me assure you that I am someone that will work and get the job done. Here are skills and benefits that I can bring to the Committee: a.) A strong desire to participate b.) Tenacity and experience with building rapport and breaking down barriers c.) A winning track record of building powerful and winning relationships d.) A desire to give back to the community I plan to live through retirement e.) A background in Global Sales Management supporting 3 different start up organizations As a founding member of a Children's Foundation, I understand the value of giving back. It is now time for me to give back to my city directly. I strongly encourage your consideration. SinCereIY'~tw~ Jeanine (Savannah) Murphy CITY OF PALO ALTO Application to Serve on the Planning and Transportation Commission Palo Alto welcomes volunteers and we appreciate that you are taking the time to apply. Completion of this application provides valuable information to the City Council. Please complete the application to the best of your abilities. If you have any questions or concerns please contact the City Clerk's Office. The Planning and Transportation Commission is responsible for: • Preparing and making recommendations to the City Council on the City's Comprehensive Plan regarding development, public facilities and transportation in Palo Alto, • Considering and making recommendations to the City Council on zoning map and zoning ordinance changes, • Reviewing and making recommendations to the City Council on subdivisions, on appeals on variances and use permits, • Considering other policies and programs affecting development and land use in Palo Alto for final City Council action, • Reviewing and making recommendations on individual projects such as Planned Community Zones, Open Space development, and those other projects as are directed by the zoning code, staff and City Council. Please see Palo Alto Municipal Code Sections 2.16 and 2.20, and 19.04.10 for more detailed information. The Planning and Transportation Commission is composed of seven Members who are not Council Members, officers, or employees of the City, and who are residents of the City of Palo Alto. Terms of Commissioners will be for four years. The Planning and Transportation Commission typically meets on the second and last Wednesdays of each month at 6:00 pm. In addition to regular meetings, Commissioners may be asked to participate on at least one sub-committee which could hold additional meetings. Click here to receive email notifications of vacancies CLICK HERE. You are also welcome to contact the City Clerk's Office at 329-2571 or beth.minor@cityofpaloalto.org. CSe.e .... lo..~ Address: '14, Sk'Y)~ J.\.ve.~ Phone 1: b So -4' S' -'3. s;-'3 ~ Phone 2: q 4 q -CZs s..., -2... C,) 0 0 E-mail: pc:t.loCLltoLi.fR. @ .3 'In ~ • c.cnn Are you a Palo Alto Resident? j.Q...$ Do you have any relatives or members of your household who are employed by the City of Palo Alto, who are currently serving on the City Council, or who are Board or Commission Members? N U Are you available and committed to complete the term applied for? 'i.t.... S California state law requires appointed Board and Commission Members to file a detailed disclosure of their financial interests, Fair Political Practices Commission, Conflict of Interest, Form 700. Do you have an investment in, or do you serve as an officer or director of, a company doing business in Palo Alto whiCh you believe is likely to; 1) engage in business with the City, 2) provide products or services for City projects, or 3) be affected by decisions of the board or commission you are applying for? Excluding your principal residence, do you own real property in Palo Alto? 'n cl Community Group Email from City Clerk Palo Alto Weekly Present or Last Employer: \llA. " Occupation: £: ' ')'l~ tv\o.'t'\~ S6~ • p (a'Y\-Y\~j rla.'l--\~ ~ 2D2 ¥ PoJo A,l~ -t; 6 l~kF~ aU p~ h U.)O~ k lhJi-be.s b p la.UL tv It V"t m'\ E a:v'lJ\" cI f \o..Y\~ ~ D-<L'Yl ~ ~ t"J • EAu-~ta~ Zoning Code LINK City Charter LINK California Environmental Quality Act LI NK EI Camino Real Design Guidelines and Master Plan LINK Downtown Urban Design Guide/Plan LINK South of Forest Avenue Plans I and II LINK Baylands Master Plan LINK California Government Code Section 6254.21 states, in part, "No state or local agency shall post the home address or telephone number of any elected or appointed official on the Internet without first obtaining the written permission of that individual." The full code is attached. This consent form will not be redacted and will be attached to the Application and posted to the City's website. The full code can be read here: LINK Read the code, and check only ONE option below: ..&v-I give permission for the City of Palo Alto to post to the City's website the attached Board and Commission Application ·intact. I have read and understand my rights under Government Code Section 6254.21. I may revoke this permission at any time by providing written notice to the Palo Alto City Clerk. OR I request that the City of Palo Alto redact my home address, phone numbers, and email address from the attached Board and Commission Application prior to posting to the City's website. I am providing the following alternate information and request that they use the following contact information instead. Address: Phone 1: Phone 2: E-mail: Signature: ___ -=s.=-~ ____ ~ __ +-----___.l-----Date: '1 4 -, S t-o.~ ~....-J folo A-th, J LA qlts o-' Seelam Reddy (Prabhakar.Sealam) Experience: Ludlum+Aerojet+Boeing+Hughes+Northrop+VMs paloaltolife@gmail.com I 747 Stanford Avenue Palo Alto, Ca 94306, USA Stanford iDEAs Engineering SW-HW solutions Theory of Constrains Optimization; lOX, Lean 650.465.3535 c 949.857.2000 c See lam Reddy (Prabhakar) +Hughes+Northrop+VMw ife@gmail.com 747 Stanford Avenue Palo Alto, Co 94306 Stanford iDEAs Engineer SW+HW 650.465.3535 and 949.857.2000 . Seelam PReddy VMwal'e+ Boeing+ Hughes+ NOl·throp •• I paloaltolife@gmail. com \ 747 Stanfol'd Avenue Palo Alto, Ca 04.306, USA paloalto iDEAS MI5JA Integl'ation Services 630.463.3333 c 040.837.2000 e Name: Przemek Gardias Address: 1252 Cedar Street, Palo Alto, CA 94301 Phone 1: 6503231238 Phone 2: E-mail: przemek@gardias.com Are you a Palo Alto Resident? Yes Do you have any relatives or members of your household who are employed by the City of Palo Alto, who are currently serving on the City Council, or who are Board or Commission Members? No Are you available and committed to complete the term applied for? Yes California state law requires appointed Board and Commission Members to file a detailed disclosure of their financial interests, Fair Political Practices Commission, Conflict of Interest, Form 700. Do you have an investment in, or do you serve as an officer or director of, a company doing business in Palo Alto which you believe is likely to; 1) engage in business with the City, 2) provide products or services for City projects, or 3) be affected by decisions of the board or commission you are applying for? No Excluding your principal residence, do you own real property in Palo Alto? No Community Group Email from City Clerk Palo Alto Weekly Daily Post Other: Library flier Practice at Dziekonski & Domaradzki Architects and Urban Planners 1989-1990 State of California Registered Architect C27737 Troop 57 Assistant Scoutmaster (ASM) 2010-2013. Experience: Urban planning 1987 (internship at Espea), Urban planning at Dziekonski & Domaradzki 1989-1990, architectural pract!ce at Dave Terpening Architects 1995-1996. Kornberg Associates 1997-1998. Interest: Personal interest in city planning. 1. Development plan of California Ave in regards to retention of Palo Alto local business. 2. Riconada Park master plan in regards to synergy of 1. Continued urban development with high retention of local business community - zoning fragmentation for higher density; 2. Expansion of biking routes and pedestrian access -influence business to promote and subsidize btke to work commuting; 3. Collaboration of work commuting services within and beyond Palo Alto boundaries Palo Alto Comprehensive Plan LINK Zoning Code LINK Yes. Experienced due to my work as an architect. City Charter LINK California Environmental Quality Act LINK EI Camino Real Design Guidelines and Master Plan. LINK Downtown Urban Design Guide/Plan LINK South of Forest Avenue Plans I and" LINK Baylands Master Plan LINK California Government Code Section 6254.21 states, in part, "No state or local agency shall post the home address or telephone number of any elected or appointed official on the Internet without first I obtaining the written permission of that individual." The full code is attached. This consent form will not I be redacted and will be attached to the Application and posted to the City's website. I The full code can be read here: LINK I Read the code; and check only ONE option below: Yes I give permission for the City of Palo Alto to post to the City's website the attached Board and Commission Application intact. I have read and understand my rights under Government Code I I Section 6254.21. I may revoke this pennission at any time by providing written notice to the Palo Alto City Clerk. OR I request that the City of Palo Alto redact my home address, phone numbers, and email address from the attached Board and Commission Application prior to posting to the City's website. I am providing the following altemate infonnation and request that they use the following contact Information instead. . Address: Phone 1: Phone 2: E-mail: Signature: -----:;o.L--Jc:-:7'-:;....--~-------------Date: March 21, 2014 ---------------------------- Name: Address: Phone 1: Phone 2: Eric Rosenblum 154 Bryant Street, Palo Alto, CA 94301 2066040443 E-mail: ericr@alum.mit.edu Are you a Palo Alto Resident? Yes Do you have any relatives or members of your household who are employed by the City of Palo Alto, who are currently serving on the City Council, or who are Board or Commission Members? No Are you available and committed to complete the term applied for? Yes California state law requires appointed Board and Commission Members to file a detailed disclosure of their financial interests, Fair Political Practices Commission, Conflict of Interest, Form 700. Do you have an investment in, or do you serve as an officer or director of, a company doing business in Palo Alto which you believe is likely to; 1) engage in business with the City, 2) provide products or services for City projects, or 3) be affected by decisions of the board or commission you are applying for? No Excluding your principal residence, do you own real property in Palo Alto? Community Group I;;"~ Email from City Clerk Palo Alto Weekly Daily Post .... ·~~~.~¥:{~~~~~,~~~OI·9.~i~~~!r~6~p~~{ti~ri~~gmmi~~i,o~7 .... No educational or work experience directly related to this role. No I received an AB in East Asian Studies (Magna cum Laude) from Harvard University in 1992, and an MBA from the Massachussetts Institute of Technology in 1997. I have been CEO and COO of successful start-ups, and was Director of Strategy at Google from 2008-2012 Present or Last Employer: Occupation: Very little. Drawbridge, Inc (Venture-backed start-up in San Mateo) Chief Operating Officer After I graduated from college, I moved to China, where I lived for 12 years. After returning to the US with my family, I have been involved in light-weight volunteer activities (volunteer work for my children's judo club, volunteer work for our synagogue (Congregation Beth Am, in Los Altos)--my family and I always staff the Home and Hope program, which provides temporary shelter for homeless families who are on their way back to self-sufficiency. I have recently become interested in spending more time on civic engagement, and have been attending City Council meetings and meeting with small community groups to try to educate myself about urban planning issues that impact our community I have spent my career asa data-driven problem solver and concensus-builder.The problems facing Palo Alto Planning and Transportation are primarily those that will be solved through rigorous data-driven analysis and grass-roots concensus building. I am drawn to the issues considered by the PTC because I strongly believe that the planning and transportation decisions that we make directly inipact the well-being of the community. Well-planned cities are bulwarks of opportunity, safety, diversity, vibrancy, and happiness; I am particularly interested in IDM, and its relationship to the "ComprehensivePlan" and the Downtown Cap Study--I believe that all of these items are closely linked, and need to be considered as a system. My interest stems from the notion that Palo Alto is currently at a cross-roads: it is.a vibrant college town that I would like to see the drafting and implementation of the planning and transportation elements of the Comprehensive Plan. In particular, I would like to see the committee take a leadership position on overseeing the design of the elements of a IDM and downtown RPP, combined with a new downtown c;ap regulation. I believe that this will be accomplished through a combination of rigorous work with the city staff, and coalition-building with local residents. I have already started working with local community activist leaders (eg., Neilson Buchanan, Adina Levin, and Elaine Uang) from a wide range of viewpoints. Palo Alto Comprehensive Plan LINK Zoning Code LINK City Charter LINK California Environmental Quality Act LINK EI Camino Real Design Guidelines and Master Plan LINK Downtown Urban DeSign Guide/Plan LINK South of Forest Avenue Plans I and II LINK Baylands Master Plan LINK California Government Code Section 6254.21 states, In part, "No state or local agency shall post the home address or telephone number of any elected or appointed official on the Internet without first obtaining the written permission of that individual." The full code is attached. This consent form will not be redacted and will be attached to the Application and posted to the City's website. The full code can be read here: LINK ,d the code, and check only ONE option below: . _ I give permission for the City of Palo Alto to post to the City's website the attached Board and Commission Application intact. I have read and understand my rights under Government Code Section 6254.21. I may revoke this permission at any time by providing written notice to the Palo Alto City Clerk. OR I request that the City of Palo Alto redact my home address, phone numbers, and email address from the attached Board and Commission Application prior to posting to the City's website. I am providing the following alternate information and request that they use the.followlng contact information instead. Address: Phone 1: Phone 2: E-mail: Signature: eri~ ~:O~U\~Wm Date: 04/04/2014 Name: Brian Hamachek Address: 1400 Oak Creek Drive #302 Phone 1: 650-556-4141 Phone 2: E-mail: brian@brianhama.com Are you a Palo Alto Resident? Yes Do you have any relatives or members of your household who are employed by the City of Palo Alto, who are currently serving on the City Council, or who are Board or Commission Members? No Are you available and committed to complete the term applied for? Yes California state law requires appointed Board and Commission Members to file a detailed disclosure of their financial interests, Fair Political Practices Commission, Conflict of Interest, Form 700. Do you have an investment in, or do you serve as an officer or director of, a company doing business in Palo Alto which you believe is likely to; 1) engage in business with the City, 2) provide products or services for City projects, or 3} be affected by decisions of the board or commission you are applying for? No Excluding your principal residence, do you own real property in Palo Alto? No Community Group Email from City Clerk Palo Alto Weekly Other: I have heen closely following this commision for some time. Computer Science, University of California at Santa Barhara Present or Last Employer: Occupation: CEO Judge for the Palo Alto App Challenge Volunteer at the Hack Palo Alto event Member of the Palo Alto Tennis Club Founder of the Palo Alto After Work Tennis Meetup Alumni! Advisor for Stanford StarlX I have lived in Palo Alto nearly my entire life, so this commission is of particular interest to me because of the direct role it's members have on protecting and guiding Palo Alto's future. My professional expierence as a technology executive has given me many relevant skills, hut I think it is my extensive personal history and deep affection for our city that makes me such a valuable resource to this commission. I would like to see the commission continue to preserve the unique character of Palo Alto while stm implementing neccessary and desirable changes in thoughtful ways. I think that creative use of technology can help to accomplish this goal in some cases. In other cases, this goal can only be accomplished by taking the time to view all the vantage points and then balancing the various interests and needs involved. Zoning Code LlN~ City Charter L1~JS California Environmental Quality Act 11r:~HS EI Camino Real Design Guidelines and Master Plan LINK Downtown Urban Design Guide/Plan LINK South of Forest Avenue Plans I and II LINK Baylands Master Plan LINK I have reviewed most of these documents at various points in lime in order to understand! . evaluate various city issues. California Government Code Section 6254.21 states, in part, "No state or local agency shall post the home address or telephone number of any elected or appointed official on the Internet without first obtaining the written permission of that individual." The full code is attached. This consent form will not be redacted and will. be attached to the Application and posted to the City's website. The full code can be read here: LINK Read the code, and check only ONE option below: L I give permission for the City of Palo Alto to post to the City's website the attached Board and Commission Application intact. I have read and understand my rights under Government Code Section 6254.21. I may revoke this permission at any time by providing written notice to the Palo Alto City Clerk. OR I request that the City of Palo Alto redact my home address, phone numbers, and email address from the attached Board and Commission Application prior to posting to the City's website. I am providing the following alternate information and request that they use the following contact information instead. Address: Phone 1: Phone 2: E-mail: Signature: B~ P. tt~ Date: 3/7/2014 Name: Freda Manuel Address: 369 Everett Avenue, Palo Alto CA Phone 1: (650)325-2805 Phone 2: (347) 861 8793 E-mail: Are you a Palo Alto Resident? Yes Do you have any relatives or members of your household who are employed by the City of Palo Alto, who are currently serving on the City Council, or who are Board or Commission Members? No Are you available and committed to complete the term applied for? ¥es California state law requires appointed Board and Commission Members to file a detailed disclosure of their financial interests, Fair Political Practices Commission, Conflict of Interest, Form 700. Do you have an investment in, or do you serve as an officer or director of, a company doing business in Palo Alto which you believe is likely to; 1) engage in business with the City, 2) provide products or services for City projects, or 3) be affected by decisions of the board or commission you are applying for? No Excluding your principal residence, do you own real property in Palo Alto? No Community Group Email from City Clerk Palo Alto Weekly Daily Post Other: __ ","C-l-lit),lfT-40ol,l,.f+P:<;&.al~o ..... A"",lwtoIJ...4'M¥-ITe~b/.l!ilil",itelP-__________________ _ M.S. Real Estate, New York University MBA, Suffolk University Management of Real Property on behalf of Public and Private Entities Present or Last Employer: County of San Mateo (present) Occupation: Real Estate Management Prior civic and community involvement includes business development within a local Chamber of Commerce, volunteer aid and a high school tutor. ~-----~--------------------~-----~---------~---- Regulation ofland use and development is essential to public accord and environmental preservation. As Palo Alto continues to experience economic and population growth, regulation is paramount to ensure compatibility amongst mixed uses and harmony amongst residents. Having managed real property on behalf of public and private entities for over a decade, I understand the significance of guidelines and their impact on the local economy and neighborhoods. The California A venue Area Concept Plan is of interest to me as it encompasses both economic and urban development. Strengthening business districts while preserving and building residential and mixed uses with public and private transportation accessibility and pedestrian and bicyclist connectivity, is a challenging and intricate process as it pertains to, and possibly amending, current zoning codes and building requirements. Public input is essential to open government. I would like to see the Planning and Transportation Commission continue its work to promote this concept, as it is vital to the success of the governmental process. Palo Alto Comprehensive Plan LINK Zoning Code LINK City Charter LINK California Environmental Quality Act LINK EI Camino Real Design Guidelines and Master Plan LINK Downtown Urban Design Guide/Plan LINK South of Forest Avenue Plans I and II LINK Baylands Master Plan LINK My involvement with Zoning Codes, City Charters and the California Environmental Quality Act stems from my experience managing real property on behalf of the County of San Mateo and the New York City Economic Development Corporation. California Government Code Section 6254.21 states, in part, "No state or local agency shall post the home address or telephone number of any elected or appointed official on the Internet without first obtaining the written permission of that individual." The full code is attached. This consent form will not pe redacted and will be attached to the Application and posted to the City's website. The full code can be read here: LINK Read the code, and check only ONE option below: x I give permission for the City of Palo Alto to post to the City's website the attached Board and I Commission Application intact. I have read and un~:~sta~_~ my rights under Gove-,,-~~~nt COde_I Section 6254.21. I may revoke this permission at any time by providing written notice to the Palo Alto City Clerk. OR I request that the City of Palo Alto redact my home address, phone numbers, and email address from the attached Board and Commission Application prior to posting to the City's website. I am providing the following alternate information and request that they use the following contact information instead. Address: Phone 1: Phone 2: E-mail: t=-re..aCf/~ 3/18/14 Signature: ________________________ Date: _____ _ City of Palo Alto (ID # 4728) City Council Staff Report Report Type: Consent Calendar Meeting Date: 5/12/2014 City of Palo Alto Page 1 Summary Title: Approval of Contract with Renne Sloan Holtzman Saka Title: Approval of Second Contract Amendment to Contract No. S13149754, for Labor Negotiations Services with Renne Sloan Holtzman Sakai LLC to add $90,000 for a Total Amount not to Exceed $180,000 and Extend the Contract Term by One Year From: City Manager Lead Department: Human Resources Recommendation Staff recommends that Council approve the Second Amendment to the Contract with Renne Sloan Holtzman Sakai LLC (“RSHS”) for labor negotiation services to (1) increase the total compensation by $90,000 to provide funding for labor negotiations with Police and Fire (for a total contract amount of $180,000) and (2) extend the contract term by one year, through June 30, 2015. Executive Summary RSHS recently served as the City’s chief labor negotiator in the summer of 2013 with the Police Managers’ Association and in the fall/winter of 2013/14 with the Service Employees’ International Union (“SEIU”), successfully guiding the City to resolution in both cases. This contract amendment will enable the City to use RSHS in its upcoming negotiations with the Palo Alto Peace Officers’ Association and the International Association of Fire Fighters. Background On April 23, 2013, the City of Palo Alto entered into an Agreement with Renne Sloan Holtzman Sakai LLP to provide labor negotiation services for a focused bargaining process with the Palo Alto Police Managers’ Association (PAPMA), which resulted in a successful agreement on economic terms that the Council approved in June 2013. In August 2013 the Council approved an amendment to the contract to add $60,000 for RSHS to serve as the City’s chief negotiator in negotiations with SEIU, the City’s largest bargaining unit. Negotiations with SEIU were successfully completed when the parties reached agreement on a successor contract in February 2014. The Council approved the new agreement with SEIU on March 17, 2014. City of Palo Alto Page 2 Discussion The City’s contracts with its two largest public safety unions, the Palo Alto Peace Officers’ Association (“PAPOA”) and the International Association of Fire Fighters (“IAFF”) expire on June 30, 2014. The City must begin negotiations for successor agreements with both groups. RSHS has successfully assisted the City in reaching agreement and has provided effective labor strategy advice in prior negotiations, and staff recommends continuing to use RSHS as the lead negotiator for the upcoming public safety negotiations. Resource Impact The recommended increase in total compensation is $90,000. Funds for this contract amendment are available in the FY 2014 Adjusted Budget for the People Strategy & Operations Department as approved by the City Council as part of the Fiscal Year 2014 Midyear Budget Amendment Ordinance. Environmental Review The approval of this contract amendment is not a project under the California Environmental Quality Act. Attachments:  Amendment Two Contract No S13149754 (PDF) CITY OF PALO ALTO OFFICE OF THE CITY CLERK May 12, 2014 The Honorable City Council Attention: Policy & Services Committee Palo Alto, California Policy & Services Committee Recommends Adoption of an Ordinance for the Use of Online or Electronic Filing of Campaign Statements RECOMMENDED MOTION Approve the first reading of an Ordinance Approving the Use of Online or Electronic Filing of Campaign Statements. BACKGROUND On January 1, 2013, Assembly Bill 2452 went into effect adding Government Code 84615 which allows a local government agency to mandate online or electronic filing for an elected officer, candidate, committee, or other person who is required to file statements, reports, or other documents under the Political Reform Act, so long as the filer receives contributions or makes expenditures totaling one thousand dollars ($1,000) or more in a calendar year. The law prescribes criteria that must be satisfied by a local government agency to require online or electronic filing of statements, reports, or other documents. The system must be available free of charge to filers and the public for viewing filings, and must include a procedure for filers to comply with the requirement that they sign statements and reports under penalty of perjury. On April 22, 2014, the Policy and Services Committee voted (4-0) in favor of sending an Ordinance Approving the Use of Online or Electronic Filings of Campaign Statements to City Council. During the meeting Council Members raised questions relating to the security of electronic filing of campaign statements. The City Clerk’s Department is currently under contract with a company, NetFile, who also administers the online filing of the Statement of Economic Interest forms (FPPC Form 700) for the City of Palo Alto. NetFile provided Attachment D: Campaign Data and Protection details the various roles a campaign may assign to individual campaign staff as well as the level of access granted to each role. NetFile also provided Attachment E: NetFile FPPC Certification Submission which explains security and redundancy measures used by NetFile to ensure minimal service disruption and secure data storage for Statement of Economic Interest Forms. NetFile uses the same hardware and software infrastructure for electronic filing of campaign statements. RESOURCE IMPACT The existing contract with NetFile for the e-filing and administration system for the campaign system is $1,750 per quarter or $7,000 per year. Page 2 ATTACHMENTS:  Attachment A: Electronic Filing of Campaign Statements Draft Ordinance (PDF)  Attachment B: CAO Report 3-22-14 (PDF)  Attachment C: P&S 04-22-2014 Item 2 Minutes (PDF)  Attachment D: Campaign Data and Protection (PDF)  Attachment E: NetFile FPPC Certification Submission (PDF) Department Head: Donna Grider, City Clerk Page 3 NOT YET APPROVED 140403 dm 0160076 1 Ordinance No. ____ Ordinance of the Council of the City of Palo Alto Approving the Use of Online or Electronic Filing of Campaign Statements The Council of the City of Palo Alto does ORDAIN as follows: SECTION 1. Findings and Declarations. The City Council finds and declares as follows: A. California Government Code Section 84615 provides that a local agency may require an elected officer, candidate, committee, or other person required to file statements, reports, or other documents, except an elected officer, candidate, committee, or other person who receives contributions totaling less than one thousand dollars ($1,000), and makes expenditures totaling less than one thousand dollars ($1,000), in a calendar year, to file those statements, reports, or other documents online or electronically with the local filing officer. B. The City has entered into an agreement with Westcoast Online Information Systems, Inc. dba NetFile, a vendor approved by the California Secretary of State, to provide an online electronic filing system (“System”) for campaign disclosure statements and statements of economic interest forms. C. The System will operate securely and effectively and will not unduly burden filers. Specifically: (1) the System will ensure the integrity of the data and includes safeguards against efforts to temper with, manipulate, alter, or subvert the data; (2) the System will only accept a filing in the standardized record format developed by the Secretary of State and compatible with the Secretary of State’s system for receiving an online or electronic filing; and (3) the System will be available free of charge to filers and to the public for viewing filings. SECTION 2. Section 2.40.065 (Electronic Filing of Campaign Statements) of Chapter 2.40 (Municipal Elections) or Title 2 (Administrative Code) of the Palo Alto Municipal Code is hereby added to read as follows: “Section 2.40.065 Electronic Filing of Campaign Statements (a) Any elected officer, candidate, committee, or other person required to file statements, reports or other documents described by Chapter 4 (Campaign Disclosure) of Title 9 (Political Reform) of the California Government Code, and that has received contributions and made expenditures of $1,000 or more, shall electronically file such statements using procedures established by the City Clerk. (b) Once an elected officer, candidate, committee, or other person files a statement, report, or other document electronically pursuant to subsection (a), all future statements, reports, or other documents on behalf of that filer shall be filed electronically. (c) In any instance in which an original statement, report, or other document must be filed with the California Secretary of State and a copy of that statement, report, or other document is required to be filed with the City Clerk, the filer may, but is not required to file the copy electronically. NOT YET APPROVED 140403 dm 0160076 2 (d) If the City Clerk’s electronic system is not capable of accepting a particular type of statement, report, or other document, an elected officer, candidate, committee, or other person shall file that document with the City Clerk in an alternative format.” SECTION 3. If any section, subsection, clause or phrase of this Ordinance is for any reason declared invalid, such declaration shall not affect the validity of the remaining portion or sections of the Ordinance. The Council hereby declares that it should have adopted the Ordinance and each section, subsection, sentence, clause or phrase thereof irrespective of the fact that any one or more sections, subsections, sentences, clauses or phrases be declared invalid. SECTION 4. This ordinance shall be effective on the thirty-first day after the date of its adoption. SECTION 5. The Council of the City of Palo Alto hereby finds that this is not a project under the California Environmental Quality Act and, therefore, no environmental impact assessment is necessary. INTRODUCED: PASSED: AYES: NOES: ABSENT: ABSTENTIONS: ATTEST: ___________________________ ____________________________ City Clerk Mayor APPROVED AS TO FORM: APPROVED: ____________________________ ____________________________ City Attorney City Manager ____________________________ Director of Administrative Services CITY OF PALO ALTO OFFICE OF THE CITY CLERK April 22, 2014 The Honorable City Council Palo Alto, California Ordinance Approving the Use of Online or Electronic Filing of Campaign Statements RECOMMENDED MOTION Recommendation to the City Council to Approve the first reading of an Ordinance Approving the Use of Online or Electronic Filing of Campaign Statements BACKGROUND On January 1, 2013, Assembly Bill 2452 went into effect adding Government Code 84615 which allows a local government agency to mandate online or electronic filing for an elected officer, candidate, committee, or other person who is required to file statements, reports, or other documents under the Political Reform Act, so long as the filer receives contributions or makes expenditures totaling one thousand dollars ($1,000) or more in a calendar year. The law prescribes criteria that must be satisfied by a local government agency to require online or electronic filing of statements, reports, or other documents. The system must be available free of charge to filers and the public for viewing filings, and must include a procedure for filers to comply with the requirement that they sign statements and reports under penalty of perjury. The online or electronic filing system shall only accept a filing in the standardized record format that is developed by the Secretary of State and is compatible with the Secretary of State’s system for receiving an online or electronic filing. There is currently only one company that is certified by the Secretary of State to provide this service. The City Clerk’s Department is currently under contract with this company, NetFile, who also administers the online filing of the Statement of Economic Interest forms. Electronic filings reduces the staff time required to process the campaign forms, and also allows visibility in the public’s eyes to view the filings at any time without waiting to come to the City Clerk’s office. Page 2 Since January of 2013, the following government agencies have converted to online campaign financing: CITIES COUNTIES / REGISTRAR OF VOTERS Anaheim Alameda Berkeley Butte Irvine Monterey Manteca Orange Oakland Riverside Pleasanton San Bernardino Sacramento San Joaquin San Francisco (Ethics Commission) San Luis Obispo San Jose Santa Clara Santa Clara Ventura Sunnyvale DISCUSSION: The default rule under AB 2452 is that all filers that receive contributions or make expenditures totaling $1,000 or more are required to file all campaign statements electronically. However, a local legislative body retains the discretion to limit the electronic filing mandate to certain types of filings or filers that meet higher monetary thresholds. Nothing in the law prevents the City from accepting electronic filings from those who opt-in to the electronic filing system. The draft ordinance before Council maintains the default rules under AB 2452. According to NetFile, most of their agency clients who have adopted paperless electronic filing have adopted the requirement thresholds from AB2452 (i.e. mandatory electronic filing for committees that have spent or received more than $1,000/year). The California legislature adopted the $1,000/year default because this is the level at which a filer must open a committee. While increasing the threshold for mandatory electronic filing offers greater flexibility to filers who may want to continue filing exclusively in paper format, it adds an additional level of complexity in tracking campaign expenditures for the filer, the City Clerk’s office, and the general public. In addition, the draft ordinance imposes an opt-in rule, under which filers that utilize the electronic filing system once are required to use the system for all future filings, regardless of whether they meet the monetary thresholds in the future. Several cities have adopted this rule to ensure continuity of records in the electronic system. The decisions before Council are: First, whether to authorize the electronic filing system and mandate electronic filings for certain elected officers, candidates, committees or other persons required to file statements, reports, or other documents under AB 2452. Second, whether to modify the default rules setting the monetary threshold and types of documents subject to Page 3 mandatory electronic filing. Third, whether to adopt the “opt in” rule, under which a filer that uses the electronic filing system one time is required to electronically file all documents in the future. RESOURCE IMPACT The existing contract with NetFile for the e-filing and administration system for the campaign system is $1,750 per quarter or $7,000 per year. ENVIRONMENTAL REVIEW The adoption of this ordinance is not a project subject to environmental review under the California Environmental Quality Act. ATTACHMENTS:  Electronic Filing of Campaign Statements Draft Ordinance (PDF) Department Head: Donna Grider, City Clerk Policy and Services Committee MINUTES Special Meeting April 22, 2014 Chairperson Price called the meeting to order at 6:07 P.M. in the Council Chambers, 250 Hamilton Avenue, Palo Alto, California. Present: Klein, Price (Chair), Schmid, Scharff Absent: ORAL COMMUNICATIONS None AGENDA ITEMS 2. Ordinance Approving the Use of Online or Electronic Filing of Campaign Statements Donna Grider, City Clerk, stated in January of 2013 the State of California approved the electronic filing of the Campaign Statements. She explained the City Clerk’s Department was in contract with a firm, NetFile, for the electronic filing of the Statement of Conflict of Interest and now was the only State certified company approved to electronically file the Campaign Statements. She asked the Policy & Services Committee to forward the proposed Ordinance to the City Council on the Consent Calendar to authorize the electronic filing of the Campaign Statements and mandate to follow the State’s protocol for filing the Statement of Committee at the $1,000 level. She requested there be an Opt-in rule that once an electronic filing has occurred the Committee remained filing electronic. She felt this was a positive move for City Staff and the candidates since they or their Treasurer can complete the form without office hour constraints. The public and newspapers have access to the information without needing to make an office visit. She thanked Albert Yang, the Senior Deputy City Attorney for his work drafting the Ordinance. Council Member Scharff asked if the Committee had a Campaign Manager or a Treasurer, could they file on behalf of the candidate. 1 Ms. Grider said the candidate provided access to their filings as they saw fit. The objective of the electronic filing was moving away from the printed version and the requirement of the blue ink signature. Albert Yang, Senior Deputy City Attorney, noted as long as the filing was submitted by an authorized user for the candidate it would be a legitimate filing. Council Member Scharff asked how the system knew whether or not the filer was authorized. Ms. Grider said the Statement of Organization, the FPPC Form 410, which was mandated to be filed with the Secretary of State provided the authorized personnel. Council Member Schmid asked about the confidentiality and security of the information. Ms. Grider noted the documents were public information whether they were filed in paper or electronic. Council Member Schmid asked how to secure the electronic versions from being modified by an unauthorized user. Ms. Grider stated there were a number of other cities utilizing the NetFile electronic filing system and in Staffs’ research there had not been mention of security breach issues. Council Member Schmid asked if the electronic filing system was more susceptible to a security breach. Mr. Yang did not feel Staff had the technical knowledge to answer the question. Council Member Schmid asked about the security of signatures. Ms. Grider noted the purpose of the electronic filing system was the void of signatures. Council Member Schmid asked how the system knew the statements coming in were from the candidate or an authorized source. Mr. Yang stated although there was not a wet signature required the candidate was required to submit and affirm the information to be truthful and the submitter was authorized. 2 April 22, 2014 Council Member Schmid asked how the system would know if a false filing was submitted. Mr. Yang noted it was possible for a false submission to occur in a paper filing; although, he did not feel the risk was high. Molly Stump, City Attorney, stated if there was an unauthorized submission it would come to light relatively quickly and would be brought to the attention of the Police Department or District Attorney for investigation. Herb Borock noted a line on the Staff Report read “the system must be available free of charge to the filers and the public for viewing filings, and must include a procedure for filers to comply with the requirement that they sign statements and reports under penalty of perjury”. He stated there must be a way to satisfy the signature requirements in the Staff Report. Mr. Yang stated there was a Federal Law, the E-Sign Act, which authorized electronic affirmation signatures and did not require a picture type signature. In 2013 the City Council authorized the use of e-signatures for City documents. MOTION: Council Member Scharff moved, seconded by Council Member Klein that the Policy & Services Committee recommend the City Council approve the first reading of an Ordinance Approving the Use of Online or Electronic Filing of Campaign Statements. MOTION PASSED: 4-0 ADJOURNMENT The meeting adjourned at 7:58 P.M. 3 April 22, 2014 Data Protection With a disclosure package running on a stand-alone PC, your data is only as safe as your hard drive. Every hard drive manufacturer provides estimates on the AVERAGE number of hours of operation before your hard drive will fail. It WILL fail; it's only a matter of time. How often do you make backups of your hard drive? With NetFile Professional, your data is backed up every night. Once a week, the data is permanently archived to CD's and shipped to a remote data vault for long-term storage. Wouldn't you feel better knowing your data was safe? Privacy Almost every stand-alone disclosure product assumes the user sitting in front of the computer keyboard is the campaign treasurer. With NetFile, you can assign each user a separate "role" with the campaign. NetFile "roles" include: Owner - Can e-file on behalf of the committee. Can do anything in the account. Can delete anything. E-Filer - Can e-file on behalf of the committee. Can do anything in the account except delete archived documents. Treasurer - Full account access, but can't e-file on behalf of the committee and can't delete archived documents. Data Entry Level 3 - Can perform data entry for all receipts and disbursements. No access to reports or bank registers. Data Entry Level 2 - Can perform data entry for Schedule G. No access to reports or bank registers. Data Entry Level 1 - Can perform data entry for contributions only. No access to reports or bank registers. Consultant - Can generate any report in the system, and can review bank registers. Can't add, alter, or delete data. Attorney - Can review generated disclosure statements, and can generate other transaction listing type reports for review purposes. Can't add, alter, or delete data. Fundraiser Level 3 - Can review contribution data and advanced contributor-related reports. Can't view expenditure data. Can update contributor contact information. Can't add, alter, or delete other data. Fundraiser Level 2 - Can only review contribution data and contributor-related reports. Can't view expenditure data. Can update contributor contact information. Can't add, alter, or delete other data. Fundraiser Level 1 - Can only review contribution data and contributor-related reports. Can't view expenditure data. Can't add, alter, or delete other data. Data Caging Firm - Can upload data using NetFile DataLoader. Can't log into the account at all. The client's administrative user can change a user's role at any time. A user can have different roles for different NetFile accounts as well. State & Federal Compliance Data Protection & Privacy Why NetFile is #1 in California Pricing for NetFile Professional Custom Development Services First Time Here? Take the Tour Try out a sample NetFile Professional or NetLobbyist (California Lobbyist) account. S accounts are available for a variety of organizations. 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(209) 742-4100 sales@netfile.com NetFile Professional Log In NetLobbyist Log In NetFile Self-Admini Home About Us Campaigns & Treasurers State Lobbyists Local Government Agencies Cont Page 1 of 1NetFile | NetFile Professional Data Protection & Privacy 4/29/2014https://netfile.com/Content/CampaignDataProtection     FPPC Form 700 System  Certification Submission for Local Agencies    Last Revised  10 January 2013     OVERVIEW  Since its ground‐breaking launch in 2006, NetFile’s FPPC Form 700 e‐filing system has received and  processed more than 67,000 Form 700 filings to date.  Of those filings, nearly 25,000 have been filed  electronically.  The NetFile FPPC Form 700 application (“SEI”) is a shared, hosted, cloud‐based system comprised of  three major architectural components:  Admin: Provides features for local agency staff to create, track and correspond with filers  Filer: Allows individuals to create, review, print, and e‐file their Form 700 documents  Public: Displays filed documents to the public on the web    SUBMISSION REQUIREMENT #1 – Network Topology    SUBMISSION REQUIREMENT #2 ‐ COI Form 700 Application  Development  All development/maintenance for the SEI application is performed in Windows 7 using Visual Studio  2010.  All application code is written in ASP.NET and C# against the .NET 3.5 runtime.  Two third party libraries are used.  First, for PDF rendering, we use iTextSharp.  Second, for middleware  data access, we use DataObjects.NET.  The web application pages use code behind files that talk to data  access libraries to retrieve and store data.  Code integrity is maintained using the Perforce source  control system.  Production  The deployed web application suite runs on Windows Server 2003 hosts, with a SQL Server 2008 R2  backend.  The operating system for the primary database server is running Windows Server 2008 R2.    SUBMISSION REQUIREMENT #3 – Website  The website runs on Windows Server 2003, using IIS v6. Two web sites are configured, one for public  access and the other for internal services.  ASP.NET web applications are stored under virtual  directories. The applications run under IIS app pools designed to maximize simultaneous users.  The app  pools will also auto restart on any detected issues to maximize uptime.  Database caching is enabled up  to 1GB on reads.    ASP.NET web services are used internally to communicate between the admin and filer components of  the system.  These web services endpoints are not exposed to the public internet, and require ASP.NET  authentication.  Secure web browsing is available using SSL certification from COMODO.  The SSL  encryption uses RC4 128 bit keys.  System logging is performed through syslog and all messages are  routed to a central logging database.  Alerts are triggered on system errors or service outages and sent  to NetFile support staff via email and text messages.    SUBMISSION REQURIEMENT #4 – Secured Authentication  Filers are uniquely identified by their private e‐mail address, stored in the NetFile SEI database along  with an internal identifier which is also unique.  Filer account creation is controlled via the Admin  application, which is administered by department‐level Filing Liaisons or agency Administrators.  Passwords are randomly generated with a mix of lower and upper‐case letters and numbers with a  length of 8 characters.  Special characters are also included.  Filers may request a new randomly‐ generated password at any time through the Filer application.    SUBMISSION REQUIREMENT #5 – Security (network, system, application)  While NetFile does use Amazon Web Services for additional off‐site storage of backup files, all other IT  assets of the SEI system are owned and managed by NetFile.  The SEI system is located at the Oakland Co‐location facility of Digital Realty Trust, a tier one data  center.  This ensures the highest level of facility‐related support, such as power, cooling, and networking  infrastructure for NetFile’s servers.  The facility is secure, with 24‐hour security on site.  Primary network security for NetFile’s collocation is provided by a High‐Availablity pair of SonicWall NSA  2400 devices.  These units act as our network firewall and intrusion detection system.  All communication between the collocation faciltity and NetFile IT staff is done through VPN  connections.    SUBMISSION REQUIREMENT #6 – Security Operations (Industry Best Practices)  NetFile has been providing online e‐filing and disclosure systems since 1998, before most of the rest of  the world even though online disclosure was a real possibility.  All of our software is carefully reviewed  with security in mind – particularly regarding such popular attack vectors as SQL injection, buffer  overflows, and server misconfigurations.  NetFile utilizes online and internal vulnerability scanning services, such as HackerTarget.com and  Netsparker to scan its software on a per‐build basis.  All software in the collocation network is updated on a continuous basis, to ensure all the latest security  patches are deployed.    SUBMISSION REQUIREMENT #7 – Backup and Restore  SQL 2008 R2 Data  All transactional data and filing document data is stored in our primary SQL 2008 R2 database.  Log  shipping is utilized to maintain a hot standby database server at all times, also located in the Oakland  facility.  Log shipping is also performed to a hot standby database server located in our Mariposa office  over the VPN.  Additionally, log shipping is performed to a SQL 2008 instance hosted in Amazon Web  Services as a failsafe.  Full backups of the SQL data is performed nightly with two copies of the backup files maintained at the  Oakland facility.  Copies of the full backups are sent nightly to our Mariposa office and Amazon S3  storage.  Backups stored in S3 are encrypted.  A minimum of ten days of complete backups are maintained.  Machine Images and Configuration Data  Backup VM images and configuration data files (such as firewall and load balancer configurations) are  made after configuration changes to the affected VM/device.  These backups are stored in Oakland and  Amazon S3.  Source Code  All NetFile source code related to the SEI system is hosted in Perforce.  A full backup of the Perforce data  is made nightly and copied to multiple locations in the Oakland facility and Mariposa office.    SUBMISSION REQUIREMENT #8 – Business Continuity and Planning / Disaster Recovery  The NetFile SEI system is designed to provide a significant amount of fail‐over redundancy without  creating exorbitant costs for our clients.  Designing the system to provide a reasonable level of planned  fault‐tolerance includes:  • Dual HA SonicWall NSA 2400 firewall appliances  • Multiple network switches with every server having at least two NIC adapters  • Kemp Technologies Load‐balancing systems configured in an HA pair  • Multiple web servers, load balanced by the Kemp units  • Multiple application/processing servers, balanced by our software processes  The only ‘single point of failure’ in the entire SEI system is the primary SQL 2008 database server.  The  database server itself is as fault tolerant as any single Intel‐based server can be with multiple power  supplies and RAID 10 SSD disk arrays.  If any single device or server apart from the SQL database server failed, NetFile’s users should not even  be able to notice.  Should the SQL database server fail, NetFile IT staff can remotely reconfigure the system to use the hot  standby SQL server (with the log shipped data, so it is fully up to date even as the failure of the primary  server occurs) within ten minutes.  If there was a more extensive disaster, such as a major earthquake destroying the city of Oakland, the  SEI system could be running again within a maximum of six hours with provisioned Amazon EC2  instances.  We’re currently in the process of evaluating several different backup solutions to reduce our  maximum potential outage duration.    SUBMISSION REQUIREMENT #9 – System Access  NetFile staff will contact FPPC IT staff to provide appropriate user credentials.  REQUIRED SYSTEM FEATURE CHECKLIST    1. E‐mail notification of filing  YES.  All e‐filing submissions to NetFile’s SEI system receive an e‐mail indicating success or  failure of the submission.    2. Electronic confirmation number  YES.  All e‐filings accepted by NetFile’s SEI system are issued a unique filing ID.  This ID is listed  on the Public portal and rendered onto the PDF representation of the e‐filing.    3. Electronic signature (date/time stamp)  YES.  All e‐filings accepted by NetFile’s SEI system are time‐stamped, and can be related back to  an individual’s private e‐filing credentials.    4. Extractable COI data in a common file format  YES.  All e‐filings generated or accepted by NetFile’s SEI system are XML data documents, which  pass through a PDF rendering process for presentation and printing purposes.    5. Auto‐populate filer information  YES.  Previous year e‐filings auto‐populate the following year form.  Additionally, changes to a  filer’s departments or positions during the year are available for easy selection into the new  form, along with the previous year’s departments and positions.    6. Previous year filings  YES.  A filer is able to review, reprint or amend any previous filing they have created using the  SEI system.    7. Public website available 24x7x365  YES.  NetFile’s web portals into the SEI system are always available.    8. FPPC Pamphlet Online  YES.  FPPC‐provided manuals and instructions are readily available to all filers while using the  system.    9. System assistance hotline  YES.  Local cities and counties using the NetFile SEI system provide telephone help desk support  to their filers.    10. Online password management  YES.  Filers or agency administrators may reset their passwords at any time.    11. Account registration process  YES.  NetFile provides local agencies with helpful documentation and procedures along with on‐ site training seminars that have worked well for other jurisdictions to achieve a high percentage  of initial e‐failing adoption by their filers.  Additionally, NetFile imports personnel database  records to initially populate the Admin system.  City of Palo Alto (ID # 4737) City Council Staff Report Report Type: Action Items Meeting Date: 5/12/2014 City of Palo Alto Page 1 Summary Title: BID Re-Authorization Title: PUBLIC HEARING: to Hear Objections to the Levy of Proposed Assessments on the Palo Alto Downtown Business Improvement District and Adoption of a Resolution Confirming the Report of the Advisory Board and Levying Assessment for Fiscal Year 2015 on the Downtown Palo Alto Business Improvement District From: City Manager Lead Department: City Manager Recommendation Staff recommends that the City Council: 1. Hold a public hearing on the levy of proposed assessments in Fiscal Year 2015 in connection with the Downtown Palo Alto Business Improvement District; and 2. Approve a resolution confirming the report of the Advisory board and levying an assessment for Fiscal Year 2015 on the Downtown Palo Alto Business Improvement District (Attachment 2). Background On April 21, 2014, the City Council  Adopted a resolution preliminarily approving the report filed by the Palo Alto Downtown Business Improvement District Advisory Board for the Fiscal Year 2015;  Adopted a resolution of intention to levy the annual assessment for 2014-2015; and  Set May 12, 2014 at 7:00pm, or soon thereafter, as the date and time for the public hearing on the levy of the proposed assessments. Discussion The City Council is required to annually hold a public hearing, approve the Advisory City of Palo Alto Page 2 Board Annual report, and determine whether or not to levy the annual assessment for the Palo Alto Downtown business Improvement District (BID). The BID is required by State law to be authorized annually. As such, it is not possible under state BID law to implement capital projects that extend longer than one year. Traditionally, funds generated from Business Improvement Districts are used for marketing, promotions, maintenance, and beautification of business districts. Although the BID is an active participant in many issues related to downtown businesses (i.e. transportation, parking, improvements), their legal limitations and budget restrict their ability to fund infrastructure such as parking structures or streetscape improvements. The assessments levied on businesses in the BID are based on the size, type, and location of downtown businesses. Based on a cost-benefit analysis, retailers and restaurants pay a larger assessment because they receive more benefit from the activities undertaken in the business district. For example, a small-large retailer/ restaurant would pay $225 to $450, while a small-large professional business (architect, accountant, etc) pay in the $50 to $225 range. Professional businesses pay the least since they receive less benefit from the BID. Absent a majority protest at the public hearing, the Council may adopt a resolution approving the report for Fiscal Year 2015 as filed or as modified by the Council at the conclusion of the public hearing. The adoption of the resolution constitutes the levying of the BID assessments for Fiscal Year 2015. The staff report (April 21, 2014) is attached and describes the actions related to the BID, including the report of the Palo Alto Downtown Business and Professional Association (PADBPA) to the City Council (Attachment 1). Attached is the Council Resolution approving the BID for Fiscal Year 2015 including required exhibits (Attachment 2). Resource Impacts Adoption of the proposed BID budget does not directly impact City revenue. BID assessments are restricted to exclusive use by the BID. A healthy BID will typically encourage growth of the retail community and consequently result in additional sales tax revenue for the City. Some staff effort is expended annually to administer the collection of the BID. Staff will continue to monitor adminitrative time devoted to the collection of BID assessments to assure that City costs do not exceed estimates for these services. The cost and collection of BID assessments past 60 days is absorbed by the BID. The Attorney’s Office will continue to provide legal oversight to the BID during the annual reathorization process. Administrative Services and/or Planning Department staff provide assistance in the collection of BID assessments. The Economic City of Palo Alto Page 3 Development Manager will continue to provide oversight of the BID and will prepare the annual reauthorization. Environmental Review This action by the City Council does not meet the definition of a project under Section 21065 of the California Environmental Quality Act, and therefore no environmental assessment is necessary. Attachments:  4-21-14 Staff Report Including BID FY 15 Annual Report (PDF)  0131198 RESO Confirming Rpt of BID For FY15 (DOCX)  BID Map and Fee Schedule (Exhibit A & B) (PDF) City of Palo Alto (ID # 4555) City Council Staff Report Report Type: Consent Calendar Meeting Date: 4/21/2014 City of Palo Alto Page 1 Summary Title: BID Preliminary Re-Authorization Title: Preliminary Approval of the Report of the Advisory Board for Fiscal Year 2015 in Connection with the Palo Alto Downtown Business Improvement District and Adoption of Resolution Declaring its Intention to Levy an Assessment Against Businesses within the Downtown Palo Alto Business Improvement District for Fiscal Year 2015 and Setting a Time and Place for a Public Hearing on May 12, at 7:00 PM or Thereafter, in the City Council Chambers From: City Manager Lead Department: City Manager Recommended Motion Staff recommends the following motion: that City Council: (a) Preliminarily approve the Business Improvement District (BID) Advisory Board’s 2015 Budget Report for the BID (Attachment 1) and; (b) Adopt a Resolution of Intention to Levy Assessments in the Palo Alto Downtown Business Improvement District for Fiscal Year 2015, setting a date and time for the public hearing on the levy of the proposed assessments for May 12, 2014, at 7:00 PM, or thereafter, in the City Council Chambers (Attachment 3) Executive Summary This Council action includes a preliminary approval of the BID Board’s annual report, and sets a time and place for a public hearing for the staff presentation, and to determine any objections to the assessments. Since the BID inception in 2004, a number of activities consistent with State BID law have been accomplished by the Palo Alto Downtown Business and Professional Association (PADBPA), the entity with which the City contracts to provide services to the 800+ businesses assessed in the Downtown. These include addressing the three main issues facing downtown businesses: cleanliness, safety, and attractiveness, as well as participation in zoning, transportation, and other matters affecting downtown businesses. City of Palo Alto Page 2 Assessments for BID businesses are based on the size, type and location of the business. Assessments range from $50 for individually owned professional businesses to $500 annually for financial institutions. The PADBPA has monthly open meetings governed by the Ralph M. Brown Act which any business or individual can attend. Background The Palo Alto Downtown Business Improvement District (BID) was established by the City Council in 2004 pursuant to the California Parking and Business Improvement Area Law to promote the economic revitalization and physical maintenance of the Palo Alto Downtown business district. The Council appointed the Board of Directors of the Palo Alto Downtown Business and Professional Association (PADBPA), a non-profit corporation, as the Advisory Board for the BID. The Board’s purpose is to advise the Council on the method and basis for levy of assessments in the BID and the expenditure of revenues derived from the assessments. Pursuant to BID law, the Advisory Board must annually submit to the Council a report that proposes a budget for the upcoming Fiscal Year for the BID. The report must: 1) propose any boundary changes in the BID; 2) list the improvements and activities to be provided in the Fiscal Year; 3) estimate the cost to provide the improvements and activities; 4) set forth the method and basis for levy of assessments; 5) identify surplus or deficit revenues carried over from the prior Fiscal Year; and 6) identify amounts of contributions from sources other than assessments. The Council must then: 1) review the report and preliminarily approve it as proposed or as changed by the Council; 2) adopt a resolution of intention to levy the assessments for the upcoming Fiscal Year; and 3) set a date and time for the public hearing on the levy of assessments in the BID. Absent a majority protest at the public hearing on May 6, 2013, at the conclusion of the public hearing, the Council may adopt a resolution confirming the report for Fiscal Year 2015 as filed or as modified by the Council. The adoption of the resolution constitutes the levying of the BID assessments for Fiscal Year 2015. Discussion The Advisory Board has prepared a report (Attachment 1) for the Council’s consideration which includes the proposed budget for the Palo Alto Downtown BID for Fiscal Year 2015. As required by BID law, the report has been filed with the City Clerk and contains a list of the improvements, activities, and associated costs proposed in the BID for Fiscal Year 2015. The Advisory Board has recommended no change in the BID boundaries or the method and basis for levying assessments. A map of the BID is attached (Attachment 2). The proposed assessments in the BID for Fiscal Year 2015 are the same as the assessments in Fiscal Year 2014. No increases are proposed. The budget report for Fiscal Year 2015 was reviewed and approved by the Palo Alto Downtown Business and Professional Association board on April 9 2014. Resource Impact City of Palo Alto Page 3 Adoption of the proposed BID budget does not directly impact City revenue. BID assessments are restricted for use exclusively by the BID. It is anticipated that a healthy BID will encourage vitality in the retail community and consequently result in additional sales tax revenue for the City. Some staff effort is expended annually to administer the collection of the BID. Staff will continue to monitor staff administrative time devoted to the collection of BID assessments to assure that City costs do not exceed estimates for these services. The cost and collection of BID assessments past 60 days is borne by the BID. The Attorney's Office will continue to provide legal oversight to the BID during the annual reauthorization process. Administrative Services staff provides assistance in the collection of BID assessments. The Economic Development Manager will continue to provide oversight to the BID and will prepare the annual reauthorization. Environmental Review This action by the City Council does not meet the definition of a project under Section 21065 of the California Environmental Quality Act, and therefore no environmental assessment is necessary. Attachments:  PAD Annual Report 2014 (PDF)  BID Map (PDF)  RESO Declaring Intention to Levy BID FY15 (DOC) 0 EATSGREAT THINGSIDEAS! FIND OUT WHAT’S BLOOMIN’ IN DOWNTOWN PALO ALTO THIS SPRING There are dozens of great places to shop and eat and thousands of great ideas being generated every day. Only in downtown Palo Alto. Palo Alto Downtown Business Improvement District 2014-15 Annual Report Prepared  for:  Palo  Alto  City  Council               Prepared  by:  Russ  Cohen,  Executive  Director,   Palo  Alto  Downtown  Business  and  Professional  Association     1 Introduction This report from the Advisory Board of the Palo Alto Downtown Business & Professional Association (“PAd”) was prepared for City Council to review for the annual reauthorization of the Downtown Palo Alto Business Improvement District (“BID”) pursuant to Section 36533 of the Parking and Business Improvement Law of 1989 (Section 36500 and following of the California Streets and Highways code) (the “Law”). This report is for the proposed fiscal year for the BID commencing July 1, 2014 and ending June 30, 2015. (“Fiscal Year 2014-15”). As required by the Law, this report contains the following information: I. Any proposed changes in BID boundaries and benefit zones within the BID; II. The improvements and activities to be provided for Fiscal Year 2014-15; III. An estimate of the cost of providing the improvements and the activities for Fiscal Year 2014-15; IV. The method and basis of levying the assessment in sufficient detail to allow each business owner to estimate the amount of the assessment to be levied against his or her business for Fiscal Year 2014-15. V. The amount of any surplus or deficit revenues to be carried over from a previous fiscal year. VI. The amount of any contributions to be made from sources other than assessments levied pursuant to the Law. Submitted by Anne E. Senti-Willis, Chair, and Russell S. Cohen, Executive Director on behalf of the Advisory Board (“Advisory Board”) of the Palo Alto Downtown Business & Professional Association (“PAd”). The Advisory Board approved this report on April 9, 2014. Received on file in the Office of the City Clerk of the City of Palo Alto on April __, 2014. 2 Section I: BID boundaries and Benefit Zones There have been no changes in the BID boundaries or benefit zones within the BID and no changes are proposed. The current boundaries are depicted on the map below. The area of the BID is referred to as “Downtown.” 934- 9 4 4 927 932 233 281 933- 9 3 7 943 327 1001 942 469 475 744 459 832 801 A P T 1 - 5 427-453 920912 362 370 900 838 846 471 459 835 - 8 5 5 460 815 840836 834 845 400 803 928930 931933 835 - 8 3 7 831 - 8 3 3 451453 802800 810 - 8 1 6 818 - 8 2 0 828 - 8 3 0 817 - 8 1 9 823 - 8 2 5 567-569 559563 536 526 1001 101 1 - 540 483 904 912 468 918 926 537 965-971505-507 519-521 939-945 931-935 923-925518-520 539541543 515-517 809811 420 1001 1011 1010 376 370 980960 990 34 354 326 426 4 1000 448 944 471 483948952 959947925 915 933 935 425-443 451449 463-465 936-940 458 460 440 428426 527-533 543 551 510520 558-560 903 825 837 581 575940934 813-823 501-509 511-519 521-529 531-539 541-547 556 596 904 926 561-567 569 845 580 574 566 991- 997 136 610 116-122 150 535529525 542516140 102 116124 163 145 566556 167 528 643635 635 645-685 660- 666 620 180 164 158156 624628632636 640644 617621 151-165 171-195 203 642640636 200 151 115 125 135 514 101 440 444 436432 427 425 117119 630616 208 228220 240-248 575 530-534536540 552 177 156 201209 215225 595 229231 611-623 180 508500 625-631 170172-174 542544 538-542 552548546 541-547 230-238 734 723 721 702- 730220-244 744 701 731 755757 771 200 160 728-732 762-776740-746 250 275 270 255741 265 724 730 651 221-225 227 668 707 205 201203451449 209 219 221 233235450460470442444 400 420 430 411 425 429 185 165 181 412 250 420 245 171-169 441- 445 435-439 346344 333335 342 344 431 460 450 235530 220 220 B 222 240 514278 274270 250 545 540 251485255 271 281 300310301 581 259-267 533535537 261267 518-526 532- 536 520-526 530-536 271 281 252 270 240-248 202-216 228226234238 244242 210- 216 228- 234 223-229 209215 247-259 240 232230 311-317 251 344 326 340 337339 323317 400 420 332330 314 353 355 367 305 347 265272-278 418 319 321- 341 328 330 300-310 431401 366 436 426 #1-7 369 335319 390 301 315 375 307- 311 325330 332 1&2330 1-3 324 326316 318 373-377 416-424 361 338 340 560 345 321325 315 529 285 555 650636 628 1-12 628 A-E 385 365 375380 345 664 325650-654 661 635300 690 675 555541-549533 535-539 318-324 326 352 425 439-441 435429 425 415-419 405403453 461 383460 502 510 526 520 540 499 467 459 439 425555 400 436-452 456 379 370-374376380-382 384-396 550-552 364 360 431 440-444 423 499 475 421-423 431-433 432428 460-476 450 635 446 430 400 745 720706 385744734 724-730 720712704 360 351 315737 332 300 653-681 683 685 512 501619 609605 518 482486496 610 630 455 400 651-687 543-545 532534 542544 550 552 554556 558560562564 635-6 643-6 470 313 334 333 325326 342 303301 229 336 308 310 312 316 318 311 331 315 319 317 321 335 228220 356-360 347-367 351357 369-379360 258-296 350 210204 302- 316 379310 320 328 332 340 437 412 311 A-B 404 313 325 327 333 407401385 411 452 378-390 360 - 1A - 1C360 - 2A - 2C360 - 3A - 3C360 - 4A - 4C360 - 5A - 5C360 - 6A 344-348 418420 482 328 456 321 325 330204 218 236 240 250-252 477 475 467 457453249235225221 201 60 275 505-509 239-243 209- 213 210- 214 513-519 460 474472228-230 535 558 201 1612 20 209 215 223 231 521 80 239-245 530-540 544-554 212-216 218-222 333 335- 337 351 457451 465 463 489-499360 530 480 420 430 480 463 451443437411405 419405401 441 480-498 347 351 355 359 525 430 473 332- 342 425415 400 570568 556 550 543 327321315305 343 515 525 551 555 328 309-311 518-528 536-540 552-554 558-562 573 A-E 591-599 557-571 330-332 318-320 406-418 417 542548568 524 550 500-528 578 564 550 546 540 530 531-535 541 505 525 537 555 565 571530 619-6 520 440-446 579 567 523610 600 555 581420-438 437 566 224 228 A-F 244 579 575 565 559 251 355 A-J 335329604 576 566 345-347 243245 25725920921922723502 505 610-616 727 678 676 674672 642 636-638 567 555 711 701705 725 525 759 730 718 734 738-740 760 746-750 701 721-7 600 827 835 899 850 530 609 759 7517537737-62611 601600 1013 10041000 1006 1001 623 137 145 700 780 790 744 111700 753100 825805 33 51 75 63 841 44 675 49 41 711 799 703 100 101 139654 625 160 1001 1005 1009 1010 1004 930 975945929931 948 181 940 960 145900 955 999875 853 925 81 855 901-907 909 87 98 917 921 925 735 849 707 847 842828 820248 230-232 212 825 829833 839 800 812818 882 165831 801 815 809801 841 791153 718 774 761 795745 201 209 834836 845 895 926 190 934 942 948 203 209 219 225 929200 240 904 910 926 270 935 904 909909A 217 222 148 171 421 130 312 318 324 317 301 186 192 323 329 151 325 329 334 131 129 355301 235 258 212 163 115 291247 210 201 207 64 202 235 251249 252 247 244250 177220 261 251-257 205245231225213205 70 2206 234240 183 251 270 241-247 215- 237 210-216 219 235 62 202 245 54 52 50 203 215 221 313-317318 220- 224 238 542-550 531-539 532 759 223-239 905 911-917907 188190 251- 293 202206 208 210 212 216 220 1008 275 539 201 400 27 168 865857 302 324 340 795 848 918 903903A 408412 440 483A - F 435 751 735 745 532 210 727 733 335 328 330 345 214 350 800 806 441 441A 230302306308312316 301 303 305 307 309 325 251 807 821 829 801 818-824 420 424 430 832A 832 842A 842 852A 852 862A 862 872A 872 351A 351 355A 355 359A 359 363A 363 367A 367 425 911 943 951 918 936 940 944 271 253 241 301 319 919A919 935 949 928 936 940-946 353 264 367 361 310 1005 1010 423425413 - 419 457-467 469-471473-481 454 729 A-D 733-743 734-740 724-732 936 824-828 920 949943941 715 95 445 324 328 545 590 425447 827 565585595 904 315 507 561 706 536 200 100 280-290 150 158164 276 516 698 161 159 157777 132 127 180 528 120 247 372 524 548 550 538 152 345 336 515 658 227 27 29 539 115 135 321 558 #200-202 558 #C & D 965 140 350 808 915 461 435433 945 1012 421 727 A-C 218 255 206 739 260 840 650 642 351 451 551 375 530 643415 12 700 802 99 89 87 901 560564568572576580584588592594 906908 910912914 916918920 922924 548 423 668 901 305 -313 423 405 352354 611 320322 346 323 471 484 528 426 264 430 1001 508 756 -760 940 930 544546 515 7 745 7 549 211213 151 160 257 433-457 482 330 349 401 539 440 691 755 67 312 202 651 443445 447 716 218 398 998 262 335 218 640-646506 327 469 303 401 403 254 401 91 40 101 819 301 725 595 705 541 Quarry Road Homer Avenue Lane 8 West Medical Foundation Way Lane 7 West Lane 7 East Encina Avenue El Camino Real Urban Lane Wells Avenue Forest Avenue High Street Emerson Street Ch a n n i n g A v e n u e Alma Street El Camino Real Mitchell Lane Everett Avenue Lytton Avenue Lane 15 E High Street Alma Street Bryant Street Lane 6 E Lane 11 W Lane 21 High Street Gilman Street Hamilton Avenue University Avenue Bryant Court Lane 30 Florence Street Kipling Street Tasso Street Cowper Street Everett Avenue Waverley Street Cowper Street Webster Street Everett Court Lytton Avenue Lane A West L L La Addison Avenue Forest Avenue Downing Lane Homer Avenue La Lane 39 Lane 56 Hamilton Avenue Webster Street Waverley Street Kipling Street Bryant Street Ramona Street Addison Avenue Scott Street Webster Street Cowper Street Addison Avenue Channing Avenue Ramona Street Paulsen Ln Lane 15 E Lane 20 W Lane 20 E University Avenue CalTrain ROW Emerson Street Waverley Street Kipling Street Bryant Street Ramona Street Palo Road ay Pear Lane Lane 12 W Lane 5 E Everett Avenue Homer Avenue Emerson Street talm Dr iv e Alma Street Lytton Avenue This map is a product of the City of Palo Alto GIS This document is a graphic representation only of best available sources. Legend abc Zone A (Ground Floor) - Zone B (Upper Floors) abc Zone B 0' 500' Downtown Palo AltoBusiness ImprovementDistrictArea Map CITY O F PALO A L TO INC OR P ORATE D C ALIFORN I A P a l o A l t oT h e C i t y o f A PRIL 16 1894 The City of Palo Alto assumes no responsibility for any errors ©1989 to 2012 City of Palo Alto rrivera, 2012-04-30 16:57:54CPA BID (\\cc-maps\gis$\gis\admin\Personal\rrivera.mdb) 3 Who and what are downtown Palo Alto? The following charts illustrate the current makeup of Downtown Palo Alto by business category. Methodology: Ratio estimates based on one time data collection through quick probability samplings considered a “windshield survey.” Margin of error is estimated to be 10-15%. Businesses  in  downtown  Palo  Alto  2014   Restaurants  =  88   Retail  =  72   High  tech  =  109   Real  Estate  =  30   Finance  =  84   Medical  =  79   Other=  230   4 Restaurants   Independenty  owned=75   Chain  or  franchise=13   Total=88   Retail   Independently  owned=51   Chain  or  franchise=21   Total  =  72   5 Restaurant  vs.  Retail   Retaurant  =  88   Retail  =  72   Total  independent  vs  Chain  (  both  rest.  &  retail  combined  )   Independent  =  126   Chain  =  34   6 Summary of findings based on the above charts: These data illustrate reality rather than perception. Many perceive that there is a preponderance of restaurants vs. retail, but in reality the mix is quite balanced. That is also true for the number of chains vs. the number of independently owned businesses—it’s clear that there is much more in the way of independently owned businesses than chain or franchised businesses—thus breaking the commonly held perception of downtown being dominated by chains and restaurants. New  vs  Closed   New  =  58   Closed  =  13   167902.001/56 6883v2 Section II: 2013-14 Year in Review and Planned Activites for Fiscal Year 2014-2015 “Keeping Downtown Palo Alto Safe, Spotless and Successful.” PROJECT STATUS EXPECTED COMPLETION Beautification and Safety Cogswell Park wi-fi hot spot Contributed funds to pilot free wi-fi hot spot program at Cogswell Park; assisted TopCorner.org with fundraising. Complete March - 2013 Operation Flagpole: an initiative to decorate University Ave with flags for special occassions Holes being installed as part of the University Ave landscaping improvements. Palo Alto Rotary and the University Rotary Club funded and volunteered to assemble, install and remove flags each national holiday. Complete July – 2013 and ongoing University Avenue landscape and irrigation rehabilitation Working with the city of Palo Alto on outreach to business community to add awareness and address concerns on scheduled improvements. Began the first of 9 phases of 1-2 weeks each on Feb 7. Work completed. Complete Apr-2013 Public Art: Aurora installation at King PAd has worked with the Pal Alto Arts Commission to move this installation to King Plaza. Fundraising, website and print material distribution underway involving, among others, the Black Rock Art Foundation. Complete Nov - 2013 Monthly sidewalk Worked with the City to increase frequency and improve equipment used for sidewalk cleaning. Ongoing Seasonal lamp post banner In development as a pilot program with the expectation of expanding the program to include a greater variety of banners and more frequent replacement. Additional funding will come from private public partnerships. Complete Spring 2013 and Summer 2013, Holiday 2013 Spring 2014 in progress Public Art: Downtown Mural Project Program under development with Palo Alto Public Arts Commission and Downtown property owners to bring murals to Downtown buildings and other locations. RFP’s have been issued. Exec. Dir. Will serve on review committee. Ongoing 8 Lytton Plaza To make Lytton Plaza more welcoming, umbrellas have been proposed to be added to outdoor seating. Downtown Streets Team has agreed to set up and dismantle umbrellas on weekdays. Outreach is beginning for storage. Friends of LP will fund. Adding public art and foliage is also under development Umbrellas and stands installed. Foliage installed. Umbrellas and stands went missing. Umbrellas will be replaced in Spring 2014 Downtown Ambassador PAd continues to explore sponsorship of “ambassadors” with the Downtown Streets Team, with individuals who would be able to provide information regarding Downtown and direction to visitors. Funding being sought. Seeking funding Downtown gateway feature Development of feature to mark entrances to Downtown being considered. Meetings have commenced Security camera installation in garages Working with PA Chamber of Commerce BAPPF to support program to increase safety in parking garages through installation and monitoring of security cameras. Currently involved with sourcing vendors, obtaining prices and suggesting placement locations. Meetings have commenced Sleeping in Vehicles subcommittee Served on the committee to develop a pilot program with the faith community to address this issue. Ordinance now before council Complete and then put on hold pending out of state litigation No smoking ordinance for Lytton Plaza and Cogswell Plaza Suggested new ordinance to City staff as a result of PAd member complaints. PAd has drafted a letter in support of current Policy & Services Committee consideration and have encouraged further business community support. Ordinance approved by city council. In effect as of June 13 Complete June- 2013 Administration Yearly audit Annual required financial statement audit and tax return completed by independent accounting firm. Complete Feb-2013. In progress for 2014 Annual database update Annual census of new and departed businesses within Downtown complete and provided to the City for annual BID assessment invoicing. Complete Feb-2014 Annual invoices Separate communications from PAd added to all City invoices, including separate welcome letter for new businesses. Scheduled for July 1, 2014 Membership Communications and programming Downtown Palo Alto walking maps In discussions with interactive developer to provide interactive and printed maps of downtown. Under development 9 Publication/ Magazine Magazine devoted to Downtown businesses under development. Partial issue was released during the Palo Alto Institute Film Festival in October 2012. When complete, it will be available for free distribution at Downtown businesses. Under development Website redesign Board authorized ED to proceed with development. Complete Dec 2013 Outdoor dining In conjunction with the City, PAd hosted three meetings on March 18 and in April with Downtown restaurant owners to provide information regarding encroachment permit requirements for outdoor dining. Efforts to facilitate compliance with City ordinances will be ongoing.. Complete June- 2013 Enforcement to begin at any time Media Coverage The past fiscal year has seen at least 15 articles, citations, listings or other references in media outlets. Ongoing Facebook presence Photos, posts and calendar items are all included in facebook content. The facebook presence also provides “friends” with updates on new and departing businesses as well as events and activities in downtown Palo Alto Complete and Ongoing Twitter Account launched Jan 2013 Ongoing Events Holiday Tree Lighting/Shop Small Saturday 2012 tree lighting occurred on November 30. The 2013 lighting is currently scheduled for November 30 to coincide with Small Business Day Account launched Jan 2013. Scheduled for Nov 30, 2014 World Music Day PAd is involved with this annual Father’s Day event through assistance with securing insurance for the event and providing outreach to the Downtown business community regarding street closures and ways to participate in the event. Complete June 2013 “The Downtown Crown” At the grand opening of each new downtown business, PAd welcomes the business to the district by presenting a crown. Ongoing Downtown Parking Committee“ Actively involved in ensuring the downtown parking assessment district is running effectively. It engaged in considerable outreach with downtown neighbors regarding impacts including the development of a pilot RPP program. We continue to be involved with ongoing downtown parking studies, working with city staff and working on outreach to downtown business and property owners. Ongoing Summer Concert Series An underwriter has been identified to resume outdoor concerts downtown. Scheduled for Summer 2014 Event outreach PAd provides continuous member outreach regarding street closures, special events, construction impacts, transportation studies, traffic disruptions and more. Ongoing Section II Continued: Year in review and Planned Activites for Fiscal Year 2014-2015 Creating a spotless downtown. The sidewalks downtown are steam cleaned once per month with super powerful equipment that helps remove stubborn stains like chewing gum. (For the record, individual businesses can sweep but are prohibited from using water to “hose down” the sidewalks, as that debris will flow directly to the bay. Steam cleaning is the most effective and the most environmentally responsible method.) These methods are an improvement over years past. These increases in frequency along with better equipment and the help of the Downtown Streets Team, (founded by The Palo Alto Downtown Business and Professional Association in 2004) help to keep downtown Palo Alto “spotless.” Creating a safe downtown. In addition to the association fees, many merchants in the downtown district also contribute fees to the downtown parking district which helped fund the building of the parking garages downtown (an ongoing cost) and fund the ongoing maintenance of the garages at an approximate cost of $1million each year. The garages are patrolled by the Palo Alto Police Department and outreach efforts by the Downtown Streets Team, both are funded by these fees. The return of dedicated patrols downtown with two officers assigned to the beat also ensure a presence downtown that helps deter crime and provides rapid response to downtown incidents. Creating a destination. Keeping downtown a great place to do business, whether you are a retailer, restaurant, start-up or a one- person office is our mission. There was a time before the existence of the business association that downtown was not a thriving, vibrant place to do business. Today, it is abuzz with activity due in large part to the efforts of the Palo Alto Downtown Business and Professional Association. Making certain that downtown is its own unique brand, one that differentiates itself from any other downtown, is an area of focus for The Association. Creating this brand comes from not only ensuring an attractive downtown, but one that doesn’t mind tooting its own horn. Creating an environment that is business friendly. The Palo Alto Downtown Business and Professional Association provides a conduit to leaders and staff at city hall. We don’t work for the city of Palo Alto; we work with it on behalf of all the business located downtown. From helping to develop public policy regarding public parking to smoking in downtown parks to noise ordinances to issues surrounding outdoor dining, we are a stakeholder with a voice that can be heard amongst other stakeholders and Palo Alto’s civic leaders. Section III. Budget for 2014-15 The total funds available for activities for this fiscal year are estimated to be $148,000. The budget for providing the activities is set forth as follows: BID 2013/14 Budget INCOME Total Non-Assessment Sources Assessments $137,000 Allowance for Uncollectible Assessments ($34,000) Other Revenue $25,000 $25,000 12-13 Surplus Carryover $20,000 TOTAL INCOME $148,000 $25,000 EXPENSES Operating Expenses Staff Salaries Executive Director Salary & Benefits $67,980 Payroll taxes and expense $6,798 Office Supplies & Expenses $250 Internet/Website Maintenance $200 Telephone $600 Rent $3,120 Reauthorization Advertising $2,600 Audit-Tax Returns $5,700 Legal $1,000 $1,000 Insurance - Liability $2,100 Workman's Comp $700 Nominating $800 Contingencies $2,000 Subtotal -- Operating Expenses $93,848 $1,000 Programs, Marketing and Events Banners $14,000 $8,000 Events $15,000 $15,000 Outreach & Communication $14,000 $1,000 Downtown Streets Team $5,000 District Improvement $61,052 Subtotal --Programs, Marketing & Events $54,152 $24,000 TOTAL EXPENSES $148,000 $25,000 Section IV: Method and Basis of Levying the Assessment Cost Benefit Analysis / Bid Assessments The method and basis of levying the assessment is provided in sufficient detail to allow each business owner to estimate the amount of the assessment to be levied against his or her business for Fiscal Year 2014-15 and is not changed from the FY 2013-14 assessment. There have been no changes made to the Cost-Benefit Analysis or to the BID Assessments since they were approved by City Council on February 2, 2004. The method of calculation used to determine the cost and benefit to each business located in the BID is described below. The BID assessments are based on three criteria: the type of business, the location of the business and the size of the business. It has been consistently demonstrated that the typical BID program places a higher priority on activities such as commercial marketing. As a result, the retail and restaurant establishments in the BID are assessed more than service and professional businesses in the district. While service-oriented businesses benefit from a BID less than retailers and restaurateurs, they benefit more than professional businesses such as medical, dental, architectural, consultant and legal offices with their minimal advertising and promotion needs. For these reasons, various business types are assessed according to the benefit that they receive from the BID, as follows: Ø Retail and Restaurant 100% of base amount Ø Service 75% of base amount Ø Professional 50% of base amount Exceptions to this rule include financial institutions that are traditionally charged a flat rate regardless of location or size and lodging businesses that are typically charged by total rooms. The location of a business also determines the degree of benefit that accrues to that business. Centrally located businesses tend to benefit more, as do businesses located on the ground floor. For this reason, A and B benefit zones have been identified for the BID. In Palo Alto, Zone A benefit businesses are assessed 100% of the base benefit assessment while Zone B businesses are assessed 75%. A third criterion is used in the BID to determine benefit. This criterion, the size of the business, takes into consideration the number of full time employees employed by the business. Please refer to Attachment 1 for a more complete understanding of the application of these three variables to establish BID benefit. Attachment 2 is the BID assessment for each business located within the BID boundaries. Applying the criteria identified in Attachment 1, a summary of the assessment that applies to each business by size, type and location is outlined. In addition to the Cost-Benefit Analysis, the assessments include the following criteria: Ø An exemption for “single person professional businesses” that have 25% or fewer full time equivalent (“FTE”), including the business owner. This covers employees who work less than 10 hours a week (based on a 40 hour work week; an FTE equals approximately 2000 hours annually) Ø An assessment specifically for “single person businesses” that have 26% FTE to 1 FTE in the professional business category of the BID (An FTE equals approximately 2000 hours annually) Ø The tiering of other professional businesses by size based (according to benefit) on the “single person business” criteria This outline provides information by which a business can determine its annual assessment based on objective criteria. Except where otherwise defined, all terms shall have the meanings identified below: Definitions of Business Types in the Downtown Business Improvement District Retailers and Restaurants: Businesses that buy or resell goods such as clothing stores, shoe stores, office supplies as well as businesses that sell prepared food and drink. Service Businesses: Businesses that sell services such as beauty or barber shops, repair shops, most automotive businesses, dry cleaners, art and dance studios, printing firms, film processing companies, travel agencies, entertainment businesses such as theatres, etc. Hotel and Lodging: These include businesses that have as their main business the lodging of customers. This is restricted to residential businesses that provide lodging services to customers for less than 30 days. Professional Businesses: Businesses that require advanced and/or specialized licenses or academic degrees such as architects, engineers, attorneys, chiropractors, dentists, doctors, accountants, optometrists, realtors, insurance brokers, venture capital firms, consultants, advertising and marketing professionals and mortgage brokers and similar professions. Financial Institutions: Includes banking, savings and loan institutions and credit unions. Additional clarification on business definitions will be defined according to Section 18.04.030 (Definitions) of the Palo Alto Municipal Code. The Advisory Board recommends that the following businesses be exempt from the BID assessment: Ø New businesses established in the BID area following the annual assessment for the year in which they locate in the BID area Ø Non-profit organizations Ø Newspapers Ø “Single person professional businesses” that have 25% or less FTE, including the business owner The Assessment calculated shall be paid to the City no later 30 days after receipt of the invoice with the amount of the annual assessment sent by the City. A second notice will be mailed as a reminder to businesses that have not remitted payment by that date. Late payment will be subject to a 10% late fee. Section V: Revenue Surplus or Deficit Based on the revenue balance on 2/28/14 of $58,631.42, the PAd expects a surplus carryover of $20,000. Expected expenses for the remainder of FY 13-14 are as follows: Current Revenue Balance $58,631.42 Expected expenses for remaining FYE6/30/2014 Staff Salaries $20,000 Elections & Annual Report $3,500 Banners $8,000 Reauthorization Advertising $2,500 Downtown Streets Team $2,500 Rent $1,040 Contingency $1,091.42 Total Expected Expense $38,631.42 Expected Carryover $20,000 Section VI: Non-assessment Income It is estimated that $24,000.00 will be raised in fundraising, and sponsor support. Additionally, we anticipate in kind contribution towards expenses for Fiscal Year 2014-15. Projected Income for Fiscal Year 2014-15 Legal (donation) $1,000 Banners $8,000 Events $15,000 Outreach & Communication $1,000 Total $25,000 Section VI: PAd Board of Directors by Business Type Retailers and Restaurants Alice Deuttscher, Shady Lane Gifts Georgie Gleim, Gleim the Jeweler Rita Comes Whitney, C is for Craft Claudia Cornejo, Café Venetia Alex Giovanotto, Joya Service Businesses Robert Peterson, Peterson Architects Hospitality Barbara Gross, Garden Court Hotel Financial Institutions Gayle Almeida Hague, Boston Private Bank & Trust Company Professional Organizations Anne E. Senti-Willis, Thoits, Love, Hershberger & McLean Brad Ehikian, Premier Properties Patty McGuigan, Cornish & Carey Commercial Michael Lee1, Palantir Non Profit Organizations Chris Richardson, Downtown Streets Team Phil Carter, Palo Alto Farmer’s Market LIAISONS Palo Alto Chamber of Commerce David MacKenzie, President & CEO Downtown Streets Team Eileen Richardson, Executive Director City Of Palo Alto Greg Scharff, Palo Alto City Council Thomas Fehrenbach, Manager of Economic Development 1 Attachment 1 ATTACHMENT 1 A General Statement Regarding Cost-Benefit Analysis For BID Businesses Using The Traditional Three Criteria Formula Criteria 1) Type of Business: Statement Concerning Cost-Benefit Formula For BID Businesses Regarding Type Of Business: In a review of 200 California Business Improvement Districts, it is consistently demonstrated that the typical BID Program places a higher priority on Commercial Marketing Programs than on Civic Beautification and Commercial Recruitment Programs. With that trend in mind, retail and restaurant businesses, with their emphasis on, and need for, commercial marketing, are traditionally assessed more than less marketing-sensitive service-oriented or professional-oriented businesses. However, while service-oriented businesses benefit from a BID less than retailers and restaurateurs, they benefit more, (from commercial marketing programs), than professional businesses such as medical, dental and legal offices with their minimal advertising and promotion needs. Therefore, set forth below, is an example of how various business types might be considered regarding the computation of the annual benefit assessment. • Retail and Restaurant: 100% of base amount • Service: 75% of base amount • Professional: 50% of base amount Exceptions to this rule include financial institutions that are traditionally charged a flat rate regardless of location or size and lodging businesses that are typically charged by total rooms. Lodging businesses are assessed based on the total number of rooms because it is a more equitable manner of determining size. Many lodging businesses have many part time employees, but revenues are based on the room occupancies of the hotel, not the goods sold or serviced provided by employees. Criteria 2) Location of Business: Statement Concerning Cost-Benefit Formula For BID Businesses Regarding Location of Business: It has also been consistently demonstrated that the more centrally located businesses tend to benefit from BID activities and services to a greater degree than businesses located toward the periphery of the proposed BID boundaries. Events and activities tend to originate in the central core of the Downtown area and spread benefit to the outer areas with diminishing energy and impact, much like the ripple effect of a stone tossed into a body of calm water. Furthermore, ground floor businesses tend to benefit to a greater degree than businesses located in upper floors. Therefore, in some cases, a new BID's annual benefit assessment formula also takes these street level criteria into account. As mentioned above, special events, fairs, festivals and other activities tend to take place within, or along, the Main Street core rather than in the areas at the periphery of the Downtown core. Additionally, BID-sponsored seasonal decorations, public art projects, street banners and street furniture tend to be located within the immediate core area. Attachment 1 Therefore, businesses located within the most central area of the proposed BID are considered to be within "Zone A" which should be considered the primary benefit zone. There is typically a "secondary zone" or "Zone B" within most proposed BID areas. This area receives less benefit than Zone A and should be assessed accordingly. An example of how different zones might be treated regarding the computation of the annual benefit assessment is as follows. • Zone A: 100% of base benefit assessment • Zone B: 75% of base benefit assessment In the case of Downtown Palo Alto, it is recommended that all Zone A upper floor businesses, as well as any other businesses located at the periphery of the proposed BID, be considered as Zone B businesses. Please refer to the map in Attachment I. Criteria 3) Size of Business: Statement Concerning Cost-Benefit Formula For BID Businesses Regarding Size of Business: In approximately 50% of newly established BIDs, a third assessment criterion is used. This criterion involves the size of each individual business that is based upon the businesses’ total number of full-time employees. Full-time employees are those working a total of 2,000 hours per year. Part-time employees are grouped into full-time job positions, i.e., two half-time employees total one full-time. Fractions are rounded down to the nearest whole number with no less than one person as a minimum for business. An example of how various business sizes might be treated regarding the computation of the annual benefit assessment is as follows: Retail/Restaurants Service Businesses Small 50% of base amount Under 6 FTE* Under 4 FTE Medium 75% of base amount 6 to under 11 FTE 4 to under 7 FTE Large 100% of base amount 11 or more FTE 7 or more FTE * FTE = full time employees Additionally, an exemption was established for “single person professional businesses” that have 25% or less FTE, including the business owner. This covers employees who work less 10 hours a week (based on a 40 hour work week) Since “single person businesses” that have 26% FTE to 1 FTE in the professional business category of the BID benefit the very least from the assessment, their assessments have been tiered by size based (according to benefit) on the new “single person business” criteria. Error! 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ATTACHMENT 2 Downtown Palo Alto Business Improvement District Annual BID Assessments ZONE A ZONE B (75% of Zone A amount) Restaurants & Retailers Under 6 FTE (50% of base amount) $225 $170 6 to under 11 FTE (75% of base amount) $340 $260 11 or more FTE (100% of base amount) $450 $340 Service Businesses Under 4 FTE (50% of base amount) $170 $130 4 to under 7 FTE (75% of base amount) $260 $200 Over 7 FTE (100% of base amount) $340 $260 Professional Businesses 25% or fewer FTE, including owner (0% of base amount) Exempt Exempt 26% FTE to under 1 FTE (25% of base amount) $60 $50 2 to 4 FTE (50% of base amount) $110 $90 5 to 9 FTE (75% of base amount) $170 $130 10+ FTE (100% of base amount) $225 $170 Lodging Businesses Up to 20 rooms (50% of base amount) $2258 $170 21 to 40 rooms (75% of base amount) $340 $260 41+ rooms (100% of base amount) $450 $340 Financial Institutions $500 $500 Note 1: For retail, restaurant, service, and professional businesses, size will be determined by number of employees either full-time or equivalent (FTE) made up of multiples of part-time employees. A full FTE equals approximately 2000 hours annually. Lodging facilities will be charged by number of rooms available and financial institutions will be charged a flat fee. Note 2: Second floor (and higher) businesses located within Zone A will be assessed the same as similar street-level businesses located within Zone B. Note 3: Assessment amounts are rounded to the nearest ten dollars. 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1A - 1C360 - 2A - 2C360 - 3A - 3C360 - 4A - 4C360 - 5A - 5C360 - 6A 344-348 418420 482 328 456 321 325 330204 218 236 240 250- 252 477 475 467 457 453249235225221 201 60 275 505-509 239- 243 209- 213 210- 214 513-519 460 474472228- 230 535 558 201 16 12 20 209 215 223 231 521 80 239-245 530-540 544-554 212- 216 218-222 333 335- 337 351 457451 465463 489-499360 530 480 420 430 480 463 451443437411 405 419405401 441 480-498 347 351 355 359 525 430 473 332- 342 425415 400 570568 556 550 543 327321315305 343 515 525 551 555 328 309-311 518-528 536-540 552-554 558-562 573 A-E 591-599 557-571 330-332 318-320 406-418 417 542 548568 524 550 500-528 578 564 550 546 540 530 531-535 541 505 525 537 555 565 571 530 619-6 520 440-446 579 567 523610 600 555 581 420-438 437 566 224 228 A-F 244 579 575 565 559 251 355 A-J 335329 604 576 566 345-347 243245 25725920921922723502 505 610-616 727 678 676 674672 642 636-638 567 555 711 701705 725 525 759 730 718 734 738-740 760 746-750 701 721-7 600 827 835 899 850 530 609 759 751753 7 737-62611 601 600 1013 10041000 1006 1001 623 137 145 700 780 790 744 111700 753100 825805 33 51 75 63 841 44 675 49 41 711 799 703 100 101 139654 625 160 1001 1005 1009 1010 1004 930 975 945929931 948 181 940 960 145900 955 999875 853 925 81 855 901-907 909 87 98 917 921 925 735 849 707 847 842828 820248 230-232 212 825 829 833 839 800 812 818 882 165831 801 815 809801 841 791153 718 774 761 795745 201 209 834836 845 895 926 190 934 942 948 203 209 219 225 929200 240 904 910 926 270 935 904 909 909A 217 222 148 171 421 130 312 318 324 317 301 186 192 323 329 151 325 329 334 131 129 355301 235 258 212 163 115 291247 210 201 207 64 202 235 251 249 252 247 244250 177220 261 251-257 205245 231225213205 70 2 206 234240 183 251 270 241-247 215- 237 210- 216 219 235 62 202 245 54 52 50 203 215 221 313-317318 220- 224 238 542-550 531-539 532 759 223-239 905 911-917907 188 190 251- 293 202 206 208 210 212 216 220 1008 275 539 201 400 27 168 865857 302 324 340 795 848 918 903 903A 408 412 440 483A - F 435 751 735 745 532 210 727 733 335 328 330 345 214 350 800 806 441 441A 230302 306 308 312 316 301 303 305 307 309 325 251 807 821 829 801 818-824 420 424 430 832A 832 842A 842 852A 852 862A 862 872A 872 351A 351 355A 355 359A 359 363A 363 367A 367 425 911 943 951 918 936 940 944 271 253 241 301 319 919A 919 935 949 928 936 940-946 353 264 367 361 310 1005 1010 423425413 - 419 457-467 469-471473-481 454 729 A-D 733-743 734-740 724-732 936 824-828 920 949 943941 715 95 445 324 328 545 590 425447 827 565 585 595 904 315 507 561 706 536 200 100 280-290 150 158164 276 516 698 161 159 157777 132 127 180 528 120 247 372 524 548550 538 152 345 336 515 658 227 27 29 539 115 135 321 558 #200-202 558 #C & D 965 140 350 808 915 461 435433 945 1012 421 727 A-C 218 255 206 739 260 840 650 642 351 451 551 375 530 643 415 12 700 802 99 89 87 901 560564568572576580584588592594 906 908 910 912 914 916 918920 922 924 548 423 668 901 305 -313 423 405 352354 611 320322 346 323 471 484 528 426 264 430 1001 508 756 - 760 940 930 544546 515 7 745 7 549 211 213 151 160 257 433-457 482 330 349 401 539 440 691 755 67 312 202 651 443 445 447 716 218 398 998 262 335 218 640-646506 327 469 303 401 403 254 401 91 40 101 819 301 725 595 705 541 Quarry Road Homer Avenue Lane 8 West Medical Foundation Way Lane 7 West Lane 7 East Encina Avenue El Camino Real Urban Lane Wells Avenue Forest Avenue High Street Emerson Street Ch a n n i n g A v e n u e Alma Street El Camino Real Mitchell Lane Everett Avenue Lytton Avenue Lane 15 E High Street Alma Street Bryant Street Lane 6 E Lane 11 W Lane 21 High Street Gilman Street Hamilton Avenue University Avenue Bryant Court Lane 30 Florence Street Kipling Street Tasso Street Cowper Street Everett Avenue Waverley Street Cowper Street Webster Street Everett Court Lytton Avenue Lane A West L L La Addison Avenue Forest Avenue Downing Lane Homer Avenue La Lane 39 Lane 56 Hamilton Avenue Webster Street Waverley Street Kipling Street Bryant Street Ramona Street Addison Avenue Scott Street Webster Street Cowper Street Addison Avenue Channing Avenue Ramona Street Paulsen Ln Lane 15 E Lane 20 W Lane 20 E University Avenue CalTrain ROW Emerson Street Waverley Street Kipling Street Bryant Street Ramona Street Palo Road ay Pear Lane Lane 12 W Lane 5 E Everett Avenue Homer Avenue Emerson Street tal m D r iv e Alma Street Lytton Avenue This map is a product of the City of Palo Alto GIS This document is a graphic representation only of best available sources. Legend abc Zone A (Ground Floor) - Zone B (Upper Floors) abc Zone B 0' 500' Downtown Palo Alto Business ImprovementDistrict Area Map CITY O F PALO A L TO I N C O R P O R ATE D C ALIFOR N IA P a l o A l t oT h e C i t y o f A P RIL 16 1894 The City of Palo Alto assumes no responsibility for any errors ©1989 to 2012 City of Palo Alto rrivera, 2012-04-30 16:57:54CPA BID (\\cc-maps\gis$\gis\admin\Personal\rrivera.mdb) Not Yet Approved 120327 jb 0130950 1 Resolution No. _____ Resolution of the Council of the City of Palo Alto Declaring Its Intention to Levy an Assessment Against Businesses Within the Downtown Palo Alto Business Improvement District for Fiscal Year 2015 and Setting a Time and Place for May 12, 2014 at 7:00 PM or Thereafter, in the Council Chambers THE CITY COUNCIL OF THE CITY OF PALO ALTO DOES HEREBY FIND, DECLARE, AND ORDER AS FOLLOWS: SECTION 1. The Parking and Business Improvement Area Law of 1989 (the "Law"), California Streets and Highways Code Sections 36500 et seq., authorizes the City Council to levy an assessment against businesses within a parking and business improvement area which is in addition to any assessments, fees, charges, or taxes imposed in the City. SECTION 2. Pursuant to the Law, the City Council adopted Ordinance No. 4819 establishing the Downtown Palo Alto Business Improvement District (the "District") in the City of Palo Alto. SECTION 3. The City Council, by Resolution No. 8416, appointed the Board of Directors of the Palo Alto Downtown Business & Professional Association, a California nonprofit mutual benefit corporation, to serve as the Advisory Board for the District (the "Advisory Board"). SECTION 4. In accordance with Section 36533 of the law, the Advisory Board prepared and filed with the City Clerk a report entitled "Downtown Palo Alto Business Improvement District, Annual Report 2014-2015" (the "Report”). The City Council hereby preliminarily approves the report. SECTION 5. The boundaries of the District are within the City limits of the City of Palo Alto (the "City") and encompass the greater downtown area of the City, generally extending from El Camino Real to the East, Webster Street to the West, Lytton Avenue to the North and Addison Avenue to the South (east of Emerson Street, the boundaries extend only to Forest Avenue to the South). Reference is hereby made to the map of the District attached hereto as Exhibit "A" and incorporated herein by reference for a complete description of the boundaries of the District. SECTION 6. The City Council hereby declares its intention, in addition to any assessments, fees, charges or taxes imposed by the City, to levy and collect an assessment against businesses within the District for fiscal year 2015 (July 1, 2014 to June 30, 2015). Such assessment is not proposed to increase from the assessment levied and collected for the prior fiscal year. The method and basis of levying the assessment is set forth in Exhibit "B" attached hereto, and incorporated herein by reference. Not Yet Approved 120327 jb 0130950 2 SECTION 7. The types of improvements to be funded by the levy of an assessment against businesses within the District are the acquisition, construction, installation or maintenance of any tangible property with an estimated useful life of five years or more. The types of activities to be funded by the levy of an assessment against businesses within the District are the promotion of public events which benefit businesses in the area and which take place on or in public places within the District; the furnishing of music in any public place in the District; and activities which benefit businesses located and operating in the District. SECTION 8. New businesses established in the District after the beginning of any fiscal year shall be exempt from the levy of the assessment for that fiscal year. In addition, non-profit organizations, newspapers and professional "single-person businesses," defined as those businesses which have 25% or less full time equivalent employees, including the business owner, shall be exempt from the assessment. SECTION 9. The City Council hereby fixes the time and place for a public hearing on the proposed levy of an assessment against businesses within the District for fiscal year 2015 as follows: TIME: 7:00 p.m. or soon thereafter DATE: Monday, May 12, 2014 PLACE: City Council Chambers 250 Hamilton Avenue Palo Alto, California 94301 At the public hearing, the testimony of all interested persons regarding the levy of an assessment against businesses within the District for fiscal year 2015 shall be heard. A protest may be made orally or in writing by any interested person. Any protest pertaining to the regularity or sufficiency of the proceedings must be in writing and shall clearly set forth the irregularity or defect to which the objection is made. Every written protest must be filed with the City Clerk at or before the time fixed for the public hearing. The City Council may waive any irregularity in the form or content of any written protest and at the public hearing may correct minor defects in the proceedings. A written protest may be withdrawn in writing at any time before the conclusion of the public hearing. Each written protest must contain a description of the business in which the person subscribing the protest is interested sufficient to identify the business and, if a person subscribing is not shown on the official records of the City as the owner of the business, the protest shall contain or be accompanied by written evidence that the person subscribing is the owner of the business. A written protest which does not comply with Not Yet Approved 120327 jb 0130950 3 the requirements set forth in this paragraph will not be counted in determining a majority protest (as defined below). If, at the conclusion of the public hearing, written protests are received from the owners of businesses in the District which will pay 50 percent or more of the assessments proposed to be levied and protests are not withdrawn so as to reduce the protests to less than 50 percent (i.e., there is a majority protest), no further proceedings to levy the proposed assessment, as contained in this resolution of intention, shall be taken for a period of one year from the date of the finding of a majority protest by the City Council. If the majority protest is only against the furnishing of a specified type or types of improvement or activity within the District, those types of improvements or activities shall be eliminated. SECTION 10. For a full and detailed description of the improvements and activities to be provided for fiscal year 2015, the boundaries of the District and the proposed assessments to be levied against the businesses within the District for fiscal year 2015, reference is hereby made to the Report of the Advisory Board. The Report is on file with the City Clerk and open to public inspection. SECTION 11. The City Clerk is hereby authorized and directed to provide notice of the public hearing in accordance with law. // // // // // // // // // // // // Not Yet Approved 120327 jb 0130950 4 SECTION 12. The Council finds that the adoption of this resolution does not meet the definition of a project under Section 21065 of the California Environmental Quality Act and, therefore, no environmental impact assessment is necessary. INTRODUCED AND PASSED: AYES: NOES: ABSENT: ABSTENTIONS: ATTEST: __________________________ _____________________________ City Clerk Mayor APPROVED AS TO FORM: APPROVED: __________________________ _____________________________ Senior Assistant City Attorney City Manager _____________________________ Director of Administrative Services _____________________________ Director of Planning and Community Environment Not Yet Approved 120327 jb 0130950 5 Not Yet Approved 140505 jb 0131198 1 Resolution No. ______ Resolution of the Council of the City of Palo Alto Confirming the Report of the Advisory Board and Levying an Assessment for Fiscal Year 2015 on the Downtown Palo Alto Business Improvement District THE CITY COUNCIL OF THE CITY OF PALO ALTO HEREBY FINDS, DECLARES, AND ORDERS AS FOLLOWS: SECTION 1. The Parking and Business Improvement Area Law of 1989, California Streets and Highways Code Sections 36500 et seq. (the “Law”), authorizes the City Council to levy an assessment against businesses within a parking and business improvement area which is in addition to any assessments, fees, charges, or taxes imposed in the City. SECTION 2. Pursuant to the Law, the City Council adopted Ordinance No. 4819 establishing the Downtown Palo Alto Business Improvement District (the "District") in the City of Palo Alto. SECTION 3. The City Council, by Resolution No. 8416, appointed the Board of Directors of the Palo Alto Downtown Business & Professional Association, a California nonprofit mutual benefit corporation, to serve as the Advisory Board for the District (the "Advisory Board"). SECTION 4. In accordance with Section 36533 of the law, the Advisory Board prepared and filed with the City Clerk a report entitled "Downtown Palo Alto Business Improvement District, Annual Report 2014-2015" (the "Report”), and, by previous resolution, the City Council preliminarily approved such report as filed. SECTION 5. The boundaries of the District are within the City limits of the City of Palo Alto (the "City") and encompass the greater downtown area of the City, generally extending from El Camino Real to the West, Webster Street to the East, Lytton Avenue to the North and Addison Avenue to the South (east of Emerson Street, the boundaries extend only to Forest Avenue to the South). Reference is hereby made to the map of the District attached hereto as Exhibit "A" and incorporated herein by reference for a complete description of the boundaries of the District. SECTION 6. The City Council has adopted a Resolution of Intention, Resolution No. 9403 declaring its intention to levy and collect an assessment for fiscal year 2015 against the businesses in the District. SECTION 7. Following notice duly given pursuant to law, the City Council has held a full and fair public hearing regarding the levy and collection of an assessment within the District for fiscal year 2015. All interested persons were afforded the opportunity to hear and be heard regarding protests and objections to the levy and Not Yet Approved 140505 jb 0131198 2 collection of the assessment for fiscal year 2015. The City Council finds that there was no majority protest within the meaning of the Law. All protests and objections to the levy and collection of the assessment and any and all protests and objections are hereby overruled by the City Council. SECTION 8. Based on its review of the Report, a copy of which has been presented to the City Council and has been filed with the City Clerk, and other reports and information, the City Council hereby finds and determines that (i) the businesses in the District will be benefited by the expenditure of funds raised by the assessment (ii) the District includes all of the businesses so benefited; and (iii) the net amount of the assessment levied within the district for the 2015 fiscal year in accordance with the Report is apportioned by a formula and method which fairly distributes the net amount in proportion to the estimated benefits to be received by each such business. SECTION 9. The City Council hereby confirms the Report as originally filed by the Advisory Board. New businesses established in the District after the beginning of any fiscal year shall be exempt from the levy of the assessment for that fiscal year. In addition, non-profit organizations, newspapers and professional "single-person businesses," defined as those businesses which have 25% or less full time equivalent employees, including the business owner, shall be exempt from the assessment. SECTION 10. The Adoption of this resolution constitutes a levy of an assessment for the fiscal year 2015 (commencing July 1, 2014, and ending June 30, 2015). The assessment formula, including the method and basis of levying the assessment, is set forth Exhibit “B” attached hereto and incorporated herein by reference. New businesses established in the District after the beginning of any fiscal year shall be exempt from the levy of the assessment for that fiscal year. In addition, non-profit organizations, newspapers and professional "single-person businesses," defined as those businesses which have 25% or less full time equivalent employees, including the business owner, shall be exempt from the assessment. SECTION 11. The City Council hereby declares that the proposed uses of the revenues derived from the assessments levied against the businesses in the District are for the following facilities and activities: The types of improvements to be funded by the levy of an assessment against businesses within the District are the acquisition, construction, installation or maintenance of any tangible property with an estimated useful life of five years or more. The types of activities to be funded by the levy of an assessment against businesses within the District are the promotion of public events which benefit businesses in the area and which take place on or in public places within the District; the furnishings of music in any public place in the District; and activities which benefit businesses locating and operating in the District. // // Not Yet Approved 140505 jb 0131198 3 SECTION 12. The Council finds that the adoption of this resolution does not meet the definition of a project under Section 21065 of the California Environmental Quality Act and, therefore, no environmental impact assessment is necessary. INTRODUCED AND PASSED: AYES: NOES: ABSENT: ABSTENTIONS: ATTEST: __________________________ _____________________________ City Clerk Mayor APPROVED AS TO FORM: APPROVED: __________________________ _____________________________ Senior Assistant City Attorney City Manager _____________________________ Director of Administrative Services 934 - 9 4 4 927 932 233 281 933 - 9 3 7 943 327 1001 94 2 469 475 74 4 459 832 801 A P T 1 - 5 427-453 920 912 362 370 900 838 846 471 459 835 - 8 5 5 460 81 5 840 836 834 845 400 803 928930 931 933 835 - 8 3 7 831 - 8 3 3 451453 802800 81 0 - 8 1 6 81 8 - 8 2 0 82 8 - 8 3 0 817 - 8 1 9 82 3 - 8 2 5 567-569 559563 536 526 100 1 101 1 - 540 483 904 912 468 918 926 537 965-971505-507 519-521 939-945 931-935 923-925 518-520 539541543 515-517 809 811 420 1001 1011 1010 376 370 980960 990 34 354 326 426 4 1000 448 944 471 483948952 959947925 915 933 935 425-443 451449 463-465 936-940 458 460 440 428426 527-533 543 551 510520 558-560 903 825 837 581 575 940934 813-823 501-509 511-519 521-529 531-539 541-547 556 596 904 926 561-567 569 845 580 574 566 991- 997 136 610 116-122 150 535529 525 542516140 102 116 124 163 145 566 556 167 528 643635 635 645- 685 660- 666 620 180 164 158156 624628 632 636 640 644 617 621 151-165 171-195 203 642640 636 200 151 115 125 135 514 101 440 444 436432 427 425 117119 630616 208 228220 240-248 575 530- 534 536 540 552 177 156 201 209215 225 595 229231 611-623 180 508500 625-631 170 172-174 542544 538- 542 552 548 546 541- 547 230-238 734 723 721 702- 730220-244 744 701 731 755757 771 200 160 728-732 762- 776740-746 250 275 270 255 741 265 724 730 651 221-225 227 668 707 205 201203 451449 209 219 221 233 235450 460 470 442 444 400 420 430 411 425 429 185 165 181 412 250 420 245 171-169 441- 445 435- 439 346344 333 335 342 344 431 460 450 235530 220 220 B 222 240 514278 274270 250 545 540 251485255 271 281 300 310 301 581 259-267 533535537 261 267 518-526 532- 536 520-526 530-536 271 281 252 270 240-248 202- 216 228226 234238 244 242 210- 216 228- 234 223- 229 209215 247-259 240 232230 311-317 251 344 326 340 337339 323317 400 420 332330 314 353 355 367 305 347 265272-278 418 319 321- 341 328 330 300- 310 431401 366 436 426 #1-7 369 335 319 390 301 315 375 307- 311 325330 332 1&2330 1-3 324 326316 318 373- 377 416- 424 361 338 340 560 345 321325 315 529 285 555 650636 628 1-12 628 A-E 385 365 375380 345 664 325650-654 661635300 690 675 555541-549533 535- 539 318-324 326 352 425 439-441 435429425 415-419 405403453 461 383460 502 510 526 520 540 499 467 459 439 425 555 400 436-452 456 379 370-374 376 380-382 384-396 550-552 364 360 431 440-444 423 499 475 421-423 431-433 432428 460-476 450 635 446 430 400 745 720706 385744 734 724-730 720 712 704 360 351 315737 332 300 653 -681 683 685 512 501619 609605 518 482486 496 610 630 455 400 651-687 543-545 532534 542544 550 552 554556 558560562564 635-6 643-6 470 313 334 333 325326 342 303301 229 336 308 310 312 316 318 311 331 315 319 317 321 335 228220 356-360 347-367 351357 369-379360 258- 296 350 210 204 302- 316 379310 320 328 332 340 437 412 311 A-B 404 313 325 327 333 407 401385 411 452 378-390 360 - 1A - 1C360 - 2A - 2C360 - 3A - 3C360 - 4A - 4C360 - 5A - 5C360 - 6A 344-348 418420 482 328 456 321 325 330204 218 236 240 250- 252 477 475 467 457 453249235225221 201 60 275 505-509 239- 243 209- 213 210- 214 513-519 460 474472228- 230 535 558 201 16 12 20 209 215 223 231 521 80 239-245 530-540 544-554 212- 216 218-222 333 335- 337 351 457451 465463 489-499360 530 480 420 430 480 463 451443437411 405 419405401 441 480-498 347 351 355 359 525 430 473 332- 342 425415 400 570568 556 550 543 327321315305 343 515 525 551 555 328 309-311 518-528 536-540 552-554 558-562 573 A-E 591-599 557-571 330-332 318-320 406-418 417 542 548568 524 550 500-528 578 564 550 546 540 530 531-535 541 505 525 537 555 565 571 530 619-6 520 440-446 579 567 523610 600 555 581 420-438 437 566 224 228 A-F 244 579 575 565 559 251 355 A-J 335329 604 576 566 345-347 243245 25725920921922723502 505 610-616 727 678 676 674672 642 636-638 567 555 711 701705 725 525 759 730 718 734 738-740 760 746-750 701 721-7 600 827 835 899 850 530 609 759 751753 7 737-62611 601 600 1013 10041000 1006 1001 623 137 145 700 780 790 744 111700 753100 825805 33 51 75 63 841 44 675 49 41 711 799 703 100 101 139654 625 160 1001 1005 1009 1010 1004 930 975 945929931 948 181 940 960 145900 955 999875 853 925 81 855 901-907 909 87 98 917 921 925 735 849 707 847 842828 820248 230-232 212 825 829 833 839 800 812 818 882 165831 801 815 809801 841 791153 718 774 761 795745 201 209 834836 845 895 926 190 934 942 948 203 209 219 225 929200 240 904 910 926 270 935 904 909 909A 217 222 148 171 421 130 312 318 324 317 301 186 192 323 329 151 325 329 334 131 129 355301 235 258 212 163 115 291247 210 201 207 64 202 235 251 249 252 247 244250 177220 261 251-257 205245 231225213205 70 2 206 234240 183 251 270 241-247 215- 237 210- 216 219 235 62 202 245 54 52 50 203 215 221 313-317318 220- 224 238 542-550 531-539 532 759 223-239 905 911-917907 188 190 251- 293 202 206 208 210 212 216 220 1008 275 539 201 400 27 168 865857 302 324 340 795 848 918 903 903A 408 412 440 483A - F 435 751 735 745 532 210 727 733 335 328 330 345 214 350 800 806 441 441A 230302 306 308 312 316 301 303 305 307 309 325 251 807 821 829 801 818-824 420 424 430 832A 832 842A 842 852A 852 862A 862 872A 872 351A 351 355A 355 359A 359 363A 363 367A 367 425 911 943 951 918 936 940 944 271 253 241 301 319 919A 919 935 949 928 936 940-946 353 264 367 361 310 1005 1010 423425413 - 419 457-467 469-471473-481 454 729 A-D 733-743 734-740 724-732 936 824-828 920 949 943941 715 95 445 324 328 545 590 425447 827 565 585 595 904 315 507 561 706 536 200 100 280-290 150 158164 276 516 698 161 159 157777 132 127 180 528 120 247 372 524 548550 538 152 345 336 515 658 227 27 29 539 115 135 321 558 #200-202 558 #C & D 965 140 350 808 915 461 435433 945 1012 421 727 A-C 218 255 206 739 260 840 650 642 351 451 551 375 530 643 415 12 700 802 99 89 87 901 560564568572576580584588592594 906 908 910 912 914 916 918920 922 924 548 423 668 901 305 -313 423 405 352354 611 320322 346 323 471 484 528 426 264 430 1001 508 756 - 760 940 930 544546 515 7 745 7 549 211 213 151 160 257 433-457 482 330 349 401 539 440 691 755 67 312 202 651 443 445 447 716 218 398 998 262 335 218 640-646506 327 469 303 401 403 254 401 91 40 101 819 301 725 595 705 541 Quarry Road Homer Avenue Lane 8 West Medical Foundation Way Lane 7 West Lane 7 East Encina Avenue El Camino Real Urban Lane Wells Avenue Forest Avenue High Street Emerson Street Ch a n n i n g A v e n u e Alma Street El Camino Real Mitchell Lane Everett Avenue Lytton Avenue Lane 15 E High Street Alma Street Bryant Street Lane 6 E Lane 11 W Lane 21 High Street Gilman Street Hamilton Avenue University Avenue Bryant Court Lane 30 Florence Street Kipling Street Tasso Street Cowper Street Everett Avenue Waverley Street Cowper Street Webster Street Everett Court Lytton Avenue Lane A West L L La Addison Avenue Forest Avenue Downing Lane Homer Avenue La Lane 39 Lane 56 Hamilton Avenue Webster Street Waverley Street Kipling Street Bryant Street Ramona Street Addison Avenue Scott Street Webster Street Cowper Street Addison Avenue Channing Avenue Ramona Street Paulsen Ln Lane 15 E Lane 20 W Lane 20 E University Avenue CalTrain ROW Emerson Street Waverley Street Kipling Street Bryant Street Ramona Street Palo Road ay Pear Lane Lane 12 W Lane 5 E Everett Avenue Homer Avenue Emerson Street tal m D r iv e Alma Street Lytton Avenue This map is a product of the City of Palo Alto GIS This document is a graphic representation only of best available sources. Legend abc Zone A (Ground Floor) - Zone B (Upper Floors) abc Zone B 0' 500' Downtown Palo Alto Business ImprovementDistrict Area Map CITY O F PALO A L TO I N C O R P O R ATE D C ALIFOR N IA P a l o A l t oT h e C i t y o f A P RIL 16 1894 The City of Palo Alto assumes no responsibility for any errors ©1989 to 2012 City of Palo Alto rrivera, 2012-04-30 16:57:54CPA BID (\\cc-maps\gis$\gis\admin\Personal\rrivera.mdb) City of Palo Alto (ID # 4744) City Council Staff Report Report Type: Action Items Meeting Date: 5/12/2014 City of Palo Alto Page 1 Summary Title: Information Follow up for the Organics Facilities Plan and the Use of the Measure E Site Title: Information Follow up to Recommendation to Cancel Request for Proposals for Energy/Compost or Export Option Proposals for Food Scraps, Yard Trimmings and Biosolids and Begin Implementing the Organics Facilities Plan, including pursuing use of the Measure E Site for Composting (THIS ITEM WAS CONTINUED BY COUNCIL MOTION ON APRIL 29, 2014 TO MAY 2014) From: City Manager Lead Department: Public Works Recommendation Staff recommends that Council direct Staff to: 1. Reject all proposals received in response to the “Energy/Compost Facility or Export Option for Food Scraps, Yard Trimmings, and Biosolids” Request for Proposals (E/CF RFP) process. 2. Begin to pursue the Organics Facilities Plan (OFP) by hiring a Program Management firm. 3. Apply for a State Water Resources Control Board State Revolving Fund (SRF) loan for Component One of the Organics Facilities Plan (OFP). 4. Initiate design of Component One of the OFP, Biosolids Dewatering and Truck Haul-Out Facility, including direction to prepare related modifications to the Regional Water Quality Control Plant (RWQCP) partner agency agreements. 5. Initiate predesign of Component Two, Development of a Thermal Hydrolysis Process Wet Anaerobic Digestion (THP AD) facility, at the RWQCP; Component Three, Food Scrap Preprocessing; and Component Four, Yard Trimmings Processing of the OFP, including the following: City of Palo Alto Page 2 a. Determine the price of electricity that the RWQCP will receive for power generated by the facility; b. Establish the optimum size of the THP AD facility built to accommodate biosolids for a 30-year planning horizon as well as capacity for food scraps, which Palo Alto and any other jurisdiction would commit to bring to the facility; c. Establish a list of contributing partner agencies who commit to bring food scraps to the facility; d. Finalize a financing plan for Component Two of the OFP; e. Determine the appropriate purchasing and project delivery mechanisms that should be utilized to develop the OFP; and f. Determine the required CEQA documentation for the Components of the OFP. 6. Update the existing timeline and schedule in December, 2014 for all Components of the OFP including next steps for the development of Component Four, Processing of Yard Trimmings, where Staff will seek to identify and pursue technologies to harness the energy and resource potential of yard trimmings that could be located on the relatively flat 3.8- acre portion of the Measure E site or elsewhere. Alternative Recommendations A set of Alternative Recommendations was developed by staff to address the concerns of the Palo Alto Green Energy (PAGE) group and was transmitted to Council via a Supplementary Memo dated April 28, 2014. The key changes are all contained in Recommendation #1, with the other changes being minor. While the Staff Recommendations remain the same, the Alternative Recommendations are acceptable to staff, and staff can make them work, operationally. The community members who are against locating facilities on the Measure E site are opposed to the Alternative Recommendations. The Alternative Recommendations are as follows: 1. a. Cancel the “Energy/Compost Facility or Export Option for Food Scraps, Yard Trimmings, and Biosolids” Request for Proposals (E/CF RFP). b. Immediately reissue a substitute RFP for implementation of Components #2-4 (Anaerobic Digesters; Food Preprocessing; Yard Trimmings Composting) of the Organics Facilities Plan (OFP). The RFP shall express a preference that the relatively flat portion (3.8 acres or less) of the Measure E Site shall be used for Aerobic Composting of Yard City of Palo Alto Page 3 trimmings (Component #4). No later than December 2014, Staff shall return to Council with recommendations to commence CEQA work and negotiate a contract(s) with the top-rated proposer(s). 2. Begin to pursue the Organics Facilities Plan (OFP) by hiring a Program Management firm. Should there be any differences between the OFP and the Recommendations adopted by Council, the Recommendations shall govern. 3. Apply for a State Water Resources Control Board State Revolving Fund (SRF) loan for Component One of the Organics Facilities Plan (OFP). 4. Initiate design of Component One of the OFP, Biosolids Dewatering and Truck Haul-Out Facility, including direction to prepare related modifications to the Regional Water Quality Control Plant (RWQCP) partner agency agreements. 5. Initiate the answering of predesign questions associated with Component Two, Development of a Thermal Hydrolysis Process Wet Anaerobic Digestion (THP AD) facility, at the RWQCP; Component Three, Food Scrap Preprocessing; and Component Four, Yard Trimmings Processing of the OFP, including the following: a. Determine the price of electricity that the RWQCP will receive for power generated by the facility; b. Establish the optimum size of the THP AD facility built to accommodate biosolids for a 30-year planning horizon as well as capacity for food scraps, which Palo Alto and any other jurisdiction would commit to bring to the facility; c. Establish a list of contributing partner agencies who commit to bring food scraps to the facility; d. Initiate a financing plan for Component Two of the OFP; e. Determine the appropriate purchasing and project delivery mechanisms that should be utilized to develop the OFP; and f. Determine the required CEQA documentation for the Components of the OFP. 6. Update the existing timeline and schedule in December, 2014 for all Components of the OFP. List of Acronyms: BFP: Biosolids Facilities Plan CEQA: California Environmental Quality Act City of Palo Alto Page 4 E/CF RFP: Energy/Compost Facility or “Export Option for Food Scraps, Yard Trimmings, and Biosolids” Request for Proposals GHG: Greenhouse Gas Emissions OFP: Organics Facilities Plan PAGE: Palo Alto Green Energy NPV: Net Present Value RWQCP: Palo Alto Regional Water Quality Control Plant SRF: State Water Resources Control Board State Revolving Fund THP AD: Thermal Hydrolysis Process Wet Anaerobic Digestion Executive Summary Rather than select any of the proposals submitted in response to the Energy/Compost Facility or Export Option for Food Scraps, Yard Trimmings, and Biosolids Request for Proposals (E/CF RFP), Staff instead recommends that the City of Palo Alto pursue an Organics Facilities Plan (OFP), which Staff has developed in concept based on both the review of proposals submitted in response to the E/CF RFP and the draft Biosolids Facilities Plan (BFP). (www.cityofpaloalto.org/energycompost). Staff made this and related recommendations in Staff Report #4550 (Attachment D) which was considered by Council at their April 29, 2014, meeting. This staff report contains Staff’s original recommendations as presented in Staff Report #4550 as well as the Alternative Recommendations first forwarded to Council in a Supplemental Memorandum dated April 28, 2014 (Attachment E). The alternative recommendations were designed to address the concerns of the Palo Alto Green Energy (PAGE) group. Council deferred action on both sets of recommendations to allow more time for public review and input. Under the Staff Recommendations, all four components of the OFP will be initiated and pursued, through a series of new Requests for Proposals (RFPs) over time. Under the Alternative Recommendations, the process would be sped up by issuing new RFP(s) for all Components of the OFP immediately. The second key feature of the Alternative Recommendations is that the RFP would state a preference for the Aerobic Composting of yard trimmings to be accomplished on the 3.8-acre, relatively flat portion of the Measure E site. Speeding up the process and composting on the Measure E site are critical to the PAGE group. Under City of Palo Alto Page 5 either option, the existing E/CF RFP proposers could reference their existing proposals in any new RFP submittal. Bringing both sets of recommendations back gives Council the option of adopting the Staff Recommendations or the Alternative Recommendations. Many PAGE supporters have expressed their willingness to accept the Alternative Recommendations in the spirit of compromise, even though they are not their first choice. Many community members who oppose locating facilities on the Measure E site have expressed opposition to the Alternative Recommendations. Background Both sets of recommendations incorporate the OFP which consists of four components: Component One: Biosolids Dewatering and Truck Haul-Out Facility. Component Two: Wet Anaerobic Digestion Facility utilizing the Thermal Hydrolysis Process. Component Three: Food Preprocessing Facility; Preprocessed food scraps would then be fed into the anaerobic digester (Component Two above). Component Four: The pursuit of technologies to harness the energy and resource potential of yard trimmings. Both sets of recommendations contemplate canceling the existing RFP and moving forward with a more narrowly tailored RFP. The recommendation to reject all proposals submitted in response to the E/CF RFP is based primarily on three reasons: one, the OFP which specifies traditional technologies is too different from the original RFP which contemplated cutting edge technologies; two, staff now wishes to have the City (as opposed to the Private Sector) own and operate key components of the OFP; and three, the City wishes to re-test the market and obtain pricing on the more traditional technologies Staff has chosen in the OFP. The City expected to receive proposals on new and emerging technologies but did not. Instead the City received proposals on standard technologies and the City should now go back out to bid on those technologies. In addition to these principal reasons for rejecting all proposals, the cost and Greenhouse Gas (GHG) comparisons of the proposals to the City’s OFP support City of Palo Alto Page 6 the decision to reject. Table 1 compares the costs (with an electricity sale price at 10.4 cents per kWh) and GHG emissions for the OFP, E/CF RFP Proposals (Synagro, Harvest Power, and We Generation (Cambi Services)), and the current conditions (biosolids incineration; off-site composting of commercial food scraps and yard trimmings; landfilling of residential food scraps): Table 1 Comparison of the OFP, E/CF RFP Proposals, and Current Conditions Organics Facilities Plan Synagro Harvest Power We Gen (Cambi) Current Conditions Net Present Value (20 years) of all costs $84.7 M $98.7 M $97 M $107 M $98 M Annual Greenhouse Gasses (MT CO2e) Total (includes truck trips) -5,260 MT 1,153 MT -3,263 MT -5,291 MT 3,057 MT From an economic and competitive perspective, the costs for the OFP are lower than any of the three E/CF RFP proposals available to the City at this time. A number of comments on the Net Present Value (NPV) for the City’s Organics Facilities Plan (OFP) were received, resulting in staff changing the forecast from $76.8 million in Staff Report #4550 to the current forecast of $84.7 million in this Staff Report. (The detailed breakdown of the cost comparison is contained in the Discussion Section.) DISCUSSION The Council requested additional information on several issues: a more detailed analysis of the cost comparisons of the OFP and the received proposals; discussion of the criteria for scoring the proposals (including a discussion of how GHG impacts were evaluated) and a further discussion of the Measure E limitations. Project Cost Estimates (Net Present Values) The community, E/CF RFP proposers, and Council, questioned the accuracy of the net present value (NPV) calculation of the Organics Facilities Plan. In Staff Report #4550 from April 29, 2014, staff estimated the NPV to be $76.8 million over 20 years for all four components of the OFP. The NPV was based on the capital and operating costs for Components One, Two, and Three, and the operating costs for City of Palo Alto Page 7 Component Four all beginning concurrently in 2019. The updated NPV assumes a beginning point in 2019 with the completion of the dewatering facility and includes the operating costs to dewater and haul biosolids and compost food scraps from 2019 through 2021 prior to the completion of the THP AD facility and food scrap preprocessing facilities in Components Two and Three. These costs were not included in the original NPV calculation. Staff also reviewed assumptions related to labor, operations, engine maintenance, and other items requested by the joint note from the E/CF RFP proposers Harvest Power and We Generation. A detailed summary prepared by CH2M Hill of these costs and assumptions is included as Attachment C to this report. Many of the items brought forward by these two proposers were baseless and relied on faulty assumptions. Nevertheless, staff believed a full review and detailed summary of the NPV was warranted. NPV assumptions Start year: 2019 Length of term: 20 years NPV discount rate: 4% Inflation rate: 2.5% City borrowing rate: 2.5% Loan term: 20 years Capital Costs for the OFP Biosolids Component One $12,000,000 Component Two $64,653,0001 Food Scrap Processing Component Three $8,850,000 Yard Trimmings Component Four $0 Operations and Maintenance Costs (2015 dollars – year one) Biosolids Component One $1,600,000 (years 2019-2021) Component Two $128,000 (years 2022-2038) Food Scrap Processing Pre-Component Three $953,442 (years 2019-2021) Component Three $70,000 (years 2022-2038) Yard Trimmings Component Four $480,766 1 Includes $400,000 for program management contract City of Palo Alto Page 8 Under the OFP, between 2019 and 2021, the RWQCP would export biosolids to an offsite facility (e.g. Synagro or EBMUD) using the dewatering and truck haul-off facility in Component One. Prior to the completion of food preprocessing in Component Three, the commercial food scraps would continue to be composted at an offsite composting facility. The operations and maintenance costs drop dramatically in 2022 when Components Two and Three are fully operational processing biosolids and food scraps and producing energy. The value of the energy generated priced at 10.3 cents per kilowatt hour (kWh) nearly offsets all of the other operational costs (labor, maintenance, agricultural use of the Class A biosolids, and other costs). Adjusted NPV = $84.7 million The adjusted NPV is still substantially lower than the overall cost for any of the E/CF RFP proposals. See Attachment A for a detailed NPV table for each feed stock and component. Criteria for and Scoring on Proposals On January 14, 2013, as an attachment to the Staff Report (ID #3269), the full E/CF RFP along with the evaluation criteria were presented and approved by Council prior to the release of the RFP in March 2013. The proposal scoring was weighted 50 percent technical (or non-cost) and 50 percent cost. The costs are based on an electricity sale price of 9.4 cents per kWh. The cost detail can be seen in Attachment A. The nonmonetary evaluation was comprised of six sections: 1. Quality of Proposal (5%) 2. Technical Resources and Experience (15%) 3. Financial Resources/Strength of Proposal (15%) 4. Record of Performance/Reliability of Technology (25%) 5. Technical Approach (25%) 6. Business Proposal (15%) Seven reviewers who represented the City Departments of Public Works, Utilities, and Administrative Services, along with representatives from Stanford and the City of Palo Alto Page 9 City of San José, provided scores, which were based on the submitted proposal and an interview. Anaergia’s score was based solely on its proposal. Synagro was highest scoring proposal finishing first in the qualitative review and with the lowest NPV with electricity sales at 9.4 cents per kWh. Synagro provided the least expensive option for biosolids treatment while Harvest Power provided the lowest cost for food scraps processing and yard trimmings compost. Cost detail can be found in Attachment A. The scoring breakdown can be seen in Attachment B. Proposal Qualitative Score Cost Rank 1. Synagro 66.00 1 ($98 million) 2. Harvest Power 57.29 2 (102 million) 3. We Generation (Cambi) 51.43 3 (112 million) (NOTE: In the ranking exercise, 9.4 cents per kWh was used, as specified in the RFP. However, in providing the NPVs in the sub-section above, 10.4 cents had to be used to match the power savings numbers in the OFP and allow an “apples-to-apples” comparison. This had the effect of improving the on-site options compared to the export option, but did not impact any of the conclusions being made.) An evaluation of greenhouse gas emissions were included as one of the factors in section six “Record of Performance/Reliability of Technology.” The evaluation compared the change in GHG emissions to the current conditions with all proposals receiving the highest score. The evaluation did not compare the relative GHG emissions of the proposals. Staff provided a comparative analysis of GHG emissions to Council as part of Staff Report #4550, which showed the OFP and We Generation (Cambi) proposal with the lowest GHG emissions. This section also included a number of technical parameters including plans for project management, permitting, design, construction, and start-up, operations and maintenance, community relations, and project schedule. The Synagro proposal, which utilized existing, permitted, and reliable technologies, had the highest overall score in this category, despite having relatively higher greenhouse gas emissions than the other two proposals. Synagro scored the highest in four of the six categories. Harvest Power only scored first in the financial strength category edging out Synagro who was able to demonstrate that their restructuring efforts have left the company in an improved financial condition. Harvest Power’s challenging site plan, including use of parkland outside of Measure E and interference with current site operations, would also have resulted in excessive City of Palo Alto Page 10 truck activity at the RWQCP and the Measure E site. This lowered their score in this planning category. Harvest Power also received a lower score in the “Record of Performance” section relative to Synagro with no comparable projects to the proposal in operation at the time of the RFP review2. The specific breakdown of the technical review panel scores is included in Attachment B. In some cases, a proposal was listed as ranking fourth. This is because the Anaergia proposal was evaluated by the technical review panel. When the technical review panel considered cost (50 percent of the evaluation), the Anaergia proposal was deemed not cost competitive. Anaergia was not offered an interview or considered further in the evaluation process. The technical analysis looked at overall costs and impacts to the specific enterprise funds (wastewater, refuse, and electric). The initial analysis compared the proposals at the likely electricity sales price of 9.4 cents per kWh, which was stated in the E/CF RFP and confirmed by Palo Alto Utilities. For the comparison, staff also used the alternative proposals from Harvest Power and We Generation (Cambi) that allowed for the use of outside feed stock (food scraps) to supplement the AD facility. These prices were the lowest and most competitive for Harvest Power and We Generation (Cambi). In this analysis at 9.4 cents per kWh, Synagro provided the lowest overall NPV. When the proposals were compared to the OFP presented by staff in Staff Report # 4550 (Attachment D) on April 29, 2014, staff adjusted the electricity price in the model to reflect a price of 10.4 cents per kWh matching the assumptions in the Biosolids Facilities Plan. This change reduced the NPV for the Harvest Power and We Generation (Cambi) proposals, which resulted in a shift in the overall NPV rank of the proposals with Harvest Power having the lowest overall NPV of the proposals while still significantly higher than the Organics Facilities Plan. In addition to the overall proposal NPV, the NPV analysis must consider the impacts to the individual enterprise funds. The Wastewater Fund is responsible not only to the City of Palo Alto but also to the RWQCP partners. For this reason, additional attention was paid to the biosolids processing NPV. To process 2 The City acknowledges the successful startup and operation of the Harvest Power facility in Orlando, FL, which contained the same team and technology offered in the Harvest power E/CF RFP proposal. However, this facility was not in operation at the time of the proposal review and only began full operations in February 2014. If the proposals were scored again today, based on the criteria in the “Record of Performance” section, the scoring would not change due to lack of historical data. City of Palo Alto Page 11 biosolids, Synagro is the far less costly option. Using 2019 as a base year, the costs to the RWQCP for the Synagro proposal, which include dewatering costs, are $3,051,669. Again, using the best possible pricing allowing for outside feedstock and an energy price at 10.4 cents per kWh, the first-year costs to the RWQCP for Harvest Power to process biosolids are $3,895,308. The first-year RWQCP costs for the We Generation (Cambi) are estimated at $3,491,882. These costs correspond with the Biosolids Facilities Plan that show exporting to the Central Valley as the lowest overall NPV option for biosolids only. Adding to the confusion is the discovery that the costs provided by We Generation (Cambi) are not dependable. This proposer acknowledged in the interview process that the tipping fees provided in the proposal were not firm prices. In addition, We Generation (Cambi) only provided for a portion of the dewatering costs in the proposal. CH2M Hill, in the analysis of the efficacy of the proposals, was very concerned with the limited capital investment of the We Generation (Cambi) proposal to provide for reliable and cost effective operation for 30 years, a minimum requirement of the E/CF RFP. We Generation (Cambi) offered a superior technology using thermal hydrolysis and anaerobic digestion. Unfortunately, the deficiencies in their proposal provided staff with little confidence that this company could successfully complete this project. Measure E Limitations Measure E (Attachment F) contains two critical provisions. First it removed the 10 acre site from parkland thus satisfying the Charter requirement that no land could be removed from park dedication without a vote of the people. Measure E also clarified the 10 acre site could only be used “for the purpose of building a biological conversion facility … to handle yard trimmings, food waste and/or sewage sludge from the regional wastewater treatment plant.” (Measure E, Enactment 1.) Second, Measure E limited the City Council’s authority to re- dedicate the same 10 acre site for a period of 10 years. After 10 years the City Council could re-dedicate the portion of the Site that was not “utilized for the purposes of [Measure E].” (Measure E, Enactment 3.) Measure E does not contain a definition of “utilize.” In Staff’s opinion if the qualifying facility had undergone all planning and environmental review, obtained all appropriate permits to begin construction, and begun construction, the site would be utilized for its intended purpose. If the site were still in the planning City of Palo Alto Page 12 stages as of November 2021, (10 years from Measure E passage), it would be difficult to conclude it was in fact “utilized.” As Measure E only places a limitation on the Council’s authority to re-dedicate, if a future Council were willing to continue pursuing a facility at the Measure E site, from a practical perspective, it is unlikely the same Council would vote to re-dedicate. In light of Measure E’s limited ten year protection of the site and the number of steps needed to implement even a simple anaerobic digester, staff has recommended a schedule that requires all critical decision making to occur before November 2021. Staff believes this schedule would allow the City to utilize the site within the 10 year limitation contemplated by Measure E. As stated above, Staff will provide a new, updated schedule to Council in December, 2014, and will insure that the new schedule meets this interpretation of the 10 year limitation. Attachments:  Attachment A: NPV Comparisons (DOCX)  Attachment B: E/CF RFP Scoring Table (DOCX)  Attachment C: CH2M HILL Response to Proposers Assertions (PDF)  Attachment D: Staff Report #4550 April 29, 2014 (PDF)  Attachment E: Alternative Recommendations presented on April 29, 2014 (PDF)  Attachment F: Complete Text of Measure E (PDF)  051214 4744 Energy Compost - DOC Letter (PDF) Attachment A: Net Present Value Tables Organics Facilities Plan (OFP) Component Four Yard Trimmings Year Capital O & M (incl. export) Capital O & M (incl. energy) Capital O & M (incl. energy) Export TOTAL 1 2019 769,766$ 1,855,509$ 3,377,539$ 567,702$ 1,072,753$ 540,324$ 8,183,593$ 2 2020 769,766$ 1,901,897$ 3,377,539$ 567,702$ 1,099,572$ 553,832$ 8,270,308$ 3 2021 769,766$ 1,949,445$ 3,377,539$ 567,702$ 1,127,061$ 567,678$ 8,359,190$ 4 2022 769,766$ 3,377,539$ 159,854$ 567,702$ 87,420$ 581,870$ 5,544,152$ 5 2023 769,766$ 3,377,539$ 163,851$ 567,702$ 89,606$ 596,417$ 5,564,880$ 6 2024 769,766$ 3,377,539$ 167,947$ 567,702$ 91,846$ 611,327$ 5,586,127$ 7 2025 769,766$ 3,377,539$ 172,146$ 567,702$ 94,142$ 626,611$ 5,607,905$ 8 2026 769,766$ 3,377,539$ 176,449$ 567,702$ 96,496$ 642,276$ 5,630,227$ 9 2027 769,766$ 3,377,539$ 180,861$ 567,702$ 98,908$ 658,333$ 5,653,108$ 10 2028 769,766$ 3,377,539$ 185,382$ 567,702$ 101,381$ 674,791$ 5,676,561$ 11 2029 769,766$ 3,377,539$ 190,017$ 567,702$ 103,915$ 691,661$ 5,700,599$ 12 2030 769,766$ 3,377,539$ 194,767$ 567,702$ 106,513$ 708,952$ 5,725,239$ 13 2031 769,766$ 3,377,539$ 199,636$ 567,702$ 109,176$ 726,676$ 5,750,495$ 14 2032 769,766$ 3,377,539$ 204,627$ 567,702$ 111,906$ 744,843$ 5,776,382$ 15 2033 769,766$ 3,377,539$ 209,743$ 567,702$ 114,703$ 763,464$ 5,802,917$ 16 2034 769,766$ 3,377,539$ 214,986$ 567,702$ 117,571$ 782,551$ 5,830,114$ 17 2035 769,766$ 3,377,539$ 220,361$ 567,702$ 120,510$ 802,115$ 5,857,992$ 18 2036 769,766$ 3,377,539$ 225,870$ 567,702$ 123,523$ 822,167$ 5,886,567$ 19 2037 769,766$ 3,377,539$ 231,517$ 567,702$ 126,611$ 842,722$ 5,915,856$ 20 2038 769,766$ 3,377,539$ 237,305$ 567,702$ 129,776$ 863,790$ 5,945,877$ Total 15,395,311$ 5,706,851$ 67,550,775$ 3,335,320$ 11,354,042$ 5,123,389$ 13,802,401$ 122,268,089$ NPV $84,694,389.89 NPV assumptions Start year: 2019 Length of term: 20 years NPV discount rate: 4% Inflation rate: 2.5% City borrowing rate: 2.5% Loan term: 20 years Electricity reimbursement price: 10.3 cents per kWh Capital Costs Biosolids Component One $12,000,000 Component Two $52,653,000 Includes $400,000 for program management contract Food Scrap Processing Component Three $8,850,000 Yard Trimmings Component Four $0 Operations and Maintenance Costs (2015 dollars – year one) Biosolids Component One $1,600,000 (years 2019-2021) Component Two $128,000 (years 2022-2038) Food Scrap Processing Pre-Component Three $953,442 (years 2019-2021) Component Three $70,000 (years 2022-2038) Yard Trimmings Component Four $489,086 Includes transportation to SMaRT Component Three Food Scrap Preprocessing Component One Dewatering and Truck Haul-Off Facility Component Two Thermal Hydrolysis and Anaerobic Digestion All Biosolids O & M shift to AD O & M AD Construction Period Synagro Biosolids Food Scraps Yard Trimmings Other Costs (incl. dewatering) Year TOTAL 1 2019 2,369,362$ 1,680,686$ 912,099$ 702,638$ 5,664,785$ 2 2020 2,446,952$ 1,722,703$ 934,901$ 725,447$ 5,830,004$ 3 2021 2,526,941$ 1,765,770$ 958,274$ 748,958$ 5,999,943$ 4 2022 2,609,400$ 1,809,915$ 982,231$ 773,190$ 6,174,735$ 5 2023 2,694,402$ 1,855,163$ 1,006,786$ 798,166$ 6,354,518$ 6 2024 2,782,024$ 1,901,542$ 1,031,956$ 823,908$ 6,539,430$ 7 2025 2,872,343$ 1,949,080$ 1,057,755$ 850,438$ 6,729,616$ 8 2026 2,965,439$ 1,997,807$ 1,084,199$ 877,779$ 6,925,224$ 9 2027 3,061,394$ 2,047,752$ 1,111,304$ 905,956$ 7,126,407$ 10 2028 3,160,294$ 2,098,946$ 1,139,087$ 934,993$ 7,333,320$ 11 2029 3,262,226$ 2,151,420$ 1,167,564$ 964,916$ 7,546,125$ 12 2030 3,367,279$ 2,205,205$ 1,196,753$ 995,751$ 7,764,987$ 13 2031 3,475,545$ 2,260,335$ 1,226,672$ 1,027,524$ 7,990,076$ 14 2032 3,587,121$ 2,316,844$ 1,257,338$ 1,060,264$ 8,221,566$ 15 2033 3,702,103$ 2,374,765$ 1,288,772$ 1,093,998$ 8,459,637$ 16 2034 3,820,592$ 2,434,134$ 1,320,991$ 1,128,756$ 8,704,473$ 17 2035 3,942,692$ 2,494,987$ 1,354,016$ 1,164,569$ 8,956,264$ 18 2036 4,068,509$ 2,557,362$ 1,387,866$ 1,201,467$ 9,215,204$ 19 2037 4,198,152$ 2,621,296$ 1,422,563$ 1,239,481$ 9,481,493$ 20 2038 4,337,461$ 2,686,828$ 1,458,127$ 1,280,281$ 9,762,698$ Total 65,250,230$ 42,932,540$ 23,299,253$ 19,298,482$ 150,780,505$ NPV $98,721,136 NPV assumptions Tipping Fees (per ton) Start year: 2019 Biosolids 93.50$ 26% solid Length of term: 20 years Food Scrap Processing 55.00$ NPV discount rate: 4% Yard Trimmings 55.00$ Inflation rate: 2.5% Other costs include Dewatering ($15.71/ton) and Transportation to SMaRT and GreenWaste 1 Harvest Power at 10.4 cents per kWh energy price Biosolids Food Scraps Yard Trimmings Other Costs/Revenue Year TOTAL 1 2019 3,895,308$ 1,150,416$ 464,341$ 20,888$ 5,530,953$ 2 2020 4,022,512$ 1,179,176$ 475,950$ 18,361$ 5,695,999$ 3 2021 4,153,641$ 1,208,656$ 487,849$ 15,771$ 5,865,917$ 4 2022 4,288,813$ 1,238,872$ 500,045$ 13,117$ 6,040,846$ 5 2023 4,428,147$ 1,269,844$ 512,546$ 10,396$ 6,220,932$ 6 2024 4,571,767$ 1,301,590$ 525,359$ 7,607$ 6,406,324$ 7 2025 4,719,801$ 1,334,130$ 538,493$ 4,748$ 6,597,173$ 8 2026 4,872,380$ 1,367,483$ 551,956$ 1,818$ 6,793,636$ 9 2027 5,029,637$ 1,401,670$ 565,755$ (1,186)$ 6,995,876$ 10 2028 5,191,712$ 1,436,712$ 579,899$ (4,264)$ 7,204,058$ 11 2029 5,358,747$ 1,472,630$ 594,396$ (7,420)$ 7,418,353$ 12 2030 5,530,889$ 1,509,445$ 609,256$ (10,654)$ 7,638,936$ 13 2031 5,708,289$ 1,547,181$ 624,487$ (13,969)$ 7,865,989$ 14 2032 5,891,103$ 1,585,861$ 640,100$ (17,367)$ 8,099,696$ 15 2033 6,079,489$ 1,625,508$ 656,102$ (20,851)$ 8,340,248$ 16 2034 6,273,612$ 1,666,145$ 672,505$ (24,421)$ 8,587,841$ 17 2035 6,473,642$ 1,707,799$ 689,317$ (28,080)$ 8,842,678$ 18 2036 6,688,607$ 1,750,494$ 706,550$ (31,831)$ 9,113,820$ 19 2037 6,910,273$ 1,794,256$ 724,214$ (35,676)$ 9,393,068$ 20 2038 7,138,843$ 1,839,113$ 742,319$ (39,617)$ 9,680,658$ Total 107,227,212$ 29,386,980$ 11,861,438$ (142,629)$ 148,333,001$ NPV $97,021,172 NPV assumptions Tipping Fees (per ton) Start year: 2019 Biosolids 344.00$ 100% solid adjusted from $412 Length of term: 20 years Food Scrap Processing 64.00$ NPV discount rate: 4% Yard Trimmings 28.00$ Inflation rate: 2.5% Other Costs/Revenue include site preparation costs, site rent, and product sales Electricity reimbursement price: 10.4 cents per kWh 1 Harvest Power at 9.4 cents per kWh energy price Biosolids Food Scraps Yard Trimmings Other Costs/Revenue Year TOTAL 1 2019 4,181,356$ 1,150,416$ 464,341$ 20,888$ 5,817,001$ 2 2020 4,317,907$ 1,179,176$ 475,950$ 18,361$ 5,991,395$ 3 2021 4,458,673$ 1,208,656$ 487,849$ 15,771$ 6,170,948$ 4 2022 4,603,778$ 1,238,872$ 500,045$ 13,117$ 6,355,811$ 5 2023 4,753,351$ 1,269,844$ 512,546$ 10,396$ 6,546,137$ 6 2024 4,907,526$ 1,301,590$ 525,359$ 7,607$ 6,742,082$ 7 2025 5,066,439$ 1,334,130$ 538,493$ 4,748$ 6,943,810$ 8 2026 5,230,230$ 1,367,483$ 551,956$ 1,818$ 7,151,487$ 9 2027 5,399,044$ 1,401,670$ 565,755$ (1,186)$ 7,365,284$ 10 2028 5,573,030$ 1,436,712$ 579,899$ (4,264)$ 7,585,377$ 11 2029 5,752,341$ 1,472,630$ 594,396$ (7,420)$ 7,811,947$ 12 2030 5,937,135$ 1,509,445$ 609,256$ (10,654)$ 8,045,182$ 13 2031 6,127,573$ 1,547,181$ 624,487$ (13,969)$ 8,285,272$ 14 2032 6,323,822$ 1,585,861$ 640,100$ (17,367)$ 8,532,415$ 15 2033 6,526,053$ 1,625,508$ 656,102$ (20,851)$ 8,786,812$ 16 2034 6,734,444$ 1,666,145$ 672,505$ (24,421)$ 9,048,673$ 17 2035 6,949,176$ 1,707,799$ 689,317$ (28,080)$ 9,318,212$ 18 2036 7,179,941$ 1,750,494$ 706,550$ (31,831)$ 9,605,154$ 19 2037 7,417,901$ 1,794,256$ 724,214$ (35,676)$ 9,900,696$ 20 2038 7,663,272$ 1,839,113$ 742,319$ (39,617)$ 10,205,087$ Total 115,102,994$ 29,386,980$ 11,861,438$ (142,629)$ 156,208,783$ NPV $102,156,480 NPV assumptions Tipping Fees (per ton) Start year: 2019 Biosolids 369.00$ 100% solid adjusted from $412 Length of term: 20 years Food Scrap Processing 64.00$ NPV discount rate: 4% Yard Trimmings 28.00$ Inflation rate: 2.5% Other Costs/Revenue include site preparation costs, site rent, and product sales Electricity reimbursement price: 9.4 cents per kWh 1 We Generation (Cambi) at 10.4 cents per kWh energy price Biosolids Food Scraps Yard Trimmings Other Costs/Revenue Year TOTAL 1 2019 3,491,882$ 1,974,581$ 663,345$ 37,078$ 6,166,886$ 2 2020 3,605,829$ 2,023,946$ 679,928$ 38,005$ 6,347,708$ 3 2021 3,723,291$ 2,074,544$ 696,926$ 38,955$ 6,533,717$ 4 2022 3,844,372$ 2,126,408$ 714,350$ 39,929$ 6,725,058$ 5 2023 3,969,180$ 2,179,568$ 732,208$ 40,928$ 6,921,884$ 6 2024 4,097,825$ 2,234,057$ 750,514$ 41,951$ 7,124,347$ 7 2025 4,230,423$ 2,289,909$ 769,276$ 43,000$ 7,332,607$ 8 2026 4,367,089$ 2,347,156$ 788,508$ 44,075$ 7,546,828$ 9 2027 4,507,944$ 2,405,835$ 808,221$ 45,176$ 7,767,176$ 10 2028 4,653,112$ 2,465,981$ 828,427$ 46,306$ 7,993,826$ 11 2029 4,802,722$ 2,527,631$ 849,137$ 47,463$ 8,226,953$ 12 2030 4,956,904$ 2,590,821$ 870,366$ 48,650$ 8,466,741$ 13 2031 5,115,793$ 2,655,592$ 892,125$ 49,866$ 8,713,376$ 14 2032 5,279,529$ 2,721,982$ 914,428$ 51,113$ 8,967,051$ 15 2033 5,448,254$ 2,790,031$ 937,289$ 52,391$ 9,227,964$ 16 2034 5,622,115$ 2,859,782$ 960,721$ 53,701$ 9,496,319$ 17 2035 5,801,265$ 2,931,277$ 984,739$ 55,043$ 9,772,323$ 18 2036 5,993,770$ 3,004,558$ 1,009,357$ 56,419$ 10,064,105$ 19 2037 6,192,275$ 3,079,672$ 1,034,591$ 57,830$ 10,364,369$ 20 2038 6,396,960$ 3,156,664$ 1,060,456$ 59,275$ 10,673,355$ Total 96,100,533$ 50,439,995$ 16,944,912$ 947,155$ 164,432,595$ NPV $107,632,455 NPV assumptions Tipping Fees (per ton) Start year: 2019 Biosolids 80.00$ 26% solid adjusted from $99 Length of term: 20 years Food Scrap Processing 110.00$ adjusted from $129 NPV discount rate: 4% Yard Trimmings 40.00$ Inflation rate: 2.5% Other Costs/Revenue include site preparation costs, site rent, and product sales Electricity reimbursement price: 10.4 cents per kWh 1 We Generation (Cambi) at 9.4 cents per kWh energy price Biosolids Food Scraps Yard Trimmings Other Costs/Revenue Year TOTAL 1 2019 3,688,670$ 2,055,470$ 663,345$ 37,078$ 6,444,562$ 2 2020 3,809,038$ 2,106,856$ 679,928$ 38,005$ 6,633,828$ 3 2021 3,933,119$ 2,159,528$ 696,926$ 38,955$ 6,828,529$ 4 2022 4,061,024$ 2,213,516$ 714,350$ 39,929$ 7,028,819$ 5 2023 4,192,865$ 2,268,854$ 732,208$ 40,928$ 7,234,855$ 6 2024 4,328,761$ 2,325,575$ 750,514$ 41,951$ 7,446,801$ 7 2025 4,468,831$ 2,383,715$ 769,276$ 43,000$ 7,664,821$ 8 2026 4,613,199$ 2,443,307$ 788,508$ 44,075$ 7,889,089$ 9 2027 4,761,992$ 2,504,390$ 808,221$ 45,176$ 8,119,780$ 10 2028 4,915,342$ 2,567,000$ 828,427$ 46,306$ 8,357,074$ 11 2029 5,073,383$ 2,631,175$ 849,137$ 47,463$ 8,601,158$ 12 2030 5,236,254$ 2,696,954$ 870,366$ 48,650$ 8,852,223$ 13 2031 5,404,097$ 2,764,378$ 892,125$ 49,866$ 9,110,466$ 14 2032 5,577,060$ 2,833,488$ 914,428$ 51,113$ 9,376,089$ 15 2033 5,755,294$ 2,904,325$ 937,289$ 52,391$ 9,649,298$ 16 2034 5,938,953$ 2,976,933$ 960,721$ 53,701$ 9,930,308$ 17 2035 6,128,199$ 3,051,356$ 984,739$ 55,043$ 10,219,337$ 18 2036 6,331,553$ 3,127,640$ 1,009,357$ 56,419$ 10,524,970$ 19 2037 6,541,245$ 3,205,831$ 1,034,591$ 57,830$ 10,839,497$ 20 2038 6,757,464$ 3,285,977$ 1,060,456$ 59,275$ 11,163,173$ Total 101,516,343$ 52,506,267$ 16,944,912$ 947,155$ 171,914,676$ NPV $112,523,724 NPV assumptions Tipping Fees (per ton) Start year: 2019 Biosolids 84.00$ 26% solid adjusted from $99 Length of term: 20 years Food Scrap Processing 114.00$ adjusted from $129 NPV discount rate: 4% Yard Trimmings 40.00$ Inflation rate: 2.5% Other Costs/Revenue include site preparation costs, site rent, and product sales Electricity reimbursement price: 9.4 cents per kWh 1 Base Case (current processing practices) Biosolids Food Scraps Yard Trimmings Other Costs/Revenue Year TOTAL 1 2019 3,663,085$ 1,348,144$ 530,676$ 29,980$ 5,571,884$ 2 2020 3,782,787$ 1,381,847$ 543,943$ 30,729$ 5,739,306$ 3 2021 3,906,184$ 1,416,393$ 557,541$ 31,497$ 5,911,616$ 4 2022 4,033,387$ 1,451,803$ 571,480$ 32,285$ 6,088,955$ 5 2023 4,164,510$ 1,488,098$ 585,767$ 33,092$ 6,271,466$ 6 2024 4,299,667$ 1,525,301$ 600,411$ 33,919$ 6,459,298$ 7 2025 4,438,979$ 1,563,433$ 615,421$ 34,767$ 6,652,601$ 8 2026 4,582,570$ 1,602,519$ 630,807$ 35,636$ 6,851,532$ 9 2027 4,730,566$ 1,642,582$ 646,577$ 36,527$ 7,056,252$ 10 2028 4,883,097$ 1,683,647$ 662,741$ 37,441$ 7,266,925$ 11 2029 5,040,298$ 1,725,738$ 679,310$ 38,377$ 7,483,723$ 12 2030 5,202,308$ 1,768,881$ 696,293$ 39,336$ 7,706,818$ 13 2031 5,369,268$ 1,813,103$ 713,700$ 40,319$ 7,936,390$ 14 2032 5,541,324$ 1,858,431$ 731,542$ 41,327$ 8,172,625$ 15 2033 5,718,628$ 1,904,892$ 749,831$ 42,361$ 8,415,711$ 16 2034 5,901,333$ 1,952,514$ 768,577$ 43,420$ 8,665,843$ 17 2035 6,089,600$ 2,001,327$ 787,791$ 44,505$ 8,923,222$ 18 2036 6,291,941$ 2,051,360$ 807,486$ 45,618$ 9,196,405$ 19 2037 6,500,594$ 2,102,644$ 827,673$ 46,758$ 9,477,669$ 20 2038 6,715,747$ 2,155,210$ 848,365$ 47,927$ 9,767,249$ Total 100,855,873$ 34,437,867$ 13,555,929$ 765,822$ 149,615,490$ NPV $97,849,630 NPV assumptions Tipping Fees (per ton) Start year: 2019 Biosolids 84.00$ 26% solid Current dewatering and incineration costs Length of term: 20 years Food Scrap Processing 75.00$ NPV discount rate: 4% Yard Trimmings 32.00$ Inflation rate: 2.5% Other charges include transportation to SMaRT and GreenWaste 1 Attachment B: E/CF RFP Scoring Table Low Mid High A B C D E F G Average Overall Rank A B C D E F G Average Overall Rank A B C D E F G Average Overall Rank 1.Quality of Proposal (5%)0-1 1-2 4-5 5 2 5 3 5 4 4.00 2 4 4 4 4 3 3 3.67 3 2 4 3 1 3 3 2.67 4 2.Technical Resources and Experience (15%) 0-5 6-10 11-15 15 10 11 10 12 11.60 2 15 15 12 14 12 13.60 1 14 14 10 8 11 11.40 3 3.FInancial Res./Strength of Proposal (15%) 0-5 6-10 11-15 7 8 10 12 12 9.80 1 13 10 9 14 2 9.60 2 10 4 6 10 8 7.60 3 4.Record of Perf./Reliability of Techn. (25%) 0-8 9-16 17-25 23 15 17 15 18 17.60 4 25 25 25 15 21 22.20 1 25 20 17 15 18 19.00 2 5.Technical Approach (25%)0-8 9-16 17-25 20 15 20 20 18 18.60 2 24 25 22 20 10 20.20 1 18 20 20 9 12 15.80 4 6.Business Proposal (15%)0-5 6-10 11-15 5 10 12 13 8 9.60 3 14 10 14 6 7 10.20 1 13 7 6 8 7 8.20 4 TOTAL FINAL SCORE 100 70 55 73 72 30 41 60 57.29 2 81 93 82 81 11 61 53 66.00 1 69 75 63 49 19 34 51 51.43 3 Non-Cost Evaluation Rank:2 4 2 2 1 3 1 2.14 2 1 1 1 1 4 1 3 1.71 1 3 2 3 4 3 4 4 3.29 4 Scoring Guidelines Harvest Power Synagro-WWT, Inc.We Generation (Cambi) Reviewers Reviewers Reviewers CH2MHILLRESPONSETOPROPOSERSASSERTIONSRE4550 1MAY2014_FINAL V3.DOCX/[INSERT DOCUMENT LOCATOR] 1 COPYRIGHT [INSERT DATE SET BY SYSTEM] BY [CH2M HILL ENTITY] • COMPANY CONFIDENTIAL TECHNICAL MEMORANDUM CH2M HILL’s Response to “Proposers Response to Staff Report (ID #4550)” Jamie Allen/Palo Alto Matt Krupp/Palo Alto Phil Bobel/Palo Alto PREPARED BY: Dru Whitlock/CH2M HILL, Dave Green/CH2M HILL, Peter Burrowes/CH2M HILL, Dave Oerke/CH2M HILL DATE: May 1, 2014 The following is a brief response to the assertions included in the document titled “Proposers Response to Staff Report (ID #4550), received on Saturday, April 26, 2014.” Pre-dewatering The RWQCP currently doses co-thickened primary sludge and waste activated sludge at 2lb polymer per dry ton of sludge, achieving 28% dry solids through the existing 20 year-old belt filter presses. Although this is a low dosing rate, here are the factors that result in the low polymer dosing: • Primary sludge dewaters better than waste activated sludge. The RWQCP primary sludge makes up 72 percent of the total sludge on a mass basis. Because the majority of the sludge is primary sludge, the polymer dosing rate is logically lower than normal. • The RWQCP thickens the sludge to 3-4 percent dry solids before dewatering. The thickening process makes dewatering easier and therefore decreases polymer demand. • The RWQCP liquid process is a fixed film/suspended growth system. The biological sludge from the RWQCP fixed film/suspended growth process tends to have a larger particle size and, therefore, dewaters better. Hence, this would have a positive effect on the polymer demand. CH2M HILL assumed 4 lb/DT sludge for the pre-dewatering process. We doubled the quantity of polymer over current usage to be conservative. The pre-dewatering step only needs to dewater the sludge to 16.5% solids, rather than the current 28% solids. The increase in NPV for the OFP indicated in the Harvest Power/We Generation letter for pre-dewatering ($69,527) should not be applied to the OFP. Anaerobic Digestion VS Harvest Power /We Generation miscalculated the volatile solids reduction calculation in their Proposers’ Response. Harvest Power /We Generation incorrectly assumed that the split between waste activated sludge and primary sludge is 50/50. As stated above primary sludge makes up 72% of the total sludge on a mass basis. In addition, Harvest Power /and We Generation also reversed the primary sludge volatile solids reduction (75%) with the waste activated sludge volatile solids reduction (45%). This resulted in an error in the mass of solids going to dewatering and hauling. CH2M HILL’s calculations are correct. The volatile solids reduction numbers included in the Harvest Power/We Generation letter are incorrect and should not be applied to the OFP. Post-dewatering There are two issues involved with post-dewatering costs: 1. The amount of volatile solids reduction affects the quantity of sludge to be dewatered, and PREPARED FOR: COPY TO: CH2M HILL’S RESPONSE TO “PROPOSERS RESPONSE TO STAFF REPORT (ID #4550)” 2 2. The dosing rate for post dewatering affects the amount of polymer used (and the cost) The primary basis for Harvest Power/We Generation’s assertion about increasing the cost of the OFP in this post- dewatering category relates to the calculation of volatile solids reduction. Harvest Power /We Generation assert that ‘there was a miscalculation… overstating the solids reduction.” But, as noted above, the error was actually in Harvest Power /and We Generation’s calculation, resulting in Harvest Power/We Generation using incorrect volatile solids reduction quantities. The quantities and the calculations in the BFP are correct, with solids reduction assumptions based on the actual solids historically produced by the RWQCP. As discussed in the pre-dewatering section regarding polymer dose, RWQCP sludge dewaters very well. Plant staff say they can achieve greater than 30% dry solids and continuously achieve 28% dry solids with their raw solids dewatering. Hence, the polymer dosing for digested sludge, although low, is consistent with the pre-dewatering assumptions. Note that some plants with THP sludge also report very low polymer dosing rates (and higher resulting cake solids than assumed in the Facilities Plan). Therefore the increase in NPV for the OFP indicated in the Harvest Power/We Generation letter for post- dewatering ($64,208) should not be applied to the OFP. Biosolids ‘Disposal’ Note also that the BFP and OFP are focused on reuse of the biosolids, rather than disposal. The language used is important, especially when working with the public. The primary basis for Harvest Power/We Generation’s assertion about increasing the cost of the OFP in this biosolids disposal category also relates to the calculation of volatile solids reduction. Again, the error was actually Harvest Power /and We Generation’s, resulting in incorrect volatile solids reduction quantities. The quantities and the calculations in the BFP are correct, with solids reduction assumptions again based on the actual solids historically produced by the RWQCP. Therefore the increase in NPV for the OFP indicated in the Harvest Power/We Generation letter for biosolids disposal ($97,041) should not be applied to the OFP. Engine Generator O&M Instead of using a rule of thumb for estimating biogas treatment and engine maintenance costs, CH2M HILL calculated the power demand, the media replacement cost, and the repair and replacement cost. Note that labor was not included in the cost because CH2M HILL and RWQCP staff assumed that existing plant labor would be reallocated for the biosolids processing projects at the RWQCP. The total cost for biogas system O&M was over $200,000/year. With the addition of 1 full-time mechanic to the maintenance cost, the cost is well over $0.02/kWh. Therefore the increase in NPV for the OFP indicated in the Harvest Power/We Generation letter for engine generator O&M ($192,400) should not be applied to the OFP. Cost of Power For the BFP, the biogas-fueled combined heat and power system is offsetting power demand at the RWQCP, not selling it to Palo Alto Power. Hence, for the OFP alternative, it is appropriate to assume the value of the power is equivalent to the rate at which the RWQCP pays. It is true the E/C proposers were required to assume the selling price of $0.077/kWh and the BFP assumed $0.103/kWh for offsetting power at the RWQCP. But when the NPV costs were calculated for the staff report, City staff adjusted the E/C proposals to reflect the benefits of selling power at the same rate as the BFP. So the value of the produced power is already reflected equally in the NPV table provided in the Palo Alto staff report. Therefore the increase in NPV for the OFP indicated in the Harvest Power/We Generation letter for power revenue ($388,599) should not be applied to the OFP. CH2M HILL’S RESPONSE TO “PROPOSERS RESPONSE TO STAFF REPORT (ID #4550)” CH2MHILLRESPONSETOPROPOSERSASSERTIONSRE4550 1MAY2014_FINAL V3.DOCX /[INSERT DOCUMENT LOCATOR] 3 COPYRIGHT 2014 BY CH2M HILL, INC. • COMPANY CONFIDENTIAL Landfill Gas Purchase For a fair comparison, it would be appropriate to reduce the OFP cost paying for landfill gas by $553,241. Therefore the decrease in NPV for the OFP indicated in the Harvest Power/We Generation letter for power revenue ($553, 341) should be applied to the OFP. Staffing The BFP assumed a reduction of 2 full-time employees for the hauling options. So, the cost of this staffing adjustment, approximately $300,000 per year for two full time equivalents (FTE’s) could be added to the OFP, but only if the City of Palo Alto intends to reduce the work force at the RWQCP in parallel with accepting a DBOO proposal. Therefore the increase in NPV for the OFP indicated in the Harvest Power/We Generation letter for staffing ($302,016) should be applied to the OFP. Impact Rather than as increase in the NPV of the OFP (as asserted in the Harvest Power/We Generation letter), the City Operating Expenses, as calculated in the BFP, should actually be reduced by approximately $250,000 per year. This would result in City Operating Expenses of approximately $130,000. The table provided by Harvest Power /and We Generation (page 11 of the Proposers Response to Staff Report) is reproduced below, with the calculations adjusted for the NPV cost changes noted above. City Operating expenses per BFP $381,000 Adjustments: Pre-Dewatering $69, 527 BFP utilized current polymer dose Post-Dewatering $64, 028 Harvest/WeGen mis-calculated solids reduction Biosolids Disposal $97,041 Harvest/WeGen mis-calculated solids reduction Power Revenue $380,599 NPV calculation by staff already normalized the power revenue for all proposers (using the $0.010 rate). Power Repairs $192,400 Accounted for in BFP Report Biogas Purchase ($553, 341) Credit to OFP Staffing $604,032 $302,016 Additional cost savings for all vendor proposals (applied as a negative cost to the OFP NPV) Operating Expense Adjustments (recalculated based on notes above) SUBTOTAL $854,526 ($251, 325) City Operating Expense (adjusted for landfill biogas and staffing changes) $1,235,526 $129,675 $129,675 (rather than the $381,000 stated in the BFP/OFP) CH2M Hill responses to assertions presented by Harvest Power and We Generation (Cambi)  May 1, 2014  Assertion  Response  1. Pre‐dewatering polymer dosing   OFP polymer dosing is too low. Asserts that  polymer cost should be increased by $69,527/year. • Polymer dosing of 4lb/DT, although low, is correct.  • Current polymer dosing is 2lb/DT to get to 28% dry  solids on average.  • Pre‐dewatering for future OFP only needs to attain  16.5% dry solids.  • The polymer dosing is correct. No change in cost.  2. Anaerobic digestion volatile solids destruction (VS)  • Volatile solids destruction calculations are  incorrect.   • Dry mass should be increased by 636 dry tons per  year.    • Harvest Power/We Generation (Cambi) made two  mistakes in their calculations:  1. Harvest/WeGen assumed that the WAS/PS  split is 50/50. RWQCP data indicates that  PS makes up 72% of the mass.  2. Harvest incorrectly reversed the WAS VS  destruction (45%) and the PS VS  destruction (75%)  • The OFP calculations were correctly calculated by  CH2M HILL.  • No change in cost  3. Post‐dewatering polymer dosing and biosolids reuse cost  • OFP miscalculated the mass of solids from the  anaerobic digester.  • OFP polymer dosing too low  • OFP annual cost should be increased by $64,208  for additional polymer costs.  • OFP annual cost should be increased by $97,041  for additional biosolids costs  • As stated earlier, polymer dosing is low because  RWQCP sludge dewaters unusually well.  • As stated earlier, Harvest/WeGen incorrectly  calculated VS destruction.  • No change in OFP Cost    4. Power Maintenance Costs  • Power costs are too low.  • Uses rule of thumb of $0.02/kWh as a basis for  point.  • OFP assumed labor would be reallocated resulting  in no additional labor cost at RWQCP  • OFP annual biogas treatment and operating cost is  more than $200k/year.  • With 1 FTE added, the cost is $350k/year, resulting  in a normalized cost of greater than $0.02/kWh  • No change in OFP cost  5. Power Revenue  • E/C RFP directed proposers to assume Palo Alto  Power would purchase power at a rate of  $0.77/kWh.  • OFP assumed a rate of $0.103/kWh  • Due to difference should result in OFP adding  $380,599/year to annual cost  • NPV calculations developed by staff assumed both  the OFP and the E/C proposals sell power at the  same rate: $0.103/kWh  • No change in OFP NPV (or E/C Proposal NPV)    6. Landfill Gas Cost  • OFP included payment of $553,241/year for  landfill gas.  • We agree  • OFP annual cost should be decreased by  • E/C vendors did not have to pay for landfill gas.  • OFP annual cost should be decreased by  $553,241/year   $553,241/year    7. Staffing and labor  • Labor change was not accounted for in comparison  of OFP with E/C vendors.  • 4 FTE should be added.  • OFP annual cost should be increased by  $604,032/year.  • We agree that labor should have been accounted  for.  • Based on the BFP analysis, RWQCP might decrease  labor by 2 FTE.  • Based on this assumption, OFP cost should be  increased by $300,000/year  8. Overall financial impact  • Based on the assertions made, the OFP annual cost  should be increased by $854,526/year.    • Assertions made by Harvest Power/We Generation  (Cambi)  were made on false assumptions,  miscalculations, and incomplete information  • Assertion regarding labor and landfill gas partially  correct.  • Result: OFP operations and maintenance annual  costs are reflected accurately in the OFP  • Any adjustments would be as a result of project  timing (the completion of the AD facilities) and not  errors in calculation    PALO ALTO City of Palo Alto City Council Staff Report Report Type: Action Items Meeting Date: 04/2fj/2013 (10 # 4550) Summary Title: Direct Staff to Pursue the Four-Component Organics Facilities Plan Title: Staff Requests Direction From Council on Pursuing the Four-Component Organics Facilities Plan for Food Scraps, Yard Trimmings, and Biosolids, Which Includes: Recommending No Near-Term Uses for the Measure E Site, Developing New Biosolids Facilities That May Also Process Food Scraps at the Palo Alto Regional Water Quality Control Plant, and Continuing With Off-Site Composting of Yard Trimmings in the Immediate Future, and Rejecting All Proposals in Response to the Energy Compost Facility or Export Option Request for Proposals From: City Manager Lead Department: Public Works Due to the length and complexity of the above subject-referenced Staff Report ID# 4550 concerning potential Energy/Compost Facilities, staff is providing you this staff report and its attachments in an early packet submittal to provide additional time for review. Also, the following new closely-related documents can be found on our website (www.cityofpaloalto.org/energycompost): 1) Palo Alto's Draft Biosolids Facilities Plan; and 2) Palo Alto's new RFP to select a Program Management Firm to help manage Wastewater Treatment and Energy/Compost Capital Improvement Projects. ? ~c:: J. Michael Sartor Public Works Director PALO ALTO City of Palo Alto City Council Staff Report Report Type: Action Items Meeting Date: 04/2fj/2013 (10 # 4550) Summary Title: Direct Staff to Pursue the Four-Component Organics Facilities Plan Title: Staff Requests Direction From Council on Pursuing the Four-Component Organics Facilities Plan for Food Scraps, Yard Trimmings, and Biosolids, Which Includes: Recommending No Near-Term Uses for the Measure E Site, Developing New Biosolids Facilities That May Also Process Food Scraps at the Palo Alto Regional Water Quality Control Plant, and Continuing With Off-Site Composting of Yard Trimmings in the Immediate Future, and Rejecting All Proposals in Response to the Energy Compost Facility or Export Option Request for Proposals From: City Manager Lead Department: Public Works Due to the length and complexity of the above subject-referenced Staff Report ID# 4550 concerning potential Energy/Compost Facilities, staff is providing you this staff report and its attachments in an early packet submittal to provide additional time for review. Also, the following new closely-related documents can be found on our website (www.cityofpaloalto.org/energycompost): 1) Palo Alto's Draft Biosolids Facilities Plan; and 2) Palo Alto's new RFP to select a Program Management Firm to help manage Wastewater Treatment and Energy/Compost Capital Improvement Projects. ? ~c:: J. Michael Sartor Public Works Director o PALO ALTO City of Palo Alto City Council Staff Report Report Type: Action Items Meeting Date: 04/2!J/2013 (10 # 4550) Summary Title: Direct Staff to Pursue the Four-Component Organics Facilities Plan Title: Staff Requests Direction From Council on Pursuing the Four-Component Organics Facilities Plan for Food Scraps, Yard Trimmings, and Biosolids, Which Includes: Recommending No Near-Term Uses for the Measure E Site, Developing New Biosolids Facilities That May Also Process Food Scraps at the Palo Alto Regional Water Quality Control Plant, and Continuing With Off-Site Composting of Yard Trimmings in the Immediate Future, and Rejecting All Proposals in Response to the Energy Compost Facility or Export Option Request for Proposals From: City Manager Lead Department: Public Works Due to the length and complexity of the above subject-referenced Staff Report ID# 4550 concerning potential Energy/Compost Facilities, staff is providing you this staff report and its attachments in an early packet submittal to provide additional time for review. Also, the following new closely-related documents can be found on our website (www.cityofpaloalto.org/energycompost): 1) Palo Alto's Draft Biosolids Facilities Plan; and 2) Palo Alto's new RFP to select a Program Management Firm to help manage Wastewater Treatment and Energy/Compost Capital Improvement Projects. ""/ ~c:: J. Michael Sartor Public Works Director o PALO ALTO City of Palo Alto City Council Staff Report Report Type: Action Items Meeting Date: 04/2!J/2013 (10 # 4550) Summary Title: Direct Staff to Pursue the Four-Component Organics Facilities Plan Title: Staff Requests Direction From Council on Pursuing the Four-Component Organics Facilities Plan for Food Scraps, Yard Trimmings, and Biosolids, Which Includes: Recommending No Near-Term Uses for the Measure E Site, Developing New Biosolids Facilities That May Also Process Food Scraps at the Palo Alto Regional Water Quality Control Plant, and Continuing With Off-Site Composting of Yard Trimmings in the Immediate Future, and Rejecting All Proposals in Response to the Energy Compost Facility or Export Option Request for Proposals From: City Manager Lead Department: Public Works Due to the length and complexity of the above subject-referenced Staff Report ID# 4550 concerning potential Energy/Compost Facilities, staff is providing you this staff report and its attachments in an early packet submittal to provide additional time for review. Also, the following new closely-related documents can be found on our website (www.cityofpaloalto.org/energycompost): 1) Palo Alto's Draft Biosolids Facilities Plan; and 2) Palo Alto's new RFP to select a Program Management Firm to help manage Wastewater Treatment and Energy/Compost Capital Improvement Projects. ""/ ~c:: J. Michael Sartor Public Works Director o PALO ALTO City of Palo Alto City Council Staff Report Report Type: Action Items Meeting Date: 04/2!J/2013 (10 # 4550) Summary Title: Direct Staff to Pursue the Four-Component Organics Facilities Plan Title: Staff Requests Direction From Council on Pursuing the Four-Component Organics Facilities Plan for Food Scraps, Yard Trimmings, and Biosolids, Which Includes: Recommending No Near-Term Uses for the Measure E Site, Developing New Biosolids Facilities That May Also Process Food Scraps at the Palo Alto Regional Water Quality Control Plant, and Continuing With Off-Site Composting of Yard Trimmings in the Immediate Future, and Rejecting All Proposals in Response to the Energy Compost Facility or Export Option Request for Proposals From: City Manager Lead Department: Public Works Due to the length and complexity of the above subject-referenced Staff Report ID# 4550 concerning potential Energy/Compost Facilities, staff is providing you this staff report and its attachments in an early packet submittal to provide additional time for review. Also, the following new closely-related documents can be found on our website (www.cityofpaloalto.org/energycompost): 1) Palo Alto's Draft Biosolids Facilities Plan; and 2) Palo Alto's new RFP to select a Program Management Firm to help manage Wastewater Treatment and Energy/Compost Capital Improvement Projects. ""/ ~c:: J. Michael Sartor Public Works Director o PALO ALTO City of Palo Alto City Council Staff Report Report Type: Action Items Meeting Date: 04/2!J/2013 (10 # 4550) Summary Title: Direct Staff to Pursue the Four-Component Organics Facilities Plan Title: Staff Requests Direction From Council on Pursuing the Four-Component Organics Facilities Plan for Food Scraps, Yard Trimmings, and Biosolids, Which Includes: Recommending No Near-Term Uses for the Measure E Site, Developing New Biosolids Facilities That May Also Process Food Scraps at the Palo Alto Regional Water Quality Control Plant, and Continuing With Off-Site Composting of Yard Trimmings in the Immediate Future, and Rejecting All Proposals in Response to the Energy Compost Facility or Export Option Request for Proposals From: City Manager Lead Department: Public Works Due to the length and complexity of the above subject-referenced Staff Report ID# 4550 concerning potential Energy/Compost Facilities, staff is providing you this staff report and its attachments in an early packet submittal to provide additional time for review. Also, the following new closely-related documents can be found on our website (www.cityofpaloalto.org/energycompost): 1) Palo Alto's Draft Biosolids Facilities Plan; and 2) Palo Alto's new RFP to select a Program Management Firm to help manage Wastewater Treatment and Energy/Compost Capital Improvement Projects. ""/ ~c:: J. Michael Sartor Public Works Director o PALO ALTO City of Palo Alto City Council Staff Report Report Type: Action Items Meeting Date: 04/2!J/2013 (10 # 4550) Summary Title: Direct Staff to Pursue the Four-Component Organics Facilities Plan Title: Staff Requests Direction From Council on Pursuing the Four-Component Organics Facilities Plan for Food Scraps, Yard Trimmings, and Biosolids, Which Includes: Recommending No Near-Term Uses for the Measure E Site, Developing New Biosolids Facilities That May Also Process Food Scraps at the Palo Alto Regional Water Quality Control Plant, and Continuing With Off-Site Composting of Yard Trimmings in the Immediate Future, and Rejecting All Proposals in Response to the Energy Compost Facility or Export Option Request for Proposals From: City Manager Lead Department: Public Works Due to the length and complexity of the above subject-referenced Staff Report ID# 4550 concerning potential Energy/Compost Facilities, staff is providing you this staff report and its attachments in an early packet submittal to provide additional time for review. Also, the following new closely-related documents can be found on our website (www.cityofpaloalto.org/energycompost): 1) Palo Alto's Draft Biosolids Facilities Plan; and 2) Palo Alto's new RFP to select a Program Management Firm to help manage Wastewater Treatment and Energy/Compost Capital Improvement Projects. ""/ ~c:: J. Michael Sartor Public Works Director City of Palo Alto (ID # 4550) City Council Staff Report Report Type: Action Items Meeting Date: 4/29/2014 City of Palo Alto Page 1 Council Priority: Environmental Sustainability Summary Title: Direct Staff to Pursue the Four-Component Organics Facilities Plan Title: Staff Requests Direction From Council on Pursuing the Four-Component Organics Facilities Plan for Food Scraps, Yard Trimmings, and Biosolids, Which Includes: Recommending No Near-Term Uses for the Measure E Site, Developing New Biosolids Facilities That May Also Process Food Scraps at the Palo Alto Regional Water Quality Control Plant, and Continuing With Off-Site Composting of Yard Trimmings in the Immediate Future, and Rejecting All Proposals in Response to the Energy Compost Facility or Export Option Request for Proposals From: City Manager Lead Department: Public Works Recommendation Staff recommends that Council direct Staff to: 1. Reject all proposals received in response to the “Energy/Compost Facility or Export Option for Food Scraps, Yard Trimmings, and Biosolids” Request for Proposals (E/CF RFP) process. 2. Begin to pursue the Organics Facilities Plan (OFP, Attachment A) by hiring a Program Management firm. 3. Apply for a State Water Resources Control Board State Revolving Fund (SRF) loan for Component One of the Organics Facilities Plan (OFP). 4. Initiate design of Component One of the OFP, Biosolids Dewatering and Truck Haul-Out Facility, including direction to prepare related modifications to the Regional Water Quality Control Plant (RWQCP) partner agency agreements. City of Palo Alto Page 2 5. Initiate predesign of Component Two, Development of a Thermal Hydrolysis Process Wet Anaerobic Digestion (THP AD) facility, at the RWQCP; Component Three, Food Scrap Preprocessing; and Component Four, Yard Trimmings Processing of the OFP, including the following: a. Determine the price of electricity that the RWQCP will receive for power generated by the facility; b. Establish the optimum size of the THP AD facility built to accommodate biosolids for a 30-year planning horizon as well as capacity for food scraps, which Palo Alto and any other jurisdiction would commit to bring to the facility; c. Establish a list of contributing partner agencies who commit to bring food scraps to the facility; d. Finalize a financing plan for Component Two of the OFP; e. Determine the appropriate purchasing and project delivery mechanisms that should be utilized to develop the OFP; and f. Determine the required CEQA documentation for the Components of the OFP. 6. Update the existing timeline and schedule in December, 2014 for all Components of the OFP including next steps for the development of Component Four, Processing of Yard Trimmings, where Staff will seek to identify and pursue technologies to harness the energy and resource potential of yard trimmings that could be located on the relatively flat 3.8- acre portion of the Measure E site or elsewhere. Executive Summary Rather than select any of the proposals submitted in response to the E/CF RFP, staff instead recommends that the City of Palo Alto pursue an OFP, which staff has developed in concept based on the review of proposals submitted in response to the E/CF RFP and the draft Biosolids Facilities Plan (BFP). (www.cityofpaloalto.org/energycompost) The OFP provides the City and the Regional Water Quality Control Plant (RWQCP) partners the best option for short-term resilience, long-term cost savings, energy production, and reduction in greenhouse gas emissions (GHG). A Graphic Summary of the OFP is presented on the last page of Attachment A. City of Palo Alto Page 3 In brief, the OFP consists of four components: Component One: Biosolids Dewatering and Truck Haul-Out Facility. Component Two: Wet Anaerobic Digestion Facility utilizing the Thermal Hydrolysis Process. Component Three: Food Preprocessing Facility; Preprocessed food scraps would then be fed into the anaerobic digester (Component Two above). Component Four: The pursuit of technologies to harness the energy and resource potential of yard trimmings. In connection with its approval of the OFP, staff recommends that the City Council reject all proposals submitted in response to the E/CF RFP. Staff’s recommendation is based on issues related to economics, competitiveness, operational issues, as well as legal procurement considerations. Table 1 compares the costs and GHG emissions for the OFP, E/CF RFP Proposals (Synagro, Harvest Power, and We Generation (Cambi Services)), and current conditions (biosolids incineration, off-site composting of commercial food scraps, and all yard trimmings): Table 1 Comparison of the OFP, E/CF RFP Proposals, and Current Conditions Organics Facilities Plan Synagro Harvest Power We Gen (Cambi) Current Conditions Net Present Value (20 years) of all costs $76.8 M $98.9 M $97.1 M $107 M $98 M Annual Greenhouse Gasses (MT CO2e) Total (includes truck trips) -5,260 MT 1,153 MT -3,263 MT -5,291 MT 3,057 MT From an economic and competitive perspective, the costs for the OFP are lower than any of the three E/CF RFP proposals available to the City at this time. Existing proposals submitted in response to the E/CF RFP cannot be modified, or combined to implement the OFP that staff proposes here. As a threshold matter, City of Palo Alto Page 4 the OFP is substantially different, and more advantageous as compared with the scope of work requested in the E/CF RFP and proposed by bidders in response. Key differences include:  The OFP contemplates the City acting as the owner-operator of the Anaerobic Digester (AD) facility, while the E/CF RFP asked proposers to provide a privately funded and operated facility. This structural change results in significant financial benefits over time, including efficiencies in staffing and management.  Reduced overall cost resulting from the recently announced 30-year loan terms available to the City and its regional wastewater partners, through the State Revolving Fund (SRF) loan program;  Reduced risk to the City and its ratepayers through a phased approach to development that matches investment in capital facilities with the growth of the food scraps program. While two of the bidders have subsequently offered to combine and modify their proposals in an attempt to match staff’s improved OFP proposal, this combined proposal would not comply with the existing RFP which requested a third party operated facility. However, the current bidders would not be barred from submitting subsequent proposals and bids. Further, now that staff has better refined its preferred approach staff believes it will receive additional and more cost effective proposals and bids in response to more narrowly focused RFPs and Invitation For Bids (IFB). For these reasons, staff recommends that the Council exercise its authority pursuant to section 2.30.470(b) of the Palo Alto Municipal Code and reject all proposals submitted in response to the City’s E/CF RFP. All four components of the OFP will be initiated and pursued as soon as possible, through a series of new RFPs. The existing E/CF RFP proposers may reference their existing proposals in new RFP submittals beginning with the first RFP to select an overall Program Management Firm. Subsequent RFPs will select Project Designers, and potentially Design/Build or Design/Build/Operate firms as appropriate. The existing timeline will be updated this fall and submitted to Council. Key next steps and tentative milestones are contained in the “Next steps” Section, below. City of Palo Alto Page 5 Background The organic waste streams of wastewater solids (also called sewage sludge), food scraps from municipal solid waste, and yard trimmings, can be converted from sources of GHG emissions to fuels for renewable energy generation, which would dramatically reduce the City’s carbon footprint. Two factors contributed to a reconsideration of the current organics’ processing options. First, capping the closed Palo Alto Landfill led to the closure of the Palo Alto Composting Facility, a facility that had been in operation for 30 years. Secondly, the RWQCP Long Range Facilities Plan called for the replacement of the incinerators due to their advanced age and regulatory concerns. Passage of Measure E in 2011 and the BFP Evaluation These two events were brought together by the citizen initiated Measure E, passed in 2011, which called for consideration of processing all three waste streams (biosolids, food scraps, and yard trimmings) on 10 acres of the closed Palo Alto landfill, adjacent to the RWQCP. As part of the Action Plan developed after the passage of Measure E (the 2011 Action Plan), the E/CF RFP was developed and issued to proposers in March, 2013. The E/CF RFP allowed proposers to use the 10-acre Measure E site as well as a half-acre site within the RWQCP. Concurrent with the E/CF RFP process , the BFP evaluated a range of options for biosolids along with the E/CF RFP. Both the E/CF RFP proposals and the BFP evaluation indicate the development of proven wet AD as the preferred technology for biosolids treatment and food scraps. All of the competitive E/CF RFP proposals utilized aerobic composting for the processing of yard trimmings. These conclusions yielded an OFP that provides significant GHG reductions for the City by generating local energy while increasing the RWQCP’s sustainability and operational resilience. The OFP does not define a specific use for the Measure E site and would limit any future use of the Measure E site to the “flat” 3.8-acre area. This would free up the remaining 6.2 acres to be reconsidered as parkland. Council and Community Involvement Progress towards the recommendation of this report and development of the OFP can be found in Staff Report ID# 4051, which accompanied the February 10, 2014, Council study session. Since the study session, Staff continued an open dialog with City of Palo Alto Page 6 the community. Staff had direct conversations with citizen panel members, who represent both the groups that supported and opposed the November 2011 Ballot Measure E. The OFP was also presented to the public at community meetings on April 1 and 5, 2014; and at a RWQCP Partners’ meeting on April 7, 2014. A summary of the questions and discussion from Council, the community, and the six-member community panel are included in Attachment B. Staff also discussed the OFP with representatives from Harvest Power and We Generation (Cambi Services), two of the competitive proposers. A fundamental question discussed with all parties and reflected in the summary of the questions addresses the exploration of options available to modify the E/CF RFP, modify a proposal, or combine the proposals, in order to allow for a low risk, cost competitive and more timely project. Discussions were held to identify a legal and effective way to modify the E/CF RFP process for procurement of an organics processing facility. However, based on legal, purchasing, and competitiveness concerns, a path forward to develop a project using the current E/CF RFP proposals is not possible. Therefore, staff recommends canceling the E/CF RFP as necessary to move forward with the procurement steps for the OFP. The rationale for E/CF RFP cancelation is discussed in greater detail in the Discussion section. Discussion Staff Recommends that the Council Direct Staff to Initiate and Pursue the Organics Facilities Plan (OFP). The OFP includes four components: Component One: Biosolids Dewatering and Truck Haul-Out Facility  Wastewater Treatment Fund  City Owned and Operated Component Two: Wet Anaerobic Digestion Facility utilizing the Thermal Hydrolysis Process  Wastewater Treatment Fund and potentially Refuse Fund  City Owned and Operated Component Three: Food Preprocessing Facility, which feeds the Wet Anaerobic Digester City of Palo Alto Page 7  Refuse Fund Component Four: The pursuit of technologies to harness the energy and resource potential of yard trimmings  Refuse Fund Components One, Two, and Three are fundamentally interrelated to process both wastewater solids and food scraps. Work can begin concurrently on all four components, but the components will not be completed by the same date. The development of Component Four, yard trimmings research and development, has little bearing on the development of Components One, Two, and Three, and will be planned somewhat independently. A more complete discussion of the timeline for the development of the Four Components is included in Timeline/Next Steps section below. A graphic summary of all four components of the OFP is presented on the last page of Attachment A. Staff has prepared the following preliminary list of Next Steps. These will be reviewed further as the existing project Timeline is updated and submitted to Council in December, 2014. 1. Coordination Meetings with the RWQCP Partners Apr 2014 2. Issuance of Program Management Firm RFP Apr 2014 3. Present Proposed Electric Price (Under PA Clean Program) to the Utilities Advisory Commission Jun 2014 4. Selection of Program Management Firm Sept 2014 5. Deliver Updated Project Timeline to Council Dec 2014 6. Issue Component One Design/CEQA RFP Jan 2015 7. Commence Pre-Design Work on Components Two through Four Feb 2015 8. Finalize Coordination with RWQCP Partners (Food Scraps and Financing) Mar 2015 9. Develop Financing Plan for Components One and Two Mar 2015 10. Completion of Component One 2018 - 2019 11. Initial Retirement of Incinerators 2018 - 2019 12. Demolish Incinerators 2019 - 2020 13. Completion of Component Two 2020 - 2022 City of Palo Alto Page 8 14. Completion of decision making & potential construction of Components Three & Four 2020 - 2022 Component One of the OFP: Development of Biosolids Dewatering and Truck Haul-Out Facility Overview The City’s consultant, CH2M HILL, produced a BFP, which builds on the RWQCP’s Long Range Facilities Plan. Component One, a Biosolids Dewatering and Truck Haul-Out Facility is a key priority in the plan. This facility will provide the necessary resilience to allow the RWQCP to transport biosolids in the case of a disaster, emergency, or failure of the primary (current or future) biosolids handling system. With proper planning the facility can be built ahead of, and still be compatible with, various options for Component Two (see Attachment C Q7). The Biosolids Dewatering and Truck Haul-Out Facility will allow the RWQCP to decommission the sewage sludge incinerators and reduce GHG emissions by 2,343 tons per year. Additionally, the demolition of the incinerators will open-up another half-acre at the RWQCP and allow more site planning options for Component Two, the Thermal Hydrolysis Process AD Facility. Estimated Cost and Timeline Component One is both essential for the RWQCP’s reliable operations and a necessary first step towards the development of an AD facility. It is anticipated to cost $12 million (2015 dollars) and be completed by 2018. Annual operational costs are estimated to be $1.6 to $2.0 million, depending on the final transportation and disposal costs of the biosolids. Two currently viable and environmentally preferable destinations for the dewatered solids are: (1) the Synagro Central Valley Compost Facility in Merced County, the same facility in the Synagro E/CF RFP proposal, and (2) the East Bay Municipal Utility District (EBMUD) wastewater treatment plant in Oakland, CA. Other options may be identified as part of Component One. Component Two: The Development of Thermal Hydrolysis Process (THP) Anaerobic Digester (AD) Overview City of Palo Alto Page 9 Component Two is the development of THP AD. Anaerobic digestion is a proven wastewater technology for stabilizing sludge and biogas generation. Wastewater treatment plants worldwide use wet AD systems to treat sludge. Due to the high water and low solids content of sludge, wet AD is an appropriate technology, and still compatible with the addition of the higher solid food scraps. At least two publicly-owned wastewater treatment plants in the Bay Area – EBMUD in Oakland and Central Marin Sanitation Agency in San Rafael – are using wet AD to process and “co-digest” combined wastewater solids and food scraps. The BFP provides an evaluation of three wet AD technologies and preprocessing options. The option that provides the greatest biogas yield, smallest physical footprint, and the highest quality biosolids, was the combination of THP with wet AD. The smaller physical footprint offers a significant advantage for dealing with site planning constraints within the available area. According to the BFP recommendations, THP AD technology provides clear non-monetary benefits for treatment and disposal of sewage sludge and favorable overall project economics. See Table 1 above. THP AD Technology The most established THP AD system under development in North America is a proprietary technology sold by CAMBI, Norway; CAMBI is also the technology provider included in the We Generation (Cambi Services) E/CF RFP proposal. The CAMBI THP technology has been installed and operated at 40 wastewater treatment plants throughout Europe, South America, Japan, and Australia. A new CAMBI THP system will begin operation in July 2014 at the Washington, D.C. Blue Plains wastewater treatment plant, the first CAMBI THP system in North America and largest in the world. A CAMBI THP system is in design for the Hampton Roads Sanitation District wastewater treatment plant in Virginia Beach, VA. The San Francisco Public Utilities Commission (SFPUC) Southeast Wastewater Treatment Plant is evaluating the use of a CAMBI THP system as part of its new digester project. The SFPUC project is also contemplating co-digesting food scraps into the CAMBI THP AD system. SFPUC staff have successfully pilot tested the co-digestion of food scraps with their wastewater solids. Pre-design, Estimated Cost and Timeline Prior to moving forward with Component Two, design development (predesign) is needed to answer vital questions related to project sizing, the use and sale of City of Palo Alto Page 10 electricity, project financing, site considerations, project delivery options, and RWQCP Partner approval considerations. It is anticipated to cost $57 million (2015 dollars) and be completed between 2020-2022. Initial annual operational costs are estimated to be approximately $400,000. Biogas generated by the THP AD facility would fuel an onsite combined heat and power system. The energy is 100 percent renewable power and heat for the RWQCP, offsetting purchased power, and providing 4,560 tons of GHG reduction per year. Ultimately, moving forward with Component Two will require selecting a project delivery method that takes into account the costs, speed of delivery, quality of the project, ability to operate, risk, and City control. Staff will consider both design-bid and design-build project delivery options. The predesign of Component Two (THP AD), which will define the project, is estimated to take about seven months when staff can return to Council with the next steps to release an RFP for the design or a design-build contract for the THP AD system. The CEQA process could also begin at this next step. The project can take advantage of the area in the RWQCP opened up by the decommissioning and demolition of the incinerators. The goal would be to complete the design phase of the THP AD development by 2018. Construction could begin shortly thereafter with the THP AD facility fully operational for the processing of biosolids in 2022. These preliminary time frames will be reviewed and an updated Timeline will be submitted to Council in December, 2014. Component Three – Food Scrap Preprocessing Overview In order to successfully process food scraps in a THP AD, the food scraps must be preprocessed so that contaminants are removed and the food can be pumped into the THP AD facility. Since food scraps provide energy potential by increasing the digester’s biogas output, the marketplace has been active in developing new technologies to preprocess food scraps. City of Palo Alto Page 11 The City currently collects commercial food scraps (12,100 tons annually) but not residential food scraps (estimated at 3,400 tons annually). Staff plans to evaluate the costs and benefits for increased collection and handling costs needed to separate food scraps from the residential garbage and yard trimmings, and will be reporting back to Council in fall 2014. THP AD facility predesign will identify the initial available excess capacity for food scraps. This capacity will help determine how much additional food could be accepted into the facility or if additional THP AD capacity should be built to accommodate available feedstocks. Food waste tonnage and its source(s) will also help define not only the size of the preprocessing equipment but also its potential location. Despite the constrained footprint of the RWQCP, the preprocessing facilities might be able to be located on the RWQCP site next to the THP AD facility. Conversely, the food scrap preprocessing could be located at an off-site location where the food scrap loads could be tipped, preprocessed into slurry and consolidated into larger trucks to be pumped into the THP AD facility. Staff observed an example of this in the We Generation (Cambi Systems) proposal submitted in response to the E/CF RFP, which included the Shoreway Environmental Center in San Carlos as a preprocessing site. Other material recovery options could include transfer stations, like the Sunnyvale Material Recovery and Transfer (SMaRT) Station, where Palo Alto is a partner. Inclusion of Palo Alto’s commercial food scraps in the digester has the potential to increase biogas production and further reduces the City’s GHG emissions by 1,825 tons of CO2e. Collecting residential food scraps suitable for an AD system presents some unique challenges. Staff may recommend the co-composting of residential food scraps with yard trimmings as a more cost effective, convenient, and sustainable processing option. Staff also will continue to actively support and encourage home composting. Estimated Costs and Timeline Due to the uncertainty about the sizing and location of a preprocessing facility, staff’s cost estimates for Component Three are preliminary, and will be later refined as the research noted above is completed. At this time, and subject to later revision, capital costs are estimated at $8.9 million. The capital costs along with RWQCP treatment costs will be recovered through food scrap tipping fees. The preliminary food scrap tipping fee estimate is $46 per ton, also refined later. City of Palo Alto Page 12 The development time for a food preprocessing system could be relatively short. The technology is modular and relatively compact. However, for food preprocessing and digestion in Component Three to begin, the RWQCP must be certain that the THP AD facility is fully operational and that it meets regulatory requirements. Therefore, the full deployment of Component Three would be completed between 2020-2022, at least one year after the THP AD facility begins operation. Component Four – Yard Trimmings Processing While aerobic composting is an established and environmentally sound processing option, new technologies are being developed to harness the energy and resource potential of yard trimmings. The San José/Santa Clara Regional Wastewater Facility recently approved a one-year small scale demonstration project to gasify wood waste with biosolids. Staff will continue to follow these emerging technology developments and improvements in composting technology to evaluate whether a local facility on the 3.8-acre relatively flat portion of the Measure E site is a sustainable option. Staff recommends no change to the current yard trimmings compost operations in the near term. Staff Recommends that the Council Reject all Proposals Submitted in Response to the E/CF RFP In connection with its approval of the OFP, staff recommends that the City Council reject all bids submitted in the E/CF RFP. Staff’s recommendation is based on issues related to economics, competitiveness, as well as legal procurement considerations. A description of the E/CF RFP and the specific proposals received is described in detail in the February 10, 2014 staff report (Staff Report ID# 4051). The E/CF RFP was designed to provide firm pricing and test the market for novel or new technologies to process food scraps, yard trimmings, and biosolids. The expectation was that there would be synergy associated with processing the three waste streams together and that would warrant the associated risk. However, the technologies proposed were generally considered conventional with a limited amount of risk. Therefore, while the three E/CF RFP proposals were competitive, the shift in staff understanding of the cost-benefit potential of a THP AD system based on the findings in the BFP and the realization that a City owned-and- City of Palo Alto Page 13 operated facility would provide long-term savings with minimal risk exposure has led staff to recommend canceling the E/CF RFP and rejecting proposals. The We Generation (Cambi Services) proposal provides a technology solution similar to the OFP. Unfortunately, due to the low score and the fact that the We Generation (Cambi Services) was also the highest cost proposal, the E/CF RFP process was not an appropriate procurement vehicle to secure the THP AD technology. Staff, as shown in the cost section, has illustrated how it can deliver a more robust project at a lower cost over the 20-year term than the proposals. While not the goal of the E/CF RFP process, staff noted that the E/CF RFP proposals validated the technology suite (AD and composting) that forms the basis of the OFP. Both the proposers and city consultants have confirmed that staff should focus on these technologies. Technologies like dry AD and gasification do not appear to be viable solutions in the near term. Staff would allow the E/CF RFP proposers to reference their proposals in any subsequent OFP procurement process. Economic and Competitive Factors Support Rejection of all Proposals. The four-component OFP provides the City with a more cost effective, environmentally robust, and flexible option for processing food scraps, yard trimmings, and biosolids, than the E/CF RFP proposals. To illustrate this, staff compared the three competitive E/CF RFP proposals to the OFP and current operations. The key parameters being compared are costs, GHG, and technical factors. For a full description of the E/CF RFP proposals and how the proposals were screened, see Staff Report ID# 4051 from February 10, 2014. Cost To compare the overall costs of the project, staff converted proposal data into equivalent terms for key criteria in order to determine the comparable net present value for the different project proposals. For the economic model, staff used an inflation rate of 2.5 percent per year, a net present value discount rate of 4 percent, a sale price of energy at 10.4 cents / kilowatt hour (kWh), a 20-year financing period, a borrowing rate of 4.5 percent for privately funded projects, and a borrowing interest rate of 2.5 percent for publicly funded projects. The different alternatives used the same assumptions for the three feedstocks. Changing any of these variables would have an impact on the overall economics of any project. The price that the City’s utilities will pay for any renewable energy City of Palo Alto Page 14 generated by the project can be an important variable that influences projects economics when comparing an export option for biosolids and food with an onsite AD. Table 2 compares the proposals submitted in response to the E/CF RFP with the OFP and current conditions as follows: 1. The Four-Component Organics Facilities Plan 2. The Synagro (export) proposal 3. The We Generation (Cambi Services) proposal with outside food scraps 4. The Harvest Power proposal with outside food scraps, and 5. Current conditions (biosolids incineration, off-site composting of food scraps and yard trimmings) While the E/CF RFP responders each proposed multiple alternatives, the chart includes only the option that provides the most favorable pricing to the City over a 20-year term. A 30-year option is also presented for the OFP and the Harvest Power proposal – the only E/CF RFP proposal to include a 30-year option. Table 2 Comparison of the OFP, E/CF RFP Proposals, and Current Conditions Organics Facilities Plan Synagro Harvest Power We Gen (Cambi) Current Conditions Net Present Value (20 years) of all costs $76.8 M $98.9 M $97.1 M $107 M $98 M Annual GHG Emissions (MT CO2e) Total (includes truck trips) -5,260 MT 1,153 MT -3,263 MT -5,291 MT 3,057 MT Annual Truck Trip Greenhouse Gasses (MT CO2e) 284 MT 748 MT 142 MT 253 MT 291 MT RFP Rank Scoring (1 = Best) -- 1 2 3 -- Notes: 20 year term, all three feed stocks (food scraps, yard trimmings, biosolids) 2.5% Inflation 4% Net Present Value Discount Rate City of Palo Alto Page 15 City Financing at 2.5% Interest Private Financing at 4.0% Interest Harvest Power and We Generation (Cambi Services) will accept outside food scraps The OFP provides the lowest overall net present value (NPV) over the 20-year time horizon ($76.8 million NPV). This is a result of the lower borrowing costs for the City (2.5% interest) as compared to the private sector (4% interest). Additionally, the bulk of the expense in the OFP, especially for biosolids, is a capital expense, which does not increase over the 20-year term. The E/CF RFP proposals have much higher operating and maintenance costs that were estimated to escalate over the term annually at a 2.5% inflation rate. The operation and maintenance of a City-operated facility can be completed with existing staff. Therefore, this escalation yields an overall higher net present value for the E/CF RFP proposals and the current conditions. An additional Synagro proposal to export and process only biosolids (not shown in the table) is the lowest priced option ($53 million NPV). When considering the addition of composting food scraps at Z-Best into the Synagro proposal ($70 million NPV), the OFP ($64 million NPV) comes in at a lower price. CH2M HILL, in their analysis of the E/CF RFP proposals noted the relatively low- cost estimates the proposers provided for capital costs and voiced concerns that a project built by the proposers would need to be “replaced” after a 20- or 30-year term. The quality of materials used for the BFP cost estimate (concrete digesters, full redundancy for major equipment, etc.) is distinctly different than the quality of materials (and expected life) assumed in the E/CF RFP proposals. On the other hand, the OFP engineering estimates provide for facilities that are designed to have a 30-year functional life and could be extended to 50 years (as is true at other wastewater treatment plants). The OFP may be a higher capital cost, but it will be less expensive over a 30-year term and provide a reliable facility long into the future. Greenhouse Gas (GHG) Emissions GHG emissions estimates are based on the latest 2013 emissions estimates for the RWQCP incinerators, the 2011 Energy/Compost Facility Feasibility Study completed by Alternative Resources Inc. (ARI), and the analysis provided by CH2M HILL in the BFP. As mentioned earlier, a large reduction in CO2 equivalent anthropogenic GHG is a result of the decommissioning of the RWQCP sewage City of Palo Alto Page 16 sludge incinerator. The RWQCP will see its annual GHG emissions change from its current 3,057 metric tons to a new 714 metric tons (2,343 metric ton reduction per year) by constructing a solids dewatering and truck haul-out facility, retiring the incinerators, and hauling to the Central Valley. Staff will continue evaluating hauling the sludge to either the Central Valley for composting or to EBMUD in Oakland; the hauling price with EBMUD is still negotiable. EBMUD offers an option where GHG emissions would offset RWQCP GHG emissions approximately 1,660 metric tons because EBMUD already has existing digesters and electricity producing equipment and sells renewable energy to the Port of Oakland. By adding THP AD, the City will see a further change in emissions from producing 714 metric tons of CO2e to offsetting 3,846 metric tons (i.e., a total 4,560 metric ton reduction). The OFP, the We Generation (Cambi Services) proposal, and the Harvest Power proposal, all achieve similar greenhouse gas emission reductions. The Synagro proposal, which uses aerobic composting to process biosolids and food scraps, is an improvement over the current operations, but does not achieve the reductions associated with digestion and the generation of renewable energy. Food scraps added to the THP AD system will provide dramatic increases in biogas production. The addition of Palo Alto’s commercial food waste will result in nearly 5 million kWh of renewable power every year. When compared to the existing composting operations, the resulting power will yield a reduction in GHG emissions by 1,795 metric tons of CO2e. Implementing the OFP will see emissions drop by over 8,000 metric tons of CO2e – the equivalent of removing over 1,500 cars from the road. Technical Analysis The BFP compared a variety of different technologies, including the three technologies offered by the E/CF RFP: composting by Synagro; traditional AD with thermal drying by Harvest Power; and THP AD by We Generation (Cambi Services). The BFP compared cost, energy output, and a number of different qualitative factors; the BFP identified the THP AD technology as the best long- term option for the RWQCP with traditional mesophilic AD as a close second option. Aerobic composting of biosolids or transport to EBMUD for AD were seen as good interim solutions during construction of an on-site facility. CH2M HILL City of Palo Alto Page 17 also provided technical support on the E/CF RFP evaluating and supporting the efficacy of the technology in the proposals. The City’s consultant, Alternative Resources Inc. (ARI), supported staff in the evaluation of the E/CF RFP proposals. The proposal scoring was 50 percent technical (or non-cost) and 50 percent cost. The costs are evident in the table. The nonmonetary evaluation was comprised of six sections: 1. Quality of Proposal (5%) 2. Technical Resources and Experience (15%) 3. Financial Resources/Strength of Proposal (15%) 4. Record of Performance/Reliability of Technology (25%) 5. Technical Approach (25%) 6. Business Proposal (15%) Seven reviewers who represented the City Departments of Public Works, Utilities, and Administrative Services, along with representatives from Stanford and the City of San José, provided scores, which were based on the submitted proposal and an interview. Proposal Qualitative Score Cost Rank Synagro 66.00 1 Harvest Power 57.29 2 We Generation (Cambi Services) 51.43 3 Five of the seven reviewers ranked Synagro number one and two ranked Harvest Power number one. Legal Considerations Support a Rejection of All Proposals The current RFP contemplated a third party operated facility, rather than one operated by the City. While the proposals technically comply with the requirements in the RFP, the RFP process itself has convinced staff that certain third party owned and operated facilities are no longer the best approach. In addition, while the RFP contemplated an emerging technology (though did not require it), none of the bidders proposed it. Accordingly, the more conservative risk allocation structure contained in the RFP served to add unnecessary cost to City of Palo Alto Page 18 the proposal. While some of the proposals technically comply with the RFP, the RFP no longer represents staff’s modified OFP proposal. While two of the bidders have subsequently offered to combine and modify their proposals in an attempt to match staff’s improved OFP proposal, this combined proposal would not comply with the existing RFP which requested a third party operated facility. However, the current bidders would not be barred from submitting subsequent proposals. Further, now that staff has better refined its preferred approach staff believes it will receive additional and more cost effective proposals and bids in response to more narrowly focused RFPs and Invitations For Bids. Responding to Key Issues In the development of the OFP, Staff has received many comments from the Council, the E/CF RFP proposers, RWQCP partner agency staff, the six-member community group of Measure E supporters and Byxbee Park open space advocates, and formal community meetings. Staff has provided response to the comments received in Attachment C to this staff report. Timeline/Next Steps Staff has prepared the following preliminary list of Next Steps. These will be reviewed further as the existing project Timeline is updated and submitted to Council in December, 2014. 1. Coordination Meetings with the RWQCP Partners Apr 2014 2. Issuance of Program Management Firm RFP April 2014 3. Present Proposed Electric Price (Under PA Clean Program) to the Utilities Advisory Commission Jun 2014 4. Selection of Program Management Firm Sept 2014 5. Deliver Updated Project Timeline to council Dec 2014 6. Issue Component One Design/CEQA RFP Jan 2015 7. Commence Pre-Design Work on Components Two through Four Feb 2015 8. Finalize Coordination with RWQCP Partners (Food Scraps and Financing) Mar 2015 9. Develop Financing Plan for Components One and Two Mar 2015 10. Completion of Component One 2018 - 2019 11. Initial Retirement of Incinerators 2018 - 2019 City of Palo Alto Page 19 12. Demolish Incinerators 2019 - 2020 13. Completion of Component Two 2020 - 2022 14. Completion of decision making & potential construction of Components Three & Four 2020 - 2022 Resource Impact In the following sections, the resource impact for the Wastewater Treatment Fund, the Refuse Fund, and the Gas and Electric Funds are discussed. Components One and Two will be budgeted primarily in the Wastewater Treatment Fund and Components Three and Four will be budgeted primarily in the Refuse Fund. As referenced in the “Recommendations” section of this staff report Council authorization to pursue a design contract is only being requested for Component One. As this plan, if approved by the City Council, moves forward, staff will bring forth related resource impact descriptions to the City Council. Wastewater Treatment Fund Financial Resource Impacts The project and operating costs for the Component One (biosolids dewatering and haul-out), and Component Two (THP AD) facilities will be funded by the City of Palo Alto Wastewater Treatment Fund. For more information on how partners fund the Wastewater Treatment Fund, see Attachment C Q12. At Council direction, staff will initiate work with all five partner agencies to modify agreements, as needed, and bring the recommended project to partner agencies for approval before bringing back the modified agreements to Council for final approval. For Components One (dewatering and haul-out facilities) and Two (biosolids THP AD), the Wastewater Treatment Fund’s new debt service expense (approximately $3.3 million / year) will be recovered through partner and sewer fund billing and paid to the State of California under terms of an SRF loan (discussed under project delivery in Attachment C Q16). Staff will return to Council for adoption of the resolution authorizing the application of the SRF loan. As of March 2014, the state SRF loan rate is 1.9% on a 30-year repayment term, which is a public financing rate much more favorable than that available to the RFP proposers through private financing. Staff will return to Council for authorization of a funding agreement for the loan. Financing tables for a $69 million SRF loan are included in Attachment E. City of Palo Alto Page 20 A THP AD facility, especially one designed in part for food scrap digestion, is a strong candidate for grant funds. CalRecycle and the California Air Resources Board have prioritized food scrap AD as an excellent technology to reduce GHG in the solid waste sector. Grant funds are generally made available to “shovel-ready” projects in the construction stage after design, permitting, and environmental work has been completed. While staff cannot currently secure any grant funds, staff can evaluate the general availability of grants and will pursue grants to reduce capital cost, improve project financing, and reduce ratepayer impact. There will be no net change in total personnel to operate the system. Similar to other wastewater plants, staff recommends that a post-construction startup and support phase be included to ensure safe and reliable operation and proper transfer to city operations staff. Wastewater Treatment Fund Operating Cost Reductions Implementing Component Three (food preprocessing) and using surplus THP AD capacity may reduce operating cost impacts in the Wastewater Treatment Fund. The project may also be eligible for grants, which will be pursued if the project meets requirements. Specific financial grant opportunities are summarized in the BFP report. Food scrap revenue estimates are preliminary and at the early investigative stage. Food scrap revenue can be realized by setting the tipping fee for potential customers at a point that is below or at market rate and above the treatment costs. Staff believes that the market rate is approximately $45 to $50/wet ton tipping fee for treatment of food scraps. Collection and transport costs vary by agency. Treatment costs for a new food scrap system are still being estimated and depend on the commitment period required for return on investment as well as available surplus capacity in the THP AD over time. Because of the need for cost recovery for the initial capital cost of an onsite food processing system, it appears that little available revenue from receiving food scraps would be available to defray wastewater treatment fund operating expenses. Taking in food scraps from offsite pre-processing systems might offer better wastewater treatment fund cost defrayal opportunities and yield higher long-term operational reliability. More research is needed. Given the speculative nature of food scrap revenue and the lack of current commitments for solid waste food scrap treatment, staff is not currently considering this revenue as guaranteed over the life of the digester City of Palo Alto Page 21 facility. Partner agencies will be granted first rights of refusal to available surplus capacity on a first-come, first served basis; surplus capacity is estimated at 19,000 dry pounds per day (9.5 dry tons per day), which is approximately equivalent to the tonnage of Palo Alto commercial food scraps currently collected. Staff has been and will continue to evaluate interest and commitment level from partner agencies. Refuse Fund Resource Impacts Staff believes that there would be no adverse Refuse Fund impacts from participating in the OFP. The Refuse Fund currently pays its hauler to accept commercial food scraps for composting at the Z-Best Composting Facility near Gilroy. The City’s agreement term with GreenWaste of Palo Alto terminates in July 2017 unless extended. With a new or revised contract the City could divert its food scraps to a City operated organics facility. The tip fee is not defined at this time. While the Refuse Fund can take advantage of surplus digester capacity, some additional upsizing might be needed for the food wastes (or use standby equipment). A rough estimate of a capital costs needed ($8.9 million) for an onsite food scrap handling system is in addition to the estimated $69 million needed for the wastewater treatment equipment for biosolids handling (Components One and Two). To offset the capital costs, the Refuse Fund would most likely pay a “tip fee” to the Wastewater Fund. The Refuse Fund would need a 20- to 30-year commitment to process food scraps at the RWQCP in order for the project to be economically feasible. Electric and Gas Fund Resource Impacts An AD project’s economics are very sensitive to the price that Utilities will pay for any renewable energy generated from the project. The project’s electric rate is a critical factor in realizing local benefits. The price of electricity must be approved by Council following recommendations and discussions among Public Works, Utilities, and ASD. Activities to discuss the price of electricity are shown in the Next Steps and include starting discussions with the Utilities Advisory Commission in June, 2014 and returning to Council by year end. Total RWQCP energy use in 2013 was 16,493 MWh/year in electric use and 412,129 therms of natural gas. The Component One biosolids dewatering and City of Palo Alto Page 22 truck haul-out component of the project will reduce the RWQCP’s natural gas and electric expenses by approximately $441,0001 and $151,8782 per year, respectively (approximately 400,000 therms of natural gas and 1,487 MWh/year of electricity). Component Two, the THP AD system, produces more energy than it needs to run itself. A summary table is shown below; net energy for the THP AD system for biosolids only is 15,573 MWh/year. Adding food scraps as part of Component Three will produce an additional 5,424 MWh/year of power. Table 3 Summary of Energy for Component 2 THP AD (biosolids only) Parameter Unit Quantity Conversion kWh/unit Energy kWh/year Truck Vehicle Miles Miles/year 91,276 n/a n/a Diesel Petroleum Consumed Gallons/year 14,488 38 549,828 Natural Gas Consumed MBTU/year 0 293 0 Power Consumed kWh/year 1,722,857 1 1,722,857 Power Produced kWh/year -14,231,597 1 -14,231,597 Heat Produced MBTU/year -12,333 293 -3,614,523 Landfill Emissions dry tons landfilled/year 0 n/a n/a -15,573,436 Natural gas will not be used initially and in negligible amounts in later years of the system (i.e., there are some minor needs for backup fuel, waste gas burners, and auxiliary equipment). Net heat produced (3,615 MWh/year) will be used to heat the biosolids building and for process heat. The electric energy produced (14,231,597 kWh/year from two 800 kW engines) would be subject to an Interconnection Agreement between City of Palo Alto Utilities (CPAU) and the RWQCP providing for the interconnection with the City grid; the agreement would be subject to Council approval. If purchased by CPAU, the potential 14,232 MWh/year of produced RWQCP electric energy would supply approximately 1.5% 1 $441,000 is approximately 1.13% of the adopted FY 14 budget’s $38,866,000 expected annual gas fund revenue 2 $151,878 is approximately 0.11% of the adopted FY14 budget’s $135,255,000 expected annual electric fund revenue City of Palo Alto Page 23 of CPAU’s electric needs of 972,000 MWh/year3, and it would add to the City’s renewable energy portfolio. The RWQCP’s produced electric energy can either (a) offset RWQCP electric needs and/or (b) be sold to electricity buyers. More specifically, options include: 1. Offset RWQCP power (currently purchased at 10.214 cents/kWh under E- 18/E-18G) and pay standby charges pursuant to rate E-7 when the engines are offline, not producing electricity; or 2. Sell the produced power: a. Sell all produced power to CPAU at market value (currently about 9.53 cents/kWh) through a 20-year power purchase agreement (PPA) subject to Council approval, retaining the option to offset plant power and pay standby charges under rate E-7-G; or b. Sell all produced power on the open market (e.g., to Stanford, PG&E, etc.) through a 20-year PPA and pay a “wheeling charge” for the transmission costs; or c. Sell all produced power to CPAU through a 20-year PPA subject to Council approval capturing the benefits of a yet-to-be-determined incentive rate for renewable baseload power (feed-in-tariff rate for local solar is currently 16.5 cents/kWh). This option is not yet available but the current 20-year levelized value of local baseload (24 hours/day) renewable energy production is 9.53 cents/kWh. This would require a change to Council policy. Using biogas energy to offset RWQCP power needs instead of selling the power to CPAU may provide a greater financial benefit for the RWQCP, unless a buyer offers a purchase price much higher than the 20-year electric expenses of the RWQCP. In January 2013, Council approved a policy on the pricing of energy that would be purchased by CPAU from potential green waste-to-energy facilities (Staff Report #3432). The policy states that CPAU committed to purchasing the electricity at the market rate for renewable energy (including any avoided transmission or other costs) at the time the contract is signed. Based on current market conditions staff estimates that price to be about 9.53 cents/kWh for a 20- year purchase commitment. In the interest of providing some level of certainty around the energy price, the resolution also committed CPAU to purchasing the 3 Fiscal Year 2012 purchase = 972 GWh City of Palo Alto Page 24 electricity at a default floor price of 7.7 cents/kWh. Both the 7.7 cents/kWh and the 9.53 cents/kWh is well below the price needed to make the project financially viable for RWQCP partners. Utilities Department staff have indicated that a price equivalent to the 16.5 cents/kWh Palo Alto CLEAN rate for local solar generation, would result in a cost increase of approximately $1 million/year for the Electric Fund, which is equivalent to an electric retail rate increase of 0.9% to all electric rate payers in Palo Alto. Staff expects to begin the discussion about the value of local energy and the community’s desire to pay a higher price with the Utilities Advisory Commission in June 2014 and bring a recommendation to Council by the year end. Project Delivery Staff recommends that the City employ the resources of consultants to design and manage the project. Staff will utilize a program manager to obtain services for the loan application and manage scope development for the numerous RFPs needed for project delivery. The anticipated RFPs are listed in Attachment F (Wastewater Major CIP Projects Delivery). Staff will return to Council in approximately September 2014 for program manager contract approval. See Attachment C Q16 and Q17 for more information on project and service delivery. Policy Implications Implementing Components One, Two, and Three of the OFP will yield significant reductions in GHG emissions (over 8,000 CO2e MT) to help Palo Alto reach its Climate Action Plan goals. The OFP supports the recommendations in the RWQCP’s Long Range Facilities Plan, Council’s directive to decommission the incinerator, and provide a beneficial use for biosolids. The OFP allows for the City to maximize the beneficial use of commercial and residential food scraps by creating energy and compost as specified in the 2007 Zero Waste Operational Plan. Ultimately, the OFP provides a sustainable path forward for organics management by creating local, reliable renewable energy, keeping costs down, and reducing citywide GHG emissions. Environmental Review The project’s CEQA process for Components One, Two, and Three is expected to be either a Mitigated Negative Declaration (MND) or an Environmental Impact Report (EIR). If Council selects a proposal or if a Component Four (Yard Trimmings technology) project is considered that utilizes any of the 10-acres defined in City of Palo Alto Page 25 Measure E, an EIR would likely be prepared and the process may take up to two years. Attachments:  Attachment A: Organics Facilities Plan (PDF)  Attachment B: Graphic Summary of the Organics Facility Plan (PDF)  Attachment C: Answers to Council and Related Questions (PDF)  Attachment D: Draft Biosolids Facilities Plan Executive Summary (PDF)  Attachment E: Financing Analysis Tables (PDF)  Attachment F: Wastewater Major CIP Projects Delivery (PDF)  Attachment G: Key Terms (DOCX) Attachment A   Palo Alto Organics Facilities Plan – April 2014     The Organics Facilities Plan (OFP), has resulted from Palo Alto’s review of  proposals submitted in response to the “Energy/Compost Facility or Export  Option for Food Scraps, Yard Trimmings, and Biosolids” Request For Proposals  (E/CF RFP) and the draft Biosolids Facilities Plan (BFP). The OFP provides the City  of Palo Alto (City) and the Regional Water Quality Control Plant (RWQCP) partners  the best option for short‐term resilience and long‐term cost savings, energy  production and a reduction in greenhouse gas emissions (GHG1) of greater than  8,000 metric tons CO2e.      The OFP consists of four Components:     Component One:  Biosolids Dewatering and Truck Haul‐Out Facility  Component Two:  Wet Anaerobic Digestion (AD) Facility Utilizing the  Thermal Hydrolysis Process (THP)  Component Three:  Food Preprocessing Facility   Component Four:  The Pursuit of Technologies to Harness the Energy  and Resource Potential of Yard Trimmings    Components One and Two, recommendations from the Biosolids Facilities Plan  (BFP) prepared by CH2M Hill, address Biosolids from the RWQCP and will be paid  for by the Wastewater Fund. Components Three and Four will be funded by the  City Refuse Fund. Components One, Two, and Three are interconnected and will  be planned concurrently. Work can begin concurrently on all four components,  but the components will not be completed by the same date.    Component One is a Biosolids Dewatering and Truck Haul‐Out Facility. This will  allow the RWQCP to both operate during emergencies and to decommission the  sewage sludge incinerators as soon as practical, per Council direction. The  incinerators are the City’s largest point source of City‐generated GHG.     The development of the Component One Biosolids Dewatering and Truck Haul‐                                                         1 Reported as annual metric tons (MT) of anthropogenic CO2‐equivalent greenhouse gas emissions throughout  report  Out Facility can begin immediately and can be completed by 2018 at an estimated  cost of $12 million. Once this dewatering and haul‐out facility is constructed, the  City will export its dewatered sludge for further treatment, retire the incinerators,  and provide an approximate annual reduction of 2,343 tons of GHG.     Component Two develops a THP2 AD facility at the RWQCP to process sewage  sludge into biosolids for ultimate disposal. Component Two uses Component One  for final dewatering and truck load‐out. The THP AD process beneficially creates  biogas (e.g., methane), which combusts into renewable energy.     The THP AD facility can also receive food scraps under the OFP’s Component  Three. Under Component Three, staff will evaluate potential preprocessing  technology options and locations.     Predesign and financial analysis of the Component Two THP AD Facility and the  Component Three Food Preprocessing Facility requires staff to define the price for  the facility’s renewable energy output and its optimal size (i.e., quantifying  capacity for food scraps). Component Two is estimated to cost $57 million.    Component Four, yard trimmings research and development, involves research  into emerging technologies to capture the energy and resource potential  embedded within yard trimmings. The deployment of such a technology could be  on the 3.8‐acre flat portion of the 10‐acre Measure E site on the closed Palo Alto  Landfill or another location. Until such a facility is developed, the current aerobic  composting conducted near Gilroy, CA, provides the best value for the City with  relatively moderate GHG. The development of Component Four is independent of  the development of Components One, Two, and Three, and will be planned  separately.                                                                  2 THP is a high‐pressure steam pretreatment for downstream AD systems; the thermal hydrolysis step disintegrates  cell structures and dissolves naturally occurring cell polymers into an easily digestible feed for AD; the  pretreatment step also makes the sludge more flowable, allowing a smaller footprint for the digesters, which is a  real advantage for the constrained 25‐acre RWQCP site; THP increases organic biodegradability, yielding more  biogas and energy and offsetting more GHG than other AD systems; THP yields a final dewatered solids up to 40%,  much higher than traditional AD systems at 28% solids, resulting in less hauling and land application costs; the final  THP dewatered biosolids are sterilized and pathogen free due to 165C  treatment for 20 minutes   More detail on the four Components follows:    1. Component One: The Development of Wastewater Solids Dewatering and  Truck Haul‐Out Facility    CH2M HILL has completed a final draft of the Biosolids Facilities Plan.  Component One is a is a key priority. The Wastewater Solids Dewatering and  Truck Haul‐Out facility will provide the necessary resilience to allow the  RWQCP to transport solids in the case of a disaster, emergency, or failure of  the current solids handling system. The facility can be designed and built  ahead of Component Two.    Component ONe allows the RWQCP decommission and demolish the sewage  sludge incinerators. This component reduces 2,343 annual tons of GHG. The  demolition of the incinerators opens up another half‐acre for efficient design  and construction of the Component Two.     Component One is both essential for the RWQCP’s reliable operations and a  necessary first step towards the development of an AD facility. It is anticipated  to cost $12 million (2015$) and be completed by 2018. Annual operational  costs are estimated between $1.6 and $2.0 million. Design and construction  details and cost will vary depending on the final disposition of the dewatered  solids. Two currently viable and environmentally preferable destinations for  the dewatered solids are: (1) aerobic composting at the Synagro Central Valley  Compost Facility in Merced County, the same facility in the Synagro E/CF RFP  proposal, and (2) anaerobic digestion and energy recovery at the East Bay  Municipal Utility District (EBMUD) wastewater treatment plant in Oakland, CA.        2. Component Two: The Development of THP AD    Component Two is the development of THP AD. Anaerobic digestion is a  proven wastewater technology for stabilizing wastewater solids (also referred  to as sludge) and biogas generation. Wastewater treatment plants worldwide  use wet AD systems to treat sludge. Wet AD is an appropriate technology for   high water and low solids content sludge. Wet AD is compatible with the  addition of the higher solid food scraps3. At least two wastewater treatment  plants in the Bay Area (EBMUD in Oakland and Central Marin Sanitation  Agency in San Rafael) are using wet AD to process and “co‐digest” combined  wastewater solids and food scraps.    The BFP evaluated three wet AD technologies and preprocessing options. The  option that provides the greatest biogas yield, smallest physical footprint, and  the highest quality biosolids, was the combination of the THP with wet AD.  According to the BFP recommendations, THP AD technology provides clear  non‐monetary benefits for treatment and disposal of sewage sludge and  favorable overall project economics. THP AD is a proprietary technology  currently sold by CAMBI, Norway; CAMBI is the technology provider to the We  Generation E/CF RFP proposal. The CAMBI THP technology has been installed  and operated at 40 wastewater treatment plants throughout Europe, South  America, Japan, and Australia. New CAMBI THP systems will begin operation in  July 2014 at the District of Columbia Wastewater Treatment Plant, the first  CAMBI in North America and largest in the world. A CAMBI system is in design  for the Hampton Roads Sanitation District Wastewater Treatment Plant in  Virginia Beach, VA. The San Francisco Public Utilities Commission (SFPUC)  Southeast Wastewater Treatment Plant is evaluating use of a CAMBI THP  system as part of its new digester project. The SFPUC project could also  incorporate food scraps into the CAMBI THP AD system.     Prior to moving forward with Component Two, design development  (predesign) is needed to answer vital questions related to project sizing and  site considerations.    A THP AD Facility would supply electric energy through biogas combustion  generated by the AD units. The energy is 100 percent renewable electric  energy and provides 4,560 tons of GHG reduction.                                                               3 Much of the debate in the Measure E campaign revolved around the potential to use dry AD. The Feasibility Study  in 2011 also looked at dry AD for much of the analysis. Since wastewater solids made up the majority of the  material to be processed, dry AD was deemed infeasible. One E/CF RFP proposal included dry AD technology, but  did not meet minimum qualifications and was not considered. Dry AD was also not likely to be an appropriate  technology for the food scraps and yard trimmings only due to the ratio of the material. The dry AD facility recently  constructed in San Jose has a yard trimming to food scrap ratio of 20:80, while the Palo Alto ratio of materials is  closer to 50:50. This ratio would provide a low biogas yield, resulting in poor project economics.   2a Project Sizing  The THP AD system will be designed to accommodate the projected 30‐year  increase in wastewater solids loads based on population growth projections  from the Association of Bay Area Governments (ABAG). While THP AD systems  allow for some modularity for future expansion (e.g., adding a tank), the  system will be designed to accommodate future capacity. The THP AD system  will have that initial extra capacity available for the addition of food scraps as  part of Component Three.     There are many questions that remain on sizing the food scrap systems. A food  receiving station, energy generation equipment, and dewatering equipment  may require upsizing to accommodate food scraps. Food scraps can be  processed to maximize THP, digester, and dewatering use of surplus capacity  until the initial excess capacity is needed for wastewater solids. This initial  excess capacity might allow a THP AD system at the RWQCP to process most,  and possibly all of Palo Alto’s commercial food scraps for a period of time  which would be determined during the predesign phase.    2b Site Considerations  The THP AD facility will impact existing RWQCP operations. The RWQCP has  numerous underground utilities including large diameter pipes. The half‐acre  location set aside in the E/CF RFP for on‐site digestion can be used, but cannot  be optimized for Component Two until the incinerator is decommissioned and  demolished. The removal of the incinerator prior to construction of the THP  AD system will allow for the optimal design and minimal disturbance to  existing operations.     Careful consideration will need to be given to truck ingress and egress. Food  waste trucks would arrive at the site (either small local haul trucks with  approximately 6 tons of capacity or larger consolidated trucks with  approximately 22 tons of capacity). The number of trucks will depend on the  capacity of the facility and the acceptance of outside sources. Trucks will also  leave the site transporting residual solids for either land application, further  composting, or for further processing or energy production such as at the  regional Bay Area Biosolids to Energy Project.     Closely linked to the site considerations is the location, on the RWQCP or  offsite, of the food preprocessing component (Component Three). Onsite  preprocessing requires a truck scale, a fully enclosed tipping floor to contain  odors, and space for the preprocessing equipment to remove contaminants  from the food scraps and turn the scraps into a slurry for injection into the THP  AD system. An offsite food scraps processing facility handles the  preprocessing, but the onsite RWQCP system requires a food receiving station  with rock trap, dilution water tank, pumps, and screening facility to protect the  THP AD System. Onsite solid waste facilities at the RWQCP require permits  from CalRecycle through the Local Enforcement Agency (LEA) at Santa Clara  County.    3. Component Three – Food Scrap Preprocessing    Preprocessing of food scraps involves removal of contaminants and physical  conversion into a pumpable mixture for delivery into the THP AD Facility.    Food scraps provide energy potential by increasing the digester’s biogas  output and the marketplace has been active in developing new technologies  for efficient preprocessing.     The City collects an estimated 12,100 tons of commercial food scraps. The City  does not currently collect the estimated 3,400 tons of residential food scraps.  Staff is evaluating the effectiveness of the Residential Two‐Cart Pilot Program,  which is, in part, designed to evaluate the potential to capture residential food  scraps. Staff will evaluate the costs and benefits for increased collection and  handling costs needed to separate food scraps from the residential garbage  and yard trimmings, and will be reporting back to Council in the fall 2014.    The THP AD facility predesign will identify the initially available excess capacity  for food scraps. This will help determine how much additional food could be  accepted into the facility or if additional THP AD capacity should be built to  accommodate available feedstocks. Additionally, the food waste tonnage and  its source(s) will help define not only the size of the preprocessing equipment  but also its potential location. The preprocessing facilities may be located on  the RWQCP site next to the THP AD Facility despite the limited space.  Conversely, the food scrap preprocessing could be located at an alternate  location where the food scrap loads could be tipped, preprocessed into slurry,  and consolidated into larger trucks to be pumped into the THP AD Facility. The  We Generation (Cambi Systems) proposal included the Shoreway  Environmental Center in San Carlos as a preprocessing site. Other material  recovery options include transfer stations, like the Sunnyvale Material  Recovery and Transfer (SMaRT) Station, where the City of Palo Alto is a part  investor.     The cost estimates are rough due to the current uncertainty regarding the  sizing and location of a preprocessing facility. Capital costs are estimated at  $8.9 million for preprocessing and digester preparation of the food scraps.  Operating costs with built‐in capital recovery in the tip fee is estimated at  $46/per wet ton.  Further research is needed to refine these estimates.     The development time for a food preprocessing system could be relatively  short. The technology is modular and relatively compact. However, for food  preprocessing and digestion in Component Three to begin the RWQCP must be  certain that the THP AD Facility is fully operational and that it meets regulatory  requirements. The full deployment of Component Three would be completed  between 2020 and 2022 which is at least one year after the THP AD Facility  begins operation.      The inclusion of food scraps in the digester increases biogas production and  further reduces the City’s GHG. Nevertheless, staff continues to support home  composting and may consider the co‐composting of residential food scraps  with yard trimmings as a suitable and sustainable processing option.     4. Component Four – The Evolution of Yard Trimmings Processing    Aerobic composting is an established and environmentally sound processing  option. However, new technologies are being developed to harness their  energy and resource potential. The San José/Santa Clara Regional Wastewater  Facility recently approved a demonstration project to gasify4 woody waste  with biosolids. Staff will continue to follow these technology developments  and improvements in composting technology to evaluate whether a local  facility is a sustainable option.                                                           4 Gasification is a thermal process using extremely high temperatures in the absence of oxygen that transforms a  solid material into a synthesis gas that can be combusted to create energy. While gasification is a thermal process,  it does not yield the same air pollutants as incineration. See BFP gasification Technical Memorandum on status of  gasification for biosolids.    Attached is a visual representation of the OFP.    Organics Facilities Plan    1 Interim  Hauling Biosolids Dewatering  and Truck Off‐Haul  Component #1 Anaerobic Digestion  Component #2 Food Scrap  Pre‐processing  Component #3 Yard Trimmings  Component #4 Design and Construction B Contracting  and DesignBF Proposed Organics Facilities Plan F Y Add Food to Digester Construction Food Scrap  Preprocessing  Development Consider Alternatives to Current Aerobic  Composting and New Locations B Biosolids – Wastewater Treatment Fund F Food Scraps –Refuse Fund Y Yard Trimmings –Refuse Fund Emergency Back up Biosolids Processing   1 Interim Hauling Biosolids Dewatering and Truck Off-Haul Component #1 Anaerobic Digestion Component #2 Food Scrap Pre-processing Component #3 Yard Trimmings Component #4 Design and Construction B Contracting and Design B F Proposed Organics Facilities Plan F Y Add Food to Digester Construction Food Scrap Preprocessing Development Consider Alternatives to Current Aerobic Composting and New Locations B Biosolids – Wastewater Treatment Fund F Food Scraps – Refuse Fund Y Yard Trimmings – Refuse Fund Emergency Back up Biosolids Processing Attachment C Answers to Council and Related Questions 1. What are the major differences between the Organics Facility Plan (OFP) and the proposals submitted in response to the Energy/Compost Facility or Export Option for Food Scraps, Yard Trimmings, and Biosolids Request for Proposal (E/CF RFP)? Answer: City as Owner-Operator The OFP is based on the City acting as the owner-operator of the anaerobic digestion facility. The E/CF RFP was designed to limit the risk to the City in adopting a less-proven technology like gasification or Dry anaerobic digestion (AD) for biosolids and having the proposers own and operate the facility. The E/CF RFP proposals included proven technologies like Wet AD and aerobic composting, which coincided with the BFP recommendations for biosolids treatment. Staff identified significant long-term operations and maintenance (O & M) cost savings by acting as the owner-operator. Site Constraints The OFP allows for the optimal use of the RWQCP site. The THP AD facility size impacts existing RWQCP operations. The RWQCP has numerous large diameter underground utilities. The half-acre location set aside in the E/CF RFP for on-site digestion can be used, but cannot be optimized for Component Two until the incinerator is decommissioned and demolished. The removal of the incinerator prior to construction of the THP AD system will allow for the optimal design and minimal disturbance to existing operations. Careful consideration will need to be given to truck ingress and egress. Food waste trucks would arrive at the site (either small local haul trucks with approximately 6 tons of capacity or larger consolidated trucks with approximately 22 tons of capacity). The number of trucks will depend on the capacity of the facility and the acceptance of outside sources. Trucks will also leave the site transporting residual solids for either land application, further composting, or for further processing or energy production such as at the regional Bay Area Biosolids to Energy Project. Closely linked to the site considerations is the location of the food preprocessing component (Component Three). No final decision on location has been made. On- site preprocessing requires a truck scale, a fully enclosed tipping floor to contain odors, and space for the preprocessing equipment to remove contaminants from the food scraps and turn the scraps into slurry for injection into the THP AD system. An off-site food scraps processing facility handles the preprocessing, but the onsite RWQCP system requires a food receiving station with rock trap, dilution water tank, pumps, and screening facility to protect the THP AD system. Onsite solid waste facilities at the RWQCP require permits from CalRecycle through the Local Enforcement Agency (LEA) at Santa Clara County. Due to the accelerated timing of the E/CF RFP proposals, their AD facilities were limited to a half acre, which would present significant logistical and planning challenges for the RWQCP. RWQCP Operations Lastly, the component approach in the OFP will allow the RWQCP to ensure that the AD facility and the later inclusion of food scraps will not adversely impact the other operations and permit restrictions of the RWQCP. 2. What are the reasons for rejecting the E/CF RFP proposals? Answer: The E/CF RFP proposals do not provide the best value for the City and long-term GHG reductions. Staff developed the OFP with Component Two (THP AD Facility) as an owner-operated facility after the E/CF RFP proposals were evaluated. The Synagro (export) proposal scored as the highest technical analysis and lowest cost option, but this proposed solution does not provide the other benefits identified by the City of Palo Alto as critical elements of an organics facilities plan. Staff believes that there is long-term value to the City in stabilizing sewage sludge on-site, reducing GHG emissions, and generating local energy, which is why Staff recommends canceling the E/CF RFP and pursuing an onsite organics facility. The We Generation (Cambi Services) proposal, the proposal using the preferred technology identified in Component Two, was the lowest scoring of the three proposals under consideration and would render it less preferable for selection. 3. Can we modify the E/CF RFP to accommodate our preferred project and service delivery method? Answer: No. The differences between the E/CF RFP and the OFP are too great. The most significant difference being the shift from a contractor owned and operated facility to a City owned and operated facility. The AD and composting technologies proposed in the E/CF RFP proposals validated the conclusions in the BFP and the cost savings possible with an owner- operated facility. Had staff known that only proven and well-established technologies would be submitted in the E/CF RFP process, staff could have issued an addendum to the E/CF RFP for an owner-operated option. However, this was not a viable option at the time. Issuing a new RFP for the Components will allow for new proposers to participate. 4. Can we negotiate with the proposers for a modified or joint contract? Answer: No. Competitiveness Staff would like to encourage new proposals to satisfy the requirements in the OFP. Further, the likely project description of Component Two of the OFP that calls for the construction of a THP AD facility may include the CAMBI technology but there are other technology providers that may be interested in participating in a bid. At the start of the THP AD design, staff will return to Council with a request for sole source approval for CAMBI should other emerging THP technology provider(s) be unreliable and unproven in the wastewater treatment market. Purchasing/Fairness If the City were to allow a combined proposal of multiple proposers, this would set an unfair precedent to the other bidders and future bidders. For example, if the City elected to combine the Harvest Power proposal with the We Generation (Cambi Services) proposal, that opportunity should be provided to other proposers or potential proposers who did not submit under the original E/C RFP. Any RFP process is designed to provide an equal playing field for the proposers, where the City cannot “pick-and-choose” whatever scenarios it wants despite the results of the process. Selecting We Generation (Cambi Services) or some combination of the proposals would violate the integrity of the purchasing process and potentially invite protests and claims from the other proposers. Other teams, who either proposed or elected not to propose, would need to be provided with the same opportunity to create this type of proposal. A desire to create this combination would require the development of a new RFP. 5. What is the risk to the City if the facility is owned and operated by the RWQCP? Answer: Staff does not believe that the Four-Component OFP is risky. The AD technology is proven and established. Staff has always planned to consider publicly financed and owner operated biosolids treatment systems alongside the E/C RFP proposals. The original RFP was developed with the intent of procurement through a design-build-own-operate and maintain (DBOOM) project and service delivery model. The primary reason for selecting the DBOOM model was to reduce risk exposure inherent with selecting a novel approach or emerging technology that could handle all three waste streams. Through the E/CF RFP process, and with the responses received, it became apparent that at this time the options available to the City (wet AD and aerobic composting) are, in fact, relatively standard and can be more economically implemented, with the RWQCP as the owner-operator. Through discussions with consultants and technology vendors (including CAMBI, Norway) the City staff is confident that, with the appropriate engineering and project management assistance, the City can control the remaining risk exposure by taking the time to identify and answer the appropriate questions needed to craft the OFP’s component RFPs. 6. How much planning is required before initiating Component One (Biosolids Dewatering and Haul-Out Facility)? Answer: The bulk of the planning was completed as part of the RWQCP’s Long Range Facilities Plan in 2012. The initial step will be to hire a program manager to oversee and develop Components One and Two. 7. Can Component One (Biosolids Dewatering and Haul-Out Facility) be designed and built without limiting future options? How does this affect the overall sizing of the Facilities? Answer: Yes. Compatibility The dewatering and truck haul-out facility is necessary for and can be designed to be fully compatible with the THP AD technology in Component Two. The provider of thermal hydrolysis technology, CAMBI, has confirmed that Component One can be designed and installed prior to installation of Component Two. Combining the pre- and post-dewatering into one building with reduced redundancy in dewatering equipment is feasible. This option was suggested by a proposer. However, staff recommends separating these systems and using independently redundant equipment for pre- and post-dewatering necessary for the THP process. Project Sizing Components One and Two will be designed for a projected 30-year growth in wastewater solids loads. While the facilities allow for some modularity for future design (e.g., adding a tank), the facilities likely will need to be designed to allow for the future capacity to be in place on the first day of operations. In other words, the facilities will have extra capacity on operational day one to account for the future solids loading. The THP AD system will be designed for a projected 30-year (2045) growth in wastewater solids loads, which results in excess capacity upon commissioning. Hence, the excess capacity of the THP AD system can be used at the beginning of the planning period to accommodate food scraps, which can be co-digested with the wastewater solids. If and when growth occurs in the RWQCP service area, the THP AD system might need to be expanded to accommodate both service area growth and projected growth of the food waste program. This allows for a cautious approach to infrastructure investment, while opportunistically leveraging the economics of the excess capacity of the system. It allows Palo Alto to better assess the economics of the co-digestion program; so, in the future, when expansion is required either to accommodate more material for co-digestion or more solids loading from growth, then an informed decision can be made as to how best to expand the system based on the historical economic and environmental performance. At that time there will also less uncertainty regarding the quantity of co-digestion material, such as food scraps, that are available. 8. Would incinerators be kept as a back-up? Answer: No. Incinerators will not be kept as a backup. After a successful startup of Component One (Biosolids Dewatering and Truck Haul-Out Facility) the demolition of the incineration building can begin so that space is made available for Component Two (THP AD Facility). 9. Can the City save time (i.e., have a facility up and running earlier than the OFP) by utilizing the E/CF RFP and not canceling it? Answer: Staff does not believe that using the E/CF RFP is an appropriate option for legal, purchasing, and business reasons. Nevertheless, even if Staff could recommend using the E/CF RFP, the construction of a privately owned and operated facility would not yield significant time savings. The core time uncertainties revolve around contracting and permitting. All documentation to comply with the California Environmental Quality Act (CEQA) must be completed prior to executing a design-build contract. This environmental documentation process may be completed in one to two years. The timing of this type of project delivery in the E/CF RFP (design-build-own-operate-maintain or DBOOM) relies on the assumption that all contracting issues will be resolved prior to the completion of the CEQA documents. However, due to the complexity of operating a private facility within the operational area of the RWQCP, the contracting relationship may require more time to develop, which could add an additional year to the schedule. In addition to City land use approvals, permitting a facility at the RWQCP requires a wastewater discharge permit amendment and approvals from the San Francisco Bay Regional Water Quality Control Board, the Bay Area Air Quality Management District, and CalRecycle. All projects, whether privately owned or City owned will need to obtain these approvals. The permitting process is complex and requires significant City involvement. Permitting could easily add one year to a project schedule. Any proposal, like Harvest Power’s proposal, that uses the Measure E site would require additional permitting and could be subject a legal challenge. Tying the development of Component One, the Biosolids Dewatering and Truck Haul-Out Facility, to the Measure E site may result in unforeseen delays in the vital decommissioning of the incinerators. While it is important to develop the energy generation THP AD project in Component Two (or as proposed by Harvest Power and We Generation (Cambi Services)), a large reduction in GHG and quick way to create a more sustainable use for biosolids is to develop Component One without delay. As noted earlier, there are many unresolved concerns, including the sizing of the facility for food scraps and energy considerations that need to be resolved before designing and constructing a THP AD facility. 10. What is the over-all timing for the OFP? Answer: The timing for Components One, Two, and Three are linked. While the specific steps and a detailed timeline are being developed by staff and will be presented to Council in fall 2014, staff can provide a basic outline of the major milestones. The overall program goals include: decommissioning the incinerator and completing Component One (Biosolids Dewatering and Truck Haul-Out Facility) by 2018; would be to complete the design phase of the THP AD development by 2018. Construction could begin shortly thereafter with the THP AD facility fully operational for the processing of biosolids sometime between 2020 and 2022. Food scraps, as part of Component Three, could be added to the THP AD system between 2020 and 2023. Staff will provide a more detailed timeline for Component Four (Yard Trimmings technologies) in fall 2014. 11. Will the proposed AD Facility import wastes from other communities? The City Manager and Mayor have sent letters to neighboring cities and RWQCP partners to gauge their interest in sending food scraps to a future AD Facility at the RWQCP. To date, no other agencies have made commitments. There are many questions that remain on sizing food scrap systems. New capacity would be needed for some facilities and surplus capacity can be utilized for others. A food receiving station, energy generation equipment, and dewatering equipment require upsizing for food scraps. Food scraps can be processed to maximize THP, digester, and dewatering use of surplus capacity until the initial excess capacity is needed for wastewater solids. This additional capacity might allow a THP AD system at the RWQCP to process most, and possibly all of Palo Alto’s commercial food scraps for a period of time which would be determined during the predesign phase. Utilizing surplus digester capacity for food scraps might defray some operational and maintenance costs for the RWQCP’s wastewater treatment fund partners, however further study is needed to quantify this amount. 12: How are the RWQCP Partners being involved? The Wastewater Treatment Fund recovers costs from the Palo Alto Wastewater Collection Fund and from the City’s five partner agencies. Each agency bills their respective sewer ratepayers for associated sewer and treatment costs. Approximately 230,767 residents are served by the six agencies contributing sewage to the RWQCP. For biosolids dewatering, digestion, and haul-out facilities, the Wastewater Treatment Fund’s new debt service expense (approximately $3.3 million / year) will be recovered through partner billing and paid to the State of California under terms of an SRF loan. The billing share will be based on a contract-defined treatment capacity allocation. The expected capacity share allocation for this project is shown below and is based on the existing contract capacity share allocation for major capital improvement projects. Agency Capacity MGD* Capacity % Palo Alto 15.30 38.16 Mountain View 15.10 37.89 Los Altos 3.80 9.47 East Palo Alto Sanitary District 3.06 7.64 Stanford University 2.11 5.26 Los Altos Hills 0.63 1.58 Totals 40.00 100.00 * Capacity expressed in annual average flow, million gallons per day Funding of design and construction requires debt financing. The design and construction project will need to be approved by the Mountain View and Los Altos City Councils, Stanford University, and the Board of the East Palo Alto Sanitary District as part of an agreement requirement with each of the Plant partners; these four partners have “veto” rights for capital projects. A veto has never occurred since agreements were originally authorized but is a possible outcome. The agreement with Los Altos Hills does not require partner approval for the construction project, however, Los Altos Hills is being kept apprised of the project. Over many years, staff met with partner agencies at the staff and board/council level, explaining the need to both retire the existing sewage sludge incinerators and build a new solids handling system. Staff at the partner agencies met regarding this project (most recently on April 7, 2014); staff continues to keep our partners informed of progress. Meetings are being scheduled for spring 2014 for a Los Altos city council study session and with the East Palo Alto Sanitary District engineering committee; staff are assisting Mountain View staff who intend to communicate to their Council with informational reports and study sessions, as warranted. At Council direction, staff will initiate work with all four partner agencies to modify agreements, as needed, and bring the recommended project to partner agencies for approval before bringing back the modified agreements to Council for final approval. 13. Should the City prioritize the development of yard trimmings compost on the 3.8 acre Measure E site? At this time, there is no local composting generation in Palo Alto other than from home composters. Two advantages can be realized if the City elected to compost yard trimmings on the Measure E site: (1) the City would have control over the operations and not rely on a contractor for capacity; and (2) the City would achieve a small reduction in GHG due to a decrease in truck vehicle-miles traveled. However, the GHG levels resulting from transportation are relatively insignificant compared to the overall benefits of the OFP. Components One, Two, and Three result in a net GHG emissions benefit of removing nearly 5,000 metric tons of CO2e from the atmosphere. Of the 267 metric tons of anthropogenic CO2e GHG emissions related to composting yard trimmings, 157 metric tons of CO2e are emissions resulting from transportation. The transportation related to yard trimmings is only 3 percent of the total OFP GHG emissions. Relocating aerobic composting technology 50 miles to the north (from Gilroy to Palo Alto) also will require a significant capital investment. This expense does not achieve significant value for the City or reduce greenhouse gases significantly. Additionally, new technologies are being developed and refined to harness the energy potential in yard trimmings and wood waste. The City of San José is developing a pilot project to gasify wood waste and biosolids at the San José/Santa Clara Regional Wastewater Facility. Staff believes these technologies will continue to mature and could be an appropriate activity on the 3.8-acre Measure E site, on the RWQCP, or elsewhere, as part of Component Four of the OFP. If that were to happen, then local compost would again be available to residents. The cost estimate to develop an aerated static pile composting facility that could manage all of the City’s yard trimmings was estimated and presented to Council as part of the Blue Ribbon Task Force on Composting efforts in 2009. The estimated 2009 capital cost of $3 million adjusted for inflation at 3% per year is approximately $3.5 million in 2014 dollars; however, capital costs may be more expensive as new stormwater and air quality regulations have been promulgated since the 2009 estimate. 14. What are the rates of home composting and what are the trends? Would more aggressive home based programs change the need for a local composting facility? Answer: Staff does not keep a record of the number of home composters in Palo Alto. While home composting is the best, most sustainable method to deal with the City’s residential yard trimmings and food scraps, there are not nearly enough residents currently composting at home to manage all of the City’s yard trimmings to impact the projected sizing of Components Two, Three, and Four in the OFP. However, with the implementation of an expanded home composting campaign in 2014, Staff will be able to reassess the impact of home composting on projected tonnages of yard trimmings and food scraps. This expanded home composting campaign will be a focused outreach and incentive-based campaign that will augment and add emphasis to the City’s traditional, ongoing, multi-partner program for home composting, water conservation, and pollution prevention programs. The goals of the expanded campaign are to: 1) raise awareness about the benefits of home composting; 2) increase the number of people composting at home; and 3) increase the number of people using compost in their yard/garden. The expanded campaign will encourage residents to compost at home through education of how composting conserves water and energy while reducing waste and pollution, and through incentives, such as the City providing a limited number of free home composting bins to Palo Alto residents. Bins have been given away at the Great Race for Saving Water on April 19, 2014, and at all Palo Alto compost workshops during 2014. Staff will also be holding a free compost give-away event on May 17, 2014, at the entrance to the closed Palo Alto Landfill. 15. Can we include levee protection and have Partner agencies share cost? The new facilities built as part of the OFP will be designed above the Base Flood Elevation (elevation 7.7) in order to provide 100-year flood protection for the new facility. Reduction of the risk from tidal flooding and storm surge in Palo Alto, including at the RWQCP, is part of a regional study being conducted by the US Army Corps of Engineers (USACE), with substantial support from the Santa Clara Valley Water District. The regional and federal project is the optimum solution for providing tidal flood protection. Staff recommends that no levees be included in the proposed projects for the Organics Facilities Plan. Isolated sections of levee improvements would not be effective in providing flood protection to the RWQCP and surrounding areas. The USACE South San Francisco Bay Shoreline Study is currently evaluating levee improvements in Alviso. The next stage of the study will be the northern portion of the Santa Clara County shoreline, which will be funded 50/50 by the USACE and Santa Clara Valley Water District (i.e., the local sponsor). Construction of levee improvements along Palo Alto’s shoreline may be identified in the USACE study; the future improvements can be funded through a combination of federal and local sources (i.e., a 35/65 local/federal cost share, minimum, up to a 50/50 local/federal cost share, maximum). It is too early to commit to a local source for the funding. A local assessment district is one potential mechanism to generate the required matching funds. Because the RWQCP is one of the many parcels at risk in Palo Alto’s tidal flood zone, the RWQCP partner agencies and the Palo Alto Wastewater Collection Fund would be obligated to share in any assessed fees for the levees, as ultimately approved by Council. 16. How is Component Two (THP AD Facility) delivered (design and construction) and how are services provided (ownership)? Answer Project Delivery Staff recommends that the City employ the resources of consultants to design and manage the project. After completion of California Environmental Quality Act (CEQA) review, staff will evaluate the merits of a design-bid-build (DBB) approach and a design-build (DB) approach. The design-build approach is not expected to significantly alter the project timeline, so the evaluation between these two approaches will focus on potential cost savings, innovation, risk exposure and the level of needed control over the quality of the design by the City. The E/CF RFP allowed for less-common, innovative, and/or emerging technologies to be proposed like gasification and dry AD. To reduce the risk to the City, the E/CF RFP asked proposers to take on all of the financial and performance risk through a design-build-own-operate-maintain (DBOOM) procurement process. The City would pay a “tipping fee” for each feedstock only if the proposer could guarantee performance. Since no gasification proposals were received and no dry AD proposals progressed past the minimum criteria evaluation, staff reevaluated the risk issue associated with being the owner operator of a wet AD. A wet AD system is a well-established technology and often owner operated. Most importantly, the City realizes significant savings as the owner-operator of a THP AD system. The 20-year net present value of the City OFP is over $20 million less than the most competitive E/CF RFP proposal with expenses shifting from operations and maintenance to long-term capital. Traditionally, projects at the RWQCP have been secured using the design-bid- build project delivery process. This process is a step-by-step approach to project delivery. The City prepares a scope of work for the design of a project, an RFP is released, environmental design engineering firms respond, and the City selects a consultant to complete final design of the project. The City then prepares a bid package for the construction of the project. The construction contract is awarded to the lowest responsive bidder. There are a few shortcomings of this process: one, the process to respond to differences between the design and the needed construction fixes can result in change orders; two, the procurement process takes additional time with two bid periods; and three, the procurement requires the selection of the lowest responsive bid. As a response to tradeoffs with design-bid-build process, many communities employ design-build project delivery. The initial engineering is more conceptual and the engineering and construction tracks begin simultaneously. The construction is also able to adapt more quickly to changes on the ground. However, some conceptual design must be completed prior to the preparation of a DB project and CEQA documents must be completed prior to a DB award. The DB process can be structured to allow more (or less) control by the City, but requires strong project management. Another significant risk related to the DB process is that the contractor is incentivized to reduce construction costs (value engineering) that may be at the expense of operational costs. One solution to this problem is to couple DB with operations (aka, DBO). This forces the DB contractor to consider the long-term operational costs. However, as noted earlier, the City could save over $1 million a year by operating the facility. This would make the DBO option less attractive. However, another project delivery option is design-build-own-operate-transfer (DBOOT). This delivery option is similar to the DBO option, but has the contractor finance the facility and transfer or sell the facility to the public entity. This option allows for the RWQCP to set the terms of the transfer (3-5 years) and use lower interest rates to finance the subsequent years of the project. In some cases, the private entity can take advantage of tax breaks unavailable to public agencies. Like DBOOM, the DBOOT provides fewer opportunities for oversight by the owner as compared to design-bid-build. Staff does not see Components One or Two as candidates for DBO or DBOOT models. However, a DBO procurement model may be more appropriate for Components Three and Four. After Council acceptance of the OFP recommendations, staff will direct CH2M HILL to begin a Component One (Biosolids Dewatering and Truck Haul-Out Facility) predesign report (Staff Report ID # 3383, C13147733, Task 11). Staff has developed a scope of work for program management; proposals are expected in May 2014. Staff will return to council in approximately July 2014 for program manager contract approval. The program manager will manage the contracting for the major capital improvement work and apply for a financial SRF loan for the project. Program management for the RWQCP’s Long Range Facilities Plan covers $197 million of work over a 10-year timeframe; annual program management costs are estimated to be $450,000 with the expense for preparation of a state SRF loan expected to be approximately $100,000. The initial tasks of the program manager will be to:  Assist with preparation of an SRF application and SRF specific environmental reporting requirements,  Prepare of a design RFP for Component One Biosolids Dewatering and Truck Haul-Out Facility,  Prepare the RFP for pre-design on the AD system,  Provide support services during the bid phase, and  Provide engineering services during the construction management phase. The work of the program manager is for the biosolids project and the other major capital projects of the wastewater treatment fund shown below: Project Title Project Start Year Project Cost Program Management Services 2014 $4,600,000 Solids Handling Facility 2014 $69,000,000 Primary Sedimentation Tank Rehabilitation 2014 $7,313,000 Lab & Environmental Services Building 2014 $17,903,763 Fixed Film Reactors Structure and Equipment 2017 $19,420,440 Headworks Facility (including Grit Removal System 2020 $38,856,627 Recycled Water Filters and Chlorine Contact Tank 2022 $14,209,044 Joint Interceptor Sewer 2022 $30,800,000 Total Long Range Facilities Plan (Major CIP) $202,102,874 The State Water Resources Control Board (SWRCB) Division of Financial Assistance funds publicly-owned wastewater treatment projects with low-interest loans through the Clean Water State Revolving Fund. The City of Palo Alto will be the applicant for a loan for Component 1 and 2 (approximately $69 million). Staff will return to Council for adoption of the resolution authorizing the application of the SRF loan. The SWRCB will review the application for funding eligibility and prepare a standard agreement for funding the project. After drafting the agreement, staff will return to Council for authorization of the agreement. The terms of an SRF loan would be a 30-year term with the first payment due approximately one-year after construction completion. The City likely would apply for an agreement for funding. The SWRCB would review the application for funding eligibility and prepare a standard agreement for funding the project. The SRF loan interest rate is one-half of the current state general obligation bond rate. As of March 2014, the SRF loan rate is 1.9% on a 30-year repayment term, which is a public financing rate much more favorable than that available to the RFP proposers through private financing. The loan can fund hard costs (e.g. construction) as well as soft costs, which include program management, environmental documents, planning, design, value engineering, construction management, and administration costs. Land and right-of-way costs are ineligible. However, no new land or right-of-way is needed for the project. The Wastewater Treatment Fund will be responsible for loan payments to the State. The partner agreements will be modified to include approval of this project and a commitment to repay debt obligations by each agency. Financing tables for a $69 million SRF loan are included in Attachment E. Wastewater Treatment Fund Staffing and Service Delivery There will be no net change in total personnel to operate the system; a change in the type of personnel is needed, subject to Council approval of the budget for staffing. When the incinerator is retired, staff expects to eliminate approximately 2.0 FTE WQC Plant Operator II (SEIU Job Class #509) positions through attrition. The new system will require some operational attention and some specialized maintenance:  The new dewatering and AD systems will be highly automated so the new facilities will not require the level of close operator attention that the City’s current sewage sludge incinerator and air pollution control systems have needed for the last 42 years; and  The new Combined Heat and Power system (CHP) system (a.k.a., turbines or internal combustion engines) will convert biogas into electricity; these are specialized engines requiring skilled mechanics for maintenance. Nearly all Bay Area wastewater plants with anaerobic digesters utilize a CHP to convert biogas to energy. For proper maintenance of the new digestion and CHP system, the RWQCP will need to fill approximately 2.0 new FTE Maintenance Mechanic positions (SEIU Job Class #505). After startup, the City will utilize a service contract for the engines to ensure RWQCP staff is properly trained on operation and maintenance. 17: Can the City operate the Component One and Two biosolids handling and treatment systems? Local municipalities commonly own and operate facilities similar to the recommended biosolids facilities in Components One and Two of the OFP. In correspondence and conversations with the CAMBI-US managing director, engineering consultants, and other municipal operators of the CAMBI thermal hydrolysis system, all indicated that a municipally owned wastewater treatment plant, such as the RWQCP, could operate and maintain a CAMBI thermal hydrolysis process (THP) system. The District of Columbia Sewer and Water Authority (DC Water) will be starting up a CAMBI THP system in July 2014; DC Water is the first CAMBI THP system in North America and will be the largest in the world. The DC Water wastewater treatment facility is about 16 times larger than the RWQCP. The Hampton Roads Sanitation District Atlantic Treatment Plant (slightly larger than the RWQCP) is in the design stage on a CAMBI THP system. These agencies will also be the owner operator of the CAMBI THP system. Similar to other wastewater plants, staff recommends that a post-construction startup and support phase be included to ensure safe and reliable operation and proper transfer to City operations staff, specifically:  The City will require six months of smooth and successful operation with the new facility;  After construction of the thermal hydrolysis and AD system, qualified THP staff from the THP provider will operate the thermal hydrolysis system onsite for approximately eight months and train City staff on safe and reliable operation;  Following the THP training and startup, the City will require a two year service contract for THP operational support (offsite support);  After startup of the thermal hydrolysis process and AD facility and prior to the addition of food scraps, the new facilities will require one year of successful operation prior to the addition of any food scraps; and  The addition of pre-processed food scraps will be progressively staged in a phased manner while staff gains experience operating the new system. 18. Can the THP AD system biogas be converted into renewable fuel instead of renewable electricity? Converting biogas into a renewable fuel is technically feasible but not pursued for the project. An analysis of biogas energy value showed that use of the electricity to meet THP AD process heat demands was a far more efficient use of the energy than combusting a biofuel in a vehicle. Similarly, clean-up and compression of the biogas for injection into the City gas distribution system is relatively complex and not as valuable a use compared to converting the embedded energy into renewable electricity. Converting the biogas into electricity maximizes the use of the project’s energy production. The electric energy has four times the value of biofuel energy (approximately $12/million BTU versus $3/million BTU). Executive Summary Introduction The City of Palo Alto has operated the Regional Water Quality Control Plant (RWQCP) to consistently provide reliable, cost-effective, and environmentally responsible wastewater treatment for its citizens and regional partners for more than 45 years. The City’s vision for future biosolids management encompasses the need to address the RWQCP’s aging solids handling infrastructure, to proactively comply with changing and uncertain regulations affecting biosolids, and to respond to community goals to increase the beneficial use of recovered organic resources city-wide. Palo Alto strives to create renewable energy and offset greenhouse gas emissions while being mindful of the financial impact on the RWQCP’s rate payers. This Biosolids Facility Plan (BFP) provides a long-term roadmap to enable the City to reliably and sustainably manage and beneficially reuse the wastewater solids produced at the RWQCP through year 2045. The focus of the BFP is to develop and evaluate sustainable biosolids-only processing and reuse alternatives. In parallel with the BFP, the City of Palo Alto is evaluating how other recovered organics (i.e., food scraps and yard trimmings) can possibly be processed with biosolids. As part of this evaluation of integrated organics management, the City of Palo Alto is comparing the results of the City’s Energy/Compost Facility or Export Option for Food Scraps, Yard Trimmings, and Biosolids Request for Proposals in concert with the outcomes of the BFP. Together, the BFP and the energy/compost projects offer an important opportunity to define a comprehensive and integrated approach to organics management and recovery. Palo Alto’s City Council has prioritized the decommissioning of the RWQCP multiple-hearth furnaces (MHFs) by the year 2019. The MHFs currently incinerate the RWQCP wastewater residuals; therefore, the City must evaluate options for wastewater residuals management. Hence, the City prepared the BFP to select a cost- effective biosolids management strategy to protect public health and the environment and to position the City to respond to rapidly evolving biosolids regulatory, technological, and end-use opportunities. This BFP is developed as a companion document to the City of Palo Alto Long Range Facilities Plan for the Regional Water Quality Control Plant Final Report (LRFP) (Carollo Engineers, 2012). The BFP builds on the LRFP, allowing solids processing recommendations in the BFP to move forward in concert with other planned improvements at the RWQCP (as defined in the LRFP). Together, the two documents provide a comprehensive long-term plan for the RWQCP. Summarized in this Executive Summary, the BFP includes: • RWQCP residuals projections • Description of evaluation methodology • Development of viable alternatives • Alternatives evaluation results • Description of the recommended alternative • Phasing and implementation plan RWQCP Residuals Projections Based on a planning period of 30 years from the base year 2015, the 2045 maximum month projections for primary sludge, secondary or waste activated sludge, and fats/oils/grease were used for alternative facility sizing and associated capital costs estimation, while the 2015 annual average solids projections were used for the evaluation of annual operations and maintenance costs. The projected quantities are summarized in Table ES-1. Note that for the BFP, food scraps and yard trimmings were not included in the analysis; PALO_ALTO_RWQCP_BIOSOLIDS_FACILITY_PLAN_DRAFT ES-1 Draft EXECUTIVE SUMMARY however, the onsite alternatives could be designed to coprocess food scraps with the primary sludge and waste activated sludge. TABLE ES-1 Primary Sludge, Waste Activated Sludge, and Fats/Oils/Grease Projections Parameter 2015 Average Annual (dry pounds per day) 2045 Maximum Month (dry pounds per day) Primary Sludge and Waste Activated Sludge Dry Mass 44,460 64,516 Fats/Oils/Grease/Scum Dry Mass 2,200 2,200 Alternatives Evaluation Methodology Generally, for biosolids facility projects, the wastewater residuals stabilization technology is initially dictated by the biosolids end-use options. For this project, in addition to the end-use options, the selection of the treatment technology and final biosolids end–uses will be determined by the evaluation criteria. The criteria are reflective of Palo Alto staff and stakeholder values. The key criteria to evaluate biosolids management alternatives are listed here and also shown in Figure ES-1: • Technical viability and reliability • Potential impacts on and benefits for the community and the environment • Capital and operation and maintenance costs • Minimizing greenhouse gas emissions • Finding a beneficial use for the biosolids generated • Producing renewable energy • Managing organics and residuals at the local level • Potential to integrate recovered organics from the Zero Waste Program with the biosolids • Meeting current and future regulations • Minimizing odors and other environmental impacts Figure ES-1 Value Hierarchy and Criteria Categories for Palo Alto RWQCP Alternatives Evaluation NPV Impact on Community Capital Outside Funding Incentives Energy Labor Chemicals Hauling O&M Economic Performance Traffic Odor Noise Safety risk to O&M staff Social Performance GHG Carbon Footprint Renewable Energy Generation Beneficial use of biosolids Level of integration of PA organic waste streams Other Environmental Impacts (Other than GHG) Environmental Performance Level of Complexity Maintenance Expertise Required Outside Entity Involvement Diversity of Biosoilds End-use Options Sidestream Impacts Technical Performance Sustainability Triple Bottom Line + ES-2 PALO_ALTO_RWQCP_BIOSOLIDS_FACILITY_PLAN_DRAFT Draft EXECUTIVE SUMMARY Development of Viable Alternatives Specific to the Palo Alto RWQCP, the viable options for biosolids management include onsite biosolids processing solutions (e.g., anaerobic digestion) and solutions that involve trucking dewatered raw sludge for further processing at an offsite processing facility. Production of an anaerobically digested Class B biosolids cake will require management of the product in a land- based solution. Production of a Class A biosolids cake would allow for more beneficial land-based reuse opportunities, as well as alternative reuse opportunities, should the City decide to create a product for local public distribution. For example, the City of Tacoma, Washington, blends its Class A cake with sawdust to produce Tagro™, which is distributed to the public and sold in home and garden stores alongside conventional soil amendments. Production of a thermally hydrolyzed and anaerobically digested Class A biosolids can be sold or used as a soil amendment by blending with soil or another amendment such as recovered wood chips. These onsite anaerobic digestion options allow for integration of food scraps collected through the Palo Alto Zero Waste program. For bulk agricultural land application in Northern California, there is currently not a clear advantage to producing a Class A product rather than a Class B product. However, given that local management of organics has been expressed as a community value for the City and given the ongoing pressure on land application sites in California, production of a Class A product opens up future opportunities for biosolids management, either locally or through production and distribution of a bulk material. In the long term (during the course of the BFP planning period), the City of Palo Alto will want facilities that can produce a Class A product, leaving multiple outlets and reuse opportunities available for RWQCP biosolids. The following technology alternatives were considered for biosolids management: 1. Dewater and Haul (Raw Sludge) Solutions: a. Synagro Central Valley Compost Facility b. East Bay Municipal Utility District (EBMUD) Anaerobic Digestion c. Kirby Canyon Landfill Facility d. Future Synagro Bay Area Compost Facility e. San José/Santa Clara Regional Wastewater Facility 1. Zero Waste Energy Natural Gas Production Demonstration Project 2. Anaerobic Digestion at San José/Santa Clara Regional Wastewater Facility 2. Onsite Processing Solutions (with truck haul to land application, or landfill alternative daily cover): a. Mesophilic Anaerobic Digestion with Biogas-fueled Combined Heat and Power b. Temperature Phased Anaerobic Digestion with Biogas-fueled Combined Heat and Power c. Thermal Hydrolysis Process and Mesophilic Anaerobic Digestion with Biogas-fueled Combined Heat and Power d. Dewatering and Landfill Gas-fueled Thermal Drying e. Dewatering and Thermal Drying/Gasification To develop a robust analysis of each alternative, non-financial criteria were developed and analyzed in addition to the economic analysis. The process, called multi-attribute utility analysis, includes a structured evaluation of the risks and benefits of a decision in comparison to costs. Multi-attribute utility analysis is recommended in situations where making a wrong decision could result in substantial financial risk, collaboration and buy-in is essential to achieving desired outcomes, and the complexity or number of alternatives is high. This type of analysis enables a decision-making process that explains the financial benefits and risks inherent in the strategies considered, and is used to prioritize multiple activities so the balance of economic, technical, environmental, and social factors is optimized. PALO_ALTO_RWQCP_BIOSOLIDS_FACILITY_PLAN_DRAFT ES-3 Draft EXECUTIVE SUMMARY Alternatives Evaluation Results During the initial screening of possible alternatives, two of the dewater and haul alternatives (Alternatives 1d and 1e, above) were identified as non-viable at this time and dropped from additional consideration. Partnership opportunities with other wastewater agencies were reexamined to confirm the current viability of the remaining dewater and haul options. The remaining eight viable alternatives were further developed to allow for a planning-level evaluation. The financial analysis results from this evaluation are summarized in Table ES-2, with the net present worth of the alternatives illustrated in Figure ES-2. The net present worth for each alternative was estimated for the planning period of 30 years using a real discount rate of 1.5 percent. TABLE ES-2 Alternatives Evaluation Financial Summary Alternative Biosolids Classification Biosolids End-use Capital ($million) 2015 Annual O&M ($million/year) 2015 Net Present Worth ($million) 1a Dewater and Haul to Synagro Central Valley Compost Facility Class A Compost 14 1.6 53 1b Dewater and Haul to EBMUD Anaerobic Digestion Class B Land application 14 2.0 62 1c Dewater and Haul to Kirby Canyon Landfill Unclassified Landfill 14 2.3 69 2a Mesophilic Anaerobic Digestion with Biogas- fueled Combined Heat and Power Class B Land application 53 0.5 64 2b Temperature Phased Anaerobic Digestion with Biogas-fueled Combined Heat and Power Class A Land application 70 0.5 83 2c Thermal Hydrolysis Process and Mesophilic Anaerobic Digestion with Biogas-fueled Combined Heat and Power Class A Land application 69 0.4 79 2d Dewatering and Landfill Gas-fueled Thermal Drying Class A Land application 57 1.6 95 2e Dewatering and Thermal Drying/Gasification Ash Landfill 53 2.2 106 Of the viable alternatives, two of the three sludge dewater and haul solutions emerged as economically most feasible in comparison to the onsite processing solutions. Hauling to the Synagro Central Valley Compost Facility (Alternative 1a) achieved the lowest positive (best) net present worth, followed by hauling to EBMUD (Alternative 1b). It is recognized that beneficial use of biosolids is a project goal and that there are increasing pressures to reduce or eliminate the disposition of unclassified sludge in landfills. Therefore, Alternative 1c, which assumes the landfilling of unclassified sludge (not alternative daily cover), is recognized as the least desirable dewater and haul alternative, and only considered as an emergency backup solution for the RWQCP. Of the onsite biosolids processing solutions, mesophilic anaerobic digestion (Alternative 2a) achieved the lowest net present worth, followed by the thermal hydrolysis process (Alternative 2c) and temperature phased anaerobic digestion (Alternative 2b). The anaerobic digestion solutions include a combined heat and power system to beneficially utilize biogas generated by the anaerobic digestion process, thereby, resulting in the most economical long-term solution. The thermal drying and gasification alternatives (Alternatives 2e and 2f) were the highest cost alternatives. ES-4 PALO_ALTO_RWQCP_BIOSOLIDS_FACILITY_PLAN_DRAFT Draft EXECUTIVE SUMMARY Figure ES-2 Alternatives Net Present Worth Comparison Net energy and anthropogenic greenhouse gas (GHG) emissions were estimated for each alternative as summarized in Table ES-3, and illustrated in Figures ES-3 and ES-4, respectively. Relative to the existing solids handling system, the anaerobic digestion solutions, Alternatives 2a, 2b, and 2c result in significant net energy production since these include a combined heat and power system to beneficially utilize energy from biogas from the anaerobic digesters. Alternative 1b (Dewater and Haul to EBMUD Anaerobic Digestion) also results in net energy production based on the energy recovered by the combined heat and power system at EBMUD from the sludge that would be sent from the RWQCP. These anaerobic digestion alternatives also result in significant GHG emission offsets. Both of these criteria (net energy production and GHG emission offsets) are recognized as two of the most significant environmental benefits of the anaerobic digestion solutions in comparison to the existing solids handling system as well as the other biosolids processing alternatives evaluated. In addition to these, the volume of anaerobically digested and dewatered biosolids to be hauled offsite and the related number of truck trips annually are substantially lower than hauling dewatered sludge. With the thermal hydrolysis process upstream of anaerobic digestion, greater volatile solids destruction would occur, further reducing the quantity of biosolids hauled and also enhancing energy production. PALO_ALTO_RWQCP_BIOSOLIDS_FACILITY_PLAN_DRAFT ES-5 Draft EXECUTIVE SUMMARY TABLE ES-3 Alternatives Environmental Analysis Summary Alternative Net Energya (MWh/year) Anthropogenic GHG Emissionsb (MT CO2e/year) Hauling Miles (truck miles/year) Number of Trucks from RWQCP (vehicles/year) 1a Dewater and Haul to Synagro Central Valley Compost Facility -2,576 714 311,300 1,354 1b Dewater and Haul to EBMUD Anaerobic Digestion 5,482 -1,660 101,500 1,354 1c Dewater and Haul to Kirby Canyon Landfill -1,255 3,104 92,000 1,354 2a Mesophilic Anaerobic Digestion with Biogas-fueled Combined Heat and Power 13,481 -3,642 135,900 755 2b Temperature Phased Anaerobic Digestion with Biogas- fueled Combined Heat and Power 12,515 -3,335 129,500 719 2c Thermal Hydrolysis Process and Mesophilic Anaerobic Digestion with Biogas-fueled Combined Heat and Power 14,219 -3,846 91,280 507 2d Dewatering and Landfill Gas-fueled Thermal Drying -4,706 1,061 55,590 397 2e Dewatering and Thermal Drying/Gasification -341 101 4,170 61 a Negative net energy represents net energy consumption, while positive net energy represents net energy production. b Negative GHG emissions represent reduction in emissions, while positive GHG emissions represent increase in emissions. MT CO2e/year = metric tons equivalent carbon dioxide per year. MWh/year = megawatt-hours per year. ES-6 PALO_ALTO_RWQCP_BIOSOLIDS_FACILITY_PLAN_DRAFT Draft EXECUTIVE SUMMARY Figure ES-3 Alternatives Net Energy Production Summary PALO_ALTO_RWQCP_BIOSOLIDS_FACILITY_PLAN_DRAFT ES-7 Draft ~ • c ~ 20,000 15,000 10,000 5,000 o -5,000 a:; -10,000 z -15,000 -20,000 • Net Energy Production .WOO> E>osting Solids Handling System -15,007 Net Energy Production (energy produced minus energy demand) I -• I Thermal Haulingto Haulingto Thermal "'" WM Gasification HaulingtoCV Hydrolysis EBMUD Kirby Drying 14,21'1 13,481 12,515 5,482 -341 -1,255 -2,576 4,~ ~ • c ~ 20,000 15,000 10,000 5,000 o -5,000 a:; -10,000 z -15,000 -20,000 • Net Energy Production .WOO> E>osting Solids Handling System -15,007 Net Energy Production (energy produced minus energy demand) I -• I Thermal Haulingto Haulingto Thermal "'" WM Gasification HaulingtoCV Hydrolysis EBMUD Kirby Drying 14,21'1 13,481 12,515 5,482 -341 -1,255 -2,576 4,~ ~ • c ~ 20,000 15,000 10,000 5,000 o -5,000 a:; -10,000 z -15,000 -20,000 • Net Energy Production .WOO> E>osting Solids Handling System -15,007 Net Energy Production (energy produced minus energy demand) I -• I Thermal Haulingto Haulingto Thermal "'" WM Gasification HaulingtoCV Hydrolysis EBMUD Kirby Drying 14,21'1 13,481 12,515 5,482 -341 -1,255 -2,576 4,~ ~ • c ~ 20,000 15,000 10,000 5,000 o -5,000 a:; -10,000 z -15,000 -20,000 • Net Energy Production .WOO> E>osting Solids Handling System -15,007 Net Energy Production (energy produced minus energy demand) I -• I Thermal Haulingto Haulingto Thermal "'" WM Gasification HaulingtoCV Hydrolysis EBMUD Kirby Drying 14,21'1 13,481 12,515 5,482 -341 -1,255 -2,576 4,~ EXECUTIVE SUMMARY Figure ES-4 Alternatives Anthropogenic Green House Gas Emissions Summary The non-financial criteria were evaluated for each alternative to assist in the identification of the preferred alternative. The total benefit scores for the alternatives were compared as illustrated in Figure ES-5. Alternative 2c (Thermal Hydrolysis Process and Mesophilic Anaerobic Digestion with Biogas-fueled Combined Heat and Power) received the highest benefit score. Hauling to Synagro Central Valley Compost Facility and to the EBMUD anaerobic digestion system alternatives involve the hauling of unclassified sludge, leaving the sludge processing and final biosolids product disposition to outside parties, outside the control of the RWQCP. These dewater haul solutions were evaluated as viable near-term solutions for the RWQCP, but they are likely not viable solutions for the entire 30-year planning period. Although the dewater and haul alternatives have relatively low net present worth values, the net energy, GHG offsets, and non-financial scores were not as favorable as the anaerobic digestion alternatives. Alternative 2c (Thermal Hydrolysis Process and Mesophilic Anaerobic Digestion with Biogas-fueled Combined Heat and Power) received the highest benefit score, the best net energy production, and highest GHG offsets, thereby emerging as the recommended approach to sustainable biosolids management that best reflects Palo Alto and its stakeholders’ interests and values. ES-8 PALO_ALTO_RWQCP_BIOSOLIDS_FACILITY_PLAN_DRAFT Draft EXECUTIVE SUMMARY Figure ES-5 Alternatives Total Benefit Score Comparison Recommended Biosolids-only Alternative The recommended alternative for biosolids management is Alternative 2c: Thermal Hydrolysis Process and Mesophilic Anaerobic Digestion with Biogas-fueled Combined Heat and Power. As presented in Figure ES-6, primary sludge, waste activated sludge, and fats/oils/grease are blended and predewatered, and then undergo thermal hydrolysis followed by mesophilic anaerobic digestion. The digested solids, which are a Class A Equivalent product (Exceptional Quality), are dewatered and land applied; however, many other end-use distribution options are available to Palo Alto with this end product. The biogas produced by anaerobic digestion is routed to a cogeneration system for production of power and heat. By combining the captured landfill gas with the biogas, it is estimated that the system could produce 1.6 megawatts of power (equivalent to powering approximately 1,000 homes) and sufficient heat to sustain the treatment process without supplemental fuel. Hence, the recovered resources from the system include the nutrients in the biosolids reused by land application, energy converted to renewable power, and heat for use by the RWQCP. Cambi technology is assumed for the thermal hydrolysis process, as it is the most proven to date. Other vendor processes, such as Veolia Kruger Exelys, can also be considered during predesign of the system. Cambi has experience with food hydrolysis and digestion, which is an added benefit of this technology if the City decides to coprocess food waste at the RWQCP in the future. The source-separated food would be hydrolyzed making the more recalcitrant material amenable to anaerobic digestion, thereby improving the PALO_ALTO_RWQCP_BIOSOLIDS_FACILITY_PLAN_DRAFT ES-9 Draft EXECUTIVE SUMMARY biogas production and helping Palo Alto beneficially utilize food scraps as part of its overall organics management program. Other advantages of the thermal hydrolysis process are improved dewatering and lower odor associated with the biosolids end-product. After blending with soil, the biosolids product could be locally distributed by Palo Alto or a third party, such as Synagro. Figure ES-6 shows the process flow diagram for Alternative 2c, including 2015 mass/energy balance and key design criteria for the major unit processes. Figure ES-6 Process Flow Diagram for Alternative 2c: Thermal Hydrolysis Process and Mesophilic Anaerobic Digestion with Biogas-fueled Combined Heat and Power TPS+TWAS+FOG 170,263 gpd 46,860 dppd Biosolids Cake 9.2 dtpd 30.6 wtpd Biosolids 48,645 gpd 19,304 dppd 6.1 MMBTU/H THP Sludge 48,645 gpd 44,517 dppd Filtrate 143,574 gpd Filtrate 62,810 gpd Ave TKN: 1571 ppd Ave NH3: 1310 ppd Landfill Gas 396,000 cf/d 6.6 MMBTU/h Mesophilic Digestion No.of units 2Diameter 43' Vol/unit 0.52 MG Total volume 1.04 MG Post-dewatering (Belt Filter Press)Duty units 2 Standby units 2 Belt width/unit 1m Solids loading 1000 lb/hr/mSolids capture 95% Cake conc 30% CHP Active units 2Standby units 1 Electric/unit 800kW Installed 2,400kW Biogas 313,728 cf/d 8.0 MMBTU/h Recycle to headworksSidestream Treatment Biogas Storage Tank (100' dia) TPS+TWAS+FOG 26,689 gpd 44,517 dppd Thermal Hydrolysis Design (TBD) Land Application Cake Storage & Loadout Total volume 147 CY Steam System Design (TBD) 1.6 MW Dilution Water Pre-dewatering (Centrifuge)Duty units 4 Standby units 2 Solids loading 1800 lb/hr/unit Solids capture 95%Solids conc 20% To WWTP and Grid Solids stream Liquids stream Energy flow path TPS+TWAS: Co-thickened Primary Sludge & Waste Activated Sludge FOG: Fats, oils, and greaseAverage Flow, gallons per day (gpd) Average Mass, dry pounds per day (dppd) (cf/d = cubic feet per day; CHP = combined heat and power; CY = cubic yards; dppd = dry pounds per day; dtpd = dry tons per day; FOG = fats, oils, and grease, gpd = gallons per day; kW = kilowatts; lb/hr/m = pounds per hour per meter; m = meter; MG = million gallons; MMBtu/h = million British thermal units per hour; ppd = pounds per day; MW = megawatts; TBD = to be determined, THP = thermal hydrolysis process, TKN = total Kjeldahl nitrogen, TPS = thickened primary sludge; TWAS = thickened waste activated sludge; wtpd = wet tons per day; WWTP = wastewater treatment plant.) ES-10 PALO_ALTO_RWQCP_BIOSOLIDS_FACILITY_PLAN_DRAFT Draft EXECUTIVE SUMMARY Phasing and Implementation Because of the requirement to decommission the MHFs by 2019, several unknowns regarding the quantity and approach to organics management in Palo Alto, and final disposition of the Energy/Compost Facility, a phased approach to implementation is recommended: • Component 1: Design and construct a sludge dewatering and loadout facility onsite at the RWQCP. This facility can be planned, designed, and constructed by the end of 2017. To ensure the best hauling and tipping fee rates, it is recommended that the RWQCP continue to negotiate with both EBMUD and Synagro as potential sludge receiving facilities. Once the facility is in service, after a typical 6 month testing and performance period, the decommissioning and demolition of the MHFs may commence, with completion by the end of 2018. This will open up more space on the RWQCP site for the Component 2 facilities, in the central part of the site. • Component 2: Design and construct Alternative 2c (Thermal Hydrolysis Process and Mesophilic Anaerobic Digestion with Biogas-fueled Combined Heat and Power) facilities that would utilize the dewatering and loadout facility (Component 1). The development of Component 2 can occur in parallel with the construction and startup of Component 1, with construction of the Component 2 facilities planned to begin immediately after the demolition of the MHFs. During this phase, it is recommended that the RWQCP continue to explore the most economical end-use options for the biosolids product. Construction of Component 2 facilities can be completed by the end of 2021. During start-up, the new biosolids facilities would be integrated with the existing dewatering and loadout facility and then the performance period of the entire system can be conducted. The implementation schedule for Components 1 and 2 is summarized in Figure ES-7. Figure ES-7 Overview of Implementation Schedule for Components 1 and 2 PALO_ALTO_RWQCP_BIOSOLIDS_FACILITY_PLAN_DRAFT ES-11 Draft Attachment E - Wastewater Treatment Fund Financing Analysis: Overview for Wastewater Treatment Fund Table 1 CAPACITY SHARE FLOW SHARE Debt Payment1 Expense Reduction (i.e. savings) by Retiring Incinerators with THP AD Alternative New Annual WWT2 Fund Expense for Project Year "A""B" "A" - "B" 2019 $3,296,657 $1,462,469 $1,834,189 2020 $3,296,657 $1,499,030 $1,797,627 2021 $3,296,657 $1,536,506 $1,760,151 2022 $3,296,657 $1,574,919 $1,721,739 2023 $3,296,657 $1,614,292 $1,682,366 2024 $3,296,657 $1,654,649 $1,642,008 2025 $3,296,657 $1,696,015 $1,600,642 2026 $3,296,657 $1,738,416 $1,558,242 2027 $3,296,657 $1,781,876 $1,514,781 2028 $3,296,657 $1,826,423 $1,470,234 2029 $3,296,657 $1,872,083 $1,424,574 2030 $3,296,657 $1,918,885 $1,377,772 2031 $3,296,657 $1,966,858 $1,329,800 2032 $3,296,657 $2,016,029 $1,280,628 2033 $3,296,657 $2,066,430 $1,230,227 2034 $3,296,657 $2,118,091 $1,178,567 2035 $3,296,657 $2,171,043 $1,125,614 2036 $3,296,657 $2,225,319 $1,071,338 2037 $3,296,657 $2,280,952 $1,015,705 2038 $3,296,657 $2,337,976 $958,682 2039 $3,296,657 $2,396,425 $900,232 2040 $3,296,657 $2,456,336 $840,322 2041 $3,296,657 $2,517,744 $778,913 2042 $3,296,657 $2,580,688 $715,970 2043 $3,296,657 $2,645,205 $651,452 2044 $3,296,657 $2,711,335 $585,322 2045 $3,296,657 $2,779,118 $517,539 2046 $3,296,657 $2,848,596 $448,061 2047 $3,296,657 $2,919,811 $376,846 2048 $3,296,657 $2,992,806 $303,851 $98,899,716 $64,206,323 $34,693,394 1: State SRF Loan=$69 mn, i = 2.5%, 30-y term, 1st payment starts 1-y after construction completion 2: WWT = Wastewater Treatment Attachment E: Page 1 of 2 4/14/201411:16 AM Attachment E - Wastewater Treatment Fund Financing Analysis: Expense Impact by Contributing RWQCP Partner Agency Table 2 Year Palo Alto WWC Fund Mountain View Los Altos EPASD 1 Stanford Los Altos Hills 2019 $699,780 $691,318 $167,994 $158,120 $83,609 $33,368 2020 $685,825 $677,373 $164,389 $155,777 $81,364 $32,900 2021 $671,520 $663,080 $160,694 $153,375 $79,063 $32,420 2022 $656,858 $648,429 $156,906 $150,912 $76,704 $31,928 2023 $641,829 $633,413 $153,024 $148,389 $74,287 $31,424 2024 $626,425 $618,020 $149,045 $145,802 $71,809 $30,908 2025 $610,635 $602,243 $144,966 $143,150 $69,269 $30,378 2026 $594,451 $586,072 $140,786 $140,432 $66,665 $29,835 2027 $577,862 $569,496 $136,500 $137,646 $63,997 $29,279 2028 $560,859 $552,506 $132,108 $134,791 $61,262 $28,709 2029 $543,430 $535,091 $127,606 $131,864 $58,458 $28,125 2030 $525,566 $517,240 $122,991 $128,864 $55,585 $27,525 2031 $507,255 $498,944 $118,261 $125,789 $52,639 $26,911 2032 $488,486 $480,190 $113,413 $122,637 $49,620 $26,282 2033 $469,248 $460,967 $108,443 $119,406 $46,525 $25,637 2034 $449,529 $441,264 $103,350 $116,095 $43,353 $24,976 2035 $429,317 $421,068 $98,129 $112,701 $40,102 $24,298 2036 $408,600 $400,367 $92,777 $109,222 $36,770 $23,603 2037 $387,365 $379,148 $87,292 $105,656 $33,354 $22,891 2038 $365,599 $357,400 $81,669 $102,000 $29,852 $22,161 2039 $343,289 $335,107 $75,906 $98,254 $26,264 $21,413 2040 $320,421 $312,257 $69,999 $94,413 $22,585 $20,646 2041 $296,981 $288,836 $63,944 $90,477 $18,815 $19,860 2042 $272,956 $264,829 $57,738 $86,443 $14,950 $19,054 2043 $248,330 $240,222 $51,376 $82,307 $10,989 $18,229 2044 $223,088 $215,000 $44,856 $78,068 $6,928 $17,382 2045 $197,215 $189,148 $38,172 $73,723 $2,766 $16,514 2046 $170,695 $162,649 $31,322 $69,270 ($1,500) $15,625 2047 $143,512 $135,487 $24,300 $64,705 ($5,872) $14,714 2048 $115,650 $107,647 $17,103 $60,026 ($10,354) $13,779 $13,232,578 $12,984,811 $3,035,060 $3,440,313 $1,259,857 $740,775 1: East Palo Alto Sanitary District 2: WWC = Wastewater Collection Share Palo Alto Mountain View Los Altos EPASD Stanford Los Altos Hills FLOW 38.17% 38.14% 9.86% 6.41% 6.14% 1.28% CAPACITY 38.16% 37.89% 9.47% 7.64% 5.26% 1.58% Attachment E: Page 2 of 2 4/14/201411:16 AM Wastewater Major CIP & Organics Facility Plan Program Management & Projects Delivery First RFP Overall Program Management (Consultant)  Development of RFPs  Applying for Grants and Loans  Pre-Design Work on Components No. 2-4  Prepare Financing Plans and Timelines for Each Component Second RFP Component No. 1 Design (Possibly Design/Build) Third RFP Component No. 2 Design (Possibly Design/Build) Fourth RFP Component No. 3 Design/Build/Own/Operate/Maintain (Possibly Fewer Functions) (Possibly Outside Palo Alto & “No Project” Needed) Fifth RFP Component No. 4 Design/Build/Own/Operate/Maintain (Possibly Fewer Functions) (Possibly Outside Palo Alto & “No Project” Needed) Attachment G: List of Key terms Anaerobic Digestion (AD): Anaerobic digestion is a collection of processes by which microorganisms break down biodegradable material in the absence of oxygen Anthropogenic and biogenic greenhouse gas emissions: Anthropogenic GHG emissions originate from human activity, which are different from biogenic GHG emissions originating in the natural world. For example, the combustion of biogas from a digester is considered biogenic while the combustion of natural gas and other fossil fuels is considered anthropogenic. Bay Are Biosolids to Energy Project (BAB2E): The RWQCP is 1 of 19 partners in the Bay Area Biosolids to Energy Project (BAB2E). BAB2E is evaluating two technologies: AquaCritox by SCFI and gasification by MaxWest. MaxWest Environmental Systems, Inc., has been selected to enter into negotiations for a 20-year contract to design, build, own, and operate a biosolids management system to benefit BAB2E project. This commercial-scale gasification facility proposed by MaxWest Environmental Systems, Inc., will process 67,000 wet tons of biosolids per year. The facility will be hosted at a BAB2E coalition member’s site, though not in Palo Alto, and will also receive biosolids from neighboring Coalition members. MaxWest was not a proposer for the E/CF RFP. Biosolids: Biosolids is a term used to describe stabilized sludge, that is, the wastewater solids after treatment. The term sludge and wastewater solids are interchangeable; they refer to the residual material separated from the liquid stream in the wastewater treatment process. The solids are residual material prior to stabilization or pathogen removal. Biosolids is a term used to describe stabilized sludge, that is, the wastewater solids after treatment. Biosolids are highly regulated through the Environmental Protection Agency Title 40 Code of Federal Regulations Part 503 Rule (often referred to as the “503 Biosolids Rule”). Biosolids, which are high in organic carbon and nutrients, can be used as a fertilizer, land amendment, alternative daily cover for landfills, and as a fuel. Technically, wastewater solids off-hauled and not stabilized through treatment should be referred to as sludge or wastewater solids and not biosolids. Dewatering: Dewatering removes water from sludge so that AD systems are properly sized, to reduce hauling costs, and to maximize biogas production and treatment efficiency. Combining the pre- and post-dewatering into one building with reduced redundancy in dewatering equipment is feasible but increases risks from an operational reliability perspective. This option was suggested by a proposer. A fundamental reason for having separate facilities is that the THP and AD process provide a pathogen free exceptional quality biosolids product. Handling of these treated and untreated solids streams in the same building, and indeed with the same equipment, presents the opportunity for cross contamination; hence, staff recommends separating these systems and using separate and independently redundant equipment for pre- and post-dewatering. Dry Anaerobic Digestion: Much of the debate in the Measure E campaign revolved around the potential to use dry AD. The Feasibility Study in 2011 also looked at dry AD for much of the analysis. Since wastewater solids made up the majority of the material to be processed, dry AD was deemed infeasible. One E/CF RFP proposal included dry AD technology, but did not meet minimum qualifications and was not considered. Dry AD was also not likely to be an appropriate technology for the food scraps and yard trimmings only due to the ratio of the material. The dry AD facility recently constructed in San Jose has a yard trimming to food scrap ratio of 20:80, while the Palo Alto ratio of materials is closer to 50:50. This ratio would provide a low biogas yield, resulting in poor project economics. Gasification: Gasification is a thermal process using extremely high temperatures in the absence of oxygen that transforms a solid material into a synthesis gas that can be combusted to create energy. While gasification is a thermal process, it does not yield the same air pollutants as incineration. See BFP gasification Technical Memorandum on status of gasification for biosolids. Greenhouse Gas (GHG): Reported as annual metric tons (MT) of anthopogenic CO2-equivalent greenhouse gas emissions throughout staff report Mesophilic Wet Anaerobic Digestion: Mesophilic digestion takes place optimally around 30 to 38°C to develop proper micro-organisms – about the same temperature as the human body. State Revolving Fund (SRF): The State Water Resources Control Board Division of Financial Assistance administers the SRF loan program. The SRF loan can fund wastewater treatment projects. Between February 2005 and March 2014, SRF interest varied between 1.7 and 3.0% with an average of 2.37%, standard deviation of 0.29%; the interest rate used in the Biosolids Facilities Plan is 2.5%; between 1989 and January 23, 2014, the SRF loan term was capped at 20 years with limited exception; as of January 23, 2014, new SRF projects including the city’s biosolids project can take advantage of 30-year terms. Thermal Hydrolysis Process (THP): THP is a high temperature and pressure pretreatment process upstream of AD systems; the thermal hydrolysis step disintegrates cell structures and dissolves naturally occurring cell polymers into an easily digestible feed for AD; the pretreatment step occurs at a very high concentration and also makes the sludge more flowable, allowing a smaller digester volume and footprint, which is a significant advantage for the constrained 25-acre RWQCP site; THP increases organic biodegradability, yielding more biogas and energy and offsetting more GHG than other AD systems; THP yields a final dewatered solids at 30-40%, much higher than traditional AD systems at 18-25% solids, resulting in less hauling and land application costs; the final THP dewatered biosolids are sterilized and pathogen free due to 165C at 20 minute treatment. CAMBI, Norway, is one of the providers of THP technology. Other technology providers of THP do not have the same patents as CAMBI and are in earlier stages of development (e.g,. Veolia Kruger Exelys); staff will continue to monitor other THP technology providers. MEMORANDUM Date: April 28, 2014 To: James Keene, City Manager From: Mike Sartor, Public Works Director Subject: Direct Staff to Pursue the Four-Component Organics Facilities Plan Council Members: This memo supplements Item #11 Staff Report: Directing Staff to Pursue the Four-Component Organics Facilities Plan (ID# 4550) on the April 29, 2014 Council Agenda. It provides Council with alternative recommendations should Council desire to direct a more immediate implementation of local aerobic composting of yard waste on the Measure E site. At this stage, Staff is not issuing a new Staff Report changing its recommendations, but these alternative recommendations have been vetted by staff and are acceptable from an operational standpoint, should Council decide to direct implementation. The Original Energy/Compost Request for Proposals (E/C RFP) and Technology Issues In light of the passage of Measure E, and the hope by many that a single emerging technology existed that would treat wastewater biosolids, food scraps and yard trimmings together, Council authorized a very broad RFP to seek out private sector proposals which would accomplish this goal. It was hoped that Palo Alto’s interest and a fast changing technological infrastructure would result in interesting new proposals and the RFP was structured more than anything else to test the market place and attempt to quantify pricing for such emerging technologies. However, the proposals received did not, for the most part, include new technologies. Instead, the proposals utilized wet anaerobic digestion (WAD) for biosolids, an old and well established technology utilized by most sewage treatment plants in the United States. At the same time, Palo Alto was using a consulting engineering firm (CH2M-Hill) to develop a Biosolids Facilities Plan to eliminate the Plant’s incinerators. The results reinforced the choice of WAD. CH2M-Hill recommended coupling WAD with Thermal Hydrolysis (TH) to release more energy from the biosolids, as did one of the responders to the RFP. Both on-site responders and CH2M-Hill recommended pre-processing food scraps so that they could be added to the WAD, and produce more methane. All responders and the research done by Staff concluded that aerobic composting was the best technology currently available for yard trimmings. Aerobic composting is the choice of most facilities, including the private sector facility near Gilroy that takes Palo Alto’s yard trimmings. In short, we have learned that there is no single process, nor is there a feasible emerging new technology, which can accept all 3 waste streams. Rather, the best path forward is utilizing established technologies: TH and WAD for biosolids and food and aerobic composting for yard trimmings. Through the RFP, staff has also concluded that mixing food stock and/or bio solids with yard trimmings would 1 degrade the compost and limit its ability to be used for residential use and other crop and food use. Therefore Staff is recommending an Organics Facilities Plan (OFP) which combines what we have learned into this 4-component plan. Public or Private Ownership and Operation Because Staff is recommending, for the most part, well-established technologies (as described above), it no longer appears wise to have all components of the OFP owned and operated by the private sector, as envisioned in the original RFP. The original RFP (the E/C RFP) anticipated the use of emerging, more risky technologies. That risk could be avoided by the City through private sector ownership and operation albeit with a higher cost. However, with the choice of less risky technologies, and the advantages of public sector financing, Staff is now recommending City ownership and operation of the Dewatering and Truck Off-Haul facility and the WAD facility. Private sector ownership and operation of the Food Preprocessing and Yard Trimmings Composting bears further consideration as project development continues. Staff has received several comments on the Net Present Value Staff calculated for the cost of the OFP and agrees that the value is not correct and is in the process of modifying its estimate. The new estimate is likely to be approximately 10% higher and will not change the Staff Report conclusions. Cancelling the Existing E/C RFP and Re-Issuing a More Narrowly Tailored RFP Since Staff is now recommending an Organics Facilities Plan (OFP) which is much more focused on specific, well-established technologies, it is recommended that the existing E/C RFP be cancelled. The existing RFP is significantly different from the new recommended plan (the OFP) and could expose the City to bid challenges if Staff did not select the top ranked proposer or negotiated a contract with any of the current proposers that varied significantly from their original proposals. Staff anticipates that a new, narrowly tailored RFP that incorporated the current OFP (with key modifications discussed below) could be prepared in short order. The existing proposers could modify their proposals to match the OFP and resubmit in response to a new RFP in a short period of time. The new RFP would specify the facilities which are to be City owned and operated. Staff has reached out to the existing proposers and at least two of them have expressed an interest in re-submitting a proposal. In addition, now that the technology has been identified, staff believes there will be additional proposers and that a more competitive price can be achieved. Finally, as the RFP will involve a more traditional technology, staff anticipates that some of the proposal terms and conditions and risk allocations can be relaxed further increasing the likelihood of reduced pricing. Alternative Recommendations to the Staff Report Recommendations In order to address some of the concerns regarding a quicker implementation of dry aerobic composting of yard trimmings, Staff is providing Council with Alternative Recommendations. These Alternative Recommendations add two key provisions to the Staff Report Recommendations. First, they specify that a new RFP will be immediately issued to replace the existing one. The new RFP would specify which facilities are to be City Owned and Operated. The current proposers could modify their proposals to match the OFP and resubmit in response to the new RFP in a short period of time. Adding this provision addresses the concern that it will consume too much time to issue multiple RFPs as envisioned by the OFP. The second and more controversial added provision is that the new RFP would express a preference that the relatively flat (3.8 acre) portion of the Measure E Site be used for yard trimmings processing. The community’s comments continue to be split over this issue, with some of the community opposed, and 2 some in favor of use of this land for a compost facility for yard trimmings. Because CEQA compliance has not yet been achieved for a facility on the Measure E site, Council cannot make a final decision with respect to this use. Council can, however, issue an RFP that states its preference to explore aerobic composting of yard trimmings on the 3.8 acre flat portion of the Measure E site and that this RFP be issued immediately. The Alternative Recommendations are shown below. 1a. Cancel the “Energy/Compost Facility or Export Option for Food Scraps, Yard Trimmings, and Biosolids” Request for Proposals (E/CF RFP). 1b. Immediately reissue a substitute RFP for implementation of Components #2-4 (Anaerobic Digesters; Food Preprocessing; Yard Trimmings Composting) of the Organics Facilities Plan (OFP, Attachment A). The RFP shall express a preference that the relatively flat portion (3.8 acres or less) of the Measure E Site shall be used for Aerobic Composting of Yard trimmings (Component #4). No later than December 2014, Staff shall return to Council with recommendations to commence CEQA work and negotiate a contract(s) with the top- rated proposer(s). 2. Begin to pursue the Organics Facilities Plan (OFP, Attachment A) by hiring a Program Management firm. Should there be any differences between the OFP and the Recommendations adopted by Council, the Recommendations shall govern. 3. Apply for a State Water Resources Control Board State Revolving Fund (SRF) loan for Component One of the Organics Facilities Plan (OFP). 4. Initiate design of Component One of the OFP, Biosolids Dewatering and Truck Haul-Out Facility, including direction to prepare related modifications to the Regional Water Quality Control Plant (RWQCP) partner agency agreements. 5. Initiate the answering of predesign questions associated with Component Two, Development of a Thermal Hydrolysis Process Wet Anaerobic Digestion (THP AD) facility, at the RWQCP; Component Three, Food Scrap Preprocessing; and Component Four, Yard Trimmings Processing of the OFP, including the following: a. Determine the price of electricity that the RWQCP will receive for power generated by the facility; b. Establish the optimum size of the THP AD facility built to accommodate biosolids for a 30- year planning horizon as well as capacity for food scraps, which Palo Alto and any other jurisdiction would commit to bring to the facility; c. Establish a list of contributing partner agencies who commit to bring food scraps to the facility; d. Initiate a financing plan for Component Two of the OFP; e. Determine the appropriate purchasing and project delivery mechanisms that should be utilized to develop the OFP; and f. Determine the required CEQA documentation for the Components of the OFP. 6. Update the existing timeline and schedule in December, 2014 for all Components of the OFP. 3 COMPLETE TEXT OF MEASURE E PALO ALTO GREEN ENERGY AND COMPOST INITIATIVE The people of the City of Palo Alto do ordain as follows: FINDINGS 1. The 126-acre Palo Alto Landfill is scheduled to close in 2012, and is currently designated as part of Byxbee Park. 2. The closing will terminate the current composting operation at the landfill. Ceasing local composting will cause significant environmental impacts, as Palo Alto ("the City" herein) will have to haul yard trimmings and food waste to locations outside the City for disposal or composting, thereby generating greenhouse gases and depriving Palo Altans of both yard trimming drop-off and local compost. 3. The incineration of sewage sludge residues at Palo Alto's regional wastewater treatment plant also generates significant greenhouse gases and creates a hazardous ash residue now disposed of in the Central Valley. 4. These adverse environmental impacts can be substantially reduced by applying biological conversion technologies. 5. Such technologies would also generate renewable energy and high-quality compost, as well as achieve substantial savings by avoiding the cost of natural gas to operate the incinerator. COMPLETE TEXT OF MEASURE E • Continued "All that certain real property situated in the City of Palo Alto, County of Santa Clara, State of California and more particularly described as "follows; commencing at a four by four fence post as shown on that Record of Survey filed with the Santa Clara County Recorder in book 258 page 4 and 5 on August 15th 1969; thence from said four by four fence post, South 88° 58' 50" East 415.54 feet; to a point on the southerly line of the Sewage Treatment Plant Parkland exclusion as said exclusion is shown on Exhibit A-2 of Section 22.08.020 of the Palo Alto Municipal Code, said point also being the True Point of Beginning for this description; thence from said True Point of Beginning the following four (4) courses and distances; south 36° 42' 20" East 209.06 feet; south 41 ° 31' 45" East 276.48 feet; south 53° 12' 33" East 180.61 feet; north 50° 22' 18" East 652.20 feet; thence North 41 0 35' 41" West 633.72 feet to a point on said southerly line of the Sewage Treatment Plant Parkland exclusion; thence along said Sewage Treatment Plant Parkland exclusion, South 52~ 42' 10" West 671.94 feet, to the True Point of Beginning." An illustration of the Property is attached as Exhibit "A." 6. Revenue for the City could be generated through the sale of renewable energy and compost, fees for receipt of organic materials, and savings in fuel purchases. Funding for construction could come from sources other than the General Fund. 2. Plan Amendments. 7. Locating the facility next to the wastewater treatment plant, as 3. recommended by Palo Alto's Blue Ribbon Task Force, would avoid transport of sewage sludge and allow other savings. There is no other suitable location in the City. 8. The facility would require that a small portion of the former landfill not yet developed as usable parkland, about ten acres, 4. be removed from park dedication. 9. The Council may compensate for the aforesaid removal by dedicating other areas of equal or greater acreage to parkland. 10. No funding currently exists for development of Byxbee Park. The Comprehensive Plan, Baylands Master Plan, and Zoning Ordinance shall be amended to be consistent with the purpose described in Enactment 1. Reversion Ten years from the passage of this Initiative, the City Council may rededicate any portion of the Property not utilized for the purposes of this Initiative to parkland. Mitigation The Facility shall include the best available and practical methods for mitigating all visual, sound and odor impacts. To avoid impacts on Byxbee Park, access to the Facility shall be by Embarcadero Way. The Council could use the revenue generated as described in Finding 6 for that purpose. 5. Severabilitv ENACTMENTS 1. Removal from Parkland. The real property described below (the "Property" herein) shall be removed from dedication as parkland, for the purpose of building a biological conversion facility ("Facility" herein) to handle yard trimmings, food waste and/or sewage sludge from the regional wastewater treatment plant: PR·8605-2e If any section of this initiative ordinance or part hereof is held by a court of competent jurisdiction in a final judicial action to be void, voidable, or unenforceable, such section or part hereof shall be deemed severable from the remaining sections and shall in no way affect the validity of the remaining sections. N SC Ballot Type 002· Page 13 COMPLETE TEXT OF MEASURE E • Continued PR-8605-3e ARGUMENT IN FAVOR OF MEASURE E Forty years ago, before climate change was an issue, "City Counci.l dedicated our dump to be added to 8yxbee Park upon closure, which happened in July. Today's need for clean energy and the threats of climate change are the great issues of our era, demanding fiscally responsible action. In this context, the current plan for handling our organic waste no longer makes sense. It includes: • Hauling yard waste 53 miles away to Gilroy, emitting tons of greenhouse gases and incurring steadily higher fuel and disposal costs. • Continuing to incinerate our sewage sludge, which uses over $1 million worth of energy per year while releasing thousands of tons of harmful emissions. Measure E offers a financially and environmentally sound alternative. It will enable the use of 10 acres of the former dump-only 8% of its 126 acres, right next to the sewage treatment plant-for the exclusive. purpose of building a facility that converts our organic waste into compost and renewable energy. If City Council determines a new facility is not cost-effective, they may rededicate the lan~ as park after 10 years, or sooner with a public vote. Disposing of waste costs money: The question is which option would cost the least and be best for the environment. The Feasibility Study commissioned by City Council found that building a composting facility in Palo Alto would likely save the City at least $18 million dollars over 20 years. Other benefits: . • Reducing our greenhouse gas emissions by as much as 13,000 tons per year compared to the alternatives, the equivalent of taking 1,700 cars off the road or planting 1,000,000 trees. • Producing enough local renewable energy to power 1,400 homes. Help create a sustainable future for Palo Alto. Vote YES on Measure EI N SC Ballot Type 002 • Page 14 ARGUMENT IN FAVOR OF MEASURE E • Continued www.pagreenenergy·org lsI Patrick Burt Council Member. City of Palo Alto lsI Ellen Fletcher Former Vice Mayor. City of Palo Alto lsI Donald Kennedy President Emeritus. Stanford University lsI Dana Tom Board Member. Palo Alto Unified School District lsI Peter Drekmeier Former Mayor. City of Palo Alto PR·8605-4e REBUTIAL TO ARGUMENT IN FAVOR OF MEASURE E Vote NO on Measure E! Palo Alto adopted a "sustainable future" in 1965 when voters dedicated all parks. including our Baylands. to protect them from industrial and public works developments. Misleading Information. "Climate Change" is shamelessly being misapplied to sell us a waste processing plant in our Baylands -the same way High Speed Rail was used to sell us "low cost" transportation. Just like High Speed Rail. this proposed project will certainly exceed its cost and greenhouse g~s projections. and will have unforeseen environmental impacts. Exaggerated Greenhouse Gas Savings. All 32 waste disposal options analyzed generate greenhouse gases. The differences are minimal. ranging from -1134 to +2200 tons. Our waste hauler will take yard waste 6 miles to SMaRT in Sunnyvale. Food scraps go 12 miles to San Jose. Only 3 trucks will go daily from SMaRT to Gilroy. Our Compost Task Force found transportation GHG emissions a minor issue. Sewage Sludge Incinerator Argument Irrelevant. Palo Alto plans to retire its incinerator and process sewage sludge using modern technology on the Sewage Plant site. Most of the attainable green energy will come from that. No parkland required. Uncertain Technology. Proponents' "benefits" rely on unproven technology that has never been used anywhere in the world for sewage sludge. This would require building a costly and technologically risky pilot plant. The next likely technology costs at least $33 million more than Palo Alto's planned regional solution. Don't give up irreplaceable parkland for this expensive, risky, and unnecessary experiment. Vote NO on Measure EI www.savethebaylands.org lsI Lanie Wheeler Mayor 1996 IslVicky Ching President. Ming's lsI Mike Cobb Mayor. 1986. 1990 lsI Karen Holman City Council Member lsI Emily M. Renzel Council member 1979-91 and Coordinator, Baylands Conservation Committee N SC Ballot Type 002 • Page 15 ARGUMENT AGAINST MEASURE E VOTE NO. Don't undedicate 10 acres of our 8aylands park. When the government looks to our parks for public works projects, and voters allow it, NO park will ever be safe from such land grabs. Once Irreplaceable parkland is gone, It's gone forever. VOTE NO. ·It costs too much. This industrial waste processing facility: • costs up to $169 million over 20 years • has NO profits • provides only 1 % of city's power demand at a huge cost REBUTTAL TO ARGUMENT AGAINST MEASURE E Opponents of Measure E use scare tactics and misinformation to distort the facts. Palo Alto voters can't be so easily fooled. City Council commissioned an exhaustive feasibility study to determine the objective facts about processing our organic waste. The r~port analyzed eight alternatives and found that building a composting facility in Palo Alto would produce the most renewable energy (valued at $1.5 million per year), reduce the greatest amount of greenhouse gases, and likely save millions of dollars. The report is available at http://tinyurl.com/PAGreenEnergy. . • forces public service cuts and raises refuse rates far into future Vote Yes. The site, referred to by opponents as "our Baylands park," is derails the city's future green processing of sewage sludge at a recently clqsed dump right next to the sewage treatment plant. You • its current facility can view photos at www.PAGreenEnergy.org. vqTE NO. Don't dig up old garbage. • Over 2 million cubic feet of old garbage would be dug up • This garbage would be spread on our remaining parkland • Excavated garbage would release tons of methane, a potent greenhouse gas . VOTE NO. We already have a cost effective proven regional solution. Since 1992, over 80% of our refuse has been disposed of regionally. Less than 16% of our waste is expected to be processed by this facility. Our own waste hauler is building a modern processing facility just 12 miles away. Why spend scarce public funds on a redundant facility here? Why sacrifice parkland and take huge financial risks when we are part of an affordable regional solution? "Taking care of our waste locally" is impractical and unattainable. VOTE NO. Don't undedicate 10 acres of our 8aylands park. This Vote Yes. Opponents' claim that 80% of Palo Alto's waste is already being exported is misleading; that figure includes mostly non-recyclable trash. A composting facility In Palo Alto could process 100% of our organic waste locally, turning it into valuable resources for our community. ' Vote Yes. Opponents base their argument on an oversized project that is unnecessary for Palo Alto's needs. It includes a rent charge that is eight times that proposed by the City's independent appraiser. A realistic project would save us $1 million per year. Refuse rates will be lower than with the alternatives. Measure E simply gives our City options to choose the best technology and design. A project will proceed only with Council approval after full environmental and economic review .. initiative used misleading information. There is: We can't afford to lose this once-in-a-lifetime opportunity. • NO project or approved design • NO true cost estimate Vote YES on EI • NO real source of funding • NO comprehensive environmental review This is a dangerous· land grab precedent and it reneges on park commitments made to Palo Alto residents. VOTE NOI Save the Baylands www.savethebaylands.org lsI Sid Espinosa Mayor, City of Palo Alto lsI Judith G Kleinberg Mayor, 2006 lsI Gary Fazzino Former Mayor lsI Greg Schmid City Council Member lsI Enid Pearson Vice Mayor 1975 and Chair, Save the Baylands Committee PR-8605-5e www.PAGreenEnergy.org lsI Larry Klein Council Member and Former Mayor, City of Palo Alto lsI Walter V. Hays Chair, Sustainable Schools Committee lsI Deborah D. Mytels Former Executive Director, Peninsula Conservation Center Foundation lsI Stephen Levy Director, "center for Continuing Study of the California Economy lsI Jim Burch Former Mayor, City of Palo Alto N SC Ballot Type 002 • Page 16 I \ ARGUMENT AGAINST MEASURE D Binding Arbitration is a fair system to settle disputes for Police Officers and Firefighters. The Citizens of Palo Alto vote was 57.2 % to 42.8 % to place Binding Interest Arbitration in the City Charter in 1978. The repeal of binding arbitration would undo 33 years of a system with a proven track record that works. Police officers and Firefighters do not have the right to strike; binding arbitration is the best alternative and remedy for the City and its public safety officers. In the Palo Alto City Charter it states both, the City or the employees, could call for arbitration. Under the arbitration process the City and the employees would name one member of the three- member arbitration board, and their designees would agree on a neutral arbitrator to be chairperson. Each. side would present its "last best offer" and the arbitrators would be empowered only to choose one or the other, this provision is an incentive to negotiate to as close a position as possible. The City Charter requires the arbitrators take into account the City's financial ability to pay before issuing a decision. Twenty-six states and twenty two California cities provide binding interest arbitration. The state of Wisconsin eliminated employee's collective bargaining rights recently but kept intact binding interest arbitration for their police officers and firefighters. Binding Arbitration, in the rare occasions that it has been used since 1978, has proven to be a fair resolution process for the City, police and firefighters. Join respected city leaders and citizens for a fair process and Vote No on repeal of Binding Interest Arbitration. lsI A. Yiaway Yeh Vice Mayor of Palo Alto lsI Gail A. Price Councilmember City of Palo Alto lsI John Barton Former City Council Member lsI LaDoris H. Cordell Former City Councilmember and Retired Judge lsI Richard Alexander AttorneylResident 35 years PR·8604-4e REBUTTAL TO ARGUMENT AGAINST MEASURE D Since binding arbitration was added to the City Charter in 1978, conditions have changed. Escalating employee costs are outpacing cities' ability to generate revenue. Binding arbitration restricts the ability of the City Council to manage employee costs and make Significant financial decisions. • When impasse is declared by either party during negotiations for wages, benefits, hours, or working conditions, a third party arbitrator makes the final decision. The arbitrator sides with one party or the other, no compromise is permitted. Binding arbitration ends negotiations. • Since 2010 all other city employees have reduced their compensation and benefits while firefighters received two 4% raises and police received a 6% raise. Fire and police budgets have grown 12% since 2009 while other City departments have. taken cuts. Pension costs for fire and police are projected to grow 34% between 2009 and 2012. If the City cannot achieve equitable public safety compensation reductions, balancing the budget will depend on cuts iii other departments and reduced City services. • Other essential employees, like utility safety workers do not have binding arbitration and yet cannot strike. These differences are not fair to other City employees, and are not fair to Palo Altans. Palo Alto's residents rely on the City Council to make financial decisions considering both short and long term economic impacts. Binding arbitration puts the City at risk of forcing deeper cuts to all other city services. Restore fairness and fiscal responsibility. Vote Yes on Measure D -Repeal Binding Arbitration lsI Annette Glanckopf Chair, Palo Alto Emergency Preparedness lsI Samir Tuma Co-Chair, Measure A School Campaign Is/vicky Ching Owner, Ming's Chinese Cuisine lsI Larry Klein Palo Alto Council Member and Former Mayor. lsI Bern Beecham Former Mayor, City of Palo Alto N SC Ballot Type 002 -Page 11 Carnahan, David From: Sent: To: Subject: May7,2014 Emily Renzel <marshmama2@att.net> Wednesday, May 07, 2014 11:12 AM Council, City Please adopt the Staff's original four point OFP Mayor Shepherd and Members of the City Council: CITY OF PALO ALTO. CA 81TY etl!f\H 5 OFF ICE lit flAY -7 Afflf: 21 Implementation of the Staff recommended Organics Facilities Plan could be a $100 million infrastructure project and should be pursued along the deliberative lines of the original staff recommendation, NOT in a pressure cooker environment created by the zeal to immediately use the Measure E site for yard trimmings in the hastily concocted alternative recommendation. Promises .... Promises ... Measure E folks made many promises, making it unclear just what tipped the balance with voters. For example, Peter Drekmeier said on 8/26/2011, "Measure E simply gives our City options to choose the best technology and design. A project will proceed only with Council approval after full environmental and economic review." That implies that YOU are going to do your job in regard to finances and full CEQA review, not just what THEY tell you to do. In addition, the ballot argument said "If City Council determines a new facility is not cost-effective, they may rededicate the land as park after 10 years, or sooner with a public vote." Voters have reason to expect YOU to make sure any project is cost-effective. The Green Energy website promised erroneously that money saved by their proposals could be used to improve Byxbee Park. The Regional Water Quality Control Plant and Refuse Fund are Enterprise Funds subject to Proposition 218. Charges must relate to the cost of service being provided to each customer class. Profit is not allowed. Money saved, if any, must accrue to the ratepayers, not to the General Fund or the improvement of Byxbee Park. Another false promise. As the Council well knows from the Mitchell Park Library debacle, a low bid does not necessarily mean a quality job. Factors such as track record, economic security, and technical competence are vital to our infrastructure projects and should be fully and carefully considered accordingly. In May 2009 Harvest Power, then one year old, made a presentation to the Council regarding using DRY anaerobic digestion for all three organic streams. In regard to yard trimmings, they said, "Brokering compost to an existing com poster m!ly be preferable to creating a stand-alone screening, product storage, marketing, and sales operation." Council should heed that caution. Please adopt the original Staff recommendation. Sincerely, Emily M. Renzel, Coordinator Bay lands Conservation Committee 1056 Forest Avenue Palo Alto, CA 94301 1 Carnahan, David From: Sent: To: Subject: May7,2014 Emily Renzel <marshmama2@att.net> Wednesday, May 07, 2014 11:12 AM Council, City Please adopt the Staff's original four point OFP Mayor Shepherd and Members of the City Council: CITY OF PALO ALTO. CA 8JTY etel\f( 5 OFF ICE lit flAY -7 Afi''': 2' Implementation of the Staff recommended Organics Facilities Plan could be a $100 million infrastructure project and should be pursued along the deliberative lines of the original staff recommendation, NOT in a pressure cooker environment created by the zeal to immediately use the Measure E site for yard trimmings in the hastily concocted alternative recommendation. Promises .... Promises ... Measure E folks made many promises, making it unclear just what tipped the balance with voters. For example, Peter Drekmeier said on 8/26/2011, "Measure E simply gives our City options to choose the best technology and design. A project will proceed only with Council approval after full environmental and economic review." That implies that YOU are going to do your job in regard to finances and full CEQA review, not just what THEY tell you to do. In addition, the ballot argument said "If City Council determines a new facility is not cost-effective, they may rededicate the land as park after 10 years, or sooner with a public vote." Voters have reason to expect YOU to make sure any project is cost-effective. The Green Energy website promised erroneously that money saved by their proposals could be used to improve Byxbee Park. The Regional Water Quality Control Plant and Refuse Fund are Enterprise Funds subject to Proposition 218. Charges must relate to the cost of service being provided to each customer class. Profit is not allowed. Money saved, if any, must accrue to the ratepayers, not to the General Fund or the improvement of Byxbee Park. Another false promise. As the Council well knows from the Mitchell Park Library debacle, a low bid does not necessarily mean a quality job. Factors such as track record, economic security, and technical competence are vital to our infrastructure projects and should be fully and carefully considered accordingly. In May 2009 Harvest Power, then one year old, made a presentation to the Council regarding using DRY anaerobic digestion for all three organic streams. In regard to yard trimmings, they said, "Brokering compost to an existing composter mllY be preferable to creating a stand-alone screening, product storage, marketing, and sales operation." Council should heed that caution. Please adopt the original Staff recommendation. Sincerely, Emily M. Renzel, Coordinator Baylands Conservation Committee 1056 Forest Avenue Palo Alto, CA 94301 1 CITY OF PALO ALTO OFFICE OF THE CITY ATTORNEY May 12, 2014 The Honorable City Council Palo Alto, California Discussion and Council Direction Regarding Potential November 2014 Charter Amendments Related to Council Seats, Including Term Limits, Beginning/End of Council Terms and Annual Reorganization Meeting, and Other Matters Recommendation Council should consider the recommendations of the Policy & Services Committee and provide direction to staff regarding any Charter or other legislative changes Council would like to make with respect to Council seats and governance matters, including: 1. Term Limits 2. Beginning and Ending of Council Terms and Scheduling of the Annual Reorganization Meeting 3. Other Matters, including possibly “Full Time” Service, Compensation, Districts, Direct Election of Mayor, or related matters Background In 2013, the Council raised several proposals for changes to Council seats, terms and other aspects of Council composition and structure. This report brings those issues back to Council for further discussion and direction. A Colleagues’ Memo dated February 4, 2013 (Klein, Schmid) expressed concern that in odd numbered years, when new Council Members begin service, there is a “gap” between January 1 and the first Monday business meeting in January, during which time Palo Alto does not have a full nine Council Members sworn and ready to conduct business, should an emergency arise.1 The Colleagues’ Memo also commented that the Council’s typical practice of using a regular Monday business meeting exclusively for ceremonial purposes means that important policy matters are not taken up until mid or late January. The Memo recommended that Council set the first business day of the calendar year as the date for the swearing in of new Council Members, the election of Mayor and Vice Mayor and the recognition of departing Council Members/Mayor/Vice Mayor, with no other business transacted at the meeting. Council considered the Colleagues’ Memo on February 4, 2013 and referred the item to Policy & Services for further consideration. 1 Palo Alto has an Emergency Standby Council, established annually and composed of former Council Members that can be activated to vote as Council Members in an emergency situation. Page 2 On March 19, 2013, Policy & Services (Kniss, Klein, Holman & Price) heard the item and made the following recommendations: 1. Recommend that Council do all things reasonable and necessary to have newly elected Council Members sworn in on January 1st, and that the City Clerk make that a part of the package given to all candidates (4-0) 2. Recommend that the reorganizational meeting for election of Mayor and Vice Mayor in odd numbered years take place on the first business day in January (3-1, Kniss no) 3. Recommend that Council consider an amendment to the Charter to eliminate the “gap” problem (4-0) Also in the Spring of 2013, a second Colleagues’ Memo (Price, Kniss, Shepherd) recommended that Council consider a Charter Amendment to: (a) change Council term limits from no more than two consecutive terms, to no more than three consecutive terms, (b) reduce Council size from nine to seven members, and (c) consider other possible changes. The Memo commented that the two-term limit can restrict Palo Alto’s ability to secure leadership positions on important regional boards, and noted that Santa Clara County voters had recently increased permissible terms for County Supervisor to three. Regarding the number of seats, the Memo noted that it is unusual for a mid-sized city to have nine council seats, and that seven might provide a better balance between effectiveness and distribution of responsibilities. The Memo encouraged Council to consider reducing the Council to seven members in a future cycle, potentially fall of 2018. On June 3, the Council took up the 2nd Colleagues’ Memo and the recommendations from Policy & Services on the timing of the Council reorganization. The Council directed: 1. The City Attorney should draft language for a Charter Amendment that would extend terms from two to three, and, in the alternative, language that would eliminate term limits. 2. Staff should return for further discussion of all remaining items, including reduction of seats, compensation, any other matters including options for immediate or phased implementation of any changes. This item returns these issues to the Council for further discussion and direction. Discussion Procedural Requirements Charter Amendments. A Charter amendment would be required to change term limits, the number of seats, and the beginning/end of council terms. A charter amendment would also be required to increase council member compensation above the amounts authorized for general law cities. Council may put such a Charter amendment on the November 4, 2014 ballot. The Page 3 final date to call a local election and put a matter on the ballot is August 8th. Charter amendments require voter approval. A simple majority (50% of votes cast, plus 1) is required. Ordinances, Resolutions and Procedures. Other potential changes are within the Council’s authority to enact. Changes in the timing of the Council’s ceremonial meeting can be adopted by policy direction, resolution or amendment of the Council’s Procedures. Adjustments to Council compensation could be adopted by ordinance if they fall within the amounts authorized for general law cities, or put to a vote of the people if the Council so directed. Implementation of Changes. A Charter amendment is effective upon declaration of the canvass of results and transmission to the Secretary of State. If the Council wishes, however, language can be inserted into the Charter amendment providing that changes be implemented at a later date. Whether to do so is a policy matter for the Council to determine. Sitting council members have no vested right to continue in office under the same terms that applied at their election. Voters may amend the Charter to change the number of seats, term limits, and timing of terms, and may make those changes applicable to sitting members. Issue #1: Term Limits The Council requested language for two potential Charter amendments: (a) extending term limits from two to three; and (b) eliminating term limits. The operative language is contained in Charter Article III (Council), Section 2 (Number – Term). The following amendment would extend permissible terms from two to three: Sec. 2. Number - Term. Commencing July 1, 1971, said council shall be composed of nine members, each of whom shall be an elector and shall have been a resident of the city of Palo Alto for at least thirty days next preceding the final filing date for nomination papers for such office. The members of said council shall be known as councilmen, councilwomen, or council members and their terms of office shall be four years, commencing on the first day of January next succeeding their election. The terms of council members who took office on July 1, 1977, shall expire on December 31, 1981. Commencing January 1, 1992, no person shall be eligible to serve consecutively in more than two full terms of office as a member of the council. Any partial term of office longer than two years shall be deemed a full term. Terms of office commenced before January 1, 1992, shall not be counted when determining eligibility under this section. No Council Member shall serve more than three consecutive full terms of office. Any partial term of office longer than two years shall be deemed a full term. In the alternative, the following amendment would eliminate term limits: Page 4 Sec. 2. Number - Term. Commencing July 1, 1971, said council shall be composed of nine members, each of whom shall be an elector and shall have been a resident of the city of Palo Alto for at least thirty days next preceding the final filing date for nomination papers for such office. The members of said council shall be known as councilmen, councilwomen, or council members and their terms of office shall be four years, commencing on the first day of January next succeeding their election. The terms of council members who took office on July 1, 1977, shall expire on December 31, 1981. Commencing January 1, 1992, no person shall be eligible to serve consecutively in more than two full terms of office as a member of the council. Any partial term of office longer than two years shall be deemed a full term. Terms of office commenced before January 1, 1992, shall not be counted when determining eligibility under this section. If no language is included establishing an alternative implementation schedule, these amendments, if adopted by the voters on November 4th, would be effective in December 2014. This means they would apply to all sitting and future Council Members. If the Council directs, language can be drafted to provide for a later implementation date. Issue #2: Beginning and End of Terms; Scheduling of the Annual Reorganization Meeting The City Charter provides that Council terms begin on January 1st and end on December 31st. New Council Members may take the oath of office at any time on or after 12:01 a.m. on January 1. The oath cannot be administered effectively before January 1. Taking the oath of office is a prerequisite to taking official action as a Council Members. Council Members must be sworn in person, but not necessarily in a public ceremony; the oath may be taken privately. Typically the Clerk administers the oath, though other officials may be deputized to perform this duty.2 The City’s administrative offices are typically closed during the last week of December and on January 1. The City’s current practice is to swear in new Council members, elect the Mayor and Vice Mayor, and recognize outgoing Council Members for their service at the first Monday business meeting in January. No other official business is conducted at that meeting. The discussion at Council and Policy & Services centered around three goals: (1) eliminating or reducing the number of days when fewer than 9 Council Members are sworn and immediately ready to take official action, a problem that is primarily caused by the Charter language fixing the transition date as January 1st, which is a holiday; (2) allowing the new Mayor to make 2 At the federal and state level, it is relatively common for newly elected officials to take the oath privately at the earliest possible time, followed by a ceremonial public swearing in at a more convenient time. Page 5 assignments and appointments earlier in January; and (3) freeing up an additional Monday meeting for policy matters. Policy and Services made three recommendations, which are listed above. The first two recommendations can be adopted together or separately. They require only an action of Council giving policy direction. The Committee’s third recommendation – to consider amending the Charter to address the “gap” – could result in a system that provides for an earlier and more seamless transition between outgoing and incoming Members in December and the elimination of the potential “gap.” Such an amendment would also give Council the ability to elect the Mayor and Vice- Mayor in December, allowing the Mayor to make early assignments and freeing up an additional Monday in January for policy matters. If Council wishes to pursue a Charter amendment, we recommend the Charter be amended to:  Provide that Council terms begin on the first regular meeting of the Council that occurs after the canvass of the returns of the election and the declaration of results by the agency or officer authorized to make the declaration.  In addition, provide that council members hold office until successors are elected and qualified.  Provide for earlier selection of Mayor and Vice Mayor (current Charter Article III, Section 8 requires selection at first meeting in January). Under state law, the County Registrar of Voters completes the canvass of returns within 28 days. The County transmits the results to the City Clerk, who issues the declaration of results. This usually occurs in late November or early December. If the Charter were amended as described above, the first regular Council meeting after the Clerk’s declaration would mark the transition of terms. The Council would adopt the Resolution declaring the results, then the new members would be sworn.3 If for some reason a regular meeting were not held in December, terms of outgoing members would continue until a regular meeting is held, resulting in no “gap.” This approach to council transition is the one used by general law cities and by a number of neighboring charter cities. Other charter cities use the first regular meeting in January or a fixed date (typically January 1st) for the transition to occur. These approaches are alternatives that Council may wish to consider. Other Issues Related to Council Seats/ Governance Matters 3 Note that while the taking of the oath is a prerequisite to exercising official authority, it is not an element of “election and qualification” for office. Under the proposed Charter amendment, the term of newly elected council members would begin on the first regular meeting after the canvass of results and Clerk’s declaration. Page 6 In addition to these items, various Council Members and/or members of the community from time to time have raised additional questions about the organization and function of the Palo Alto Council. These include: 1. Should the Council be reduced from nine members to seven. 2. Should Council service be considered “full time,” with or without adjustments to compensation. Normally charter cities are not subject to State law limits on council member compensation. Palo Alto’s Charter however provides that council member compensation shall not exceed State law. Any compensation adjustments within the State law cap can be adopted by ordinance. Adjustments in excess of the State law limit would require a Charter amendment. 3. Should some or all Council Member seats be chosen by district as opposed to the City at-large. 4. Should voters elect the Mayor directly, for a four-year term. In addition, if the Council decides to place a Charter amendment on the ballot, the City Clerk recommends eliminating the requirement that the order of candidates’ names be determined by lot (Charter Art. VII, Sec. 3.) If this requirement is deleted, Palo Alto would follow the random name order set for each election by the County Registrar of Voters. Council Members may have additional items related to Council seats or the structure or the Council, which may be raised at this time. If Council wishes to pursue any of the ideas listed above, or other matters related to Council seats, staff will return in early June with further analysis. Timeline August 8th is the last day to call a municipal election and place a matter on the November 4 ballot. Resource Impact Modest resources in the City Manager’s Office, Clerk’s Office and City Attorney’s Office will be required to draft and implement the changes to term limits and beginning/end of council terms. The other items listed in this report require more complex analysis of resource implications. Reduction of the number of seats and direct election of Mayor could result in increased efficiencies and streamlining of workflow. If Council directs further work on any of these topics, staff will return with a fuller exploration of the resource implications. Policy Implications The items in this report are policy matters for the Council to determine, subject in many cases to voter approval. Page 7 Environmental Review Council governance matters are not projects subject to review under the California Environmental Quality Act. ATTACHMENTS:  Attachment A - Colleagues Memo dated 2-4-13 (PDF)  Attachment B - Policy and Services Staff Report dated 3-19-13 (PDF)  Attachment C - Policy and Services Committee Meeting Minutes dated 3-19-13 (PDF)  Attachment D - Colleagues Memo dated 6-3-13 (PDF) Department Head: Molly Stump, City Attorney Page 8 City of Palo Alto PALO COLLEAGUES MEMO ALTO DATE:February 4,2013 TO: City Council Members FROM:Council Member Schmid,Council Member Klein SUBJECT: COLLEAGUES MEMO FROM COUNCIL MEMBERS KLEIN AND SCHMID REGARDING ANNUAL COUNCIL REORGANIZATION MEETING Problem:Ourpresent practiceof holding our annual Reorganization meetingon the first business MondayinJanuary creates legaland practicalproblems. Proposed Solution:Council to direct staff to prepare the necessary Resolution or Ordinance to set the first business dayofthe calendaryearasthe date forthe swearing inofnew Council Members,the electionofthe Mayorand Vice Mayorand the recognition of departing Council Members/Mayor/Vice Mayor,with noother business to betransactedat such meeting. Discussion:Under our Charter terms of outgoing Council Members end at midnight on December 31. New Council Members cannot act until they are sworn in.By delayingthe swearing in untilas late as January 8 we run the riskof not havingsufficient Council Members on hand to act ifan emergency should arise. Further, when the Mayor isa departing Council Member, as was true in2012,he/she cannot serve in that position past December 31. Ifboth the Mayor and ViceMayor were departing Council Members we would have no person in those positions until the Reorganization meeting. Our present schedule also creates an unnecessary delay in getting down to business inJanuary. The newly elected Mayor cannot make appointments until she/he is in fact chosen.Thisdelays such appointments until mid-month.Further,by using the first business Monday solely for swearing in and reorganization we leave ourselves with only two Mondays (three when January has five Mondays) in January for regular business meetings,since the Martin Luther King holidayfallson the third Monday each year. Atthe very time when enthusiasm ishigh- particularly in years when new people are joining the Council -we in effect are dawdling.Please join us in supporting this simple change in our schedule. February 04,2013 Page 1 of 1 (ID#3513) c.tvof City of Palo Alto (id#3634) PALOALTO Policy and Services Committee Staff Report Report Type:Meeting Date:3/19/2013 Summary Title:Annual Reorganization Meeting Title:Review and Consider Recommendations to the City Council on Potential Changes to the Conduct of the Annual Reorganization Meeting From:City Manager Lead Department:City Manager Recommendation Draft motion: The Policy and Services Committee recommends that the City Council direct staffto prepare the necessary Resolution or Ordinance to amend the City's practice for conducting the City'sannual reorganization meeting as follows: Background On February 4,2013,the CityCouncil considered a Colleagues Memo from Council Member Klein and Council Member Schmid regarding the annual reorganization meeting. The Colleagues Memo,included as Attachment A,identifies a number of potential legal and practical problems associated with the City's current practice of holding the City'sannual reorganization meeting on the first business Monday inJanuary. The Council discussed potential changes to the City's current practice and ultimately referred the item to the Policy and Services Committee for further consideration. Discussion The City's current practice is to swear in new Council Members,elect the Mayor and Vice Mayor,and recognize outgoing Council Members at the first business meeting of each calendar year.A reception follows at the close of the meeting.No additional business is considered at the reorganization meeting.This memo identifies potential issues that the Committee may want to consider and potential options for changes to the City's current practice that Council Members and staff have raised. Considerations: CityofPaloAlto Page1 1. Under the City'sCharter,terms of outgoing Council Members end at midnight on December 31. New Council Members may not be sworn into office until January 1. New Council Members cannot act until they are sworn in. 2. The City typicallytakes a holiday break the last week of December and the first day of the new year (January 1). 3.IfCouncil Members are not sworn inon January 1, the City may not have sufficient Council Members to act in the case of an emergency.Inthis situation the Citywould initiate its Emergency Standby Council.The City'sEmergency Standby Council is composed of former Council Members that have indicated a willingnessto serve inan emergency. 4. The City's current practice delays the conduct of business until the second Council meeting in January.This isa time when enthusiasm and momentum is high. 5. The annual reorganization meeting provides a ceremonial opportunity to recognize the City's incoming Council Members and acknowledge outgoing Council Members for their service to the community. Attachment Bprovides a calendar of the month ofJanuary over the next four years and illustrates the first business day and first calendar day of each year. Potential Options for Changes to Current Practice (options are not mutually exclusive) 1. Set the first business day of the calendar year as the date for the meeting to swear in new Council Members, elect the Mayorand Vice Mayorand recognizedeparting Council Members, with no other business to be transacted at such meeting. 2. Swear in new Council members the first business day of the year individually in the Clerk's Office. 3. Keep the City's current practice of swearing in new Council members at the first business meeting of each calendar year and conduct additional City business after the reorganization.A reception may or may not follow the meeting. 4. Conduct the swearing in ceremony and reception at an event separate from the Council's first business meeting of the year. 5. Keep the City's current practice. Attachments: •Attachment A.Colleagues Memo (PDF) •Attachment B.Four Year Calendar (DOCX) CityofPaloAlto Page2 City of Palo Alto Palo Colleagues Memo ALTO DATE:February 4,2013 TO: City Council Members FROM:Council Member Schmid,Council Member Klein SUBJECT:COLLEAGUES MEMO FROM COUNCIL MEMBERS KLEIN AND SCHMID REGARDING ANNUAL COUNCIL REORGANIZATION MEETING Problem:Our present practice of holding our annual Reorganization meeting on the first business Monday inJanuary creates legaland practical problems. Proposed Solution:Council to direct staffto prepare the necessary Resolution or Ordinance to set the first business day of the calendar year as the date for the swearing inof new Council Members,the election of the Mayor and Vice Mayor and the recognition of departing Council Members/Mayor/Vice Mayor, with no other business to be transacted at such meeting. Discussion:Under our Charter terms of outgoing Council Members end at midnight on December 31. New Council Members cannot act until they are sworn in. By delaying the swearing in until as late as January 8 we run the risk of not having sufficient Council Members on hand to act ifan emergency should arise.Further,when the Mayor isa departing Council Member,as was true in 2012,he/she cannot serve in that position past December 31. Ifboth the Mayor and Vice Mayor were departing Council Members we would have no person in those positions until the Reorganization meeting. Our present schedule also creates an unnecessary delay in getting down to business in January. The newly elected Mayor cannot make appointments until she/he isinfact chosen. Thisdelays such appointments until mid-month.Further, byusing the first business Monday solely for swearing in and reorganization we leave ourselves with onlytwo Mondays (three when January has five Mondays)in January for regular business meetings,since the Martin Luther King holiday falls on the third Monday each year.At the very time when enthusiasm is high- particularly in years when new people are joining the Council -we in effect are dawdling.Please join us in supporting this simple change in our schedule. February 04,2013 Page 1 of 1 (ID #3513) At t a c h m e n t B. Fo u r Ye a r Ca l e n d a r - Mo n t h on Ja n u a r y JA N U A R Y 2 0 1 6 s M T W T F • i 1 2 3 4 5 6 7 8 9 1 0 11 12 13 1 4 1 5 16 1 7 18 19 2 0 21 2 2 2 3 24 25 26 2 7 2 8 2 9 3 0 31 J Fir s t Ca l e n d a r Day of th e Mo n t h / H o l i d a y • J A N U A R Y 2 0 1 5 fl s M T W T F S 1 2 3 4 5 6 7 8 9 10 11 1 2 1 3 14 15 16 1 7 18 1 9 20 21 22 23 24 25 26 27 2 8 29 30 31 JA N U A R Y 2 0 1 7 s M T W T F S 1 2 3 4 5 6 7 8 9 10 11 1 2 13 14 15 1 6 17 18 19 20 21 22 23 2 4 25 26 2 7 2 8 29 30 31 Fi r s t Bu s i n e s s Da y o f th e Mo n t h Itxo CITY OF PALO ALTO CITY COUNCIL EXCERPT MINUTES Special Meeting February 4,2013 Colleagues Memo From Council Members Klein and Schmld Regarding Annual Council Reorganization Meeting. Council Member Klein reported twice in the last 10-12 years,the City came close to having an emergency in early January.The flood in 1998 occurred on December 28,and the third heaviest rain storm In the history of San Francisquito Creek occurred on December 24 or 25,2012.If there was a need for an emergency Council meeting on January 1 or 2,in many years the Council would not have a quorum.Council Members who were reelected needed to take a new oath before they could act in the new term.If Council Members did not take their oath until January 6,7 or 8,they were not authorized to act. Molly Stump,City Attorney agreed.All Council Members who were elected to a new term needed to take the oath before they took any official action. Council Member Klein explained in the years five Council Members were elected,the City could conceivably not have a quorum.The easiest solution that did not require a Charter Amendment was to set the swearing in and reorganization date on the first business day of the year or January 2.The City Charter was out of sync,but a Charter Amendment required a vote of the people.Term ending dates could be earlier,but that would also require a Charter Amendment and vote of the people.The City Attorney correctly instructed former Mayor Yeh that he could not perform any actions as Mayor after December 31,2012,because he was no longer In office.Having the swearing in ceremony on the first Monday in January could result in a serious problem. MOTION:Council Member Klein moved,seconded by Council Member Schmid to request Staff prepare the necessary Resolution or Ordinance to set the first business day of the calendar year as the date for the swearing in of new Council Members,the election of the Mayor and Vice Mayor and the recognition of departing Council Members/Mayor/Vice Mayor, with no other business to be transacted at such meeting. Page1 of 5 EXCERPT MINUTES Council Member Schmtd noted four Council meetings in January and February were not business meetings.It made sense to have the organizational meeting on the first business day,and hopefully the first Monday would add a meeting to keep the Agenda moving. Council Member Kniss did not believe this had been a problem for many years.There was a historical precedent for holding the organizational meeting on the first Monday in January.The City liked the pomp and ceremony.She inquired whether anyone could be sworn in as early as January 1. Ms.Stump answered yes.The only people who needed to be sworn were folks who were elected to a new term.They were eligible to be sworn from the first moment of January 1 under the Charter. Council Member Kniss recalled that If the Council wished,it could extend the time period for the Mayor's service until January 7.She asked Council Member Klein If his term was extended in 1984 or 1985 because of extenuating circumstances. Council Member Klein stated the terms of Mayor and Vice Mayor were defined differently.Council Members left office at midnight on December 31. Mayors and Vice Mayors,if they were still Council Members,continued in office until their successors were elected.Former Mayor Yeh could not continue in office beyond December 31,because he was no longer on the Council.The extension of his Mayoral term for three or four weeks in 1985 was not extenuating circumstances;it was a nice honor by his colleagues. Council Member Kniss reiterated that the Mayor's term could be extended. Council Member Klein clarified that only a Mayor serving a new term or continuing on the Council could have his term extended.Former Mayor Yeh's term could not have been extended. Council Member Kniss concurred.That situation was not an issue,because Vice Mayor Scharff was on the Council.She inquired whether an emergency Council could be utilized at any time. Ms.Stump replied yes.Those individuals were available as provided by Ordinance in an emergency where the regular Council was not available. Council Member Kniss felt Staff could handle an emergency.A meeting on January 2 could interfere with holiday vacations.She did not understand why the Council was trying to fix this;it was not broken.The public enjoyed Page2 of5 CityCouncil Meeting Excerpt Minutes:2/4/13 EXCERPT MINUTES attending the ceremony.She would support sending the Item to the Policy and Services Committee if there was strong sentiment for that. Vice Mayor Shepherd was aware that Mayor Yeh could not perform any Council work after midnight on December 31.She asked if the candidate's oath was the same as the Council Member's oath. Donna Grider,City Clerk responded yes.The oath was administered to a candidate and then to a Council Member. Vice Mayor Shepherd inquired whether the oath was merely ceremonial. Ms.Stump explained the California Constitution provided that,before exercising official duties,local officials must take the oath of that office. Taking the oath as a candidate was not the same.Council Members needed to take the oath before exercising the duties of the office they were assuming under the City Charter on January 1. Vice Mayor Shepherd inquired whether the oath had to be administered to all Council Members at the same time. Ms.Stump indicated swearing in could be performed in private. AMENDMENT:Vice Mayor Shepherd moved,seconded by Mayor Scharff instead of having a Council Meeting the new Council Members are sworn In on the first business day of the year. Vice Mayor Shepherd believed the concern was having an official nine- member Council as soon as the year began. Mayor Scharff felt the pomp and ceremony on the first Monday was a community transition of power.It would be a shame to lose that tradition and many of the community.The practical issue was not having all Council Members sworn In,and the Amendment would take care of that issue.If an emergency occurred,the City would have sworn Council Members and a full contingent of Council Members.This was a situation of more perceived risk than actual risk. Council Member Berman supported the Amendment and original concern. The Amendment did not address voting for Mayor and Vice Mayor and the number of working meetings in January.He did not want to lose the community meeting of the reorganization.The Amendment was a good compromise on the issue.He did not believe the Council could require Council Members to be sworn on January 2. Page3 of5 City Council Meeting Excerpt Minutes:2/4/13 EXCERPT MINUTES Council Member Holman indicated the Motion had a conflict in that the first business day was not always January 2. The Motion also mentioned election of Mayor and Vice Mayor.The Mayor did not have more authority to take action than the Council majority did. A standby Council was available for service.There were a number of questions and issues that required more vetting. SUBSTITUTE MOTION:Council Member Holman moved,seconded by Council Member Klein to refer this Item to the Policy and Services Committee. Council Member Klein stated the Motion used the first business day.He would support the Substitute Motion.The Amendment may be out of order, because it moved the status quo which was not allowed.The Amendment was not a compromise,because it was already possible.He was concerned about any use of the Emergency Standby Council.There could be situations where both the Mayor and Vice Mayor were leaving office. The Council needed to protect themselves from that.The people's business was more important than a nice party. Council Member Burt recalled as recently as January 1,2010,both the Mayor and Vice Mayor were termed out, leaving no Council leadership. There was real confusion as to whether the outgoing Mayor was In charge when there was almost a flood at Chaucer Bridge on January 1,2006.He inquired whether the State Constitution and the Charter prohibited newly elected and reelected Council Members from taking the oath before January 1. Ms.Stump explained the Charter did not prohibit any oath taking wish to engage In,but the oath was ineffective to make one eligible to take authority as a Council Member until one was in the office,which was the first moment of January 1. Council Member Burt stated Mr.Borock asserted that Council Members had taken office prior to January 1 in the past. Ms.Stump indicated,with due respect to Mr.Borock,the office began at the first moment of January 1. Council Member Burt did not believe it was the intention of the community to rely on an Emergency Standby Council.He encouraged the Policy and Services Committee to consider adding a circumstance where if the Mayor Page4 of 5 CityCouncil Meeting Excerpt Minutes:2/4/13 EXCERPT MINUTES and Vice Mayor were termed out and only on that occasion,then the first meeting would be moved to the first business day of the year. Council Member Price supported the Substitute Motion,and agreed with comments made in support of the Substitute Motion. Council Member Kniss suggested the Council determine why it had an Emergency Standby Council;consider electing a Vice Mayor that would be in office longer than January 1 of the next year;and,consider actions of other cities in similar situations. Council Member Schmid urged the Policy and Services Committee to address the issue of only four business meetings in January and February. SUBSTITUTE MOTION PASSED:9-0 Page5 of 5 CityCouncil Meeting Excerpt Minutes:2/4/13 Slto policy and services committee MINUTES Regular Meeting Tuesday,March 19,2013 Chairperson Kniss called the meeting to order at 7:03 P.M. in the Council Conference Room,250 Hamilton Avenue,Palo Alto,California. Present:Holman,Klein,Kniss (Chair),Price Absent: AGENDA ITEMS 1.Consideration of a Recommendation to Council to Adopt an Ordinance Prohibiting Smoking in Three Public Parks. Chair Kniss wished to include Johnson Park,a small park used by many children. Council Member Holman suggested including Scott Park. Chair Kniss inquired about the size of Johnson Park. Greg Betts,Director of Community Services reported Johnson Park was about 2.2 acres. Council Member Klein noted Johnson Park was named after the first female obstetrics/gynecology doctor in the Palo Alto area. Chair Kniss stated two parks were added to the original three parks proposed for a smoking ban. Council Member Price suggested including Juana Briones Park,and asked if the proposal would return to the Parks and Recreation Commission (PARC) for discussion. Chair Kniss felt limiting the number of parks to six would not require PARC involvement. Policy&Services Meeting March 19,2013 Page 1 of17 MINUTES Council Member Price proposed Juana Briones Park,because it was used by all ages. Chair Kniss believed few people opposed a smoking ban in parks. Council Member Klein indicated the Policy and Services Committee (Committee)was establishing a rule for parks. Chair Kniss noted the City had 36 parks. Council Member Klein recommended the Committee list all the parks that a smoking ban did not apply to so that parks similar to the named parks were not omitted.He inquired about the number of parks containing less than 10 acres. Council Member Holman reported all parks in College Terrace contained less than 10 acres. Council Member Klein asked why the Committee wanted to distinguish among similar parks. Chair Kniss felt including that many parks required a discussion with the PARC.She was willing to double the number of parks included in a smoking ban. Council Member Klein suggested including all parks containing less than five acres. Chair Kniss inquired about the number of parks within the City that contained less than five acres.She felt additional Staff work was needed to phrase a recommendation in that manner.She inquired about the size of Scott Park. Council Member Holman felt it was probably 1/3 acre. Council Member Price requested the number of parks containing five acres or less. Mr.Betts named off parks and preserves in Palo Alto: Mitchell Park, Rinconada Park,Seale Park,Baylands Athletic Center,Esther Clark Nature Preserve,Arastradero Preserve,Baylands Nature Preserve,and Foothills Park. James Keene,City Manager wondered why smoking was allowed in Foothills Page 2 of 17 Policyand Services Committee Regular Meeting Minutes 3/19/2013 MINUTES Park when the City staffed a fire station in that area during fire season. Council Member Price agreed with Council Member Klein's suggestion to broaden the scope of a recommendation. Chair Kniss wanted more information before moving in that direction,but estimated between 20 and 25 of the 36 parks contained less than five acres. Council Member Holman noted the Agenda Item was noticed for only three parks,and expressed concern that the public objected because it was not given an opportunity to provide input. Mr.Keene indicated the Committee had two concerns:1)broadening the scope of the recommendation from three parks to many parks and 2) a policy interpretation. Molly Stump,City Attorney reported the Committee could make a recommendation.There was a full hearing at the Council on the first reading,and then a second reading was required but said the Committee could direct Staff to broaden the Ordinance. Chair Kniss noted another question was whether the Committee should include all parks under a certain size.She noted Council Member Holman's concern regarding public reaction,and inquired about the size of Juana Briones Park. Mr.Betts reported Juana Briones Park contained 4.1 acres. Chair Kniss believed Juana Briones Park was the largest of the parks noted for inclusion. Ms.Stump stated the Committee could ban smoking in all parks or could name selected parks.She suggested that Staff could draft reasonable and supportable findings to ban smoking in all parks below five acres. Chair Kniss felt incremental increases worked better politically. Council Member Holman agreed with banning smoking in all parks;however, banning smoking in Foothills and Arastradero Parks was logical because of the fire hazard.She questioned the ability of the Planning and Transportation Commission (P&TC)to expand an Agenda Item without providing additional notice. Ms.Stump explained P&TC was distinct from all other Commissions.The Page 3 of 17 Policyand Services Committee Regular Meeting Minutes 3/19/2013 MINUTES Council was able to determine how to use its Commissions.Not all policy matters were reviewed by Commissions.She said a policy item could be handled by the Council,or by a Committee and then the Council.Under the Brown Act,a full hearing was required with proper notice. Council Member Holman inquired whether the P&TC was able to expand the scope of an Agenda Item to be as broad as the Committee was asking. Ms.Stump stated much of P&TC's work was quasi-adjudicative,which was different.P&TC's work was governed by provisions of the Municipal Code, and that did not apply to this discussion. Mr.Keene stated Council policy allowed Council Members to place a recommendation on the Council Agenda through a Colleagues Memo.A Committee recommendation was not very different from a Colleagues Memo regarding process and notice requirements. Ms.Stump believed a smoking ban was in effect for Foothills Park. Mr.Betts reported a smoking ban was placed on trails in Foothills Park,but not on the meadow or in the picnic areas. Chair Kniss suggested expanding the smoking ban for Foothills Park.She viewed a smoking ban as a public health issue,and the Council was a guardian of community health. Mr.Betts reported Sarah Wallis Park contained 0.3 acres;Cogswell Plaza 0.5 acres;Lytton Plaza 0.5 acres;El Camino Park 12.2 acres;Eleanor Pardee Park 9.6 acres;El Palo Alto Park 0.5 acres;Mayfield Park 1.1 acres;Mitchell Park 21.4 acres;Monroe Park 0.55 acres;Rinconada Park 19 acres; Cameron Park 1.1 acres;Boulware Park 1.5 acres;Bowden Park 2 acres; Bowling Green Park 2 acres;Juana Briones Park 4.1 acres;Peers Park 4.7 acres;Ramos Park 4.4 acres;Bol Park 13.8 acres;Greer Park 22 acres; Heritage Park 2.01 acres;Hoover Park 4.2 acres;Hopkins Creekside Park 12.4 acres;Edith Johnson Park 2.5 acres;Foothills Park 1,400 acres;Esther Clark Preserve 22 acres;Pearson Arastradero Park 622 acres. Chair Kniss estimated between 10 and 14 parks contained less than five acres. MOTION:Council Member Klein moved,seconded by Council Member Price to recommend the City Council:1)adopt an Ordinance amending Section 9.14 to establish new smoking restrictions in all parks that are 5 acres or less in size;2)increase no-smoking buffer zones from 20 to 25 feet for Page 4 of 17 Policyand Services Committee Regular Meeting Minutes 3/19/2013 MINUTES consistency with Leadership in Energy and Environmental Design (LEED) standards;and 3)direct the Parks and Recreation Commission to consider and make recommendations regarding expanding a no-smoking regulation to possibly include other City parks and open space areas within two to three months. Mr.Betts indicated 17 parks contained less than five acres of a total of 34 urban parks and four open space preserves. Chair Kniss stated almost half the number of parks contained less than five acres,but only a small percentage of total acreage. Russ Cohen,Executive Director of Palo Alto Downtown Business and Professional Association supported a smoking prohibition in the three parks originally proposed for inclusion. Herb Borock reported Hoover Park contained approximately 6.4 acres after acquiring land from Hoover School.He noted that under the Brown Act,the Committee could only act on the three parks noticed.The PARC had to make policy recommendations for parks.He suggested the Committee refer the item to the PARC. Chair Kniss was comfortable with the City Attorney's statement that the Committee could recommend more than three parks. Mr.Betts revised his previous count to a total of 22 parks containing less than five acres. Council Member Holman requested Staff respond to Mr.Borock's comment that Hoover Park was larger than reported. Mr.Betts reported records indicated Hoover Park contained 4.2 acres. Mr.Keene indicated the acreage of Hoover Park would be clarified prior to the Ordinance being written. Ms.Stump noted the Ordinance would enumerate the parks being affected by the smoking ban. MOTION PASSED:4-0 Page S of 17 Policyand Services Committee RegularMeeting Minutes 3/19/2013 MINUTES 2.Discussion and Recommendation on the Process to be Used to Establish Guiding Principles/Core Values. James Keene,City Manager recalled that the full Council referred this item to the Policy and Services Committee (Committee)at the end of the Retreat.A second Retreat was scheduled to discuss Guiding Principles and Core Values. Council directed the Committee to propose a process for the Retreat,and directed Council Members to submit three Core Values to the Mayor.Staff received Council Members'proposed Core Values,and forwarded them to the Mayor.Staff proposed the Committee Chair and the Mayor work with Staff to organize the proposed Core Values to present to the Council at the next Retreat.Staff welcomed Committee recommendations regarding a process for use at the Retreat. Chair Kniss noted the Mayor would be involved in the process.She inquired when a Retreat could be held. Mr.Keene indicated Council Members requested a Retreat be scheduled for a weekday,which required facilitating scheduling for a Retreat in May. Chair Kniss believed Guiding Principles and Core Values concerned long-term goals and were easily understood by the public. Council Member Klein expressed concerns about defining a Core Value,the number of Core Values,and having topics that distinguished Palo Alto from other communities.Having too many Core Values was the same as having none,but he thought there should be more Core Values than Priorities.He preferred avoiding feel-good phrases.He requested Council Members reconsider Youth Well Being,which was a Priority which omitted other aspects of the population. Chair Kniss believed Healthy Communities Healthy Cities would include Youth Well Being. Council Member Klein noted mental health issues affected the entire population,not just youth. Council Member Holman recalled a comment at the Retreat that Healthy Communities Healthy Cities was a Core Value rather than a Priority.She was unclear about the purpose of the exercise,and was unsure about the number of Core Values that was needed.Many Core Values were included in the Comprehensive Plan.She questioned whether the list of Core Values should be the same as or different from Core Values contained within the Comprehensive Plan. Page6 of17 Policyand Services Committee Regular Meeting Minutes 3/19/2013 MINUTES Mr.Keene noted a material difference among Guiding Principles,Core Values,and other terms.Values were internally direct.They were agreements or commitments among a group of people regarding the conduct of the group.He mentioned that the Council could use Core values to communicate the foundations of the City to the wider world. Chair Kniss explained the Council needed a docking place for topics not considered Priorities.Priorities were different from Guiding Principles or Core Values. Council Member Price agreed with comments regarding group conduct.She inquired whether the Council reviewed Core Values yearly. Mr.Keene believed Core Values would be ongoing,given the fact that a new set of Council members could revisit any of these topics. Council Member Price suggested the Sub-Committee review Vision Statements in each chapter of the Comprehensive Plan in order to refine values.Having a Mission Statement provided a framework for values and related to the Comprehensive Plan.At the Retreat,a time limit for Council discussion prevented lengthy self-examination. Chair Kniss agreed with the suggestion to review Vision Statements in the Comprehensive Plan,but was uneasy with Mission Statements because they required a great deal of time to draft.The Sub-Committee organized information in order to hold a Retreat.She inquired whether the Committee would agree to the Sub-Committee being comprised of the Mayor, Committee Chair,and City Manager. Council Member Klein favored that general policy,and asked if the Mayor was interested in being part of the Sub-Committee. Chair Kniss stated he was. Council Member Klein viewed the process as a series of questions.The Committee needed to draft a series of questions for Council consideration and some proposed language. Chair Kniss agreed,and suggested limiting the number of Core Values to four to six.She inquired whether Council Member Klein meant for the item to return to the Committee prior to holding a Retreat. Page7 of 17 Policyand Services Committee Regular Meeting Minutes 3/19/2013 MINUTES Council Member Klein did not believe further Committee discussion was necessary. Council Member Holman had difficulty with setting a finite number of Core Values because a Mission Statement was helpful in reaching fewer Core Values. The Committee had to know what it was doing in order to establish a process. Chair Kniss believed the discussion indicated Priorities were not Core Values or Guiding Principles;Core Values and Guiding Principles were considered by some interchangeable.She thought it might be good to include a Mission Statement. Council Member Price suggested the number of Core Values be a guideline. She agreed with Council Member's Klein suggestion of drafting options for Mission Statements and providing a simplified list of Core Values.Vision Statements in the Comprehensive Plan provided some perfect phrases for Core Values or Mission Statements. Chair Kniss felt the Committee had to limit the number of Priorities/Core Values. MOTION:Council Member Klein moved,seconded by Chair Kniss to recommend the City Council:1)appoint the Mayor,Committee Chair,and City Manager as a Sub-Committee to organize Guiding Principles/Core Values submitted by Council Members;2)prepare drafts of Core Values/Mission Statement/Guiding Principles;3)provide recommendations as to which term to use;and,4)prepare clearly focused questions for Council discussion. Chair Kniss inquired whether the Motion stated a specific number of Core Values. Council Member Klein answered no because he thought the Sub-Committee should recommend a number. Chair Kniss suggested that number be five to seven. Council Member Price suggested the Sub-Committee review examples from other cities and Vision Statements in the Comprehensive Plan as part of the process. Page8 of 17 Policyand Services Committee RegularMeeting Minutes 3/19/2013 MINUTES Council Member Holman was not comfortable with a specific number,and suggested checking the City Charter because it might contain a Mission Statement. Chair Kniss reported the Mission Statement was no longer relevant. Council Member Holman opposed a specific number of Core Values. Chair Kniss explained the number was a guide or way to prevent having far too many Core Values Council Member Klein agreed with not having a specific number in the Motion. MOTION PASSED:4-0 Council Member Holman noted not all Council Members submitted proposed Core Values and asked if there was a time limit. Chair Kniss requested Staff send a final request for submissions. 3.Review and Consider Recommendations to the City Council on Potential Changes to the Conduct of the Annual Reorganization Meeting. Council Member Klein reported a Council Member's term of office expired at midnight on December 31,and a new Council Member was sworn-in on the first Monday of the new year.Therefore,on January 1 it was possible to have a Council with only four,five,or six Council Members.Use of an emergency Council was not feasible.He suggested Council Members be sworn-in on January 1 or 2. Chair Kniss inquired whether it was necessary for a Council Member to be sworn-in in person. Molly Stump,City Attorney reported Council Members had to be sworn-in in person,but not in public.She mentioned that the ceremony could be held in private,and other people could be deputized to swear-in the Council Member's. Council Member Klein noted a problem arose when emergencies occurred in late December or early January,and the Council did not have a quorum to conduct business.Typically,the Mayor continued in office until his successor was elected;however,the Mayor's term ended on December 31 and was no Page9 of 17 Policyand Services Committee RegularMeeting Minutes 3/19/2013 MINUTES longer qualified to serve as a Council Member. If the Vice Mayor along with the Mayor were not qualified to serve as Council Members,then the Council was without both leaders beginning on January 1.These problems arose only in odd years,because Council elections were held in even years. MOTION:Council Member Klein moved,seconded by XXXX to recommend the City Council hold the swearing-in ceremony and election of Mayor and Vice Mayor on the first business day of the year in odd years. MOTION FAILED DUE TO LACK OF A SECOND Chair Kniss indicated the first business day was January 2 and said there were a number of other issues that were not addressed. Council Member Klein felt swearing in Council Members was the primary goal. Chair Kniss inquired whether Council Member Klein wished to hold the reorganizational meeting in the evening of January 2. Council Member Klein suggested it be held in the evening or afternoon. Chair Kniss noted the Council's Winter Break typically extended through that Friday.Holding the reorganizational meeting at that time required Council Members to return early from vacation. Council Member Klein indicated the reorganizational meeting was held on the first business day of the year only in odd-numbered years. Chair Kniss suggested the City Manager and emergency personnel handle emergencies if the Council did not have a quorum.If the Council had a quorum but no Mayor or Vice Mayor in place,then the longest-serving Council Member would act as Mayor. Council Member Klein felt it was possible for Council Members to return from vacation every other year to tend to City business. Council Member Holman noted Staff often scheduled vacation time over the holidays,and was unavailable.School schedules were also a consideration in determining the Winter Break.She asked if the reorganizational meeting would be held on the first business day of the year or on January 1. Council Member Klein stated the first business day. Page 10 of17 Policy and ServicesCommittee Regular Meeting Minutes 3/19/2013 MINUTES Council Member Holman inquired whether the swearing-in of Council Members occurred on January 1. Council Member Klein suggested the Council strongly encourage new Council Members to be sworn-in on January 1. Council Member Holman asked if the Council could require Council Members be sworn-in on January 1. Chair Kniss suggested changing the City Charter regarding end of term provisions because other cities held swearing in ceremonies and reorganizational meetings as soon as election results were certified. Council Member Holman asked when election results were certified. Ms.Stump reported that depended on how quickly the County Registrar worked;however,it was usually the first week in December. Chair Kniss stated results could not be certified any sooner than 28 days after the election. Council Member Holman inquired about the process for changing the reorganizational meeting to a date in December. Ms.Stump explained a Charter Amendment had to be proposed by the Council,placed on the ballot,and approved by a vote of the electorate.The City's Charter was unusual in that it stated a conclusion date of Council terms. Council Member Holman preferred to avoid the cost of an election,and asked if there was a way to amend the Charter without an election. Ms.Stump Charter responded no.Amending the Charter required a vote of the people. Council Member Price supported encouraging Council Members to be sworn- in on January 1,and inquired whether it was simpler to state the first business day or January 1. Ms.Stump reported the Council could direct the City Manager to ensure that the appropriate Staff was available to swear-in Council Members at the first moment a Council Member was eligible to be sworn-in,or January 1.Taking the oath of office was a voluntary action,and the Council was not able to require Council Members to be sworn-in on January 1.She suggested that Page11 of17 Policyand Services Committee Regular Meeting Minutes 3/19/2013 MINUTES the Council schedule a meeting on January 1,assuming a quorum was present. Council Member Price proposed that newly elected Council Members be encouraged to take the oath on January 1. Chair Kniss questioned whether a Council Member had to be in the State to take the oath of office. Ms.Stump said she would review the location issue,because she was unsure whether a Council Member was required to be in the jurisdiction or in the State to take the oath of office. Chair Kniss separated the issues of Council Member's swearing-in from a date for the reorganizational meeting.She inquired whether Council Member Klein proposed holding a reorganizational meeting on the first business day in January in every other year. Council Member Klein responded yes.The ceremonial aspect and celebration continued to be held on the first Monday of the year.Voting for Mayor and Vice Mayor was held on the first business day of the year. Chair Kniss noted holding the reorganizational meeting on January 2,2015 required changing the Council Winter Break. Council Member Klein indicated the Winter Break start date could be adjusted. Chair Kniss was not in support of that point. Council Member Price inquired whether Council Member Klein would consider setting January 3 for the election of Mayor and Vice Mayor,the second business day. Council Member Klein indicated the second business day in 2015 was Monday.In 2017,the first business day was Tuesday,January 3. Chair Kniss suggested holding the reorganizational meeting on the first business day after the end of Council's Winter Break. Council Member Price asked if the second business day of the year was agreeable. Page12 of 17 Policy and Services Committee Regular Meeting Minutes 3/19/2013 MINUTES Council Member Klein stated the second business day left a gap of five days in 2017. Chair Kniss suggested holding the reorganizational meeting on January 5, 2015 and January 3,2017,and wanted to include language that encouraged Council Members to be sworn-in on January 1. Council Member Klein agreed with encouraging Council Members to be sworn-in on January 1,and added the Council needed to direct the City Manager to ensure that Staff was available to assist in the swearing-in process. Chair Kniss inquired whether Council Member Klein agreed to the two dates for the reorganizational meeting. Council Member Klein answered no. Council Member Holman asked why the reorganizational meeting could not be held on January 2,2017. Council Member Klein explained that was a holiday. Chair Kniss noted Staff would not be working on a holiday. Council Member Price recalled the City Manager could require an individual be present to conduct the swearing-in. Chair Kniss wished to choose two dates for the reorganizational meeting in 2015 and 2017. Council Member Klein chose January 2 in 2015 and 2017. Chair Kniss asked if he wished to keep those dates even though they were holidays. Council Member Klein replied yes. Council Member Price inquired whether Council Member Klein proposed separating the selection of Mayor and Vice Mayor from the celebration. Council Member Klein answered yes. Council Member Price supported scheduling the first Monday for the celebration with the Mayor and Vice Mayor already in place. Page 13 of 17 Policyand Services Committee RegularMeeting Minutes 3/19/2013 MINUTES Council Member Klein suggested amending the Charter to avoid the awkward process. Ms.Stump reported Staff would follow Council direction. Chair Kniss suggested adding a Charter Amendment to the ballot in 2014. Council Member Holman was concerned about the cost of an election,but felt a Charter Amendment was cleaner.A gap existed between Council Members being sworn-in on January 1 and a reorganizational meeting being held on the first business day. Council Member Klein proposed amending the Charter to hold the reorganizational meetings in December or to have Council Members serve until successors were sworn-in. Council Member Price agreed that was better. Chair Kniss also agreed,and inquired whether an emergency Council meeting was needed in the past on a holiday. Council Member Klein indicated that there were three different occasions that came close to requiring emergency Council meetings. Ms.Stump clarified that January 2 was the first business day of 2015 and 2017. Chair Kniss reiterated that new Council Members would be sworn-in on January 1 if possible,and a meeting to elect the Mayor and Vice Mayor were held on the first business day in 2015 and 2017. Council Member Price clarified that they were talking about odd numbered years. Chair Kniss agreed with swearing-in Council Members on January 1. Council Member Holman inquired whether that worked with moving the organizational meeting to December. Council Member Klein suggested the Committee ask the City Clerk about the cost of an election to amend the City Charter. Page 14 of 17 Policy and Services Committee Regular Meeting Minutes 3/19/2013 MINUTES Chair Kniss believed the January 2 dates for organizational meetings were a compromise until the Committee discussed it fully at another meeting. Council Member Holman suggested a series of Motions that began with moving the swearing-in date to January 1 for all newly elected Council Members. Council Member Kniss recalled that Council Members were not required to be sworn-in on January 1. Council Member Klein noted incumbent Council Members reelected to office were not official Council Members from January 1 until sworn-in. Chair Kniss inquired whether reelected Council Members were not officially Council Members from January 1 until they were sworn-in. Ms.Stump explained a Council Member who served four years was out of office at midnight on December 31, and were not eligible to act as a Council Member. MOTION:Council Member Klein moved,seconded by Council Member Holman to recommend to the Council that it do all things reasonable and necessary to have newly elected Council Members sworn-in on January 1; and the City Clerk make that a part of the package given to all candidates. MOTION PASSED:4-0 MOTION:Council Member Klein moved,seconded by Council Member Holman to recommend to the Council that the reorganizational meeting for election of Mayor and Vice Mayor in odd-numbered years take place on the first business day in January. MOTION PASSED:3-1 Kniss no MOTION:Council Member Klein moved,seconded by Council Member Price to recommend to the Council to consider,depending on information from the City Clerk regarding cost,the possibility of a Charter Amendment to eliminate this problem. MOTION PASSED:4-0 Chair Kniss suggested the Committee obtain parameters for amending the Charter in two to three months. Page 15 of17 Policy and Services Committee Regular Meeting Minutes 3/19/2013 MINUTES Council Member Holman noted the Council would meet the first business day of January for its reorganizational meeting,and that they retain the first regular Monday meeting for celebration. Chair Kniss indicated the Mayor and Vice Mayor would not be elected at the first regular Monday Council meeting. Council Member Klein explained in odd years,the reorganizational meeting occurred on the first business day,and the ceremonial event occurred the following Monday. Council Member Price appreciated the modification to explore the possibility of moving the reorganizational meeting to December. Chair Kniss referred the issue of a Charter Amendment to the City Clerk and noted an ending date for the Winter Break was not set. Ms.Stump stated the Winter Break was scheduled to begin on December 20, 2013. Chair Kniss indicated the Winter Break could end on January 3,2014;in 2015,it had to end a day earlier. FUTURE MEETINGS AND AGENDAS Sheila Tucker,Assistant to the City Manager noted Staff would return to the May 2013 meeting with vehicle habitation and an update on the emerging technologies pilot program for the April 2013 meeting. Council Member Price suggested Val Fong and Thomas Fehrenbach be present for the emerging technologies update. Ms.Tucker anticipated the emerging technologies pilot as an informational item. Chair Kniss hoped the City Clerk could provide a report regarding amending the Charter at the April or May meeting. Council Member Holman inquired whether the recommendation for a Charter Amendment would be presented to the Council. Chair Kniss answered no and said it would return to the Committee. Page 16 of17 Policy and Services Committee Regular Meeting Minutes 3/19/2013 MINUTES Molly Stump,City Attorney anticipated a Staff Report would consider election date options for a Charter Amendment,cost estimates for an election,and a survey of surrounding jurisdictions with options for framing the Amendment. Council Member Holman inquired whether recommendations other than the Charter Amendment would be presented to the Council with a note that the Policy and Service Committee was considering a Charter Amendment. Chair Kniss responded yes. ADJOURNMENT:Meeting adjourned at 9:00 P.M. Page 17 of 17 Policyand Services Committee RegularMeeting Minutes 3/19/2013 City of Palo Alto palo Colleagues Memo ALTO DATE:June 3,2013 TO: City Council Members FROM:Council Member Price, Council Member Kniss,Vice Mayor Shepherd SUBJECT: COLLEAGUES MEMO FROM COUNCIL MEMBERS KNISS,PRICE AND VICE MAYOR SHEPHERD REGARDING POTENTIAL CHARTER CHANGE INITIATIVES FOR COUNCIL TERMS,NUMBER OF SEATS AND OTHER RELATED MATTERS FOR NOVEMBER 2013 BALLOT Description Recommend that Council discuss and consider directing the City Attorney to return with language at the June 10,2013 meeting for a draft Charter Amendment regarding possible changes: 1) Under the Charter, council members are limited to serving two consecutive four-year terms.We recommend that the Council propose a Charter amendment to extend permissible terms to three, 2) That the Council sizebe reduced from nine members to seven. Furthermore, that staff consider the various options for timing of such a reduction with respect to the election cycle if this were to be considered,and 3) Other charter items whichshould be considered ifthese changes were brought forward. Background:Item 1,Term Limits In1992 the City limitedcouncilmembers to two terms. Althoughterm limitsinthe 1980swere an immerging actionbymanyelected bodiesthroughoutthe state and nation,recently the voters ofSanta Clara Countydecided to change the limitationon terms for Supervisorsfrom two terms to three.We believe this isa good idea that PaloAlto voters should consider. Term limitsplaya valuablefunction of bringing new people intogovernment. Onthe other hand,there isa steep learning curve required to be an effective council member.PaloAlto council members serve on regional planningand regulatory bodies with complex responsibilities,for example preserving the Bay,countywide public transit,regional water planning,gas/electric regulation,ABAG,VTA,Caltrain and more.To effectively represent Palo Alto's interests,the city's representatives need time to gain expertise and build seniority on these bodies.Term limits interrupt this process.Under the current charter,members can sit out an election cycle and re-runfor two more terms, but we considerthis disruptive and not in the City'sinterest.We think PaloAltowill be better served by extending consecutive terms. June 03,2013 Page1of3 (ID#3874) Recommendation 1 We think countyvoters struck the right balance by keeping term limits but extending the number of terms from two to three.Palo Alto should consider following their lead. Background:Item 2,Council Seats The size of the Palo Alto CityCouncil body of nine members is unusual for municipal government for a city of our population.Although reduced in 1971 from 15 to 9 members,we believe that council should discuss the merits of reducing the body of government further from nine to seven members.It is typical for municipalities to have a smaller council.Menlo Park is a five member council,we consider this to be too small.On the other hand,Mountain View has seven and we think that this could bring efficiencies of meeting effectiveness and workload which deserves discussion and consideration while also reducing costs. Our Charter established a council/manager form of government making council the legislative body of the City. It sets policy and establishes the City's overall priorities and direction.The Cityis run through the professional expertise of four Council Appointed Officers (CAOs),the City Manager,Attorney,Auditor and Clerkwho administer the City business and serve at the pleasure of the council.The rotation of Mayor and Vice Mayor are elected each year through the council member body and their role isfor a period of time,customarily one calendar year. Council members are elected at large to a four-year term ina general municipal election,four members during a Presidential year and fiveduring the mid-term congressional elections.In 2014 there will be an election of five council members.We consider that a possible reduction of council members might need to occur during a future mid-term election cycle,perhaps during the election cyclein 2018 for two reasons;1)the mid-term isa likely period to reduce elections from five to three council members,and 2)current seats from this last election cycle (four members)were elected for their first term and could disrupt the developing efforts and measured experiences of colleagues representing various regional organizations and related expertise. Recommendation 2 That council discuss the merits of a reduced body and consider having the City Attorney prepare draft languageto reduce the mid-term elections ofcouncilmembers from fiveto three in the year 2018 for the June 10,2013 council meeting. Background:Item 3.Other In the event that council size is reduced,elected members would need to manage more liaison positions, roles and appointments which will impact their abilityto serve intime and quality. Additionally,serving on the CityCouncil demands a significant amount of time, including preparingand attending meetings, meeting withthe communityand attending events. We recommend that council discuss this impact,consideran increaseto the $600per month (plus benefits)stipend,to accommodate this possible change. Althoughthis isnot a Charter change, June 03,2013 Page2of 3 (ID#3874) we think that at the appropriate time and if the voters reduce council members the Finance Committee should take up the task of discussing council member pay. Furthermore,there may be other charter changes which are not identified in this memo based on these possible changes to the election process.We recommend that staff help identify these changes for the purposes ofconsideration at the June 10 meeting. Recommendation 3 That council discuss these items and direct staff to identify a thoughtful process/changes to help address the various requirements for Council members for the meeting ofJune 10,2013. Financial Impact: When this item returns to Council,the Clerk should report the estimated cost ofone or more Charter amendment measures for the November 2013 ballot.Additionally,prepare an estimate ofadministration expenses for reduction of work from nine to seven council members. June 03,2013 Page 3of 3 (ID #3874) City of Palo Alto (ID # 4702) City Council Staff Report Report Type: Action Items Meeting Date: 5/12/2014 City of Palo Alto Page 1 Summary Title: Recommendation on Avenidas & PACCC in HSRAP Title: Policy and Services Committee Recommendation to Council on Moving Agreements with Avenidas and Palo Alto Community Child Care out of the Human Services Resources Allocation Process From: City Manager Lead Department: Community Services Recommendation: The Policy and Services Committee recommends that the Council direct staff to separate the funding contracts with Avenidas and Palo Alto Community Child Care (PACCC) from the Human Services Resource Allocation Process (HSRAP) and instead contract directly with these two service providers. Background: At its special meeting on June 13, 2013 during the adoption review of the FY14 budget, City Council directed staff to return to the Policy and Services Committee to discuss the question of removing contracts with Avenidas and PACCC from the HSRAP process. This referral stemmed from a discussion during the FY14 budget hearings in which the Council was not supportive of the Human Relations Commission’s (HRC) proposed distribution recommendation to Avenidas and PACCC of additional HSRAP funds (Attachment A -Staff Report and Background Information for the March 25, 2014 Policy & Services Meeting.) As HSRAP allocation recommendations fall within the scope of responsibility of the HRC, staff brought this issue forth to the HRC for discussion and development of a recommendation to be presented to the Policy and Services Committee. The HRC discussed this matter at several meetings in the ensuing months and approved a recommendation that the HRC believed was a compromise that addressed the concerns brought forth by Council, Avenidas and PACCC, yet kept these agencies within the HSRAP funding scope with certain stipulations. City of Palo Alto Page 2 The HRC recommendation was discussed at the Policy and Services Committee meeting on March 25, 2014 (Attachment B –Excerpt Minutes 3- 25-14 Policy & Services Meeting.) Council Member Schmid said that there was an advantage to having a Human Services budget to focus Council discussion and to have a clear-cut goal for Human Services as a percentage of the budget was important. Senior and youth services were critical to a healthy community and he would not like to take out the two “most important pieces” but have them discussed as part of the larger HSRAP discussion. Council Member Schmid preferred that Avenidas and PACCC remain within HSRAP. Council Member Klein stated that if Avenidas and PACCC would be separated out, the total dollar amount allocated for HSRAP would be much less and would more likely appear inadequate and that Council may be more likely to allocate additional funding. He felt it was misleading to include programs in HSRAP that many other cities offer as part of their regular services. Council Member Price concurred with Council Member Klein’s comments and added that separating out Avenidas and PACCC made sense from a “structural, administrative and predictability point of view” and that it would still preserve and made the work of HRC extremely important and would continue to do that, but it also provides a way to give significant funding to two key non-profit providers in the community. Thereafter, Council Member Klein moved, seconded by Chair Price that the Policy and Services Committee recommend the Council direct Staff to prepare the necessary paperwork to separate Avenidas and PACCC from the HSRAP process. MOTION PASSED: 2-1 Schmid no, Scharff absent. Resource Impact: The current resource impact remains the same whether or not Avenidas and PACCC receive funding as part of the HSRAP process or as a general contractor for the Office of Human Service. That amount is $431,184 for Avenidas and $436,830 for PACCCC, for a total of $868,014 in FY2014. Policy Implications: The Comprehensive Plan addresses the needs of seniors and children in Goal C-3: Improved Quality, Quantity, and Affordability of Social Services, Particularly for Children, Youth, Seniors, and People with Disabilities. Attachments:  Attachment A - Staff Report 3-25-14 P & Smtg (PDF)  Attachment B - Excerpt Minutes-03-25-14 P & S COMMITTTEEFINAL (DOC) City of Palo Alto (ID # 4531) Policy and Services Committee Staff Report Report Type: Meeting Date: 3/25/2014 City of Palo Alto Page 1 Summary Title: HRC Recommendation on Avenidas/PACCC in HSRAP Title: Recommendation from the Human Relations Commission in response to City Council request to consider moving Avenidas and Palo Alto Community Child Care (PACCC) out of the Human Services Res ource Allocation Process From: City Manager Lead Department: Community Services Recommendation: The Human Relations Commission (HRC) recommends to the Policy and Services Committee that contracts with Avenidas and Palo Alto Community Child Care (PACCC) remain within the Human Services Resource Allocation Program (HSRAP) group of human service providers with these differences from other HSRAP grantees:  Avenidas and PACCC will be assured that their HSRAP funding will not be cut in order to fund reallocations to other HSRAP grantees.  When the Council determines annual adjustments to reflect the increased costs of doing business in the nonprofit sector, Avenidas and PACCC will be assured their proportional shares.  When the Council makes an incremental allocation over and above any annual adjustment, the HRC will recommend redistribution of those funds according to its assessment of human service needs at that time. Incremental allocations will be recommended according to a review covering all HSRAP recipients (including Avenidas and PACCC) and new applicants.  In the case of budget reductions set by the Council and staff, Avenidas and PACCC will bear their proportional share, but no more, in the HRC’S recommendations. Executive Summary: City of Palo Alto Page 2 The Palo Alto City Council, at its special meeting on June 13, 2013, directed staff to return to the Policy and Services Committee to discuss the question of removing contracts with Avenidas and PACCC from the HSRAP process. As HSRAP allocation recommendations fall within the scope of responsibility of the HRC, staff brought this issue forth to the Commission for discussion and development of a recommendation to be presented to the Policy and Services Committee. The HRC discussed this matter at several meetings and approved a recommendation (listed above) that the Commission believes is a compromise that addresses the concerns brought forth by Council, Avenidas and PACCC, yet keeps these agencies within the HSRAP funding scope. Background: At the Fiscal Year 2014 budget hearing on May 9, 2013, the Finance Committee recommended an increase of $55,523 in funding for HSRAP agencies. The Human Relations Commission (HRC) was requested to return to Council with its distribution recommendation. At the June 3, 2013 Council meeting, staff presented the HRC’s recommended funding distribution, which included a 7.1 % increase for the HSRAP agencies with two-year term (limited) contracts and a 1% increase for Avenidas and PACCC who have six-year term (multi-year) contracts. The HRC stated that the rationale for the two-tier percentage distribution recommendation was that, if the $55,523 was distributed by equal percentage to all funding recipients, the two larger agencies would receive the bulk of the increase. The Council was not supportive of this approach and asked that all agencies be increased by 7.2% and provided additional funding to accomplish this. Council Member Klein explained that Avenidas and PACCC operated programs for Palo Alto that other cities administered themselves. He suggested that Avenidas and PACCC should be separated from the HSRAP process. Until then, they should be treated in the same manner as other HSRAP funded agencies are treated. Staff returned to the Council on June 13, 2013, to present a budget that included a 7.2 % increase for all HSRAP agencies. HRC Jill Chair O’Nan explained to Council that it was not the HRC’s intention to treat any HSRAP agency unfairly. The HRC felt it was important to open HSRAP to new agencies to fill gaps in services identified by the Human Services Needs Assessment. To be able to fund new agencies without an increase in the base funding of HSRAP, the HRC reduced funding from the two-year term (limited) contracts to accomplish this. Avenidas and PACCC were not cut to do so. Subsequently, when the Finance Committee recommended additional HSRAP funding and asked the HRC to return with its distribution recommendation, the HRC restored the funding cut to the agencies on two-year term (limited) agencies and allocated additional funding of 7.1 % and increased funding to Avenidas and PACCC by 1%. As stated previously, the Council was not supportive of this approach and felt it was important to have a policy discussion regarding funding for Avenidas and PACCC. Therefore, the Council formally referred to the Policy and Services Committee the question of removing Avenidas and PACCC from the HSRAP process. HRC Chair O’Nan reported that the HRC had considered splitting off Avenidas and PACCC in the past and that the concern at that time was that the funding for smaller agencies may be overlooked if the larger agencies were removed. The smaller agencies provide critical services to the community. The HSRAP process was initiated in 1984 at a time when contracts with social service-type agencies were being managed by several departments (see Attachment A – HSRAP History) City of Palo Alto Page 3 and the City wanted to implement a more integrated planning and resource allocation approach that would:  Identify needs and establish priorities for the funding of social services in the face of shrinking financial resources.  Set up a collaborative planning approach using the skills and knowledge of City staff, community groups and the HRC. Both Avenidas (then the Senior Coordinating Council) and PACCC were initial HSRAP funding recipients and have long relationships with the City (see Attachments B & C) and summaries below. Prior to receiving City support through the HSRAP process, Avenidas received funding as part of a grant administered by the Community Services Department, starting in 1978. Key historical points from this relationship are listed below:  The City established its own Senior Adult Services in 1971, based on a study of Palo Alto senior residents completed by the Senior Coordinating Council (SCC), and witnessed an expansion of those services over the next few years.  The City funded the SCC administration, Senior Day Care (now Day Health) program and Home Repair Service prior to the establishment of the Senior Center of Palo Alto, while concurrently funding its own Senior Adult Services.  After lengthy discussions over time, the City agreed to offer the Old Police/Fire Station building to the SCC at a nominal yearly rent, provided the SCC raised the necessary funds ($1.2 million) to renovate the facility. Implicit in this agreement was a commitment to help the SCC with operating funds for the Senior Center as well as continuing support for its other programs.  In 1978, the City transferred its Senior Adult Services to the SCC and first provided funds for the operation of the Senior Center.  The City and the SCC agreed that the SCC would always make substantial efforts to secure community support and other non-city public funds. That objective has remained part of the SCC’s contract Scope of Services.  A 1986 evaluation of the SCC conducted by a City-retained outside consultant reported that the SCC had become an established part of the community and that the SCC’s administrative component represented one of the most important tools for leveraging the dollars the City puts into senior services. PACCC has also been a HSRAP grantee since its inception in 1984. Prior to that it received funding as part of a grant administered by the Community Services Department starting in at least 1980. Key historical points from that relationship are listed below: City of Palo Alto Page 4  In 1973, the City Council established a Task Force to develop a plan for the implementation of the recommendations included in the report on Palo Alto Child Care Needs and Resources. The City Council designated the following priorities in the order listed for consideration by the Task Force: (1) an extended day care program, (2) an additional preschool day care center, and (3) an infant care center. In considering these priorities, the Council has stated that the City should not be considered the primary source of funds, but that City funds might be available for pilot projects or to provide matching funds for federal or state programs. The Task Force was viewed as a working committee to develop the recommended plan of action.  In order that the City have an official positive position on child care, the Task Force recommended that the City Council adopt a policy recognizing child care needs and accept responsibility to be actively supportive of the following: Promoting legislation; providing funds within its means; and assisting the Board of Directors of the non-profit corporation in its efforts to improve and expand child care. In essence, the policy statement read as follows: “The City Council recognizes the growing need for quality child care for all those who live and work in Palo Alto, with priority determined by needs and payment dependent upon economic ability. The City Council here-by accepts a major responsibility to support the development, implementation, and coordination of a comprehensive child care program in Palo Alto and assigns to child care a high priority in terms of the commitment of local resources.” o The Task Force recommended that the City of Palo Alto take an active and supportive role in the provision of child care and related services and that a non- profit corporation be established to implement and coordinate the Task Force recommendations, to appoint a Child Care Mobilizer, to administer disbursement of money, and to develop community understanding and support of child care.  During the next two years, PACCC was created and incorporated as a 501 (c) 3 organization and on March 25, 1974, City Council approved a contract with PACCC which allocated funds for the various components of the Task Force Plan.  In 1984, the City began to reduce the administrative subsidy to PACCC. The remaining administrative money was to be used for administering the subsidy program for income eligible families and coordinating child care efforts in Palo Alto. The central administration for the PACCC child care centers was to become self-sufficient.  PACCC responded to this reduction in support by reducing the central office staff and eliminating the child care coordination, resource and referral at a time when the City was expecting PACCC to take the lead role in developing employer support for child care. PACCC was unable to assume that role. The City responded by creating a Child Care Task Force by action of the City Council on March 3, 1986.  The Task Force was asked to recommend to the City ways of encouraging more active participation by local employers in assisting employees with their child care needs. In addition the Task Force was to determine the most effective way of establishing a City of Palo Alto Page 5 child care resource and referral service for people who live and/or work in Palo Alto.  Two of the recommendations from that report were to establish an ongoing Child Care Task Force and draft a Master Plan for child care in Palo Alto.  By 1989, with the passage of the utility user’s tax, after school care was being developed at every elementary school site. PACCC became a major provider of school- age care which increased the number of PACCC centers from 7 to 15. However, PACCC did not adjust any of its administrative processes to accommodate this growth and reduced further its involvement in child care coordination for the City even though PACCC was still receiving financial support from the City for those services. The Master Plan was completed and the City hired a Child Care Coordinator to work with the ongoing Task Force and coordinate school age care with PAUSD and the Providers. City of Palo Alto Page 6  By 1993, PACCC was at a major crossroads. The agency structure in place at that time did not allow for complete administration of the 15 centers or the City’s Subsidy Program, the financial viability of the organization was questionable at best and support for the agency from the community was decreasing. The question being asked by the Board of Directors was not where is PACCC headed, but whether it should exist at all. In the fall of 1993, after much analysis, the Board of Directors of PACCC committed to the major task of rebuilding the agency into again being a healthy and viable community resource that provides and advocates for high quality child care and related services for the Palo Alto community. In October, 1993 the City issued PACCC a loan in the amount of $75,000 as well as the services of City accounting personnel so that PACCC could meet its financial obligations. The loan was subsequently paid off in 1995. Research was conducted into past HSRAP-related staff reports to check whether a specific policy existed to codify a special relationship between the City and Avenidas and PACCC. While a specific policy was not found, the following includes the record of a related discussion. In 1993, Council directed staff to work with the HRC in consideration of several new goals in regards to HSRAP: 1) Recognize the special relationship that the Senior Coordinating Council (Avenidas) and PACCC have with the City and ensure that both organizations automatically receive whatever increase is granted to Human Services contracts as a whole. 2) Review separating Senior Coordinating Council (Avenidas) and PACCC from the HSRAP process and adding them to the Human Services Division internal City budget process. The HRC discussed this at several meetings and ultimately decided not to forward a recommendation that the Senior Coordinating Council (Avenidas) and PACCC be given special consideration. The HRC felt that is was difficult to draw the line between Senior Coordinating Council (Avenidas) and PACCC and many of the other agencies in terms of a “special relationship” and by removing two major contractors from the HSRAP process and 76% of the funding, the HRC believed that this might lessen the influence of the other 14 contracted agencies and endanger their funding. At the February 22, 1993, Council meeting that discussed the issues listed above, Council Member Gary Fazzino made the following comments:  Senior services were part of the City staff in the early 1970s, and when the senior services were spun-off into the SCC, the City Council at that time made a clear commitment to the fact that senior services would continue to be an essential City service but felt those services could be provided to the public in a much more cost- effective manner by an independent agency.  The City set up a special citizen committee with respect to the child care, and there had been consideration that those services would be handled by staff. The Council made a decision that PACCC would provide those services. City of Palo Alto Page 7  There were other outstanding services which had been granted City funds, but in no other case did the City provide those services through the use of the City staff. It was a special relationship with these two groups but it was best not to develop language in a policy that ascertained such. His interest in his recommendation was not to create problems or competition between these two important agencies or any other important agencies that came before the Council for funding. At present, the Council has referred to Policy and Services Committee the consideration that Avenidas and PACCC be split off from the HSRAP process. A similar funding separation request was approved once before when in 2007, Project Sentinel, which administers the Palo Alto Mediation Program, requested and was removed from the HSRAP process. This contract is now funded through a direct professional services contract managed by the Office of Human Services. The rationale presented was that Project Sentinel is contracted to operate and implement a City ordinance: “Mandatory Response to Request for Discussion of Disputes between Landlords and Tenants Ordinance 9.72” and this service is not subject to bi-annual priority of needs setting, but is an ongoing service as required by a City ordinance. This is a similar option to be considered by the Policy and Services Committee for Avenidas and PACCC. However, while this takes the agencies out of the HSRAP process, it does not exempt them from the Request for Proposal (RFP) process similar to that followed by HSRAP, however, the review of the RFP would be under the discretion of staff for review and Council for approval due to the contract value. In addition, since their current contracts with the City are managed under the auspices of the HSRAP program, if the agencies were to be removed, they would be required to respond to a new RFP for senior services and child care subsidy administration for consideration for a new contract. Discussion: The HRC discussed the prospect of removing Avenidas and PACCC from the HSRAP process and budget at its December 2013 (see Attachment E), January 2014 (see Attachment F) and February 2014 (see Attachment G) meetings in order to inform their recommendation to the Policy and Services Committee. Lisa Hendrickson, Executive Director of Avenidas and Janice Shaul, Executive Director of PACCC, addressed the HRC at the December meeting and shared their reasons for wanting to be removed from the HRSAP process (see Attachment D). In brief, both agencies would like to be removed from the HSRAP process. They believe that over the years, with the cycle of new commissioners on the HRC, the “special relationship” that the City has with Avenidas and PACCC has not always been understood. Since their combined allocations total over 70% of the HSRAP budget, they feel that their allocations have been an “attractive target” for the commissioners to recommend accessing to address other needs and agencies or that their agencies do not get an equal share of Council recommended increases to HSRAP. During these times, they report having felt it necessary to address these discrepancies directly with Council and publicly oppose the HRC recommendation. The two agencies feel that this is an uncomfortable dynamic for the Council and for their agencies and it feels that they are in “competition” with the other human service providers receiving HSRAP grants. Their letter specifically included the following reason why they want to be removed from the HSRAP budget: City of Palo Alto Page 8  Limited funding for all human service agencies and the high percentage historically granted to the sole source providers invite inequitable treatment of PACCC and Avenidas.  PACCC and Avenidas will continue to lobby the Council directly to reverse inequities in the HRC recommendation, putting both the HSRAP agencies and the Council in an awkward position.  Without PACCC and Avenidas, all increases of the HSRAP budget can be allocated to existing and new agencies.  The HRC will no longer have to factor in “special relationships” when making its HSRAP funding recommendations. The HRC discussed the concerns brought forward by Avenidas and PACCC in depth. Several commissioners shared that while they understand the concerns brought forward by the agencies and have a deep appreciation of the special relationship with the City and the services they provide the community, they have a major concern that if Avenidas and PACCC were removed from the HSRAP process, along with over 70% of the total funding, somehow the rest of the HSRAP funding for the small agencies might be in future jeopardy with the Council due to its relatively small dollar amount. Over the course of three HRC meetings, the commissioners considered first a recommendation that removed Avenidas and PACCC from the HSRAP process along with several qualifications, and then a second recommendation that kept the agencies within the HSRAP process with several qualifications. HRC commissioners felt that the second recommendation was a good compromise to address the concerns brought forward by Avenidas and PACCC and their concerns of what might become of HSRAP funding if the larger agencies were no longer included. Other commissioners also expressed concern that if Avenidas and PACCC were now longer part of the HSRAP process, other long-time funding recipients would request to have a direct contract with the City as well, thereby upending the HSRAP allocation process. In the end, the HRC voted unanimously to pass on the following recommendation to the Council: The HRC recommends to the Policy and Services Committee that Avenidas and Palo Alto PACCC remain within the HSRAP group of human service providers with these differences from other HSRAP grantees:  Avenidas and PACCC will be assured that their HSRAP funding will not be cut in order to fund reallocations to other HSRAP grantees.  When the Council determines annual adjustments to reflect the increased costs of doing business in the nonprofit sector, Avenidas and PACCC will be assured their proportional shares.  When the Council makes an incremental allocation over and above any annual adjustment, the HRC will recommend redistribution of those funds according to its assessment of human service needs at that time. Incremental allocations will be recommended according to a review covering all HSRAP recipients (including Avenidas and PACCC) and new applicants. City of Palo Alto Page 9  In the case of budget reductions set by the Council and staff, Avenidas and PACCC will bear their proportional share, but no more, in the HRC’S recommendations. Vice Chair Ray Bacchetti stated the issues to which this recommendation responds are: 1. To resolve Avenidas’ and PACCC’s concern that money from their HSRAP allocations might be cut and redistributed to other HSRAP grantees and, similarly, that they might not receive their proportional share of annual HSRAP increases (if any) intended to reflect the increased cost of doing business in the nonprofit sector. 2. To maintain the integrated character and robustness of the HSRAP process in the search for budget increases for human service purposes. Avenidas and PACCC mark the two ends of the age continuum among which human needs are distributed. Their work and the work of other HSRAP-supported agencies have many overlaps. The ability for the HRC to appraise these overlaps and use the HSRAP process to identify means for increasing mutual benefits are enhanced by having all the agencies represented and visible each year. 3. To keep the HRC meaningfully involved in City funding of human service nonprofits and able to make sound recommendations to the Council on human service needs through the appropriate Council committees. The HRC has been asked to play a unique role for the City in assessing human needs, and it has special knowledge of the City’s relationship with service providers. Through its work in human service needs assessment, its attention to the Council's longstanding interest in having nonprofits work together, and its equally longstanding responsibility to make the case for funding responsive to identified needs, the HRC will be better able to advise the Council if Avenidas and PACCC are part of the overall spectrum of agencies funded through the allocation review process. Vice Chair Bacchetti continued that whether these issues can best be responded to by reassigning Avenidas and PACCC funding to the Office of Human Services of the City or keeping them within HSRAP is a matter on which reasonable people can disagree. As such funds are currently managed within the city, HSRAP funding and funding for other human service nonprofits (such as Palo Alto Mediation Program) are all under the Office of Human Services. If Avenidas and PACCC were separated from HSRAP, their funding would go through the City’s administrative budget processes. Together they claim roughly 71 percent of the HSRAP total. Thus, the remainder of approximately $350,000—less weighty in both dollars and scope—might compete less favorably for budget increases. This recommendation keeps Avenidas and PACCC within HSRAP and provides the necessary protections that they seek. Resource Impact: The current resource impact remains the same whether or not Avenidas and PACCC receive funding as part of the HSRAP process or as a general contractor for the Office of Human Service. That amount is $431,184 for Avenidas and $436,830 for PACCCC, for a total of $868,014 in FY14. Policy Implications: City of Palo Alto Page 10 The Comprehensive Plan address the needs of seniors and children in Goal C-3: Improved Quality, Quantity, and Affordability of Social Services, Particularly for Children, Youth, Seniors, and People with Disabilities. Attachments:  ATTACHMENT A - HSRAP history (DOC)  ATTACHMENT B - AVENIDASHISTORY (DOC)  ATTACHMENT C - PACCCHISTORY (DOC)  ATTACHMENT D - AVENIDAS PACCC LETTER (PDF)  ATTACHMENT E - Excerpt December 2013 HRC mtg (DOCX)  ATTACHMENT F - Excerpt January 2014 HRC mtg (DOCX)  ATTACHMENT G - Excerpt FEBRUARY 2014 HRC mtg. (DOCX) 3/19/2014 1 Human Services Resource Allocation Process (HSRAP) History This history will include pertinent information on the formation of HSRAP and key changes thereafter. 1982-1984 Setting up the HSRAP Process BACKGROUND The preparation of a Human Services Plan (later in implementation process changed to the Human Services Resource Allocation Process - HSRAP) was proposed by the City Manager in his 1981-82 budget messages to the Council:  The proposal called for an approach that would identify needs and establish priorities for the funding of social services in the face of shrinking financial resources.  The proposal also indicated the need for a collaborative planning approach using the skills and knowledge of City staff, community groups and the Human Relations Commission (HRC). Service and Funding Approach prior to the Proposed Human Services Plan: Social services were provided by the City in several ways: 1. Direct services provided by City departments. (i.e. special recreation programs for the disabled, emergency medical services and various types of library services) 2. Other services were provided under contract with non-profit organizations (i.e. these include child care, senior services, adolescent counseling and fair housing services funded with combinations of general fund and CDBG funds) 3. Third group of services were those provided by appointed groups and volunteers in the areas of rental housing mediation, disabled awareness and community based crime prevention. All of these activities and services had been incorporated into separate departmental budgets operating as discrete activities. However, the effective use of these resources required an integrated planning and resource allocation approach which reduced competition and increased cooperation and coordination among affected City departments and community groups. Proposed Human Services Plan The proposed Human Services Plan was developed after an extensive review of similar efforts in eleven California cities, League of California Cities and the International City Manager’s Association (ICMA) materials, planning documents of non-profit social service agencies and appropriate City of Palo Alto documents, including past planning efforts and financial information. The experiences of the eleven cities have helped to develop an overall approach that is prudent and workable. 3/19/2014 2 The League of California Cities and ICMA material provided a foundation for some of the issues that may surface in the development of funding policies and priorities under the Plan. The Proposed plan had 5 major parts:  Human Services Defined  Fields of Service Defined for Existing City Services  Objectives of the Plan  Policies and Programs (activities)  Planning and Allocation System Human Services Defined: The definition establishes the framework in which planning and allocation considerations are to be made. The definition incorporates 2 levels of service; 1. The delivery of the good to an individual or 2. Individuals largely for the community’s well being. Field of services classification consisted of 5 fields: 1. Health:  Nutrition programs  Day Health Care  Substance abuse counseling 2. Basic Material Needs  Housing services  Fair housing services  Housing counseling  Home repair services for senior  Tenant/landlord information and referral  Tenant/landlord services 3. Individual and Collective Safety  Domestic violence victim support 4. Individual and family Life  Disabled awareness  Information and referral  Support services for adults  Mental health services 5. Social Development and Education  Community relations  Youth in government  Child care  Senior programs and activities  Employment services for young adults 3/19/2014 3 Objective of the Plan: The policies and programs of the plan were guided by 2 objectives: 1. The development of a framework within which the City of Palo Alto to define its role and funding priorities in responding to identified community problems and needs. 2. The development of a basis for collaboration with other funding and service provider groups (public and private) to enhance the capacities of systems of human service delivery. Policies and Programs: 5 policies that are the core of the plan: 1. Develop Demographic and Services Information. 2. Analysis of Information for Priority Setting 3. Development and Adoption of Policies and Priorities 4. Allocate City Resources for Human Services as Part of the Annual Budget Process Based on Adopted Policies and Priorities 5. Collaboration with Public/Private Sector Planning and Allocation System: These policies were the blueprint for identifying service priorities, allocating resources and, where necessary, encouraging collaboration and integration of services. Human Services Plan was not intended to identify specific activities to be funded. It was a planning approach that enabled key factors, including City staff, representatives of community groups and citizens to cooperatively develop priorities for City services and contract services. Implementation There was an abbreviated application of the HSRAP in the preparation of the 1983-84 budget and full application in 1984-85 and ensuing fiscal years. Abbreviated Application: The abbreviated application involved the first 3 policies in modified form. The priority setting activities were used only to examine proposals for new or expanded services. Information developed by the HRC served as guidelines in the review of new and expanded contract funding requests. Full Application: The first opportunity for full application of the HSRAP process occurred in development of the 1984-85 budget. 1984 First HSRAP allocations:  Senior Coordinating Council  Mid-Peninsula Support Network  Palo Alto Community Child Care 3/19/2014 4  Mid-Peninsula Citizens for Fair Housing, Inc.  Adolescent Counseling Services  Catholic Social Services/Shared Housing Project 1993 The City Council requested that the HRC and City staff review a proposal submitted by two Council members regarding changes to HSRAP. The information below is from the staff report presented to Council on February 22, 1993 on this issue. BACKGROUND At the Council meeting of 9/21/1992, Council directed staff to work with the HRC in consideration of the following goals in regards to HSRAP: 1. Increase the total amount of funding for Human Services contracts by a fixed amount each year, such as the Consumer Price Index (CPI) or the average percentage increase in employee salaries for the prior year, whichever is less. 2. Recognize the special relationship that the Senior Coordinating Council (SCC) and Palo Alto Community Child Care (PACCC) have with the City and ensure that both organizations automatically receive whatever increase is granted to Human Services contracts as a whole. Review separating SCC and PACCC from the HSRAP and adding them to the Human Services Division internal City budget process. 3. Funding for new agencies could be considered as “seed money” for new programs; there would then be no guarantee of funding in future years, but if the HSRAP determine it should be funded, the 2nd year would be at a maximum of 75% of the first year funding and the 3rd year would be a t a maximum of 50% of the first year funding. Consideration could be given to a 3 year funding limit. 4. If money is available as the “seed money” concept takes hold, consideration could be given to build into the HSRAP added “points” for agencies that provide matching funds for the City’s investment in their programs. 5. For existing agencies, i.e., funded in 1992-93, options are: a) Treat them as a “new” agency after 1992-93; b) Consider any increases above the 1992-93 “base” on a “matching funds” basis; and c) Allow SCC and PACCC to apply for more than their base on a “matching funds” basis. The HRC recommended implementation of Option #1: Based on 3 meetings of the HRC, (Nov. 12, Dec. 10, 1992 and the subcommittee meeting on 11/25/1992), the HRC recommended the implementation of Option #1 at the Council meeting of 2/18/1993: 3/19/2014 5 Option #1: Increase the total amount of funding for Human Services contracts by a fixed amount each year, such as the Consumer Price Index (CPI) or the average percentage increase in employee salaries for the prior year, whichever is less. Rationale:  This option would provide clarity to the City’s human services contractors regarding the total amount of funding available from the City on a year-to-year basis.  This would not “promise” a certain contract amount for any agency, but provide a ballpark figure to assist them in preparing grant requests.  Individual contract amounts still would be determined based on performance of the scope of services stated in the contract and the level of need prevalent in the community.  This option would also provide stability to the HSRAP process. The HRC did not support the Options 2-5 Rationale for not supporting:  Option 2: HRC felt that it is difficult to draw the line between SCC and PACCC and many of the other agencies in terms of a “special relationship” and by removing 2 major contractors from the HSRAP process and 76% of the funding, the HRC believed that this might lessen the influence of the other 14 contracted agencies and endanger their future funding.  Option 3: The principle that the City is funding services, not agencies, and these services needs do not diminish after 3 years. In many cases, the agencies currently receiving funding would not survive without City support. Also, there are not many qualified agencies in the community available to provide the services that the HSRAP “Areas of Interest” recommend.  Option 4: This could lead to fiscal pledges that are beyond our ability to honor because the agencies have fund raising plans in place which have resulted in garnering revenues that exceed the City’s contribution.  Option 5: Treating these agencies as a “new” agency could lead to the demise of many of our nonprofit organizations. Nonprofit organizations have limited options for procuring the types of ongoing program funding which the City provides. Excerpt from minutes of February 22, 1993 Council Meeting: A motion was passed to approve the staff recommendation and refer the following changes to the current HSRAP policy to the Council Finance Committee: 1. Approve a 2 year budget cycle for the HSRAP, to coincide with the City’s 2 year budget process. In the 2nd year of each 2 year budget cycle, agencies would receive the CPI or the average of City salary increases, whichever is less. 2. Direct staff to return with a plan regarding establishment of a pilot project funding policy before the HRC makes its funding recommendations for the 1994-95 fiscal year. 3. Direct staff to review the HSRAP for the purpose of strengthening the process 3/19/2014 6 The minutes also reflect the following comments by Council Member Fazzino in regards to Avenidas and PACCC.  Senior services were part of the City staff in the early 1970s, and when the senior services were spun off into the SCC, the City Council at that time made a very clear commitment to the fact that senior services would continue to be an essential City service but felt those services could be provided to the public in a much more cost-effective manner by an independent agency.  The City set up a special citizen committee with respect to the child care, and there had been serious consideration that those services would be handled by staff. The Council made a decision that Palo Alto Community Child Care (PACCC) would provide those services.  There were other outstanding services which had been granted City funds, but in no other case did the City provide those services through the use of the City staff. It was a special relationship with those two groups but it was best not to develop language in a policy that ascertained such. His interest was not to create problems or competition between those two important agencies or any other important agencies that came before the Council for funding. 1994 2.8 CPI – 1995 1.6% CPI 1996 2% CPI 1997 2.6% CPI 1998 No able to verify amount 1999 The following improvements to the HSRAP process were approved and were implemented in the next FY 2000 HRSAP cycle: 1. Expanding the sources of information utilized by staff and HRC to include current demographic and other trends in the region, when making HSRAP funding recommendations. 2. Broadening the community’s participation in the HSRAP process by increasing the number of HRC community forums on community needs. 3. Establishing an annual HRC prioritization of community needs based on local demographic information and community input prior to the HSRAP Request for Proposals (RFP) process. 4. Including a member of the HRC on the HSRAP RFP funding panel. 3/19/2014 7 Safety Net/Multi-year contracts Staff also established a “safety net” of services/Multi-year contracts, basic services that provide a baseline of services for Palo Alto residents. The services examples of services that would meet the funding criteria for multi-year, ongoing contracts for the fiscal year 1999-2000 HSRAP funding cycle were;  Child care,  Youth  Seniors,  Food  Case management, and  Mediation services These services will receive funding through multi-year, ongoing contract upon meeting one of the following 3 criteria: 1. Services having a historical relationship with the City of Palo Alto by either having been created through City efforts or having traditionally received Council’s high priority for funding over the years; 2. Services meeting critical basic needs such as food, clothing, emergency housing, case management, personal care and rehabilitative services; or 3. Services addressing emerging socioeconomic indicators such as needs of special populations. Agencies that meet the criteria for multi-year funding would have more time to plan and budget their financial and staff resources with a greater degree of certainty about future City funds and improve service delivery. Limited/Annual Funding Staff believed that in addition to providing funding for a basic “safety net” of services, funds should be made available on a limited/annual basis for services that meet a second set of criteria: “meeting a critical service need in the community, based on the HRC’s annual priority of community needs, as originally intended by Council.” Agencies requesting limited/annual funding would compete for an annual appropriation through the HSRAP Request for Proposal process. The annual funding cycle will encourage new and existing nonprofits to apply for funding that address the community’s annual priority of needs and emerging issues. Additional resources would support critical human service needs as identified by the HRC’s annual priority of community needs. All agencies funded through the HSRAP process are required to raise additional funds to augment funds provided by the City. 3% CPI approved 3/19/2014 8 2000 HSRAP base budget split into 2 components:  Multi-year contractors $1,028,672 and limited-year contractors $164,054 for total base funding of $1,192,726. o Multi-year contractors: Avenidas, Palo Alto Community Child Care, Project Sentinel, Second Harvest Food Bank o Limited-year contractors: Adolescent Counseling Services, Alliance for Community Care (now Momentum for Mental Health), American Red Cross, Clara Mateo Alliance, Community Association for Rehabilitation (now Abilities United), Family Service Mid-Peninsula, La Comida de California, May View Health Center, Peninsula Center for the Blind & Visually Impaired, Social Advocates for Youth, Support Network for Battered Women  Two new bases will be adjusted annually in future years by the CPI. 2001 3% CPI increase approved 2002 3% CPI increase approved? 2003 Temporary suspension of the CPI increase 2004 Continued suspension of the CPI increase 2005 Continued suspension of the CPI increase and an additional HSRAP funding decrease of 5%. 2007 Palo Alto Mediation Program (PAMP) removed from the HSRAP process and was funded through a contract with the City of Palo Alto.  Project Sentinel administers the Palo Alto Mediation Program requested that they not be part of the HSRAP process as they are contracted to operate and implement a City ordinance: Mandatory Response to Request for Discussion of Disputes between Landlords and Tenants Ordinance Continued suspension of CPI increase due to city budget shortfall. 2009 Continued suspension of the CPI increase and an additional HSRAP funding decrease of 5%. 3/19/2014 9 2010 Continued suspension of the CPI increase 2011 Continued suspension of the CPI increase 2012 No funding increase 2013 Increase of 7.2% across the board Updated 12/4/13 ATTACHMENT B Early History of Senior Services in Palo Alto and the Relationship with Avenidas* EARLY HISTORY WITH AVENIDAS The Senior Coordinating Council’s (SCC) relationship with the City covers a twenty-plus year period. Several significant events and changes occurred during that time period: The City established its own Senior Adult Services in 1971, based on a study of Palo Alto senior residents completed by the SCC, and witnessed an expansion of those services over the next few years. A small office was established in the new Downtown Library. A part-time Coordinator mobilized the agencies and trained volunteers to bring services for seniors together in the downtown area. The coordinator was a City employee. The City funded the SCC administration, Senior Day Care (now Day Health) program and Home Repair Service prior to the establishment of the Senior Center of Palo Alto, while concurrently funding its own Senior Adult Services. In 1974, the City Council approved expenditure of up to $20,000 to remodel a multi-use room in the library as a Senior Services Center, on a temporary basis (two to three years) to accommodate the growth in the number of services, staff and volunteers. In April, 1975 the City Council-appointed Task Force on Aging presented its report, based largely on the SCC’s 1974 Study of Persons 60 and Older in Palo Alto. In Addition, City staff prepared a “Staff Review of Task Force on Aging Report.” (CMR: 202:5). The staff report contains a statement that “Staff feels strongly that the City’s primary role should continue to be that of facilitator…”, and also makes several specific staff recommendations: “1. Staff recommends that Council endorse the concept of multi-purpose Senior Center…that the City shall provide the land, funds for construction shall be raised by the private sector; that the City shall provide for the construction and operation of the Senior Center. “2. Staff recommends that Council endorse the concept of a foundation (read ‘SCC’) and…set aside an appropriate level of funding in the 1975-76 budget. “7. Staff recommends that Council endorse the Home Repair/Home Maintenance Service and include funds in the 1975-76 budget. “8. Staff recommends that Council set aside funds for the Senior Day Care Program, not to exceed $12,000, to be released upon agreement between the City and the Senior Coordinating Council.” At subsequent meetings of the Policy and Procedures (P & P) Committee (May 15, 1975) and the City Council (June 9, 1975) despite differing viewpoints regarding roles and responsibilities, funding levels, and timing, the City Council moved to approve “…a level of funding of $75,000 for the 1975-76 fiscal year for the program on aging without designation at this time as to a particular program, and that the Task Force and City staff attempt to reconcile the differences…and return to the Policy and Procedures Committee with a program” On September 22, 1975, the City Council unanimously moved that “staff be directed to prepare a contract for senior services with the Senior Coordinating Council…” The City’s first contract with the SCC was approved by the City Council in January, 1976 as described in CMR:601:5 of December 10, 1975. An allocation of $75,000 was budgeted for the balance of the fiscal year, as directed by Council. The staff report stated: “In order to encourage independence on the part of the organization both the basic document and scope of services commit the SCC to make a significant effort to obtain funding from sources other than the City.” Since that time the SCC has demonstrated both the commitment and the ability to secure both private and non-City public funds. Following the approval of this contract, events moved quickly. The Senior Day Care Program (now Senior Day Health Program) opened its doors on February 9th. The SCC hired an Executive Director and secretary, and secured donated office space. A contract for Senior Home Repair was signed with the City on June 14th. And in November, the sponsorship of the RSVP of Northern Santa Clara County was transferred from the Volunteer Bureau (now defunct) to the SCC. After lengthy discussions over time, the City agreed to offer the Old Police/Fire Station building to the SCC at a nominal yearly fee, provided the SCC raised the necessary funds ($1.2 million) to renovate the facility. Beginning in October of 1977 a Committee including SCC representatives, City staff and Councilman Fred Eyerly (liaison to the SCC) met repeatedly for six months to discuss issues related to the City’s role in the planned multi-purpose Senior Center. (CMR:235:8, 4/6/78] Until this time, Council decisions on funding the SCC and establishing a Senior Center had not included the consolidation of the City’s Senior Adult Services (SAS) within the SCC’s Senior Center. The SCC reported that it had not been able to raise sufficient operating funds for the Center because of the inflationary increases associated with construction costs. In November 1977, the SCC submitted a budget request for the City to fund the full cost of operating the Center in 1978- 79 as well as to continue to fund the basic SCC organization and subsidies to Day Care and Senior Home Repair. City staff pointed out that this request represented “a change from the direction in the inferred (by City staff) Council policy of May 12, 1977”, i.e. that the City would play no funding role in the Center except as noted in the lease. This new direction regarding the City’s funding role for operations of the Center had implications for decisions on the issue of the incorporation of Senior Adult Services (SAS) into the senior center. The outcome of the joint SCC/City staff negotiations was outlined in the staff report of April 6, 1978 (CMR:235:8), and accepted by the City Council on April 10, as follows: “SCC’s {Senior} Center operating plan and budget incorporate SAS into the Center and provide a well-conceived framework for the integration of SAS. Under the plan, the SCC will become responsible for directing and administering the SAS program and SAS staff would become employees of SCC and their positions eliminated from the City’s staffing authorization and budget. “Staff feels that incorporation of SAS into the SCC is the most workable arrangement to assure consolidation of administration in the Center and avoid coordination and integration problems that might occur if SAS staff were to remain City employees. The transfer of SAS would be acted out through whatever contract for funding of the Center is developed with SCC and through deletion of the SAS costs in the Preliminary Budget. “Staff recommendations regarding SAS: Staff recommends that the transfer of SAS to the SCC occur if SCC adequately demonstrates financial stability for the Center; i.e., obtains funding whether from the City or other sources, to implement the full operating plan. “SCC has been unable to fund the center’s operating budget for 1978-79 and has requested City funding. Based on SCC’s information, staff feels that a City funding role is appropriate.” On April 10, 1978 the City Council approved the recommendations of the joint SCC-City negotiating team, as transmitted by City staff. Fiscal arrangements were made to draw money from the Capital Improvement budget for 1978-79 to assure that the SCC would have the funds for the first year’s operation of the Senior Center. The following week, on April 19, the Finance and Public Works Committee again discussed the plans for transfer of SAS to the SCC before approving the General Fund allocation for the SCC as part of contract services for 1978-79. In 1978, the City transferred its Senior Adult Services to the SCC and first provided funds for the Operation of the Senior Center. The City and the SCC agreed that the SCC would always make substantial efforts to secure community support and other non-city public funds. That objective has remained part of the SCC’s contract Scope of Services. A 1986 evaluation of the SCC conducted by a City-retained outside consultant reported that the SCC had become an established part of the community and that the SCC’s administrative component represented one of the most important tools for leveraging the dollars the City puts into senior services. The Senior Coordinating Council changed its name to Avenidas in 1996. Avenidas has been a HSRAP grantee since its inception in 1984, prior to that it received funding as part of a grant administered by the Community Services Department starting in 1978. CURRENT CITY RELATIONSHIP WITH AVENIDAS Contract:  HSRAP:  Current Grant Amount is $ 431,184  Supports staff salaries and a variety of senior programs and services including case management, counseling, handy man services, and fitness classes among others. Lease Agreement:  Senior Center facility on Bryant Street in Palo Alto for $1/year. Current lease expires in 2027. Avenidas is responsible for all of the maintenance and upkeep, the City maintains the roof and exterior. Other Agreements:  Avenidas pays approximately $14,000 to the City annually (increasing each year) for the parking spaces behind their building. Associated maintenance of parking spots costs approximately costs $60,000 each year. * Source: Adapted From Presentation to the City Council on June 18, 1992, by Kathleen Gwynn, President/CEO of the Senior Coordinating Council of the Palo Alto Area 12/4/13 ATTACHMENT C History of child care in Palo Alto and relationship with Palo Alto Community Child Care (PACCC) * PAST HISTORY WITH PACCC Palo Alto has a long history of support for child care and related services for working parents in the community. Following World War II, a group of women tried to form a child care center that would address the needs of low-income families in what was then known as the Mayfield area. Many reasons, among them the problem of finances, finally brought these efforts to a halt. Meanwhile, as Palo Alto grew, a number of private full-time “day care schools” were started in at least three areas: north Palo Alto, the Midtown area, and Barron Park. In 1964, the Community council of Northern Santa Clara County asked the school district to help with an informal survey of the need for child care, and the response of many indicated there was a need at that time. Early in 1967, a citizens’ committee set up by the organization that ultimately became the local Office of Economic Opportunity conducted a more extensive survey, including school district statistics, welfare figures, and a small survey of industry. As a result of this survey, the Board of Education of the Palo Alto Unified School District requested permission of the State Department of Education to open a children’s center. The Besse Bolton Children’s Center opened in February 1968, with one building. In 1969, students, employees, and other concerned citizens of the Stanford community opened a small day care center at the edge of the campus. When the Stanford Elementary School building became available in 1970, the center was moved there, and an additional program to accommodate infants and toddlers opened on that site. The Unitarian Church opened a child care center in 1971 known as the Ellen Thacher Children’s Center and accommodated twenty-four children ages 2 3/4 to 7. While operating under the aegis of the church, the program was a separate private non-profit organization. Child Care Now, an organization concerned about expanding child care facilities for low income working parents, opened its center in 1971. A room at Mayfield School was made available by the Palo Alto School District to the Sojourner Truth Children’s Center for a token payment of $25 a month. It accommodated twenty-four children, ages 2 1/2 to 5. 2 Assessment of child care needs and recommendations was commissioned by the City Council in spring of 1972. It was completed by City staff, a Citizen’s Community Resource Group, and the Social Planning Council in July of 1972. The results of the needs assessment found that all of the existing child care centers in Palo Alto had long waiting lists and were not able to meet the demand for care of children of working parents. In 1973, the City Council established a Task Force to develop a plan for the implementation of the recommendations included in the report on Palo Alto Child Care Needs and Resources. The City Council designated the following priorities in the order listed for consideration by the Task Force: (1) an extended day care program, (2) an additional preschool day care center, and (3) an infant care center. In considering these priorities, the Council has stated that the City should not be considered the primary source of funds, but that City funds might be available for pilot projects or to provide matching funds for federal or state programs. The Task Force was viewed as a working committee to develop the recommended plan of action. In order that the City have an official positive position on child care, the Task Force recommended that the City Council adopt a policy recognizing child care needs and accept responsibility to be actively supportive of the following: Promoting legislation, providing funds within its means, and assisting the Board of Directors of the non-profit corporation in its efforts to improve and expand child care. In essence, the policy statement read as follows: “The City Council recognizes the growing need for quality child care for all those who live and work in Palo Alto, with priority determined by needs and payment dependent upon economic ability. The City Council here-by accepts a major responsibility to support the development, implementation, and coordination of a comprehensive child care program in Palo Alto and assigns to child care a high priority in terms of the commitment of local resources.” The Task Force recommended that the City of Palo Alto take an active and supportive role in the provision of child care and related services and that a non-profit corporation be established to implement and coordinate the Task Force recommendations, to appoint a Child Care Mobilizer, to administer disbursement of money, and to develop community understanding and support of child care. During the next two years, Palo Alto Community Child Care (PACCC) was created and incorporated as a 501c3 organization and on March 25, 1974, City Council approved a contract with PACCC which allocated funds for the various components of the Task Force Plan. They were: 3 Sick Care Program This component was already operating under a grant from the US. Department of Health, Education and Welfare. This was a program for sick children who would normally attend other centers. Future funding of this component would be from City funds and County revenue-sharing moneys. Infant-Toddler Center A second component of the proposal was creating an infant-toddler center for 20 children. Part-Time Centers Creating two part-time child care centers was a third component of the proposal. The centers would serve children of parents who have part-time jobs, perhaps half of a day two to three days a week. Each center would have twenty children with a ratio of five children to one adult. Two sites were arranged for these centers. One at All Saints Episcopal Church would house the Downtown Children’s Center. Licensed Day Care Homes This fourth component of the proposal would add approximately 35 licensed day care homes. Subsidies of Existing Centers A fifth component of the proposal was to use Palo Alto funds to subsidize low-income children at two centers which were not part of the PACCC program. From five to eight children were subsidized at Sojourner Truth Center located at Mayfield School and at Ellen Thacher Center located at the Unitarian Church on Charleston Ave. Start-up funds for other independent centers were also made available. Pre-School Center The sixth component of the child care proposal was the creation of a pre-school center for twenty-four children at the College Terrace Library. Children ages 2-1/2 to 5 would attend this center with staff ratios of 1 staff to 6 or 7 children. Remodeling of the meeting room in the library was necessary. Office of Child Care Mobilizer The seventh component included opening an office on the third floor of City Hall for the Child Care Moblizer and PACCC. The Child Care Mobilizer also assumed the role of Executive Director of PACCC. By 1978, PACCC was operating College Terrace Pre-school, Afternoon Children’s Center, Downtown Children’s Center, Extended Day Center, Palo Alto Infant Toddler Center, 7 independent “affiliate” programs and a network of 25 Family Day Care Homes (14 of the home care providers were PACCC employees). PACCC employee benefits and staff trainings were offered to affiliate programs and Home Care Providers as part of the 4 mobilizing effort. PACCC had also established itself as the City’s expert on Child Care and related services with the Executive Director serving on local committees related to child care. In 1981, the City of Palo Alto leased the old Ventura School site to PACCC rent free in exchange for managing the facility and providing child care on the site. Sojourner Truth Preschool became a PACCC center and relocated to Ventura. PACCC also opened an extended day program for elementary school children and the Ventura Infant Toddler Center. Space at Ventura was also leased to Heffalump Preschool Co-op, an independent PACCC Affiliate Center. In 1984, the City began to reduce the administrative subsidy to PACCC. The remaining administrative money was to be used for administering the subsidy program for income eligible families and coordinating child care efforts in Palo Alto. The central administration for the PACCC child care centers was to become self supporting. PACCC responded to this reduction in support by reducing the central office staff and eliminating the child care coordination, resource and referral at a time when the City was expecting PACCC to take the lead role in developing employer support for child care. PACCC was unable to assume that role. The City responded by creating a Child Care Task Force by action of the City Council on March 3, 1986. The Task Force was asked to recommend to the City ways of encouraging more active participation by local employers in assisting employees with their child care needs. In addition the Task Force was to determine the most effective way of establishing a child care resource and referral service for people who live and/or work in Palo Alto. Two of the recommendations from that report were to establish an ongoing Child Care Task Force and draft a Master Plan for child care in Palo Alto. By 1989, with the passage of the utility users tax, after school care was being developed at every elementary school site. PACCC became a major provider of school age care which increased the number of PACCC centers from 7 to 15. However, PACCC did not adjust any of its administrative processes to accommodate this growth and reduced further its involvement in child care coordination for the City even though PACCC was still receiving financial support from the City for those services. The Master Plan was completed and the City hired a Child Care Coordinator to work with the ongoing Task Force and coordinate school age care with PAUSD and the Providers. By 1993, PACCC was at a major crossroads. The agency structure in place at that time did not allow for proper administration of the 15 centers or the City’s Subsidy Program, the financial viability of the organization was questionable at best and support for the agency from the community was decreasing. The question being asked by the Board of Directors was not where is PACCC headed but whether it should exist at all. 5 In the fall of 1993, after much soul searching, the Board of Directors of PACCC committed to the major task of rebuilding the agency into again being a healthy and viable community resource that provides and advocates for high quality child care and related services for the Palo Alto Community. In October, 1993 the City issued PACCC a loan in the amount of $75,000 as well as the services of City accounting personnel so that PACCC could meet its financial obligations. The loan was subsequently paid off in 1995. Currently, PACCC is contracted with the City of Palo Alto to administer the City’s child care subsidy program. The other services listed below are those that PACCC offers to the child care community at large in Palo Alto. The Provider Connection  The Provider Connection (PC) brings professional and educational opportunities within reach of local providers. The PC, located at the Ventura facility and funded by PACCC, provides learning opportunities to over 125 child development professionals in the Palo Alto community. CPR is offered at least 5 times each year at a much lower cost than most other agencies.  In addition to the services offered, the PC is a partner agency to CARES which is a program designed to monetarily support early educators pursuing a college degree. Funding for CARES is provided by FIRST 5 (through Proposition 10 tobacco tax dollars, FIRST 5 sponsors essential services for young children and families across the State) and WestEd E3 (E3 promotes educational obtainment and professional development of early childhood educators in Santa Clara County). The PC staff support CARES applicants on their path to a college degree. The rental subsidies received by the City for administrative offices, child care facilities and PAUSD classrooms supports PACCC to offer the services of the PC to the educational community in Palo Alto. Health Insurance Services  PACCC enables other child care providers in the City, including those operating out of their homes, to purchase their health insurance through PACCC’s policies. This allows providers to access lower-cost health benefits to their own employees. 6 CURRENT CITY RELATIONSHIP WITH PACCC The current relationship with PACCC can be categorized through a series of contracts and lease agreements listed below. Contracts:  HSRAP:  Current Grant Amount is $436,830. o 15% of grant spent on subsidy program administration. o 85% of grant spent on tuition subsidy for 34 low income children in preschool and afterschool care. o PACCC leverages HSRAP contract funds with other funding sources, (such as the State of California), including its own fundraising, to offer subsidized child care to more of the community’s families.  Extended Child Care Services o Under contract with the City to provide after-school child care services at 11 of the 12 elementary school sites serving approximately 600 children. Lease Agreements:  Sub Lease – Portables - In collaboration with PAUSD for after school child care, the City underwrites leases to the child care providers on all PAUSD Elementary School Sites (12). PACCC is the sub lessee on 11 of these sites.  Lease - Ventura Community Center and a space by the College Terrace Library are provided free of charge in exchange for providing a variety of services as laid out in the scope of services. PACCC is responsible for all of the maintenance and upkeep, the City maintains the roof and exterior. Current lease expires in 2014. * Source: Adapted From history document provided to the City by Janice Shaul, Executive Director of PACCC. 12/4/13 APPROVED 1 1 2 EXCERPT ONLY 3 4 HUMAN RELATIONS COMMISSION 5 Thursday, December 12, 2013 6 Council Chambers 7 Palo Alto Civic Center 8 250 Hamilton Avenue 9 6:00 PM 10 SPECIAL MEETING 11 12 13 14 15 1. Discussion of Staff Report in response to City Council request to consider moving Avenidas 16 and Palo Alto Community Child Care (PACCC) out of Human Services Resource Allocation 17 Process (HSRAP). 18 19 Commissioner Bacchetti introduced Janet Shaul, Executive Director of Palo Alto Community Child 20 Care (PACCC) and Lisa Hendrickson, Executive Director of Avenidas. Staff discussed highlights of 21 the staff report. (Exhibit A). 22 (Commissioner O’Nan arrived at 6:10pm) 23 24 Ms. Lisa Hendrickson, thanked staff for preparing the report and said it adequately represented the 25 relationship between Avenidas and the City. She recognized the competing interests in HSRAP and 26 the unique and individual interests of the HRC members. 27 28 Janice Shaul explained that last spring, she and Ms. Hendrickson had to go to City Council to 29 request an increase equal to what the other agencies were recommended to receive. This made for a 30 very uncomfortable situation, because they were forced to compete with their colleagues of other 31 equally important agencies who they would otherwise not have to compete with. When there is a 32 recommendation that they feel is unequitable, they feel obligated to oppose the HRC 33 recommendation and approach the Finance Committee directly. 34 35 Amy, can you listen to the tape again for the highlighted section above. 36 37 Commissioners comments/questions to speakers: 38 If PACCC and Avenidas were removed from HSRAP, then the HRC may find it difficult to assist 39 families who need child care or senior services. Ms. Hendrickson said they would still be available 40 as a resource no matter where the funding comes from. Ms. Shaul said they know they are not 41 meeting the need and are always looking for other funding sources to help families. Their 42 APPROVED 2 collaboration with City Staff will still exist. City Staff will still have an influence in the scope of 43 services. 44 45 By being removed from HSRAP they are hoping for more consistency. 46 47 There was a brief discussion regarding concerns that since PACCC and Avenidas receive a large 48 portion of the total HSRAP budget, their removal could have a negative effect to the overall HSRAP 49 funding for the remaining agencies. 50 51 Commission Ezran said he failed to see the argument for removing PACCC and Avenidas from 52 HSRAP because of their long history, while other agencies who receive less, have a long history as 53 well. Ms. Hendrickson said it is because they are sole source agencies. Commissioners expressed 54 that the HSRAP process should be improved, rather than to remove agencies from HSRAP. 55 56 Commissioner Morin commented that it is important to maintain fairness and competition. 57 58 Vice Chair Bacchetti made a motion that the HRC recognized the major and continuing 59 contributions of nonprofit human service providers and the important role of HSRAP funding 60 to that sector of the community. We also recognize the distinctive historical roles of Avenidas 61 for seniors and PACCC for children and their families. As agencies with direct ties to the City 62 Council in terms of their origins and continuing significance regarding functions often 63 performed in other cities by the city government itself, they have requested that their city 64 funding be separated from HSRAP and negotiated directly with the city. While recognizing 65 the validity of their request, we also acknowledge the significance of other current and 66 potential future HSRAP-funded agencies and believe it is in the best interests of the 67 community that funding for these agencies not suffer because annual funding would be 68 reduced by this move to roughly $350,000. Accordingly, we recommend to the Finance 69 Committee of the Council that Avenidas and PACCC funding be separated from HSRAP and 70 go with these agencies as they develop a different relationship with the city. Further, we 71 recommend that future increases to HSRAP be no less a percent than the weighted average 72 increase to Avenidas and PACCC; and that future decreases to HSRAP be no greater than the 73 weighted average of city funding reductions to Avenidas and PACCC. Seconded by 74 Commissioner Chen. 75 76 After some discuss, Vice Chair Bacchetti and 2nd withdrew the motion for further discussion at the 77 January HRC meeting. 78 79 Commissioner Ezran said he would change his mind, if motion contained language that if City 80 Council did not accept the second part of the motion that the HRC recommendation would be to 81 NOT separate the agencies from HSRAP. 82 83 APPROVED 1 1 2 EXCERPT ONLY 3 4 5 HUMAN RELATIONS COMMISSION 6 Thursday, January 09, 2014 7 Council Conference Room 8 Palo Alto Civic Center 9 250 Hamilton Avenue 10 7:00 PM 11 REGULAR MEETING 12 13 14 1. Continued Discussion of Staff Report in response to City Council request to consider moving 15 Avenidas and Palo Alto Community Child Care (PACCC) out of Human Services Resource 16 Allocation Process (HSRAP). 17 18 Chair O’Nan summarized the discussion at last month’s meeting. Vice Chair Bacchetti explained 19 that he would like to satisfy PACCC and Avenidas concerns that their allocations would not be cut 20 to give to other grantees, but to also protect the integrity of the HSRAP program and be able to seek 21 future increases, and be able to keep the HRC involved in Human Services funding 22 recommendations. He said he was originally in favor of the idea, but he wanted to propose a new 23 motion for consideration. 24 25 Vice Chair Bacchetti made a motion that the HRC propose to the Policy and Services 26 Committee that Avenidas and PACCC remain in the HSRAP group of human service 27 providers with these differences from other HSRAP grantees: Avenidas and PACCC will be 28 immune from reallocation of their HSRAP funding to other HSRAP Grantees. When City 29 Council through annual cost of living allocations to increase HSRAP funding, Avenidas and 30 PACCC will be assured a proportional share of those cost of living increases. When an 31 incremental allocation above cost of living is decided, the HRC will recommend distribution 32 according to its assessment of human service needs, the incremental allocations will be 33 accordingly recommended on a basis among all HSRAP applicants so that would include 34 Avenidas and PACCC, should they seek to make a case for getting part of this incremental 35 allocation. In the case of budget reductions set by the City Council and staff, Avenidas and 36 PACCC will bear their share, but no more, in the HRC’s recommendations. Seconded by 37 Commissioner Ezran. 38 39 Discussion of Motion: 40 Commissioner Ezran said he supported the motion because it was a good compromise. He believed 41 they should not be treated differently than other agencies. Chair O’Nan commented that she 42 APPROVED 2 preferred the new motion and wanted to review it in writing before it’s voted on. 43 44 The commissioners discussed briefly the desire to keep HSRAP funding robust and the concerns if 45 PACCC and Avenidas were removed from HSRAP. 46 47 Chair O’Nan explained she viewed the main problem being that HSRAP is chronically under-funded 48 and needs to be more sustainable. 49 50 Commissioner Morin said that Avenidas and PACCC do have a special role since they receive more 51 funding, and that she supported Vice Chair Bacchetti’s motion which distinguishes them from the 52 other recipients. 53 54 The commissioners discussed tabling the motion, so it could be revised and discussed again at the 55 February 13th HRC meeting. 56 57 Commissioner Ezran made a motion to table the motion. Seconded by Commissioner Stone. 58 Discussion: Chair O’Nan asked that anyone who may want to make a motion submit one to 59 staff to be in the packet for the February 13th meeting. AYES: Unanimous. 60 61 DRAFT 1 1 EXCERPT ONLY 2 3 HUMAN RELATIONS COMMISSION 4 Thursday, February 13, 2014 5 Council Conference Room 6 Palo Alto Civic Center 7 250 Hamilton Avenue 8 7:00 PM 9 REGULAR MEETING 10 11 12 13 14 15 1. Motion regarding participation of Avenidas and Palo Alto Community Child Care (PACCC) 16 in the Human Services Resource Allocation Process (HSRAP.) 17 Vice Chair Bacchetti commented that he had no changes to the motion that was in the packet and 18 would answer any questions. Commissioner Ezran said the motion was well thought out and 19 balanced, and would support the motion. Chair O’Nan invited Lisa Hendrickson and Janice Shaul to 20 speak. Ms. Hendrickson said they are sticking by their original request to be removed from HSRAP; 21 while they acknowledge that the recommendation does address some of their issues, historically, 22 they seldom see an equal share of funding increases, but have an equal share of funding decreases. 23 Chair O’Nan said she would like to see these agencies stay in HSRAP, because she believed the 24 problem is due to chronic underfunding of HSRAP. She also supported the motion. 25 26 Chair O’Nan made a motion to pass Vice Chair Bacchetti’s motion: The HRC proposes to the 27 Policy and Services Committee that Avenidas and Palo Alto Community Child Care (PACCC) 28 remain within the Human Services Resource Allocation Process (HSRAP) group of human 29 service providers with these differences from other HSRAP grantees: Avenidas and PACCC 30 will be assured that their HSRAP funding will not be cut in order to fund reallocations to other 31 HSRAP grantees. When the Council determines annual adjustments to reflect the increased 32 costs of doing business in the nonprofit sector, Avenidas and PACCC will be assured their 33 proportional shares. When the council makes an incremental allocation over and above any 34 annual adjustment, the HRC will recommend redistribution of those funds according to its 35 assessment of human service needs at that time. Incremental allocations will be recommended 36 according to a review covering all HSRAP recipients (including Avenidas and PACCC) and 37 new applicants. In the case of budget reductions set by the Council and staff, Avenidas and 38 PACCC will bear their proportional share, but no more, in the HRC’S recommendations. 39 Seconded by Commissioner Morin, AYES: Unanimous. 40 41 Policy and Services Committee MINUTES 1 EXCERPT ONLY Special Meeting March 25, 2014 Chairperson Price called the meeting to order at 6:06 P.M. in the Council Chambers, 250 Hamilton Avenue, Palo Alto, California. Present: Klein, Price (Chair), Schmid Absent: Scharff 1. Recommendation from the Human Relations Commission in response to City Council request to Consider Moving Avenidas and Palo Alto Community Child Care (PACCC) Out of the Human Services Resource Allocation Process. Minka Van der Zwaag, Community Services Manager of Senior Programs, reviewed the Finance Committee's recommendation for the Policy and Services Committee (Committee) to consider removing Avenidas and Palo Alto Community Child Care (PACCC) from the Human Services Resource Allocation Process (HSRAP). She provided a brief history of HSRAP. In 1993 the Human Relations Commission (HRC) recommended PACCC and Avenidas not be removed from HSRAP and the Council concurred. In 2007, Project Sentinel was removed from HSRAP because Project Sentinel provided services in relation to a City Ordinance. If PACCC and Avenidas were removed from HSRAP, they could respond to a Request for Proposal (RFP) for child care subsidy administration and senior services. Jill O’Nan, Human Relations Commission Chairperson, heard from representatives of PACCC and Avenidas regarding their wish to be removed from HSRAP. Representatives were concerned that funding would be cannibalized by smaller agencies. The HRC wished to preserve the relationship of PACCC and Avenidas with HSRAP in order to maintain a robust program, to simply the RFP process, and to retain HSRAP visibility. Page 2 of 3 Policy and Services Committee Special Meeting Minutes 03/25/14 The HRC unanimously passed a Resolution guaranteeing that PACCC and Avenidas funding would remain intact. However, the HRC would have discretion to recommend a reallocation of incremental funding. The HRC recommended PACCC and Avenidas remain a part of HSRAP. The HRC felt agency competition for funding resulted from chronic underfunding. Chair Price requested Staff restate the RFP process should PACCC and Avenidas separate from HSRAP. She inquired whether the timeframe for allocations would remain the same in a new RFP process. Ms. Van der Zwaag indicated a new RFP process would be substantially similar to the current RFP process with only minor changes. The terms could be the same as those utilized now. There would not be an opportunity for public discussion prior to recommendations being made to the Council. Respondents to the RFP would negotiate contract terms with Staff. Council Member Schmid felt human services was not the main function of local governments. There was an advantage to having a human services budget to focus Council discussion. To have a clear-cut goal for human services as a percentage of the budget was important. Senior and youth services were critical to a healthy community. He preferred PACCC and Avenidas remain within HSRAP. He did not favor the HRC's recommendation. Council Member Klein did not believe the existing process was logical for PACCC and Avenidas because they operated as City functions. The HRC's recommendation, though well intentioned, would be useful only if the City Council did not allocate funding to specific programs. The Council would be inclined to allocate more funding to the smaller agencies, if it was aware of the small amount of total funds available to allocate to HSRAP agencies. Separating PACCC and Avenidas from HSRAP would benefit those agencies as well as the smaller agencies. Chair Price concurred with Council Member Klein. Separating Avenidas and PACCC from HSRAP was logical and would provide funding predictability for Avenidas and PACCC. MOTION: Council Member Klein moved, seconded by Chair Price that the Policy and Services Committee recommend the City Council direct Staff to prepare the necessary paperwork to separate Avenidas and PACCC from the HSRAP process. Ms. O’Nan noted Palo Alto was unusual in the large disparity between wealthy and not wealthy residents. Nonprofit agencies were denied funding Page 3 of 3 Policy and Services Committee Special Meeting Minutes 03/25/14 from many sources because of the high standard of living in Palo Alto. The HRC was committed to providing snapshots of the total health of the community. If the Committee recommended the Council remove PACCC and Avenidas from HSRAP, she hoped the Council would support continued funding of the smaller agencies. Council Member Schmid remarked the Council contributed land or space for nonprofit agencies' use as well as funding. MOTION PASSED: 2-1 Schmid no, Scharff absent Council Member Klein inquired whether the Committee's recommendation would be presented to the Council in April 2014. Ms. Van der Zwaag noted the Committee’s recommendation would be presented to Council; although, she had not yet set a date. Council Member Klein was unsure whether the Council could act on the item prior to the upcoming Budget hearings. Ms. Van der Zwaag clarified that separating PACCC and Avenidas from HSRAP would not affect the Budget. City of Palo Alto (ID # 4780) City Council Staff Report Report Type: Action Items Meeting Date: 5/12/2014 City of Palo Alto Page 1 Summary Title: Consideration of Finance Committee Referral to the HRC Title: Consideration of Finance Committee Referral to the Human Relations Commission Regarding Additional Funding for Human Resource Allocation Process Agencies From: City Manager Lead Department: Community Services Recommendation: Staff recommends that Council consider the recommendation by the Finance Committee at their meeting on April 15, 2014 that the Human Relations Commission (HRC) re-visit potential funding for underfunded, new, and emerging needs for agencies within the Human Services Resource Allocation Process for FY15 in an amount up to $200,000. Background At the April 15, 2014 Finance Committee Meeting, staff presented the Human Services Resource Allocation Process (HSRAP) FY 2015 budget request (see Attachment A). HSRAP contracts run on either a two- year (14 agencies) or six-year (2 agencies) funding cycle; FY2015 is mid-contract cycle for all agencies. For the 14 agencies on a two-year cycle, this recommendation would impact the second year of their two-year cycle. Staff recommends that Council review the issue and make a policy recommendation prior to staff and the HRC reviewing a potential additional funding plan. If Council support is unclear, staff and the HRC could dedicate considerable time exploring potential funding plans, unintentionally raising funding expectations on the part of the agencies that could be unwarranted if Council would not consider expanding funding. The following is the Finance Committee recommendation: “The Finance Committee recommends that the Human Relations Commission review the funded agencies in Human Services Resource Allocation Process to identify the most critical needs that were requested and unable to be allocated for Fiscal Year 2015, not to exceed the amount initially requested City of Palo Alto Page 2 by those agencies with the following guidelines: 1) include any critical and new and emerging needs that the Human Relations Commission has identified, as well as critical needs that were identified previously but unable to be allocated in the previous budget cycle; and 2) not to exceed the additional $200,000 that was requested in aggregate that was not funded at the beginning of the prior two-year cycle. “ The amount included in the motion ($200,000) was selected as it was the difference between the amount requested in FY2014 by the fourteen agencies with two-year contracts and the amount received, which was based on the amount of funding available. Staff asked the Finance Committee for clarification on the effect of the motion on Avenidas and Palo Alto Community Child Care, the two agencies on a six-year cycle, as those agencies have requested to be removed from the HSRAP process and the item is up for Council review on May 12, 2014. Chair Berman noted the Committee would have clarification on PACCC and Avenidas prior to discussing the Community Services Department budget, which at the time of the Finance Committee meeting was scheduled for May 20, 2014. Resource Impact If Council decides to provide one-time funding for the HSRAP program, staff recommends using the City Council contingency ($250,000) in FY15. If Council approves ongoing funding, then staff recommends using the Budget Stabilization Reserve as a one-time source of funding; staff will incorporate the ongoing increase into future budgets. The process timing may not allow for discussion during the proposed budget meetings, but this transaction can be approved after budget adoption as well. In addition, the Council has the option of recommending a specific amount and asking staff and the HRC to return with detailed recommendations. Attachments:  ATTACHMENT A - STAFF REPORT # 4617NEW (PDF)  ATTACHMENT B - Excerpt - 04-15-2014 FC transcript (DOCX) FINANCE COMMITTEE EXCERPT - FINAL MINUTES Page 1 of 13 Special Meeting Tuesday, April 15, 2014 3. Human Services Resource Allocation Process (HSRAP) Contract Renewal for FY 2015. Minka Van Der Zwaag, Community Services Manager reported the Council approved Human Services Resource Allocation Process (HSRAP) funding for Fiscal Year (FY) 2014 and approved funding in concept for FY 2015 in the same amount. The FY 2014 HSRAP allocation included a 7.1 percent increase which was distributed in equal proportions to all HSRAP grantees. HSRAP executed six-year contracts with Palo Alto Community Child Care (PACCC) and Avenidas and two-year contracts with other agencies. Agencies under six-year contracts had a historical relationship with the City and provided services identified in the Comprehensive Plan. Agencies under two-year contracts traditionally provided critical services identified in the Human Relations Commission's (HRC) annual priority setting process. A biannual funding program allowed the HRC, Finance Committee (Committee), and the Council to incorporate new agencies to meet emerging needs. The HRC recommended to the Policy and Services Committee that Avenidas and PACCC remain a part of HSRAP. The Policy and Services Committee recommended PACCC and Avenidas become direct services contractors. The Council was going to consider this issue on May 12, 2014. The Outlet Program, an outreach program to lesbian, gay, bisexual, and transgender (LGBT) youth, was now a part of Adolescent Counseling Services. All grantees met performance indicators and were good stewards of funds. The HRC visited HSRAP agencies to understand the services being provided. Stepping Stones and Dream Catchers, tutoring programs for low- income youth, and Vista Center for the Blind and Visually Impaired were new agencies that received HSRAP funding in FY 2014. The HRC conducted a detailed Human Services Needs Assessment in 2011 and was currently working on a supplement. The HSRAP Budget for FY 2015 was the same as the FY 2014 Budget. If the Council acted to remove PACCC and Avenidas from HSRAP, then Staff needed to issue a Request for Proposal (RFP) to seek providers for senior services and child care. Jo Jaros, Vista Center for the Blind and Visually Impaired served more than 50 senior citizens in Palo Alto in FY 2014. Vista Center utilized HSRAP funding to provide daily living skill services, orientation and mobility services, counseling, and support groups. FINAL MINUTES Dawn Wilcox, Vista Center for the Blind and Visually Impaired was able to maintain her nursing license because of services she obtained at Vista Center. She now volunteered as Coordinator of the Health Library at Vista Center. More and more residents needed the services provided by Vista Center. Georgia Bacil, Senior Adults Legal Assistance (SALA) Directing Attorney provided free civil legal services to senior citizens throughout Santa Clara County (County). HSRAP funding allowed SALA to double the number of appointments scheduled in Palo Alto. Karen Anselmo, Community Technology Alliance (CTA) Director of Operations indicated CTA provided technology solutions to issues of homelessness and poverty. HSRAP funding supported three programs, one of which was community voice mail. CTA was exploring a pilot program to design a mobile service specifically for homeless and low-income populations. Council Member Burt asked if the new program was intended to be cellular, wireless, or both. Ms. Anselmo indicated it was mobile phone technology. Council Member Burt clarified that use of a wireless network did not incur fees for the user. Ms. Anselmo said she would provide information at a later time. Eileen Richardson, Downtown Streets Team and Peninsula Healthcare Connection advised that the Downtown Streets Team won an award from MetLife for its partnership with the Palo Alto Police Department and the Palo Alto Business Improvement District. Peninsula Healthcare Connection merged with New Directions in 2013. Council Member Holman requested Staff provide reasons for the HRC recommending PACCC and Avenidas to remain a part of HSRAP and the reasons the Policy and Services Committee voted against that. Chair Berman indicated the issue was not a part of the Agenda Item under discussion. Ms. Van Der Zwaag clarified that the Council would consider the issue in May 2014. Proposed allocations included funding for Avenidas and PACCC. Chair Berman did not believe it was appropriate for the Committee to discuss policy issues. FINAL MINUTES Council Member Holman inquired about the anticipated Budget for FY 2015. Lalo Perez, Director of Administrative Services and Chief Financial Officer reported Staff was still preparing the Proposed Budget. Council Member Holman requested a rough estimate. Mr. Perez believed the Budget would be in the range of $170 million. Council Member Holman noted the City did not commit one percent of its Budget to HSRAP funding and wanted HSRAP funding to reach that level. She inquired about the process to introduce a new nonprofit agency. Ms. Van Der Zwaag reported new agencies could submit applications at the beginning of the next cycle. In the fall of 2014, Staff was going to release an RFP for FY 2016. In her experience, agencies were not added in the second year of the funding cycle. Council Member Holman seemed to recall from her service as liaison to the HRC that some organizations were removed from HSRAP. Ms. Van Der Zwaag advised that more agencies applied for funding than HSRAP could fund. To add new agencies, funding for existing agencies had to be reduced. In her experience with HSRAP, agencies continued to receive funding in new cycles unless they missed a deadline in the application process. Council Member Holman wished to provide the name of an agency for consideration for HSRAP funding. Ms. Van Der Zwaag indicated Staff provided names of agencies to the Purchasing Department when the RFP was issued. Council Member Holman suggested Staff include Fresh Lifetimes for Youth (FLY). Vice Mayor Kniss asked if the suggestion of agencies was appropriate under the Agenda Item. Mr. Perez suggested the Committee only provide the names of agencies for inclusion in the RFP process. Council Member Holman reported FLY was a new nonprofit agency that worked to break the crime/violence/incarceration cycle for teens. Ms. Van Der Zwaag was familiar with FLY. FINAL MINUTES Council Member Holman reiterated that HSRAP funding should total one percent of the City's Budget. Council Member Burt recalled that HSRAP funding had not contained inflationary increases and had actually decreased since 2003. Ms. Van Der Zwaag reported the Council policy to include a Consumer Price Index (CPI) increase for HSRAP grantees was temporarily suspended in 2003. In 2007 and again in 2009, HSRAP funding was reduced. Council Member Burt was not able to recall a reason for suspension of the CPI increase, and inquired about the reason for the suspension becoming permanent. Mr. Perez did not have the complete history; however, he believed the impact of pensions not being fully funded resulted in an overall decrease in the City's Budget. Council Member Burt noted the Budget for FY 2015 would be approximately $170 million, and inquired about the total Budget amount in FY 2003. Mr. Perez said he could provide that information shortly. Council Member Burt referenced Ms. Van Der Zwaag's comments regarding the HRC's process to identify needs. Staff anticipated Budget surpluses for the next several years. He was concerned that input from the HRC would lag behind the Committee's consideration of additional HSRAP funding in FY 2015. The Committee was able to use a placeholder amount without identifying the allocation of HSRAP funding. He asked if Staff had additional ideas. Mr. Perez suggested the Committee place HSRAP funding in the parking lot during the Budget process. The Committee was able to discuss HSRAP funding during the Community Services Department Budget review or at wrap-up night. Council Member Burt inquired whether the HRC would be able to provide information to the Committee within that timeframe. Ms. Van Der Zwaag felt the HRC could complete its supplemental report if they knew there was an opportunity for increased funding. Mr. Perez recalled that in 2013 the HRC was tasked with determining HSRAP allocations prior to the final adoption of the Budget. FINAL MINUTES Council Member Burt advised that the Committee could not provide an explicit allocation under the current Agenda Item, but could request the HRC provide recommendations early in the Budget process. Mr. Perez added that the Committee could utilize funds from the Council Contingency Fund for HSRAP funding when discussing the Proposed Budget. Past Committees provided one-time funding from the Council Contingency Fund. Council Member Burt believed the Committee was ready to institutionalize funding for HSRAP because of anticipated surpluses and prior discussions. Mr. Perez indicated the FY 2003 Budget totaled $114,950,000. Council Member Burt stated at that time HSRAP funding was greater than one percent of the total Budget. It was a possibility for the Committee to consider creating some type of reserve fund to assure level HSRAP funding in times of economic downturns. He also understood the Food Closet could be in jeopardy with its funding. Ms. Van Der Zwaag requested Mr. Dah of InnVision Shelter Network to respond to Council Member Burt's comment. Philip Dah reported the Food Closet served two bags of groceries twice a week to homeless and low-income people in Palo Alto. The budget for the Food Closet was $41,300 and HSRAP provided only $12,000. Council Member Burt suggested the HRC review funding for and needs of the Food Closet. Mr. Perez noted the Adopted Budget in FY 2004 included HSRAP funding of $1,318,853. Proposed funding for HSRAP in FY 2015 was almost the same as in the Adopted Budget for FY 2005. Council Member Burt remarked that it was important for the Committee to consider how HSRAP services integrated with other elements of City programs and the ability of the recipients to access services. He inquired whether proposed shuttle routes would meet the needs of clients served by HSRAP funding. Ms. Van Der Zwaag indicated neither HSRAP Staff nor the HRC was involved in the creation of new routes. FINAL MINUTES Jaime Rodriguez, Chief Transportation Official indicated routes were created in conjunction with public input at community meetings. In preparing the first Needs Assessment, the HRC talked with the Planning and Transportation Commission regarding concerns that transportation was a baseline need with key gaps. The new routes encompassed many senior centers. Council Member Burt recalled Staff stating to the Council that the routes were conceptual. Earlier in the day Council Members received information which indicated proposed routes. He was not sure those routes would meet a variety of needs. Vice Mayor Kniss remarked that Staff did not mention the interaction of HSRAP funding with other funding sources or the agencies' rationales for their requests. Ms. Van Der Zwaag reported that agencies provided specific scopes of service and specific information about the percentage of agency funding requested from the City. Agencies also indicated the percentage of funding received from government agencies, in-kind services, donations, etc. Review of that type of information was part of the HRC's recommendation process. The HRC did not want City funding to be a major source for agencies. Vice Mayor Kniss was curious as to how the one percent of total Budget amount was determined. Ms. Van Der Zwaag indicated it was a conceptual amount. Vice Mayor Kniss asked if the one percent amount was subjective rather than objective. Ms. Van Der Zwaag answered yes. Some cities provided a percentage of their overall budgets to agencies. The HRC viewed that as a model for its requests for funding. Vice Mayor Kniss noted many HSRAP agencies received funding from the County as well as the City. There needed to be an objective means to determine the appropriate amount of funding for HSRAP. Mr. Perez commented that the Committee should note the difference in budget sizes between Palo Alto and other cities. Palo Alto provided non- typical business activities, such as utilities. Staff discussed whether one percent was the correct amount to consider, given the Budget differences. FINAL MINUTES Vice Mayor Kniss hoped the reports clearly demonstrated why the HRC selected certain amounts. Ms. Van Der Zwaag offered to include the information in the Staff Report to the Council. Vice Mayor Kniss wanted background information for the current funding cycle. Ms. Van Der Zwaag explained that in the past, the mid-cycle Item was informational. Chair Berman suggested HSRAP information presented at the beginning of each cycle be included in the mid-cycle report. He concurred with Council Member Burt's suggestion of a reserve fund for HSRAP. He inquired whether the HRC lacked sufficient resources to complete the supplemental Needs Assessment. Ms. Van Der Zwaag reported that in 2010 the HRC had the services of an intern who prepared demographic information and researched data. Chair Berman asked if a small amount of funding would assist with completion of the supplemental Needs Assessment. Ms. Van Der Zwaag indicated the HRC conducted one-on-one contact with agencies, with the possibility of a full Needs Assessment in the next few years. At the current time, the HRC felt they could perform the smaller review. Chair Berman recommended Commissions approach the Council if they needed a few thousand dollars for professional assistance. With respect to shuttle routes, the Transportation Department needed a comprehensive discussion with other departments to receive input. Council Member Burt inquired whether the Committee could request that the Transportation Department engage fully with the Community Services Department regarding needs. Mr. Perez suggested the Committee provide direction to Staff in the Budget hearing for the Planning Department. Council Member Burt expressed concern that plans would be set by the time Budget hearings were held. Mr. Perez reported Staff could hold internal discussions without specific direction. FINAL MINUTES Council Member Burt wanted Staff to reconsider routes before the process had advanced. MOTION: Chair Berman moved, seconded by Council Member Burt to recommend to the City Council that: 1. The funding allocation as recommended by the Council for the 2013-2015 Human Services Resource Allocation funding period be included in the Fiscal Year 2015 Human Services contract budget; 2. The City Manager or his designee be authorized to execute year two of separate two-year contracts with fourteen agencies as was approved in June 2013; and 3. The City Manager or his designee be authorized to execute year five of separate six-year contracts with Avenidas and Palo Alto Community Child Care. INCORPORATED INTO THE MOTION WITH THE CONSENT OF THE MAKER AND SECONDER to request that Human Relations Commission evaluate supplemental or increases for funding for Fiscal Year 2015 and bring to the Finance Committee as soon as possible. Council Member Holman asked if the Committee should utilize the parking lot approach to consider additional funding. Chair Berman explained that HRC information would be presented to the Committee which determined whether to move HSRAP funding to the parking lot in order to understand the overall Budget. Council Member Burt clarified that if the HRC did not have ample opportunity to complete the process at the commencement of the Budget process, then the parking lot would give the HRC three to four weeks to complete it. The HRC needed to begin work now so that they could provide a recommendation by the end of the Budget process. Vice Mayor Kniss asked if the intent of the Motion was to provide additional funds for HSRAP. Chair Berman stated the intent was to approve amounts contained in the original contracts and to inquire whether the HRC would propose increased funding and provide a report on possibly increasing funding. The Committee was not advocating a funding increase, but it was open to the concept if the HRC had a logical recommendation. FINAL MINUTES Vice Mayor Kniss remarked that the Committee was indicating there might be additional funds available for HSRAP. She inquired whether additional funding could be $200,000-$300,000. Chair Berman was not setting any amount. Vice Mayor Kniss wanted to understand the process being discussed. Ms. Van Der Zwaag did not believe the intent of the Motion was to invite other nonprofit agencies to apply for additional funding. Through the supplemental Needs Assessment, the HRC held specific conversations with current grantees regarding new and emerging needs or urgent budget shortfalls. The HRC presented those needs to the Committee, and the Committee determined whether to allocate additional funding on a one-time basis or an ongoing basis to address those needs. Council Member Burt referenced the difference between an agency's request at the beginning of the two-year cycle and the amount allocated. Vice Mayor Kniss felt allocations were made based on specific reasons. She asked if the Motion was indicating that the Committee could reassess the situation now that there could be additional funds available. Council Member Burt responded yes. Vice Mayor Kniss asked how the Committee would assess that. Council Member Burt inquired whether Vice Mayor Kniss meant assess the amount of funds to allocate or how funds would be spent. Vice Mayor Kniss answered either way. For example, Abilities United requested $53,000 and received $40,000. Council Member Burt clarified that the Committee would utilize the usual process. The HRC provided funding recommendations and the Committee deviated from HRC recommendations only if they found an unusual reason to do so. The Committee did not normally review each agency's funding. Vice Mayor Kniss inquired about the criteria utilized to make a decision. Council Member Burt stated the criteria was the HRC's recommendations. Vice Mayor Kniss indicated the Committee had the HRC's recommendations. Council Member Burt clarified that the City could not fully fund those recommendations. The HRC had to review specific programs. FINAL MINUTES Vice Mayor Kniss asked if the HRC already did that. Council Member Burt responded yes, but the HRC would update their recommendations. He suspected the HRC would update information and make specific recommendations. Vice Mayor Kniss needed to know the amount of money and whether the Committee was telling the HRC additional funds were available. Chair Berman asked if Vice Mayor Kniss was suggesting some sort of cap. Vice Mayor Kniss needed to know the amount of funds. The Motion appeared to be requesting the HRC review allocations to agencies and determine whether some agencies should receive additional funding. She expressed concern that all agencies would compete for the additional funds. Mr. Perez reported that prior Committees provided parameters either as a percentage or a specific amount. Chair Berman inquired whether Vice Mayor Kniss wished to offer parameters. Vice Mayor Kniss did not wish to do so as any additional funding was not known. Chair Berman did not want to spend the entire Budget surplus, as funds were needed for infrastructure projects. Vice Mayor Kniss asked if Chair Berman would increase allocations to the amounts requested if each agency could justify additional funding. Chair Berman replied no. INCORPORATED INTO THE MOTION WITH THE CONSENT OF THE MAKER AND SECONDER that the Human Relations Commission review the funded agencies in Human Services Resource Allocation Process to identify most critical needs that were requested and unable to be allocated for Fiscal Year 2015, not to exceed the amount initially requested by those agencies. Council Member Burt explained that the difference between amounts allocated and amounts requested was the high-end parameter. The Motion asked the HRC to review each program to determine the most critical unmet needs. Ms. Van Der Zwaag believed the original request and the original scope of service could be different from new and emerging needs. As the Motion stated, it seemed to include only the former. FINAL MINUTES Council Member Burt felt the HRC should review new and emerging needs as well as previously identified needs without funding. INCORPORATED INTO THE MOTION WITH THE CONSENT OF THE MAKER AND SECONDER to: 1) include any critical and new and emerging needs that the Human Relations Commission has identified, as well as critical needs that were identified previously but unable to be allocated in the previous budget cycle; and 2) not to exceed the additional $200,000 that was requested in aggregate that was not funded at the beginning of the prior two-year cycle. Vice Mayor Kniss inquired whether the Committee was willing to allocate a maximum of $200,000. Council Member Burt was willing to consider allocating a maximum of $200,000. Vice Mayor Kniss said she could support that but was very uncomfortable with an open-ended direction. Mr. Perez advised "consider" was an important word that needed to be part of the Motion as the Committee had not seen the Proposed Budget. Ms. Van Der Zwaag suggested the effect of the Motion on PACCC and Avenidas if they were removed from HSRAP could be discussed at a future meeting. Chair Berman inquired whether the Council's consideration of removing PACCC and Avenidas from HSRAP would occur prior to the Committee's review of the Item in the Budget process. Mr. Perez indicated Committee review of the Community Services Department Budget was scheduled for May 20, 2014 and wrap-up was scheduled for May 29, 2014. Chair Berman noted the Committee would have clarification on PACCC and Avenidas prior to discussing the Budget. Council Member Burt suggested the Committee request HRC place additional funding in two categories, highest and second highest priorities. Ms. Van Der Zwaag commented that the HRC often provided multiple options for Committee and Council consideration. Council Member Holman understood the Motion requested the HRC identify emerging needs not funded in the prior cycle up to requested amounts. She FINAL MINUTES inquired whether funding not allocated to one agency could be transferred to another agency. For example, Dream Catchers requested $55,000 and received $8,000. She asked if the Committee could shift some of the difference, $47,000, to InnVision for example. Council Member Burt stated the additional amount was aggregate. The Motion allowed the HRC to use its discretion in the recommendations regarding application of total dollars. INCORPORATED INTO THE MOTION WITH THE CONSENT OF THE MAKER AND SECONDER to allow the Human Relations Commission to use their discretion in the recommendation on how the total dollars will be applied. Chair Berman supported increasing HSRAP funding, but was unsure whether to support the full amount of $200,000. He requested Staff ensure the HRC of the understanding that $200,000 was the high end. Vice Mayor Kniss requested a restatement of the Motion. Kimberly Lunt, Administrative Associate III, reviewed the Motion and incorporated language. Vice Mayor Kniss wanted the record to reflect that the Committee was not guaranteeing additional HSRAP funding. Ms. Van Der Zwaag clarified that the HRC would review current agencies and/or new needs identified in the supplemental Needs Assessment. The total dollar amount was not to exceed $200,000. If additional funds were less than $200,000, then the Committee was able to reduce HRC recommendations by a percentage. The HRC had discretion to bring to the Committee's attention either additional distribution among current grantees or new Items. Council Member Burt indicated the HRC was free to make recommendations for new needs that they felt were more important than other previously requested needs. Ms. Van Der Zwaag reiterated that the HRC would have flexibility to reduce a current allocation so the total amount did not exceed $200,000. Council Member Burt did not believe HRC recommendations would exceed $200,000. FINAL MINUTES Chair Berman clarified that the Motion allowed the HRC to allocate the $47,000 difference between amount requested and amount allocated for Dream Catchers to Dream Catchers or to other agencies. INCORPORATED INTO THE MOTION WITH THE CONSENT OF THE MAKER AND SECONDER that in looking at the revised allocation provided by the Human Relations Commission, that it [the report] be provided in a two-tier recommendation. Chair Berman asked if the HRC usually provided a prioritization of recommendations. Ms. Van Der Zwaag reported the HRC usually provided multiple recommendations when Commissioners did not agree. If Commissioners were in complete agreement, the HRC provided only one funding recommendation. Council Member Burt advised that the Committee preferred HRC recommendations be provided in two tiers of priorities. MOTION PASSED: 4-0 City of Palo Alto (ID # 4770) City Council Staff Report Report Type: Inter-Governmental Legislative Affairs Meeting Date: 5/12/2014 City of Palo Alto Page 1 Summary Title: Resolution Supporting Prop 13 Reform Title: Adoption of a Resolution Supporting Proposition 13 Reform From: City Manager Lead Department: City Manager Recommendation Staff recommends that Council consider the following resolution for approval. Background Proposition 13, passed in 1978, was a major property tax reform effort measure in California. Specifically, it stated that the maximum amount of any ad valorem tax on real property shall not exceed one percent of the full cash value of such property. According to the legislative Analyst’s Office, a typical California property tax bill consists of many taxes and charges including the one percent rate, voter-approved debt rates, parcel taxes, Mello-Roos taxes, and assessments. The one percent rate is the largest tax on the property tax bill and the only rate that applies uniformly across every locality. The taxes due from the one percent rate and voter-approved debt rates are based on a property’s assessed value. The California Constitution sets the process for determining a property’s taxable value. Although there are some exceptions, a property’s assessed value typically is equal to its purchase price adjusted upward each year by two percent. Under the Constitution, other taxes and charges may not be based on the property’s value. Only when there is a change in residential or commercial property ownership is a property reassessed at its current market value. Due to the provision preventing market reassessment except in cases of a change in property ownership, there has been interest among certain groups to reform Prop 13 as it relates to commercial property. One example that is citied of how commercial property owners have unfairly benefited from Prop. 13 is that before Prop. 13 40% of local property tax revenue came from non-residential commercial property. Today, commercial property accounts for only 28% of California's property tax revenue, while home and apartment owners pay the remaining 72%. According to an analysis of data provided by the California Board of Equalization, City of Palo Alto Page 2 regularly reassessing non-residential property would generate at least $6 billion in additional revenue for California. This change would be a substantial shift in the tax burden from homeowners and renters to corporations and commercial landholders. Some examples of cities that have already provided preliminary support for Prop. 13 reform are Berkeley, Brisbane, Burlingame, Emeryville, Oakland, Richmond, and Santa Monica. Therefore, a resolution is before you tonight that would provide preliminary City support for Prop 13 reform as it relates to commercial properties. This preliminary support; however, does not constitute formal support of any particular ballot measure on this issue, or a related subject, until such a ballot measure is separately reviewed and endorsed by the City Council. The draft resolution is attached for your review (Attachment A). For more information on Prop. 13 please see the attached report published by the Legislative Analyst's Office titled Understanding California’s Property Taxes (Attachment B). Attachments:  A - Draft Prop 13 Reform Resolution_5-12-2014 (DOC)  B - Understanding California’s Property Taxes (PDF) RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PALO ALTO SUPPORTING PROP 13 REFORM WHEREAS, Proposition 13, passed in 1978, is unfair in that it allows commercial property owners to avoid paying their fair share and has shifted the tax burden to residential property and away from business, including everyday homeowners and working families; and WHEREAS, the state of California continues to face chronic budget crises in large part because Proposition 13 has forced the state to rely on more volatile revenue sources than the property tax, like income taxes and sales taxes paid by working families that move in tandem with economic cycles, causing deficits and requiring cuts to vital services that grow our economy and thereby worsening economic downturns; WHEREAS, regularly reassessing non-residential property would, according to an analysis of data provided by the California Board of Equalization, generate at least $6 billion in additional revenue for California, and shift the tax burden from homeowners, renters, and working families to corporations and commercial landholders; WHEREAS, tax revenues generated by modernizing how commercial property is reassessed benefits local counties, cities, special districts and schools and not the state general fund. NOW, THEREFORE, BE IT RESOLVED, that the City Council of the City of Palo Alto supports this resolution but shall not constitute formal support of any particular ballot measure on this or a related subject until such ballot measure is separately reviewed and endorsed by the City Council. INTRODUCED AND PASSED: May 12, 2014 ATTEST: APPROVED: ___________________ _________________ City Clerk Mayor APPROVED AS TO FORM: ____________________ _________________ City Attorney City Manager Understanding California’s Property Taxes MAC TAylor • legislATive AnAlysT • noveMBer 29, 2012 An LAO RepORt 2 Legislative Analyst’s Office www.lao.ca.gov ConTenTs executive summary ..................................................................................................5 Introduction ..............................................................................................................7 What Is on the Property Tax Bill? .............................................................................7 How Are Property Taxes and Charges Determined? ..............................................8 What Properties Are Taxed? ...................................................................................14 How Is the Revenue Distributed? ..........................................................................17 Why Do Local Government Property Tax Receipts Vary? ....................................22 Are There Concerns About How Property Taxes Are Distributed? ......................24 What Are the strengths and Limitations of California’s Property Tax system? .........................................................................................26 Appendix 1: The History of California’s Property Tax Allocation system ................................33 Tax Allocation Prior to Proposition 13 ..................................................................34 Proposition 13 and the state’s Response .............................................................34 Changes to the AB 8 system ..................................................................................37 Limits on the state’s Authority over Property Tax Allocation ...............................................................41 Looking Forward ....................................................................................................43 Appendix 2: Property Tax and Local Government Publications ..............................................44 An LAO RepORt www.lao.ca.gov Legislative Analyst’s Office 3 An LAO RepORt 4 Legislative Analyst’s Office www.lao.ca.gov exeCUTIVe sUmmARy The various taxes and charges on a California property tax bill are complex and often not well understood. This report provides an overview of this major source of local government revenue and highlights key policy issues related to property taxes and charges. A Property Tax Bill Includes a Variety of Different Taxes and Charges. A typical California property tax bill consists of many taxes and charges including the 1 percent rate, voter-approved debt rates, parcel taxes, Mello-Roos taxes, and assessments. This report focuses primarily on the 1 percent rate, which is the largest tax on the property tax bill and the only rate that applies uniformly across every locality. The taxes due from the 1 percent rate and voter-approved debt rates are based on a property’s assessed value. The California Constitution sets the process for determining a property’s taxable value. Although there are some exceptions, a property’s assessed value typically is equal to its purchase price adjusted upward each year by 2 percent. Under the Constitution, other taxes and charges may not be based on the property’s value. The Property Tax Is One of the Largest Taxes Californians Pay. In some years, Californians pay more in property taxes and charges than they do in state personal income taxes, the largest state General Fund revenue source. Local governments collected about $43 billion in 2010-11 from the 1 percent rate. The other taxes and charges on the property tax bill generated an additional $12 billion. The Property Tax Base Is Diverse. Property taxes and charges are imposed on many types of property. For the 1 percent rate, owner-occupied residential properties represent about 39 percent of the state’s assessed value, followed by investment and vacation residential properties (34 percent) and commercial properties (28 percent). Certain properties—including property owned by governments, hospitals, religious institutions, and charitable organizations—are exempt from the 1 percent property tax rate. All Revenue From Property Taxes Is Allocated to Local Governments. Property tax revenue remains within the county in which it is collected and is used exclusively by local governments. State laws control the allocation of property tax revenue from the 1 percent rate to more than 4,000 local governments, with K-14 districts and counties receiving the largest amounts. The distribution of property tax revenue, however, varies significantly by locality. The Property Tax Has a Significant Effect on the State Budget. Although the property tax is a local revenue source, it affects the state budget due to the state’s education finance system—additional property tax revenue from the 1 percent rate for K-14 districts generally decreases the state’s spending obligation for education. Over the years, the state has changed the laws regarding property tax allocation many times in order to reduce its costs for education programs or address other policy interests. The State’s Current Property Tax Revenue Allocation System Has Many Limitations. The state’s laws regarding the allocation of property tax revenue from the 1 percent rate have evolved over time through legislation and voter initiatives. This complex allocation system is not well understood, transparent, or responsive to modern local needs and preferences. Any changes to the existing system, however, would be very difficult. An LAO RepORt www.lao.ca.gov Legislative Analyst’s Office 5 California’s Property Tax System Has Strengths and Limitations. Economists evaluate taxes using five common tax policy criteria—growth, stability, simplicity, neutrality, and equity. The state’s property tax system exhibits strengths and limitations when measured against these five criteria. Since 1979, revenue from the 1 percent rate has exceeded growth in the state’s economy. Property tax revenue also tends to be less volatile than other tax revenues in California due to the acquisition value assessment system. (Falling real estate values during the recent recession, however, caused some areas of the state to experience declines in assessed value and more volatility than in the past.) Although California’s property tax system provides governments with a stable and growing revenue source, its laws regarding property assessment can result in different treatment of similar taxpayers. For example, newer property owners often pay a higher effective tax rate than people who have owned their homes or businesses for a long time. In addition, the property tax system may distort business and homeowner decisions regarding relocation or expansion. An LAO RepORt 6 Legislative Analyst’s Office www.lao.ca.gov InTRoDUCTIon For many California taxpayers, the property tax bill is one of the largest tax payments they make each year. For thousands of California local governments—K-12 schools, community colleges, cities, counties, and special districts—revenue from property tax bills represents the foundation of their budgets. Although property taxes and charges play a major role in California finance, many elements of this financing system are complex and not well understood. The purpose of this report is to serve as an introductory reference to this key funding source. The report begins by explaining the most common taxes and charges on the property tax bill and how these levies are calculated. It then describes how the funds collected from property tax bills—$55 billion in 2010-11—are distributed among local governments. Last, because California’s property taxation system has evoked controversy over the years, the report provides a framework for evaluating it. Specifically, we examine California property taxes relative to the criteria commonly used by economists for reviewing tax systems, including revenue growth, stability, simplicity, neutrality, and equity. The report is followed with an appendix providing further detail about the allocation of property tax revenue. A California property tax bill includes a variety of different taxes and charges. As shown on the sample property tax bill in Figure 1, these levies commonly include: • The 1 percent rate established by Proposition 13 (1978). • Additional tax rates to pay for local voter- approved debt. • Property assessments. • Mello-Roos taxes. • Parcel taxes. The Constitution establishes a process for determining a property’s taxable value for purposes of calculating tax levies from the 1 percent rate and voter-approved debt. In our sample property tax bill, “Box A” identifies the taxable value of the property and “Box B” shows the property’s tax levies that are calculated based ARTWORK #120521 Property ID: 1234567 Mailing Address: Doe, Jane 1234 ABC Street Sacramento, CA 00000 2012-13 Roll LandImprovements TotalLess Exemptions Net Assessed Value Assessed Value $115,000.00$242,000.00 $357,000.00 $7,000.00 $350,000.00 Secured Property Tax for Fiscal Year July 1, 2012 to June 30, 2013 Property Owner Information Property Valuation on Jan 1, 2012 Detail of Taxes Due Sample Annual Property Tax Bill Agency General Tax Levy Voter-Approved Debt Rates City Water District School District Community College District Direct Levies Sidewalk District Assessment Flood Control District Assessment Street Lighting District Assessment Mello-Roos District School District Parcel Tax Total Taxes Due 1st Installment 2nd Installment Rate 1.0000 0.02010.0018 0.1010 0.0102 Amount $3,500.00 $70.35 6.30 353.50 35.70 $9.36 64.39 12.71 86.51 125.00 $4,263.82 $2,131.91 2,131.91 Figure 1 B C D A Graphic Sign Off Secretary Analyst Director DeputyWHAT Is on THe PRoPeRTy TAx BILL? An LAO RepORt www.lao.ca.gov Legislative Analyst’s Office 7 on this value. Levies based on value—such as the 1 percent rate and voter-approved debt rates—are known as “ad valorem” taxes. Under the Constitution, other taxes and charges on the property tax bill (shown in “Box C”) may not be based on the property’s taxable value. Instead, they are based on other factors, such as the benefit the property owner receives from improvements. As shown in “Box D,” the total amount due on most property tax bills is divided into two equal amounts. The first payment is due by December 10 and the second payment is due by April 10. HoW ARe PRoPeRTy TAxes AnD CHARGes DeTeRmIneD? Ad valorem property taxes—the 1 percent rate and voter-approved debt rates—account for nearly 90 percent of the revenue collected from property tax bills in California. Given their importance, this section begins with an overview of ad valorem taxes and describes how county assessors determine property values. Later in the chapter, we discuss the taxes and charges that are determined based on factors other than property value. Taxes Based on Property Value The 1 Percent Rate. The largest component of most property owners’ annual property tax bill is the 1 percent rate—often called the 1 percent general tax levy or countywide rate. The Constitution limits this rate to 1 percent of assessed value. As shown on our sample property tax bill, the owner of a property assessed at $350,000 owes $3,500 under the 1 percent rate. The 1 percent rate is a general tax, meaning that local governments may use its revenue for any public purpose. Voter-Approved Debt Rates. Most tax bills also include additional ad valorem property tax rates to pay for voter-approved debt. Revenue from these taxes is used primarily to repay general obligation bonds issued for local infrastructure projects, including the construction and rehabilitation of school facilities. (As described in the nearby box, some voter-approved rates are used to pay obligations approved by local voters before 1978.) Bond proceeds may not be used for general local government operating expenses, such as teacher salaries and administrative costs. Most local governments must obtain the approval of two-thirds of their local voters in order to issue general obligation bonds repaid with debt rates. General obligation bonds for school and community college facilities, however, may be approved by 55 percent of the school or community college district’s voters. Local voters do not approve a fixed tax rate for general obligation bond indebtedness. Instead, the rate adjusts annually so that it raises the amount of money needed to pay the bond costs. Property tax bills often include more than one voter-approved debt rate. In our sample property tax bill, for example, the property owner is subject to four additional rates because local voters have approved bond funds for the city and water, school, and community college districts where the property is located. These rates tend to be a small percentage of assessed value. Statewide, the average property tax bill includes voter-approved debt rates that total about one-tenth of 1 percent of assessed value. An LAO RepORt 8 Legislative Analyst’s Office www.lao.ca.gov Calculating Property Value for Ad Valorem Taxes One of the first items listed on a property tax bill is the assessed value of the land and improvements. Assessed value is the taxable value of the property, which includes the land and any improvements made to the land, such as buildings, landscaping, or other developments. The assessed value of land and improvements is important because the 1 percent rate and voter-approved debt rates are levied as a percentage of this value, meaning that properties with higher assessed values owe higher property taxes. Debt Approved by Voters Prior to 1978 The California Constitution allows local governments to levy voter-approved debt rates—ad valorem rates above the 1 percent rate—for two purposes. The first purpose is to pay for indebtedness approved by voters prior to 1978, as allowed under Proposition 13 (1978). Proposition 42 (1986) authorized a second purpose by allowing local governments to levy additional ad valorem rates to pay the annual cost of general obligation bonds approved by voters for local infrastructure projects. Because most debt approved before 1978 has been paid off, most voter- approved debt rates today are used to repay general obligation bonds issued after 1986 as authorized under Proposition 42. Some local governments, however, continue to levy voter-approved debt rates for indebtedness approved by voters before 1978. While most bonds issued before the passage of Proposition 13 have been paid off, state courts have determined that other obligations approved by voters before 1978 also can be paid with an additional ad valorem rate. Two common pre-1978 obligations paid with voter-approved debt rates are local government employee retirement costs and payments to the State Water Project. Voter-Approved Retirement Benefits. Voters in some counties and cities approved ballot measures or city charters prior to 1978 that established retirement benefits for local government employees. The California Supreme Court ruled that such pension obligations represent voter- approved indebtedness that could be paid with an additional ad valorem rate. Local governments may levy the rate to cover pension benefits for any employee, including those hired after 1978, but not to cover any enhancements to pension benefits enacted after 1978. Local governments may adjust the rate annually to cover employee retirement costs, but state law limits the rate to the level charged for such purposes in 1982-83 or 1983-84, whichever is higher. A recent review shows that at least 20 cities and 1 county levy voter-approved debt rates to pay some portion of their annual pension costs. The rates differ by locality. For example, the City of Fresno’s voter-approved debt rate for employee retirement costs is 0.03 percent of assessed value in 2012-13, while the City of San Fernando’s rate is 0.28 percent. State Water Project Payments. Local water agencies can levy ad valorem rates above the 1 percent rate to pay their annual obligations for water deliveries from the State Water Project. State courts concluded that such costs were voter-approved debt because voters approved the construction, operation, and maintenance of the State Water Project in 1960. As a result, most water agencies that have contracts with the State Water Project levy a voter-approved debt rate. An LAO RepORt www.lao.ca.gov Legislative Analyst’s Office 9 Under California’s tax system, the assessed value of most property is based on its purchase price. Below, we describe the process county assessors use to determine the value of local “real property” (land, buildings, and other permanent structures). This is followed by an explanation of how assessors determine the value of “personal property” (property not affixed to land or structures, such as computers, boats, airplanes, and business equipment) and “state assessed property” (certain business properties that cross county boundaries). Local Real Property Is Assessed at Acquisition Value and Adjusted Upward Each Year. The process that county assessors use to determine the value of real property was established by Proposition 13. Under this system, when real property is purchased, the county assessor assigns it an assessed value that is equal to its purchase price, or “acquisition value.” Each year thereafter, the property’s assessed value increases by 2 percent or the rate of inflation, whichever is lower. This process continues until the property is sold, at which point the county assessor again assigns it an assessed value equal to its most recent purchase price. In other words, a property’s assessed value resets to market value (what a willing buyer would pay for it) when it is sold. (As shown in Figure 2, voters have approved various constitutional amendments that exclude certain property transfers from triggering this reassessment.) In most years, under this assessment practice, a property’s market value is greater than its assessed value. This occurs because assessed values increase by a maximum of 2 percent per year, whereas market values tend to increase more rapidly. Therefore, as long as a property does not change ownership, its assessed value increases predictably from one year to the next and is unaffected by higher annual increases in market value. For example, Figure 3 shows how a hypothetical property purchased in 1995 for $185,000 would Figure 2 Property Transfers That Do Not Trigger Reassessment Proposition Year Description 3 1982 Allows property owners whose property has been taken by eminent domain proceedings to transfer their existing assessed value to a new property of similar size and function. 50 1986 Allows property owners whose property has been damaged or destroyed in a natural disaster to transfer their existing assessed value to a comparable replacement property within the same county. 58 1986 Excludes property transfers between spouses or between parents and children from triggering reassessment. 60 1986 Allows homeowners over the age of 55 to transfer their existing assessed value to a new home, of equal or lesser market value, within the same county. 90 1988 Extends Proposition 60 by allowing homeowners to transfer their existing assessed value to a new home, of equal or lesser market value, in a different participating county. 110 1990 Allows disabled homeowners to transfer their existing assessed value from an existing home to a newly purchased home of equal or lesser market value. 171 1993 Extends Proposition 50 by allowing property owners affected by a natural disaster to transfer their existing assessed value to a comparable replacement property in a different participating county. 193 1996 Excludes property transfers between grandparents and grandchildren (when the parents are deceased) from triggering reassessment. 1 1998 Allows property owners whose property is made unusable by an environmental problem to transfer their existing assessed value to a comparable replacement property. An LAO RepORt 10 Legislative Analyst’s Office www.lao.ca.gov be assessed in 2012. Although the market value of the property increased to $300,000 by 2002, the assessed value was $200,000 because assessed value grew by only up to 2 percent each year. Upon being sold in 2002, the property’s assessed value reset to a market value of $300,000. Because of the large annual increase in home values after 2002, however, the market value was soon much greater than the assessed value for the new owner as well. Property Improvements Are Assessed Separately. When property owners undertake property improvements, such as additions, remodeling, or building expansions, the additions or upgrades are assessed at market value in that year and increase by up to 2 percent each year thereafter. The unimproved portion of the property continues to be assessed based on its original acquisition value. For example, if a homeowner purchased a home in 2002 and then added a garage in 2010, the home and garage would be assessed separately. The original property would be assessed at its 2002 acquisition value adjusted upward each year while the garage would be assessed at its 2010 market value adjusted upward. The property’s assessed value would be the combined value of the two portions. (As shown in Figure 4, voters have excluded certain property improvements from increasing the assessed value of a property.) Market Value Can Exceed Assessed Value Figure 3 ARTWORK #120521 100,000 200,000 300,000 400,000 500,000 $600,000 1995 1997 1999 2001 2003 2005 2007 2009 2011 Property Purchased in 1995 Assessed at acquisition value. Assessed Value Increases by up to 2 percent each year. Property Sold in 2002Reassessed to acquisition value, then increases by up to 2 percent annually. Market Value Increases or decreases based on local real estate conditions. 1996 1998 2000 2002 20122004 2006 2008 2010 Graphic Sign OffSecretaryAnalystDirectorDeputy Figure 4 Property Improvements That Do Not Increase a Property’s Assessed Value Constitutional Amendments Approved After June 1978 Proposition Year Type of Improvement 8 1978 Reconstruction following natural disaster 7 1980 Solar energy construction 31 1984 Fire-safety improvements 110 1990 Accessibility construction for disabled homeowners 177 1994 Accessibility construction for any property 1 1998 Reconstruction following environmental contamination 13 2010 Seismic safety improvements An LAO RepORt www.lao.ca.gov Legislative Analyst’s Office 11 Assessed Value May Be Reduced When Market Values Fall Significantly. When real estate values decline or property damage occurs, a property’s market value may fall below its assessed value as set by Proposition 13. Absent any adjustment to this assessed value, the property would be taxed at a greater value than it is worth. In these events, county assessors may automatically reduce the Proposition 13 assessed value of a property to its current market value. If they do not, however, a property owner may petition the assessor to have his or her assessed value reduced. These decline-in-value properties are often called “Prop 8 properties” after Proposition 8 (1978), which authorizes this assessment reduction to market value. Figure 5 illustrates the assessment of a hypothetical decline-in-value property over time. The market value of the property purchased in 1995 stays above its Proposition 13 assessed value through 2007. A significant decline, however, drops the property’s market value below its Proposition 13 assessed value. At this time, the property receives a decline-in-value assessment (equal to its market value) that is less than its Proposition 13 assessment. For three years, the property is assessed at market value, which may increase or decrease by any amount. By 2012, the property’s market value once again exceeds what its assessed value would have been absent Proposition 8 (acquisition price plus the 2 percent maximum annual increase). In subsequent years, the property’s assessed value is determined by its acquisition price adjusted upward each year. Homeowners Are Eligible for a Property Tax Exemption. Homeowners may claim a $7,000 exemption from the assessed value of their primary residence each year. As shown in “Box A” of the sample property tax bill in Figure 1, this exemption lowers the assessed value of the homeowner’s land and improvements by $7,000, reducing taxes under the ARTWORK #120521 Assessed Value Can Fall Below Proposition 13 Value Figure 5 100,000 150,000 200,000 250,000 300,000 $350,000 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Market Value Increases or decreases based on local real estate conditions. Property Purchased Assessed at acquisition value. Property Assessed at Market Value Proposition 13 Value Increases by a maximum of 2 percent each year. Graphic Sign Off Secretary Analyst Director Deputy An LAO RepORt 12 Legislative Analyst’s Office www.lao.ca.gov 1 percent rate by $70 and reducing taxes from voter- approved debt rates by a statewide average of $8. Two Types of Property Are Assessed at Their Market Value. Two categories of property are assessed at their current market value, rather than their acquisition value: personal property and state- assessed property. (We provide more information about these properties in the nearby box.) Combined, these types of properties accounted for 6 percent of statewide-assessed value in 2011-12. Most personal property and state-assessed property is taxed at the 1 percent rate plus any additional rates for voter-approved debt. Determining other Taxes and Charges All other taxes and charges on the property tax bill are calculated based on factors other than the property’s assessed value. For example, some levies are based on the cost of a service provided to the property. Others are based on the size of a parcel, its square footage, number of rooms, or other characteristics. Below, we discuss three of the most common categories of non-ad valorem levies: assessments, parcel taxes, and Mello-Roos taxes. In addition to these three categories, some local governments collect certain fees for service on property tax bills, such as charges to clear weeds on properties where the weeds present a fire safety hazard. These fees are diverse and relatively minor, and therefore are not examined in this report. Assessments. Local governments levy assessments in order to fund improvements that benefit real property. For example, with the approval of affected property owners, a city or county may create a street lighting assessment district to fund the construction, operation, and maintenance of street lighting in an area. Under Proposition 218 (1996), improvements funded with assessments must provide a direct benefit to the property owner. An assessment typically cannot be levied for facilities or services that provide general public benefits, such as schools, libraries, and public safety, even Properties Assessed at Current market Value Personal Property. Personal property is property other than land, buildings, and other permanent structures, which are commonly referred to as “real property.” Most personal property is exempt from property taxation, including business inventories, materials used to manufacture products, household furniture and goods, personal items, and intangible property like gym memberships and life insurance policies. Some personal property, however, is subject to the property tax. These properties consist mainly of manufacturing equipment, business computers, planes, commercial boats, and office furniture. When determining the market value of personal property, county assessors take into account the loss in value due to the age and condition of personal property—a concept known as depreciation. Unlike property taxes on real property, which are due in two separate payments, taxes on personal property are due on July 3. State-Assessed Property. The State Board of Equalization is responsible for assessing certain real properties that cross county boundaries, such as pipelines, railroad tracks and cars, and canals. State-assessed properties are assessed at market value and, with the exception of railroad cars, taxed at the 1 percent rate plus any additional rates for voter-approved debt. (As part of a federal court settlement decades ago, railroad cars are taxed at a rate that is somewhat lower than 1 percent. The railcar tax rate varies each year and currently is about 0.8 percent.) An LAO RepORt www.lao.ca.gov Legislative Analyst’s Office 13 though these programs may increase the value of property. Moreover, the amount each property owner pays must reflect the cost incurred by the local government to provide the improvement and the benefit the property receives from it. To impose a new assessment, a local government must secure the approval of a weighted majority of affected property owners, with each property owner’s vote weighted in proportion to the amount of the assessment he or she would pay. Parcel Taxes. With the approval of two-thirds of voters, local governments may impose a tax on all parcels in their jurisdiction (or a subset of parcels in their jurisdiction). Local governments typically set parcel taxes at fixed amounts per parcel (or fixed amounts per room or per square foot of the parcel). Unlike assessments, parcel tax revenue may be used to fund a variety of local government services, even if the service does not benefit the property directly. For example, school districts may use parcel tax revenue to pay teacher salaries or administrative costs. The use of parcel tax revenue, however, is restricted to the public programs, services, or projects that voters approved when enacting the parcel tax. Mello-Roos Taxes. Mello-Roos taxes are a flexible revenue source for local governments because they (1) may be used to fund infrastructure projects or certain services; (2) may be levied in proportion to the benefit a property receives, equally on all parcels, by square footage, or by other factors; and (3) are collected within a geographical area drawn by local officials. Local governments often use Mello-Roos taxes to pay for the public services and facilities associated with residential and commercial development. This occurs because landowners may approve Mello-Roos taxes by a special two-thirds vote—each owner receiving one vote per acre owned—when fewer than 12 registered voters reside in the proposed district. In this way, a developer who owns a large tract of land could vote to designate it as a Mello-Roos district. After the land is developed and sold to residential and commercial property owners, the new owners pay the Mello-Roos tax that funds schools, libraries, police and fire stations, or other public facilities and services in the new community. Mello-Roos taxes are subject to two-thirds voter approval when there are 12 or more voters in the proposed district. WHAT PRoPeRTIes ARe TAxeD? Property taxes and charges are imposed on many types of properties. These properties include common types such as owner-occupied homes and commercial office space, as well as less common types like timeshares and boating docks. In the section below, we describe the state’s property tax base—the types of real properties that are subject to the 1 percent rate and the share of total assessed value that each property type represents. Due to data limitations, we do not summarize the tax bases of other taxes and charges. We note, however, that the property tax base for other taxes and charges is different from the tax base for the 1 percent rate. This is because the 1 percent rate applies uniformly to all taxable real property, whereas other taxes and charges are levied at various levels and on various types of property throughout the state (according to local voter or local government preferences). For example, if a suburban school district levies a parcel tax on each parcel in a residential area, the owners of single-family homes would pay a large share of the total parcel taxes. Accordingly, the school district’s parcel tax base would be more heavily residential An LAO RepORt 14 Legislative Analyst’s Office www.lao.ca.gov than the statewide property tax base under the 1 percent rate (which applies to all taxable property). What Properties Are subject to the 1 Percent Rate? Although most real property is taxable, the Constitution exempts certain types of real property from taxation. In general, these are government properties or properties that are used for non-commercial purposes, including hospitals, religious properties, charities, and nonprofit schools and colleges. California properties that are subject to the property tax, however, can be classified in three ways: • Owner-occupied residential—properties that receive the state’s homeowner’s exemption, which homeowners may claim on their primary residence. • Investment and vacation residential— residential properties other than those used as a primary residence, including multifamily apartments, rental condominiums, rental homes, vacant residential land, and vacation homes. • Commercial— retail properties, industrial plants, farms, and other income-producing properties. Distribution of the Tax Base for the 1 Percent Rate Owner-Occupied Residential. In 2010-11, there were 5.5 million owner-occupied homes in California with a total assessed value of $1.6 trillion. As shown in Figure 6, owner-occupied residential properties accounted for the largest share—39 percent—of the state’s tax base for the 1 percent rate. Investment and Vacation Residential. Although the majority of residential properties are owner occupied, many others are investment or vacation properties such as multifamily apartments, rental condominiums, rental homes, vacant residential land, and vacation homes. (We classify vacant residential land and vacation homes as investment properties because they are an investment asset for the owner, even if he or she does not receive current income from them.) In 2010-11, there were 4.2 million investment and vacation residential properties. The assessed value Share of Assessed Value for Properties Subject to the 1 Percent Ratea, 2010-11 a Excludes personal property and state-assessed property. Commercial Owner-Occupied Residential Investment and Vacation Residential The Distribution of California’s Property Tax Base ARTWORK #120521 Figure 6 Graphic Sign Off Secretary Analyst Director Deputy An LAO RepORt www.lao.ca.gov Legislative Analyst’s Office 15 of these properties was about $1.4 trillion, which represents 34 percent of the state’s total assessed value. Commercial. In 2010-11, there were approximately 1.3 million commercial properties in California. This amount includes about 600,000 retail, industrial, and office properties (such as stores, gas stations, manufacturing facilities, and office buildings). It also includes 500,000 agricultural properties and 200,000 other properties (gas, oil, and mineral properties and the private use of public land). While commercial properties represent a relatively small share of the state’s total properties, they tend to have higher assessed values than other properties. Therefore, as shown in Figure 6, these properties (which have a total assessed value of $1.2 trillion) account for 28 percent of the state’s property tax base. Has the Distribution of the Property Tax Base Changed over Time? There is little statewide information regarding the composition of California’s property tax base over time. Based on the available information, however, it appears that homeowners may be paying a larger percentage of total property taxes today than they did decades ago. We note, for example, that the assessed value of owner-occupied homes has increased from a low of 32 percent of statewide assessed valuation in 1986-87 to a high of 39 percent in 2005-06. (The share was 36 percent in 2011-12.) It also appears likely that owners of commercial property are paying a smaller percentage of property taxes than they did decades ago. For example, Los Angeles County reports that the share of total assessed value represented by commercial property in the county declined from 40 percent in 1985 to 30 percent in 2012. In addition, the assessed value of commercial property in Santa Clara County has declined (as a share of the county total) from 29 percent to 24 percent since 1999-00. What Factors may Have Contributed to Changes in the Property Tax Base? Various economic changes that have taken place over time probably have contributed to changes to California’s property tax base. For example, investment in residential property has increased significantly since the mid-1970s. Newly built single-family homes have become larger and are more likely to have valuable amenities than homes built earlier. As a result, new homes are more expensive to build and assessed at higher amounts than older homes. Over the same period, commercial activity in California has shifted away from traditional manufacturing, which tends to rely heavily on real property. Newer businesses, on the other hand, are more likely to be technology and information services based. These businesses tend to own less real property than traditional manufacturing firms do. (Technology and information services firms, however, rely heavily on business personal property—for example, computing systems, design studios, and office equipment—that are taxed as personal property and not included in the distribution of the state’s real property tax base.) It also is possible that Proposition 13’s acquisition value assessment system has played a role in the changes to California’s tax base. Specifically, under Proposition 13, properties that change ownership more frequently tend to be assessed more closely to market value than properties that turn over less frequently. (Because properties are assessed to market value when they change ownership, properties that have not changed ownership in many years tend to have larger gaps between their assessed values and market values.) It is possible that some categories of properties change ownership more frequently than others and this could influence the composition of the overall tax base. The limited available research suggests that investment and vacation An LAO RepORt 16 Legislative Analyst’s Office www.lao.ca.gov residential properties change ownership more frequently than commercial or owner- occupied residential property, indicating that they may be assessed closer to market value than other types of property. How MucH Revenue Is collected? In 2010-11, California property tax bills totaled $55 billion. As shown in Figure 7, this amount included $43.2 billion under the 1 percent rate and $5.7 billion from voter-approved debt rates, making ad valorem property taxes one of California’s largest revenue sources. Comparatively little is known about the remaining $6 billion of other taxes and charges on the property tax bill. From various reports summarizing local government finances, elections, and bond issuances, it appears that most of this $6 billion reflects property assessments, parcel taxes, and Mello-Roos taxes, though statewide data are not available on the exact amounts collected for each of these funding sources. 2010-11 (In Billions) Property Tax Revenue Compared With Other Major Revenue Sources ARTWORK #120521 Figure 7 1 Percent Rate Voter-Approved Debt Rates Other Taxes and Charges 10 20 30 40 50 $60 Corporation Tax State and Local Sales and Use Tax Personal Income Tax Property Taxes and Charges Graphic Sign OffSecretaryAnalystDirectorDeputy HoW Is THe ReVenUe DIsTRIBUTeD? California property owners pay their property tax bills to their county tax collector (sometimes called the county treasurer-tax collector). The funds are then transferred to the county auditor for distribution. The county auditor distributes the funds collected from the 1 percent rate differently than the funds collected from the other taxes and charges on the bill. Specifically, the 1 percent rate is a shared revenue source for multiple local governments. This section describes the distribution of revenue raised under the 1 percent rate and summarizes the limited available information regarding the distribution of voter-approved debt rates and non-ad valorem property taxes and charges. Revenue From the 1 Percent Rate Is shared by many Local Governments The 1 percent rate generates most of the revenue from the property tax bill—roughly An LAO RepORt www.lao.ca.gov Legislative Analyst’s Office 17 $43 billion in 2010-11. On a typical property tax bill, however, the 1 percent rate is listed as the general tax levy or countywide rate with no indication as to which local governments receive the revenue or for what purpose the funds are used. In general, county auditors allocate revenue from the 1 percent rate to a variety of local governments within the county pursuant to a series of complex state statutes. More Than 4,000 Local Governments Receive Revenue From the 1 Percent Rate. All property tax revenue remains within the county in which it is collected to be used exclusively by local governments. As shown in Figure 8, property tax revenue from the 1 percent rate is distributed to counties, cities, K-12 schools, community college districts, and special districts. Until recently, redevelopment agencies also received property tax revenue. As described in the nearby box, redevelopment agencies were dissolved in 2012, but a large amount of property tax revenue continues to be used to pay the former agencies’ debts and obligations. Figure 9 shows the share of revenue received by each type of local government from the 1 percent rate and voter-approved debt rates. (As described later in the report, however, these shares vary significantly by locality.) Property Taxes Also Affect the State Budget. Although the state does not receive any property tax revenue directly, the state has a substantial fiscal interest in the distribution of property tax revenue from the 1 percent rate because of the state’s education finance system. Each K-12 district receives “revenue limit” funding—the largest source of funding for districts—from the combination of local property tax revenue under the 1 percent rate and state resources. Thus, if a K-12 district’s local property tax revenue is not sufficient to meet its revenue limit, the state provides additional funds. Community colleges have a similar financing system, in which each district receives apportionment funding from local property tax revenue, student fees, and state resources. In 2010-11, the state contributed $22.5 billion to K-12 revenue limits and community college apportionments, while the remainder ($14.5 billion) came from local property tax revenue (and student fees). State Laws Direct Allocation of Revenue From the 1 Percent Rate. The county auditor is responsible for allocating revenue generated from the 1 percent rate to local governments pursuant to state law. The allocation system is commonly referred to as “AB 8,” after the bill that first Figure 8 How Many Local Governments Receive Revenue From the 1 Percent Rate? Type of Local Government Number Counties 58 Cities 480 Schools and Community Colleges K-12 school districts 966 County Offices of Education 56 Community college districts 72 Special Districts Fire protection 348 County service area 316 Cemetery 241 Community services 201 Maintenance 136 Highway lighting 117 County water 100 Recreation and park 85 Hospital 64 Sanitary 60 Irrigation 46 Mosquito abatement 43 Public utility 43 Othera 400 Redevelopment Agenciesb 422 Total 4,254 a Thirty three other types of special districts report receiving property tax revenue from the 1 percent rate. These include county sanitation, municipal water, memorial, water authority, drainage, and library districts.b Dissolved in 2012. A portion of property tax revenue continues to pay these agencies’ debts and obligations. An LAO RepORt 18 Legislative Analyst’s Office www.lao.ca.gov implemented the system— Chapter 282, Statutes of 1979 (AB 8, L. Greene). In general, AB 8 provides a share of the total property taxes collected within a community to each local government that provides services within that community. Each local government’s share is based on its proportionate countywide share of property taxes during the mid-1970s, a time when each local government determined its own property tax rate and property owners paid taxes based on the sum of Most Ad Valorem Property Tax Revenue Is Allocated to Schools and Countiesa Figure 9 ARTWORK #120521 2010-11 a As a percentage of total revenue from the 1 percent rate and voter-approved debt rates. b Redevelopment agencies were dissolved in 2012. Successor agencies will continue to use property tax revenue to pay former agencies' debts and obligations. K-14 Districts Counties Cities Redevelopment Agenciesb Special Districts Graphic Sign OffSecretaryAnalystDirectorDeputy Redevelopment and successor Agencies More than 60 years ago, the Legislature established a process whereby a city or county could declare an area to be blighted and in need of redevelopment. After this declaration, most property tax revenue growth from the redevelopment “project area” was distributed to the redevelopment agency, instead of the other local governments serving the project area. As discussed in our report, The 2012-13 Budget: Unwinding Redevelopment, redevelopment agencies were dissolved in February 2012. Prior to their dissolution, however, redevelopment agencies received over $5 billion in property tax revenue annually. These monies were used to pay off tens of billions of dollars of outstanding bonds, contracts, and loans. In most cases, the city or county that created the redevelopment agency is managing its dissolution as its successor agency. The successor agency manages redevelopment projects currently underway, pays existing debts and obligations, and disposes of redevelopment assets and properties. The successor agency is funded from the property tax revenue that previously would have been distributed to the redevelopment agency. As a result, even though redevelopment agencies have been dissolved, some property tax revenue continues to be used to pay redevelopment’s debts and obligations. Over time, most redevelopment obligations will be retired and the property tax revenue currently distributed to successor agencies will be distributed to K-14 districts, counties, cities, and special districts. An LAO RepORt www.lao.ca.gov Legislative Analyst’s Office 19 these rates. (The average property tax rate totaled about 2.7 percent.) As a result, local governments that received a large share of property taxes in the 1970s typically receive a relatively large share of revenue from the 1 percent rate under AB 8. (More detail on the history of the state’s property tax allocation system—including AB 8—is provided in the appendix of this report.) Revenue Allocated by Tax Rate Area (TRA). The county auditor allocates the revenue to local governments by TRA. A TRA is a small geographical area within the county that contains properties that are all served by a unique combination of local governments—the county, a city, and the same set of special districts and school districts. A single county may have thousands of TRAs. While there is considerable variation in the steps county auditors use to allocate revenue within each TRA, typically the county auditor annually determines how much revenue was collected in each TRA and first allocates to each local government in the TRA the same amount of revenue it received in the prior year. Each local government then receives a share of any growth (or loss) in revenue that occurred within the TRA that year. Each TRA has a set of growth factors that specify the proportion of revenue growth that goes to each local government. These factors—developed by county auditors pursuant to AB 8—are largely based on the share of revenue each local government received from the TRA during the late 1970s. Figure 10 shows sample growth factors for TRAs in two California cities. As the figure indicates, 23 percent of any growth in revenue from the 1 percent rate in the sample TRA for Norwalk would be allocated to the county, 7 percent would go to the city, and the rest would be allocated to various educational entities and special districts. The percentage of property tax growth allocated to each type of local government can vary significantly by TRA. For example, Walnut Creek’s K-12 school district receives 33 percent of the growth in revenue within its TRA while Norwalk’s school district receives only 19 percent from its TRA. As noted above, this variation is based largely on historical factors specified in AB 8. Some Revenue Is Allocated to a Countywide Account—ERAF. Most of the revenue from the 1 percent rate collected within a TRA is allocated to the city, county, K-14 districts, and special districts that serve the properties in that TRA. State law, however, directs the county auditor to shift a portion of this revenue to a countywide account that is distributed to other local governments that do not necessarily serve the taxed properties. The state originally established this account—the Educational Revenue Augmentation Fund (ERAF)—to provide additional funds to K-14 districts that do not receive sufficient property tax revenue to meet their minimum funding level. State laws later expanded the use of ERAF to include reimbursing cities and counties for the loss of other local revenue sources (the vehicle license fee and sales tax) due to changes in state policy. For example, Figure 10 shows that 20 percent of any revenue growth within Norwalk’s TRA is deposited into ERAF. It is possible that some or all of this revenue could be allocated to a city or K-14 district in a different part of Los Angeles County. most Revenue From Voter-Approved Debt Distributed to schools Voter-approved debt rates are levied on property owners so that local governments can pay the debt service on voter-approved general obligation bonds (and pre-1978 voter-approved obligations). The state’s K-12 school districts receive the majority of the revenue from voter-approved debt rates ($3.1 billion of $5.2 billion in 2009-10). The amount received by cities ($520 million), special districts ($470 million), and counties An LAO RepORt 20 Legislative Analyst’s Office www.lao.ca.gov Figure 10 Allocation of Property Tax Growth in Sample Tax Rate Areas Norwalk, Los Angeles Countya Percent Share Los Angeles County 23% Educational Revenue Augmentation Fund 20 Norwalk-La Mirada Unified School District 19 Los Angeles County Fire Protection District 18 City of Norwalk 7 Norwalk Parks and Recreation District 3 Los Angeles County Library 2 La Mirada Parks and Recreation District 2 Cerritos Community College District 2 Los Angeles County Flood Control District 1 Los Angeles County Sanitation District 1 Greater Los Angeles County Vector Control —b Water Replenishment District of Southern California —b Little Lake Cemetery District —b Los Angeles County Department of Education —b 100% Walnut Creek, Contra Costa Countyc Percent Share Mount Diablo Unified School District 33% Educational Revenue Augmentation Fund 17 Contra Costa County 13 Contra Costa County Fire 13 City of Walnut Creek 9 Contra Costa Community College District 5 East Bay Regional Park District 3 Contra Costa County Library 2 Central Contra Costa Sanitary District 2 Contra Costa County Office of Education 1 Contra Costa County Flood Control 1 Bay Area Rapid Transit 1 Contra Costa Water District 1 Contra Costa County Water Agency —b Contra Costa County Resource Conservation District —b Contra Costa County Mosquito Abatement District —b Contra Costa County Service Area R-8 —b Bay Area Air Management District —b 100% a Percentages indicate allocation of the growth in property taxes in Los Angeles County tax rate area 06764.b Less than 0.5 percent.c Percentages indicate allocation of the growth in property taxes in Contra Costa County tax rate area 09025. ($320 million) is significantly less. The amount of taxes collected to pay voter-approved debt varies considerably across the state. For example, the average amount paid by an Alameda County property owner for voter-approved debt rates is about $2 for each $1,000 of assessed value, while the average amount paid in some counties is less than 10 cents per $1,000 of assessed value. Limited Information About Distribution of other Property Taxes and Charges Less information is available about the statewide distribution of the revenue from parcel taxes, Mello-Roos taxes, and assessments. Parcel Taxes. Recent election reports and financial data suggest that parcel taxes represent a significant and growing source of revenue for some local governments. Specifically, between 2001 and 2012, local voters approved about 180 parcel tax measures to fund cities, counties, and special districts, and about 135 measures to fund K-12 districts. The most recent K-12 financial data (2009-10) indicate that schools received about $350 million from this source. We were not able to locate information on the statewide amount of parcel tax revenue collected by cities, counties, and special districts. Mello-Roos Taxes. Mello-Roos districts are required to report on their bond issuance, which An LAO RepORt www.lao.ca.gov Legislative Analyst’s Office 21 provides some information about the types of local governments that receive Mello-Roos tax revenue. It is likely that local governments issuing a large amount of Mello-Roos bonds also are collecting a large amount of Mello-Roos tax revenue. Between 2004 and 2011, cities issued about 50 percent of the bonds issued by Mello-Roos districts in California, followed by K-12 districts at about 30 percent. During the same time period, the issuance of Mello-Roos bonds was concentrated in specific regions, as more than 60 percent of the bonds were issued by local governments in four counties— Riverside, Orange, San Diego, and Placer. Assessments. Most of the property improvements funded by assessments are provided by cities and special districts. In 2009-10, cities and special districts reported receiving $760 million and $650 million, respectively, in revenue from assessments. In contrast, counties reported $11 million in such revenues. WHy Do LoCAL GoVeRnmenT PRoPeRTy TAx ReCeIPTs VARy? The share of revenue received by each type of local government from the 1 percent rate varies significantly by locality. County governments, for example, receive as little as 11 percent (Orange) and as much as 64 percent (Alpine) of the ad valorem property tax revenue collected within their county. As shown in Figure 11, revenue raised from the 1 percent rate also varies considerably by locality when measured by revenue per resident. Orange County receives about $175 per resident, while four counties receive more than $1,000 per resident. Although cities, on average, receive about $240 per resident in revenue from the 1 percent rate, some receive more than $500 per resident and many receive less than $150 per resident. School districts also receive widely different amounts of property taxes per enrolled student, with an average of just under $2,000. (As noted above, the state “tops off” school property tax revenue with state funds to bring most schools to similar revenue levels.) Finally, special districts also receive varying amounts of property tax revenue, though data limitations preclude us from summarizing this variation on a statewide basis. Three factors account for most of this variation in local government property tax receipts. We discuss these factors below. Variation in Property Values California has a diverse array of communities with large variation in land and property values. Some communities are extensively developed and have many high-value homes and businesses, whereas others do not. Because property taxes are based on the assessed value of property, communities with greater levels of real estate development tend to receive more property tax revenue than communities with fewer developments. For example, high-density cities generally receive more property tax revenue than rural areas due to the greater level of development. Coastal and resort areas also typically receive more property taxes due to the high property values. Certain high-value properties—such as a power plant or oil refinery—also increase property tax revenue. Alternatively, localities with large amounts of land owned by the federal government, universities, or other organizations that are not required to pay property taxes may receive less revenue. An LAO RepORt 22 Legislative Analyst’s Office www.lao.ca.gov Prior Use of Redevelopment Prior decisions by cities and counties to use redevelopment also influences the amount of property tax revenue local governments receive. Prior to the dissolution of redevelopment agencies in 2012, most of the growth in property taxes from redevelopment project areas went to the redevelopment agency, rather than other local governments. A large share of property tax revenue now goes to successor agencies to pay the former redevelopment agencies’ debts and obligations. The use of redevelopment varied extensively throughout the state. In those communities with many redevelopment project areas, the share of property tax revenue going to other local governments is less than it would be otherwise. In places with large redevelopment project areas—such as San Bernardino and Riverside counties—more than 20 percent of the county’s property tax revenue may go to pay the former redevelopment agencies’ debts and obligations. state Allocation Laws Reflecting 1970s Taxation Levels Finally, the amount of property taxes allocated to local governments depends on state property tax allocation laws, principally AB 8. As discussed earlier in this report (and in more detail in the appendix), the AB 8 system was designed, in part, to allocate property tax revenue in proportion to the share of property taxes received by a local government in the mid-1970s. Under this system, local governments that received a large share of property taxes in the 1970s typically continue to receive a relatively large share of property taxes today. Although there have been changes to the original property tax allocation system contained in AB 8, the allocation system continues to be substantially based on the variation in property tax receipts in effect in the 1970s. This variation largely reflects service levels provided by local governments in the 1970s. Local governments providing many services generally collected more property taxes in the 1970s to Figure 11 Property Tax Receipts From the 1 Percent Rate for Selected Local Governments 2009-10 Cities Property Taxes per Resident Counties Property Taxes per Resident Schoolsa Property Taxes per Student Industry $2,541 San Franciscob $1,411 Mono $10,683 Malibu 559 Sierra 1,126 San Mateo 5,432 Mountain View 344 Inyo 876 Marin 5,213 Los Angeles 332 Napa 522 San Francisco 4,020 Long Beach 268 El Dorado 464 Orange 3,315 Oakland 250 Los Angeles 359 San Diego 2,760 State Average 242 State Average 320 State Average 1,960 San Jose 200 Alameda 301 Yolo 1,765 Fresno 183 Sacramento 286 Sacramento 1,344 Anaheim 167 Contra Costa 271 San Joaquin 1,163 Santa Clarita 140 San Diego 261 Los Angeles 1,142 Chico 129 Riverside 200 Fresno 810 Modesto 119 Orange 174 Kings 379 a Countywide average for K-12 schools.b San Francisco is a city and a county. An LAO RepORt www.lao.ca.gov Legislative Analyst’s Office 23 pay for those services. As a result, those local governments received a larger share of property taxes under AB 8. For example, cities and counties that provided many government services, including fire protection, park and recreation programs, and water services, typically receive more property tax revenue than governments that relied on special districts to provide some or all of these services. ARe THeRe ConCeRns ABoUT HoW PRoPeRTy TAxes ARe DIsTRIBUTeD? While no system for sharing revenues among governmental entities is perfect, the state’s system for allocating property tax revenue from the 1 percent rate raises significant concerns about local control, responsiveness to modern needs, and transparency and accountability to taxpayers. We discuss these concerns separately below and then address the question: Could the state change the allocation system? Lack of Local Control Unlike local communities in other states, California residents and local officials have virtually no control over the distribution of property tax revenue to local governments. Instead, all major decisions regarding property tax allocation are controlled by the state. Accordingly, if residents desire an enhanced level of a particular service, there is no local forum or mechanism to allow property taxes to be reallocated among local governments to finance this improvement. For example, Orange County currently receives a very low share of property taxes collected within its borders—about 11 percent. If Orange County residents and businesses wished to expand county services, they have no way to redirect the property taxes currently allocated to other local governments. Their only option would be to request the Legislature to enact a new law— approved by two-thirds of the members of both houses—requiring the change in the property tax distribution. In other words, local officials have no power to raise or lower their property tax share on an annual basis to reflect the changing needs of their communities. As a result, if residents wish to increase overall county services, they would need to finance this improvement by raising funds through a different mechanism such as an assessment or special tax. Limited Transparency and Accountability The state’s current allocation system also makes it difficult for taxpayers to see which entities receive their tax dollars. Property tax bills note only that a bulk of the payment goes to the 1 percent general levy. Even if taxpayers do further research and locate the AB 8 local government sharing factors for their TRA, it is difficult to follow the actual allocation of revenue because the fund shifts related to ERAF and redevelopment complicate this system. In addition to making it difficult for taxpayers to determine how their tax dollars are distributed, the AB 8 system reduces government accountability. The link between the level of government controlling the allocation of the tax (the state) and the government that spends the tax revenue (cities, counties, special districts, and K-14 districts) is severed. For example, if a taxpayer believes the level of services provided by an independent park district is inadequate, it is difficult to hold the district entirely accountable An LAO RepORt 24 Legislative Analyst’s Office www.lao.ca.gov because the state is responsible for determining the share of property taxes allocated to the district. Limited Responsiveness to modern needs and Preferences An effective tax allocation system ensures that local tax revenue is allocated in a way that reflects modern needs and preferences. In many ways, California’s property tax allocation system—which remains largely based on allocation preferences from the 1970s—does not meet this criterion. California’s population and the governance structure of many local communities have changed significantly since the AB 8 system was enacted. For example, certain areas with relatively sparse populations in the 1970s have experienced substantial growth and many local government responsibilities have changed. One water district in San Mateo County—Los Trancos Water District—illustrates the extent to which the state’s property tax allocation system continues to reflect service levels from the 1970s. Specifically, this water district sold its entire water distribution system to a private company in 2005, but continues to receive property tax revenue for a service it no longer provides. Changing the Allocation system Is Difficult Over the years, the Legislature, local governments, the business community, and the public have recognized the limitations inherent in the state’s property tax allocation system. Despite the large degree of consensus on the problems, major proposals to reform the allocation system have not been enacted due to their complexity and the difficult trade-offs involved. Because California has thousands of local governments—many with overlapping jurisdictions—reorienting the property tax allocation system would be extraordinarily complex. Updating the AB 8 property tax sharing methodology would require the Legislature to determine the needs and preferences of each California community and local government. This would be a difficult—if not impossible—task to undertake in a centralized manner. Alternatively, the state could allow the distribution of the property tax to be carried out locally, but there is no consensus about what process local governments would use to allocate property taxes among themselves. Whether done centrally or locally, any reallocation is difficult because providing additional property tax receipts to one local government would require redirecting it from another local government or amending the Constitution. In addition, any significant change to the allocation of property tax revenue would require approval by two-thirds of the Legislature due to provisions in the Constitution added by Proposition 1A (2004). (These issues are discussed further in the appendix.) An LAO RepORt www.lao.ca.gov Legislative Analyst’s Office 25 For many years, California’s overall property tax system—the types of taxes paid by property owners and the determination of property owner tax liabilities—has evoked controversy. Some people question whether the distribution of the tax burden between residential and commercial properties is appropriate and whether the amount of taxes someone pays should depend, in part, on how long he or she has owned the property. Other people praise the financial certainty that the tax system gives property owners. From one year to the next, property owners know that their tax liabilities under the 1 percent rate will increase only modestly. In this section, we do not attempt to resolve this long-standing debate. Instead, we review property taxes by looking at how they measure according to five common tax policy criteria—growth, stability, simplicity, neutrality, and equity. Using this framework, we highlight particular aspects of the state’s property tax system, both its strengths and limitations, for policymakers and other interested parties. Economists use the five common tax policy criteria summarized in Figure 12 to objectively compare particular taxes. These criteria relate to how taxes affect people’s decisions, how they treat different taxpayers, and how the revenue raised from taxes performs over time. In practice, all taxes involve trade-offs. Sometimes the trade-offs are between two tax policy criteria. For example, revenue sources that grow quickly may be less stable from one year to the next than other revenue sources. Other times, the trade-offs are between tax policy criteria and other governmental policy objectives that may not be directly related to one of the five tax criteria. For example, one such trade-off might be that ensuring that a property owner’s taxes do not increase dramatically from one year to the next (a reasonable governmental policy objective) can result in a tax system in which the owners of similar properties are taxed much differently (contrary to the equity criteria of tax policy). Revenue Growth From government’s perspective, revenue sources that grow along with the economy are preferable because they can provide resources sufficient to maintain current services. This can help governments avoid increasing existing taxes or taxing additional activities in order to meet current service demands. The Property Tax Has Grown Faster Than the Economy. Personal income in California—an WHAT ARe THe sTRenGTHs AnD LImITATIons oF CALIFoRnIA’s PRoPeRTy TAx sysTem? Figure 12 Common Economic Criteria for Evaluating Tax Systems 9 Growth—Does revenue raised by the tax grow along with the economy or the program responsibilities it is expected to fund? 9 Stability—Is the revenue raised by the tax relatively stable over time? 9 Simplicity—Is the tax simple and inexpensive for taxpayers to pay and for government to collect? 9 Neutrality—Does the tax have little or no impact on people’s decisions about how much to buy, sell, and invest? 9 Equity—Do taxpayers with similar incomes pay similar amounts and do tax liabilities rise with income? An LAO RepORt 26 Legislative Analyst’s Office www.lao.ca.gov What Factors Affect Property Tax Growth each year? Most of the annual change in property tax revenues is the result of large changes in assessed value that affect a small number of properties, including: • Recently Sold Properties. When a property sells, its assessed value resets to the purchase price. This represents additional value that is added to the tax base because the sale price of the property is often much higher than its previous assessed value. • Newly Built Property and Property Improvements. New value is added to the county’s tax base when new construction takes place or improvements are made—mainly additions, remodels, and facility expansions—because structures are assessed at market value the year that they are built. • Proposition 8 (1978) Decline-in-Value Properties. These properties contribute significantly to growth or decline in a county’s tax base because their assessed values may increase or decrease dramatically in any year. A particularly large impact on assessed valuation tends to occur in years when a large number of these properties transfer from Proposition 13 assessment to reduced assessment. As shown by the dark bars in the figure below, recently sold, newly built, and decline-in-value properties typically account for more than two-thirds of total changes in countywide assessed value in Santa Clara County. Other properties, although they represent most of the properties in the county’s tax base, contribute less because the growth of these properties’ assessed values is limited to 2 percent per year. (In Billions) Components of Annual Change in County Assessed Valuation in Santa Clara County ARTWORK #120521 -5 5 10 15 20 $25 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Other Properties Due to Recently Sold, Newly Built, or Decline-in-Value Properties 0 Graphic Sign Off Secretary Analyst Director Deputy An LAO RepORt www.lao.ca.gov Legislative Analyst’s Office 27 30% Annual Percent Change Property Tax Revenue Is Much Less Volatile Than Personal Income Tax Revenue Figure 13 ARTWORK #120521 -30 -20 -10 10 20 1980 1984 1988 1992 1996 2000 2004 2008 Property Tax Revenue From the 1 Percent Rate Personal Income Tax Revenue 0 Graphic Sign Off Secretary Analyst Director Deputy approximate measure of the size of the state’s economy—has grown at an average annual rate of 6.3 percent since 1979. Over the same period, revenue from the 1 percent property tax rate has grown at an average annual rate of 7.3 percent. As we describe in the nearby box, much of the growth in property tax revenue depends on new construction and property sales. The Growth of Parcel and Mello-Roos Tax Revenues Depends on the Structure of the Tax. The terms of parcel taxes and Mello-Roos taxes vary by locality. Some local governments have taxes with escalation clauses or other provisions that modify the amount of the tax as local government costs change. Other parcel taxes and Mello-Roos taxes are set at fixed amounts per parcel. Depending on their structure, these taxes may or may not provide local governments with a growing source of revenue. Revenue stability Revenue sources that remain relatively stable from one year to the next help governments manage economic downturns, which tend to reduce revenue and at the same time increase demand for certain public services. Stable revenue sources also may help governments plan more effectively for future needs, including long-term investments in transportation, education, and public safety. The Property Tax Is a Stable Revenue Source. Despite being linked to the volatile real estate market, the property tax is California’s most stable major revenue source. Since 1979, as shown in Figure 13, personal income tax revenue has been three times more volatile, on average, than property tax revenue from the 1 percent rate. During the same period, statewide property tax revenue has declined in only three years, 1994-95, 2009-10, and 2010-11. The Property Tax Was More Stable Than Other Revenue Sources During the Recent Recession. As shown in Figure 14, revenue from the 1 percent property tax rate fared comparatively well during the most recent recession. (In the nearby box, we discuss why the property tax is stable.) Changes in property tax revenue tend to lag economic trends by one or more years because of the state’s acquisition value assessment system and the lengthy period between when most properties are assessed (January) and when property tax payments are due (December of that year and April of the next). An LAO RepORt 28 Legislative Analyst’s Office www.lao.ca.gov Parcel Taxes and Mello-Roos Taxes Also Are Stable. Because most parcel and Mello-Roos taxes are set at fixed amounts per parcel, there is minimal year-to-year fluctuation in the revenues that they raise. Assessed Valuation in Some Counties, However, Has Declined Significantly. Though statewide property tax revenue has remained comparatively stable throughout the recent recession, some areas of the state have experienced considerable declines What Factors Affect Property Tax stability? Acquisition Value Assessment System Contributes to Revenue Stability. The main reason California’s property tax revenue is stable is that the assessed value of most properties increases each year by a maximum of 2 percent. In any given year, only a small fraction of properties are sold and reset to market value. This means that real estate conditions affect a relatively small portion of the tax base each year, insulating property tax revenue from year-to-year real estate fluctuations. Proposition 8 (1978) Decline-in-Value Properties Reduce Revenue Stability. As noted earlier in the report, county assessors may reduce a property’s assessed value in the event that its market value falls below its assessed value. Each year thereafter, the property is assessed at market value until it rises above what its assessed value would have been had it remained at its acquisition value adjusted upward each year at a maximum of 2 percent. During 2010-11, more than one in four properties in California was temporarily assessed to market value. Because these properties are assessed each year at market value, they link the property tax base more closely to the local real estate market than other properties, thereby reducing the property tax’s stability somewhat. Percent Change 2007-08 to 2008-09 Personal Income Tax Corporation Tax Sales and Use Tax Property Taxa -25% -20 -15 -10 -5 5 10 Property Tax Revenue During the Recent Recession Figure 14 ARTWORK #120521 0 a Revenue from the 1 percent rate. Graphic Sign OffSecretaryAnalystDirectorDeputy An LAO RepORt www.lao.ca.gov Legislative Analyst’s Office 29 in their property tax base. These counties tend to have a large proportion of their properties under Proposition 8 decline-in-value assessments and have high foreclosure rates. For example, Riverside County had the second highest number of foreclosures (17,000) among counties and more than 400,000 decline-in-value properties in 2011. Partly as a result of these trends, total assessed value in Riverside County declined by 15 percent between 2008 and 2011. simplicity A well-designed tax system should be simple for taxpayers to understand and easy and inexpensive for governments to administer. Complex tax systems can be expensive for governments to administer effectively and may be confusing, time-consuming, and costly for taxpayers. Most of the costs associated with administering the state’s property tax system (ad valorem property taxes, parcel taxes, and Mello-Roos taxes) reflect the activities by county assessors, tax collectors, and auditors. While comprehensive data on these costs are not available, total property tax administration costs likely are between 1.5 percent and 2 percent of collections, a somewhat higher level than that of state tax agencies that perform similar functions. A significant component of the property tax’s administrative cost is from counties’ responsibility to allocate property taxes to local governments pursuant to increasingly complex state laws. County costs related solely to determining property values, the other main component of administration, were slightly less than 1 percent of total revenues collected in 2010-11—a percentage similar to that of state tax agencies. From the taxpayers’ perspective, the property tax is generally a simple tax with which to comply. Tax payments are due in equal installments twice per year. And, in most years, the assessed value of real property grows automatically by a maximum of 2 percent. Reassessments based on market value (which taxpayers are more likely to appeal) occur infrequently for most property owners. The property tax assessed on personal property is typically more administratively cumbersome for owners and assessors. This is because personal property is assessed annually at market value using complex depreciation schedules. These assessments, therefore, are more likely to be appealed, a process that can take more than a year to resolve. neutrality Nearly all taxes alter taxpayer behavior to some degree. Economists agree, however, that in most cases the ideal tax system is one that alters decisions—about what goods to buy, what products to make, and where to work or live—as little as possible. Economists prefer these “economically neutral” taxes because they assume that people and businesses are in the best position to make consumption, savings, and investment decisions that meet their economic and personal needs. Tax policies that influence what people buy and what businesses produce tend to distance people and businesses from their preferred choices, leaving them less well off than they would be if the tax system were economically neutral. Policymakers design some taxes, on the other hand, to influence taxpayer behavior in a way that promotes or discourages particular activities. In general, these should be well targeted and have strong justifications so that they achieve their policy goals with as little interference as possible in other personal decision making. Below, we describe how ad valorem property taxes may influence taxpayer behavior and then discuss the possible effects of parcel and Mello-Roos taxes. Some Homeowners and Businesses May Move Less Frequently. California’s ad valorem An LAO RepORt 30 Legislative Analyst’s Office www.lao.ca.gov property taxes may affect an individual’s decision to move because longer ownership results in a lower effective property tax rate. (An effective property tax rate differs from the 1 percent basic rate in that it is the amount of property taxes paid divided by the current market value of the property.) As shown in Figure 15, effective tax rates can vary considerably. New Owner A, for example, has an effective tax rate of 1 percent because the assessed value of his or her property is the same as its market value. Owners B and C, who have owned their properties longer than Owner A, have assessed values below their market values because their market values increased by more than 2 percent each year (and therefore faster than assessed values). As a result, most owners who have owned a property for many years pay an effective tax rate well below 1 percent. For those choosing to move, however, their effective tax rate is reset to 1 percent, producing a moving penalty that may influence some property owners’ relocation decisions. For example, established firms that benefit from their comparatively low effective property tax rates could be dissuaded from relocating—decisions that, absent the moving penalty, could benefit the companies financially. (As we discuss below, differing effective tax rates also affect the equity of the property tax.) Homeowners and Businesses May Invest Less in Property Improvements. When a property undergoes improvements, the newly constructed portion of the property is assessed at its full market value. The existing property, on the other hand, is typically assessed below its current market value, meaning that improvements are taxed at a higher effective rate than existing property. Because improvements are subject to higher effective tax rates, the return on investment that businesses receive from new improvements is lower and the taxes that homeowners pay on them are higher than they would be if all property—new and existing—were taxed uniformly. This may lead some businesses and homeowners to invest less than they otherwise would in new property improvements. Homeowners May Change Behavior in Response to Assessment Exclusions. Voters have approved ballot propositions that exclude some types of property transfers from triggering reassessment to market value. (These exclusions are summarized earlier in this report in Figure 2.) For example, residential property transfers between certain family members do not trigger reassessment. These exclusions could alter decisions homeowners make about their property. For example, a homeowner might transfer property to his or her child (thereby passing on his or her low effective property tax rate) when, absent the exclusion, the owner might have sold the property to a nonrelative. In turn, that child could find it more economical to rent the property (and benefit from the low effective property tax rate) than to sell (and forego the benefit of his or her low effective rate). equity Equity relates to how taxes affect taxpayers with different levels of income or wealth. Economists use two different standards of equity—vertical and horizontal—to evaluate taxes. Vertical equity occurs when wealthier taxpayers Figure 15 Hypothetical Effective Property Tax Rates for Three Property Owners Year Purchased Market Value Assessed Value Property Tax Rate Property Tax Paid Effective Tax Rate Owner A 2012 $300,000 $300,000 1% $3,000 1.0% Owner B 2002 300,000 180,000 1 1,800 0.6 Owner C 1986 300,000 110,000 1 1,100 0.4 An LAO RepORt www.lao.ca.gov Legislative Analyst’s Office 31 pay a greater amount in taxes than less wealthy taxpayers. Horizontal equity, on the other hand, occurs when similar taxpayers—those with similar incomes or wealth—pay the same amount in taxes. Under an equitable property tax system (1) owners of highly valuable property pay more in taxes than owners of less valuable property and (2) the owners of two similar properties pay a similar amount in property taxes. Put differently, an equitable system would tax property owners at the same effective rate. As we discussed in the previous section, however, property owners often are subject to different effective tax rates. Therefore, California’s ad valorem property taxes, parcel taxes, and Mello-Roos taxes often do not meet these standards of equity. Equity Reduced by Acquisition Value Assessment and 2 Percent Assessed Value Cap. California’s property tax system does not consistently meet the standards of horizontal or vertical equity. As discussed earlier in this report, two owners with identical properties may pay different amounts of property taxes if one owner bought the property a decade before the other. In a tax system with horizontal equity, both owners would pay similar amounts. In relation to vertical equity, the tax system’s reliance on acquisition value and the 2 percent cap on assessed valuation growth can result in owners of valuable property paying less than owners of (recently acquired) less valuable property. In a tax system with vertical equity, owners of valuable property would pay more in taxes because owners of valuable property generally are wealthier than owners of less valuable property. Homeowners Who Are Mobile Pay Higher Effective Tax Rates. Homeowners who move often—military families, younger homeowners, or those with jobs that require them to relocate frequently—tend to have higher effective ad valorem tax rates than homeowners who move less frequently because newly purchased properties are assessed at market value. Relocation decisions may result from circumstances that households may not have foreseen, such as employment changes, divorce, or other changes in family composition. Under horizontal equity, in contrast, taxpayers pay similar taxes unless their household income, wealth, or consumption patterns differ. Fixed-Rate Taxes Do Not Meet Vertical Equity Standard. Parcel taxes and Mello-Roos taxes typically meet the criteria of horizontal equity but not vertical equity because property owners typically are charged the same amounts— regardless of their wealth or their properties’ value. summary Our comparison of California’s property tax system with common tax policy criteria found mixed results. The ad valorem taxes generally meet the goals of administrative simplicity and providing governments with a growing source of stable revenue, but often do not meet the goals of neutrality and equity. Specifically, California’s ad valorem tax system (1) may influence decisions property owners make about relocations and expansions and (2) treat similar taxpayers differently and wealthier taxpayers the same as less wealthy taxpayers. California’s other property taxes (parcel taxes and Mello-Roos taxes) generally perform well relative to the goals of stability, administrative simplicity, and horizontal equity, but may perform less well in regard to the other objectives. An LAO RepORt 32 Legislative Analyst’s Office www.lao.ca.gov APPenDIx 1: THe HIsToRy oF CALIFoRnIA’s PRoPeRTy TAx ALLoCATIon sysTem California’s system for allocating property tax revenue from the 1 percent rate among local governments is complex and has changed over time. The most significant change was voter approval of Proposition 13 in 1978, which shifted the control over the allocation of property taxes from local communities to the state. Since that time the state has made several major changes that affect the amount of property tax revenue from the 1 percent rate distributed to counties, cities, K-14 districts, and special districts. Some of these changes have benefited the state fiscally (by indirectly reducing state costs for education). Others have benefited local governments or taxpayers. This appendix describes the evolution of the state’s property tax allocation system. The key events are highlighted in Figure A-1, and described in more detail below. Figure A-1 History of California’s Property Tax Allocation 1972 SB 90—Establishes school “revenue limit” funding system, giving the state a significant fiscal interest in the allocation of local property tax revenue. 1978 Proposition 13—Voters cap the basic property tax rate at 1 percent and give the state new responsibilities for allocating property tax revenue. SB 154—State’s first law allocating property tax revenue. Amounts based on share of property tax received prior to Proposition 13, with state providing grants for some of local revenue loss. 1979 AB 8—State changes property tax allocations in SB 154, establishes system for allocating future growth in property tax revenue, and absorbs costs of some local programs. 1992 First ERAF Shift—State permanently shifts some property tax revenue from counties, cities, and special districts into a fund for K-14 districts. 1993 Second ERAF Shift—State permanently shifts additional property tax revenue into a fund for K-14 districts. 2004 Triple Flip—State uses some local sales tax revenue to repay deficit-financing bonds. Reimburses counties and cities with property tax revenue from ERAF and K-14 districts. The VLF Swap—State permanently shifts some property tax revenue from ERAF and K-14 districts to reimburse cities and counties for the state’s reductions to their VLF revenue. Temporary ERAF Shift—State shifts some property tax revenue from noneducational local agencies to K-14 districts for two years. Proposition 1A—Voters restrict the state’s authority to shift property tax revenue away from cities, counties, and special districts. 2009 Proposition 1A (2004) Borrowing—State borrows $1.9 billion of property tax revenue from cities, counties, and special districts as authorized by Proposition 1A. 2010 Proposition 22—Voters eliminate the state’s authority to borrow property tax revenue and to shift redevelopment agencies’ property tax revenue. 2012 Dissolution of Redevelopment Agencies—Redevelopment agencies are abolished. Over time, their share of the property tax will revert to other local governments. ERAF = Educational Revenue Augmentation Fund; VLF = vehicle license fee. An LAO RepORt www.lao.ca.gov Legislative Analyst’s Office 33 TAx ALLoCATIon PRIoR To PRoPosITIon 13 Tax Allocation Determined Locally Until 1978. Prior to voter approval of Proposition 13 in 1978, each local government authorized to levy a property tax set its own rate (within certain statutory restrictions). Each local government annually determined the amount of revenue necessary to finance the desired level of services and set its property tax rate to collect that amount. A property owner’s property tax bill reflected the sum of the individual rates set by each taxing entity. Under this system, schools and community colleges received over 50 percent of statewide property tax revenue, counties about 30 percent, and cities about 10 percent. (At the local level, however, the share of property tax revenue supporting each type of local government varied. Some communities, for example, provided a greater percentage of total property tax revenue to schools and others provided more to their county or city.) Property Tax Allocation Linked to State Budget in 1972. Although local governments had control over the property tax during this period, property tax revenue had an effect on the state’s budget beginning in 1972. Chapter 1406, Statutes of 1972 (SB 90, Dills), started an education finance system in which the state guarantees each school district an overall level of funding. For K-12 districts, each district receives an overall level of funding—a “revenue limit”—from local property taxes and state resources combined. Community college districts receive apportionment funding from local property taxes, student fees, and state resources. Thus, if a district’s local property tax revenue (and student fee revenue in the case of community colleges) is not sufficient, the state provides additional funds. If a district’s nonstate resources alone exceed the district’s revenue limit or apportionment funding level, the district does not receive state aid and can keep the excess local property tax revenue for educational programs and services at their discretion. These districts are commonly referred to as “basic aid” districts because historically they have received only the minimum amount of state aid required by the California Constitution (known as basic aid). This system of school finance gives the state a significant fiscal interest in the distribution of local property tax revenue. PRoPosITIon 13 AnD THe sTATe’s ResPonse Proposition 13 fundamentally changed local government finance and assigned the state responsibility for property tax allocation. Property tax receipts fell by more than 60 percent because Proposition 13 lowered the statewide property tax rate to a constitutional maximum of 1 percent. Additionally, the measure required the state, rather than local communities, to determine the allocation of property tax revenue among the local governments within a county. In response to Proposition 13, the Legislature enacted two major bills: Chapter 292, Statutes of 1978 (SB 154, Petris) and then Chapter 282, Statutes of 1979 (AB 8, L. Greene). In general, these bills established methods for allocating the new lower amount of property tax revenue and shifted certain county and school district costs to the state. First state Allocation system—sB 154 Shortly after the passage of Proposition 13, the Legislature approved SB 154 in an effort to avoid major local government service reductions An LAO RepORt 34 Legislative Analyst’s Office www.lao.ca.gov and significant fiscal distress from the decrease in property tax revenue. Senate Bill 154 was the state’s first attempt to allocate property taxes among counties, cities, special districts, and K-14 districts. Under SB 154, a local government’s share of the 1 percent property tax rate in 1978-79 was based on the share of countywide property tax revenue going to that local government before Proposition 13. For example, if a city received 10 percent of the property taxes collected by all local jurisdictions in the county prior to the passage of Proposition 13, the city would receive 10 percent of the property taxes collected in the county at the 1 percent rate. This was a significant change from the allocation of property taxes prior to Proposition 13, when a local government received property tax revenue only from the properties located within its jurisdiction. In addition, to partially offset the revenue loss resulting from the reduction in the property tax rate, SB 154 used state funds to relieve counties of a portion of their obligation to pay for certain health and welfare programs and to provide block grants to counties, cities, and special districts. The Current Property Tax Allocation system—AB 8 A year after enacting SB 154, the Legislature adopted AB 8, a long-term policy to allocate property taxes and provide fiscal relief to local governments. The legislation (1) directed county auditors to allocate 1979-80 property tax revenue in a manner similar to SB 154 but with some modifications and (2) established a method for allocating property tax growth in future years. New Base Property Tax Allocation. Assembly Bill 8 established a new base property tax allocation for 1979-80. The new base allocations in AB 8 resembled those in SB 154—a local government’s share was based on the share of the countywide property tax going to that local government before Proposition 13—with some modification. Specifically, rather than continue the state block grants included in SB 154, AB 8 increased the base share of property taxes allocated to most counties, cities, and special districts by reducing the base share going to K-14 districts. (Under the state’s school finance system, K-14 district losses were in turn made up with increased state funds for education.) For cities and special districts, the increase in the base property tax allocation was derived from the block grant amount provided in SB 154. Cities received increased property taxes equivalent to about 83 percent of their SB 154 block grant amount and special districts 95 percent of their block grant amount. Counties received a combination of increased property taxes, reduced expenditure obligations for health and social services programs, and a state block grant for indigent health programs. The reduced county expenditure obligations included complete state assumption of the costs for Medi-Cal and the State Supplementary Payment Program, as well as an increased state share of costs for the Aid to Families with Dependent Children program (the predecessor to California Work Opportunities and Responsibility to Kids). (These changes resulted in an increased share of property tax revenue for most counties. As discussed in the box on page 36, six counties ended up as so-called negative bailout counties.) In summary, AB 8 shifted property tax revenue away from K-14 districts in order to provide cities, special districts, and most counties with a greater amount of property tax revenue than they received the previous year under SB 154. As shown in Figure A-2 (see next page), this greatly reduced K-14 districts’ share of the statewide property tax. New Method for Allocating Property Tax Growth. Assembly Bill 8 also established a new process for allocating growth (or decline) in property tax revenue in future years. In contrast to the property tax allocation process in 1978-79 and An LAO RepORt www.lao.ca.gov Legislative Analyst’s Office 35 1979-80 (that distributed revenue on a countywide basis without regard to where the property was located), the legislation specified that future growth in property tax revenue would be allocated only to those local governments serving the property where the revenue increase took place. Accordingly, beginning in 1980-81, AB 8 required that each local government receives the same amount of property tax it received in the prior year plus its share of any growth or decline in property tax revenue that occurred in its jurisdiction. To ensure that each local government receives the property tax growth from the properties it serves, each county is divided into tax rate areas (TRAs). Each local government represented in a TRA receives a share of the property tax growth 60% ARTWORK #120521 a As a percentage of total revenue from the 1 percent rate and voter-approved debt rates. 10 20 30 40 50 1976-77 1980-81 1984-85 1988-89 1992-93 1996-97 2000-01 2004-05 2008-09 K-14 Districts Counties Cities SB 154, AB 8 Permanent ERAF Shifts Enacted Triple Flip, VLF Swap, Two-Year ERAF Shift b Special districts and redevelopment agencies. Payments from redevelopment agencies to K-14 schools not included. Major Changes in Allocation of California Property Tax Revenuea Figure A-2 ERAF = Educational Revenue Augmentation Fund; VLF = vehicle license fee. Other Districtsb Graphic Sign OffSecretaryAnalystDirectorDeputy What Are “negative Bailout Counties?” Assembly Bill 8 did not provide additional property tax revenue to six counties (Alpine, Lassen, Mariposa, Plumas, Stanislaus, and Trinity). Under the provisions of AB 8, the increased share of the base property tax allocation to counties was calculated as the value of the SB 154 block grant plus a small adjustment for the cost of the Aid to Families with Dependent Children program less the amount of the indigent health block grant. In these six counties, the value of the indigent health block grant was so great that it exceeded the value of the adjusted SB 154 block grant. In order for these counties to be treated in the same way as all other counties, the amount of property taxes allocated to these counties was reduced. Because these counties received a smaller percentage of total property taxes collected after implementation of AB 8 relative to their pre-Proposition 13 shares, these counties are termed negative bailout counties. An LAO RepORt 36 Legislative Analyst’s Office www.lao.ca.gov that occurs within that TRA. As required by AB 8, county auditors developed a methodology to determine the percentage of property tax growth— known as TRA factors—to allocate to each local government in each TRA. These TRA factors were based largely on the 1979-80 base allocation established by AB 8 (including the shift of property tax revenue from K-14 districts to other local governments). In most counties, these TRA factors remain constant. Thus, if a city received 25 percent of the property tax revenue growth generated in a TRA in 1980-81 (the first year TRA factors were used to distribute property tax revenue growth), it continued to receive 25 percent of the growth in property taxes in future years. As a result, the distribution of property tax revenue among local governments continued to closely resemble the 1979-80 distribution until the first major changes to the AB 8 system occurred in the 1990s. In summary, the AB 8 property tax allocation system provides each local government with the same amount of property tax revenue it received in the prior year (the base), plus its share of any growth or decline in property tax revenue that occurred in its jurisdiction in the current year. CHAnGes To THe AB 8 sysTem The state property tax allocation system set up in AB 8 continues to be the basis for property tax allocation among local governments today. Since 1979, however, there have been some significant changes to the original property tax allocation system contained in AB 8. In most cases, the changes reflect the complex fiscal relationship between the state and local governments. Because of the state’s role in allocating property tax revenue after Proposition 13 and in funding K-14 districts and other local programs, decisions regarding the state budget and other policy issues have led the Legislature and Governor to occasionally change how property tax revenue is distributed. We highlight the major changes in property tax allocation below. It is important to note, however, that these changes in property tax allocation do not explain the entire scope of the state-local fiscal relationship—a relationship that also has involved the realignment of many government programs and changes in other revenue sources such as the sales tax and the vehicle license fee (VLF). Some of these decisions have benefited the state fiscally, and others have benefited local governments or taxpayers. no and Low Property Tax Cities One change in property tax allocation relates to so-called “no and low property tax cities.” Cities that did not levy a property tax, levied only a very low property tax, or were not incorporated as cities prior to the passage of Proposition 13 typically received few property taxes under AB 8. During the 1980s the Legislature directed county auditors to modestly increase the amount of property taxes going to some of these cities by shifting a share of county property tax revenue to them. Property Taxes shifted to schools Ongoing Property Tax Shifts Started in 1990s. In 1992-93 and 1993-94, in response to serious budgetary shortfalls, the Legislature and Governor permanently redirected almost one-fifth of statewide property tax revenue—over $3 billion in 1993-94—from cities, counties, and special districts to K-14 districts. (The legislation also temporarily required redevelopment agencies to make payments to K-14 districts.) Under the changes in property tax allocation laws, the redirected property tax revenue is deposited into a countywide fund for An LAO RepORt www.lao.ca.gov Legislative Analyst’s Office 37 schools, the Educational Revenue Augmentation Fund (ERAF). The property tax revenue from ERAF is distributed to non-basic aid schools and community colleges, reducing the state’s funding obligation for K-14 school districts. The amount transferred into ERAF from each city, county, and special district was based on many factors, including the magnitude of the fiscal relief that the state provided the local government in AB 8 and, for counties, the level of taxable sales within its borders. As a result, individual local government ERAF obligations varied widely. For example, the ERAF shifts from cities formed after 1978 typically were lower than those for older cities because the newer cities did not receive any AB 8 benefits. Similarly, counties with many retail developments typically had larger ERAF shifts than rural counties because the state anticipated that extensively developed counties would receive more relief from the state’s primary ERAF mitigation measure: a half-cent sales tax for local public safety (Proposition 172, 1993). As shown in Figure A-2, after the ERAF transfer of the early 1990s, schools and community colleges once again received more than 50 percent of the state’s property tax revenue, while other local governments received less. “Excess ERAF” Shifted Back. In the late 1990s, some county auditors reported that their ERAF accounts had more revenue than necessary to offset all state aid to non-basic aid K-14 districts. In response, the Legislature enacted a law requiring that some of these surplus funds be used for countywide special education programs and the remaining funds be returned to cities, counties, and special districts in proportion to the amount of property taxes that they contributed to ERAF. The ERAF funds that are returned to non-education local governments are known as excess ERAF. Additional Temporary Property Tax Shift. The 2004-05 budget package also shifted $1.3 billion of property taxes from noneducation local agencies (cities, counties, special districts, and redevelopment agencies) to ERAF in 2004-05 and again in 2005-06. This temporary ERAF shift reduced the state’s funding responsibilities for K-14 districts to help address the budget shortfalls in those two years. Changes to eRAF The Triple Flip. In 2004, state voters approved Proposition 57, a deficit-financing bond to address the state’s budget shortfall. The state enacted a three-step approach—commonly referred to as the triple flip—that provides a dedicated funding source to repay the deficit bonds: • Beginning in 2004-05, one-quarter cent of the local sales tax is used to repay the deficit-financing bond. • During the time these bonds are outstanding, city and county revenue losses from the diverted local sales tax are replaced on a dollar-for-dollar basis with property taxes shifted from ERAF. • The K-14 tax losses from the redirection of ERAF to cities and counties, in turn, are offset by increased state aid. The triple flip increases the amount of property tax revenue going to cities and counties and reduces the amount of ERAF provided to K-14 districts. Overall, however, cities, counties, and K-14 districts do not experience any net change in revenue from the triple flip. Cities and counties receive more property tax revenue, but this revenue gain is offset by the reduction in sales tax revenue. K-14 districts receive less property tax revenue, but this is offset with increased state aid. The flip of sales taxes for property taxes ends after the deficit-financing bonds are repaid (currently estimated to occur in 2016). An LAO RepORt 38 Legislative Analyst’s Office www.lao.ca.gov The VLF Swap. The VLF—a tax on vehicle ownership—provides revenue to local governments. In 1999, the state began reducing the VLF rate and backfilling city and county revenue losses from this tax reduction with state aid. The 2004-05 budget package permanently replaced the state VLF backfill by diverting property tax revenue from ERAF and, if necessary, non-basic aid K-14 districts to cities and counties. In 2004-05, cities and counties did not experience a change in overall revenue from the VLF swap, as the amount of property tax shifted to them was equal to the VLF backfill amount. In subsequent years, state law specifies that each local government’s VLF swap payment grows based on the annual change in its assessed valuation. As a result, most cities and counties benefit fiscally from the VLF swap because assessed valuation typically grows more quickly than VLF revenue. Similar to the triple flip, K-14 districts’ property tax revenue losses are made up with increased state aid. Distributing eRAF The triple flip and VLF swap further expanded the use of ERAF and changed the priorities governing how its resources are used. As shown in Figure A-3, the original purpose of ERAF was to supplement the property tax revenue of non-basic aid K-14 districts. Under current law, however, funding K-14 districts falls to the fourth priority. As a result, non-basic aid school districts do not receive any ERAF resources unless additional funds remain after the county auditor (1) returns excess ERAF, (2) reimburses the triple flip, and (3) make payments for the VLF swap. This change in priorities has a significant effect on the amount of ERAF available for school districts. In 2010-11, for example, auditors in 33 counties reported using all ERAF resources for the first three priorities, leaving no ERAF for schools. Figure A-4 (see next page) displays the complex process county auditors follow to allocate ERAF and to reimburse cities and counties for the triple flip and VLF swap. This figure also shows that, under certain circumstances, it is possible that the auditor could determine that there are not enough funds to fully compensate cities and the county for the triple flip and/or the VLF swap. These funding insufficiencies are referred to as “insufficient ERAF.” Step 1: Return Excess ERAF. As shown in the figure, the first step is for each county auditor to determine whether the funds deposited into the countywide account exceed the amount needed by all non-basic aid K-14 districts in the county, plus a specified amount for special education. If so, the excess ERAF is returned to cities, special districts, and the county in proportion to the amount of property taxes they contributed to ERAF. This calculation of excess ERAF was modified recently to reflect the increased revenue that K-14 districts and ERAF receive from the dissolution of redevelopment agencies. Specifically, to maximize the state fiscal benefit related to redevelopment Figure A-3 Uses of ERAF Listed in Priority Order Priority Early 1990s Late 1990s to 2004 2004 to Present First Fund non-basic aid K-14 districts Return excess ERAF Return excess ERAF Second Fund non-basic aid K-14 districts Reimburse triple flip Third Make payments for VLF swap Fourth Fund non-basic aid K-14 districts ERAF = Educational Revenue Augmentation Fund; VLF = vehicle license fee. An LAO RepORt www.lao.ca.gov Legislative Analyst’s Office 39 Process to Distribute ERAF and Reimburse the Triple Flip and VLF Swap ARTWORK #120521 Figure A-4 County auditors shift property taxes from counties, cities, and special districts to ERAF. Does the amount in ERAF exceed the total amount needed by K-14 districts? (2) Use ERAF to reimburse cities and counties for triple flip. (1) Return excess ERAF to counties, cities, and special districts. Is ERAF sufficient to fully pay for VLF swap? (5) Distribute remaining ERAF funds to K-14 districts. (4) Negative ERAF: Use property taxes from K-14 districts that are not basic aid to pay for VLF swap. County is experiencing insufficient ERAF. Are K-14 district property taxes sufficient to fully pay for VLF swap? End. YES NO NO YES NO YES ERAF = Educational Revenue Augmentation Fund; VLF = vehicle license fee. Is ERAF sufficient to fully reimburse for triple flip? (3) Use remaining ERAF to pay cities and counties for VLF swap. YES NO An LAO RepORt 40 Legislative Analyst’s Office www.lao.ca.gov dissolution, Chapter 26, Statues of 2012 (AB 1484, Committee on Budget) directs county auditors to exclude property taxes related to the dissolution of redevelopment agencies in the calculation of excess ERAF. Step 2: Reimburse Triple Flip. Following the calculation and distribution of excess ERAF, state law directs county auditors to reimburse local governments for their revenue losses associated with the triple flip. This reimbursement is shown in the figure as step two. If the county auditor uses all available ERAF, but determines that the local governments have not been fully reimbursed for the triple flip, the county has insufficient ERAF. In this situation, additional state action is required if cities and counties are to be fully reimbursed for the triple flip. Steps 3 and 4: Pay for VLF Swap. After reimbursing the triple flip, the next use of ERAF is to make payments to local governments for the VLF swap. If the county auditor determines that ERAF resources are not sufficient to fully pay cities and the county for the VLF swap, the county auditor redirects some property taxes from non-basic aid K-14 districts for this purpose, as shown in step 4. The redirection of school property taxes is commonly referred to as negative ERAF because it decreases K-14 property taxes rather than supplementing them (the original purpose of ERAF). If the amount of property taxes deposited in ERAF and allocated to non-basic aid school district is not enough to make the payments required under the VLF swap, then the county has insufficient ERAF. In this situation, additional state action is required for cities and counties to receive the full VLF swap payment. In 2012-13, the first time this issue came before the Legislature, the state included $1.5 million in the budget to compensate the county and cities in Amador County for insufficient ERAF. Step 5: Distribute Remaining ERAF to K-14 Districts. Any funds remaining in ERAF after the other uses have been satisfied are distributed to schools and offset state education spending. LImITs on THe sTATe’s AUTHoRITy oVeR PRoPeRTy TAx ALLoCATIon The state’s use of property tax shifts to help resolve its severe budget difficulties—as well as other actions affecting the state-local fiscal relationship—have been a source of considerable friction between state and local government. In response, local government advocates have sponsored initiatives to limit the state’s authority over local finances, including two constitutional measures reducing the state’s authority over property tax allocation. As a result, much of the authority granted to the state in Proposition 13 and used to establish AB 8, ERAF, the VLF swap, and the triple flip is now restricted. Proposition 1A (2004) In 2004, voters approved Proposition 1A, amending the State Constitution to prohibit the state from shifting property tax revenue from cities, counties, and special districts to K-14 districts. The measure, however, provided an exception to its restrictions. Beginning in 2008-09, the measure allowed the state to shift a limited amount of local property tax revenue to schools and community colleges provided that the state repaid local governments for their property tax losses, with interest, within three years. The measure also specified that any change in how property tax An LAO RepORt www.lao.ca.gov Legislative Analyst’s Office 41 revenue is shared among cities, counties, and special districts must be approved by two-thirds of both houses of the Legislature (instead of by majority vote). For example, state actions that shift a share of property tax revenue from one local special district to another, or from the county to a city, require approval by two-thirds of both houses of the Legislature. The state utilized Proposition 1A’s exception for shifting property tax revenue to provide state fiscal relief in its 2009-10 budget package. Specifically, the state borrowed $1.9 billion of property tax revenue from cities, counties, and special districts—revenue equal to roughly 8 percent of each local agency’s property tax revenue. (Under Proposition 1A, the state was required to repay these funds by 2012-13. Companion legislation, however, allowed local governments to borrow against the state’s future repayments so that local government budgets were not negatively affected in 2009-10.) The 2009-10 budget package also required redevelopment agencies to make payments totaling $1.7 billion (2009-10) and $350 million (2010-11) to K-12 school districts serving students living in or near their redevelopment areas. Unlike the borrowing from cities, counties, and special districts, the state did not reimburse redevelopment agencies for these required payments. Proposition 22 (2010) In 2010, voters approved Proposition 22, which, among other things, prohibits the state from redirecting property tax revenue as it did in 2009-10. Specifically, Proposition 22 eliminates the state’s authority to borrow property tax revenue from local governments as previously allowed under Proposition 1A and prohibits the state from requiring redevelopment agencies to shift revenue to K-14 districts or other agencies. As discussed in the nearby box, the prohibition on shifting redevelopment funds contributed indirectly to the dissolution of redevelopment agencies in February 2012. The Dissolution of Redevelopment Agencies As discussed in our report, The 2012-13 Budget: Unwinding Redevelopment, redevelopment had the overall effect of increasing state costs for K-14 education. For this reason, the state frequently required redevelopment agencies to shift some funds to support K-14 education. Under Proposition 22 (2010), however, the state no longer had the authority to require redevelopment agencies to shift property tax revenue to school districts. Facing considerable fiscal constraints and not authorized to shift funds from redevelopment for state fiscal relief as it had done in the past, the Legislature took a new approach as part of the state’s 2011-12 budget. Specifically, the Legislature approved and the Governor signed Chapter 5, Statutes of 2011 (ABX1 26, Blumenfield), which dissolved all redevelopment agencies. They also approved Chapter 6, Statutes of 2011 (ABX1 27, Blumenfield), allowing redevelopment agencies to avoid dissolution by voluntarily agreeing to make annual payments to school districts. The Supreme Court later ruled ABX1 27 unconstitutional, meaning all redevelopment agencies were subject to ABX1 26’s dissolution requirement. Under the dissolution process, the property tax revenue that formerly went to redevelopment agencies is first used to pay off redevelopment debts and obligations and the remainder is distributed to local governments in accordance with AB 8. An LAO RepORt 42 Legislative Analyst’s Office www.lao.ca.gov LookInG FoRWARD Proposition 1A and Proposition 22 limit the state’s authority to change property tax allocation laws. Measures that reallocate property tax revenue among counties, cities, and special districts require a two-thirds vote of the Legislature and measures that change state laws to increase the percentage of property taxes allocated to schools are prohibited. Even without additional legislative action, however, the distribution of property tax revenue will change in the near future for two reasons. • End of Redevelopment. As the debts and obligations of former redevelopment agencies are paid off, property tax revenue that previously was allocated to redevelopment agencies will be distributed to K-14 districts, counties, cities, and special districts. • The End of the Triple Flip. We estimate that the state’s deficit-financing bonds will be paid off in 2016-17. At that time, the state sales tax rate will decline by one-quarter cent and the local sales tax rate will increase by one-quarter cent. Because the local sales tax rate is restored in full, the property tax revenue currently used to backfill cities and counties for the loss in sales tax revenue will be allocated to K-14 districts. Although none of these entities will experience any change in overall revenue, cities, and to a lesser extent counties, will receive a smaller share of the property tax than they do today. In addition, the property tax revenue allocated to K-14 districts will reduce the state’s education costs. An LAO RepORt www.lao.ca.gov Legislative Analyst’s Office 43 APPenDIx 2: PRoPeRTy TAx AnD LoCAL GoVeRnmenT PUBLICATIons Property Taxes Property Tax Agents at the Local Level in California: An Overview (June 20, 2012) Discusses the role of property tax agents in appealing property assessments. Reconsidering AB 8: Exploring Alternative Ways to Allocate Property Taxes (February 3, 2000) Examines the problems in the current property tax allocation system and discusses the tensions and trade-offs inherent in five reform proposals. Reversing the Property Tax Shifts (April 2, 1996) Explains the mechanics of the Educational Revenue Augmentation Fund shift and the formulas which implemented it. Local Finance Major Milestones: Over Four Decades of the State-Local Fiscal Relationship (November 29, 2012) Provides a timeline summarizing major changes in the state-local relationship. Local Government Bankruptcy in California: Questions and Answers (August 7, 2012) Addresses some common questions about the Chapter 9 process for local governments. The 2012-13 Budget: Unwinding Redevelopment (February 17, 2012) Reviews the history of redevelopment agencies, the events that led to their dissolution, and the process communities are using to resolve their financial obligations. The 2011-12 Budget: Should California End Redevelopment Agencies? (February 8, 2011) Examines the Governor’s proposal to end redevelopment. Ten Events That Shaped California State- Local Fiscal Relations (December 16, 2009) Discusses key events and measures that influenced state-local relations. Overview of California Local Government (June 17, 2010) Summarizes key issues related to local government. Understanding Proposition 218 (December 17, 1996) Examines the constitutional requirements related to property assessments and fees. An LAO RepORt 44 Legislative Analyst’s Office www.lao.ca.gov An LAO RepORt www.lao.ca.gov Legislative Analyst’s Office 45 An LAO RepORt 46 Legislative Analyst’s Office www.lao.ca.gov An LAO RepORt www.lao.ca.gov Legislative Analyst’s Office 47 LAO Publications This report was prepared by Chas Alamo and Mark Whitaker, and reviewed by Marianne O’Malley. The Legislative Analyst’s Office (LAO) is a nonpartisan office that provides fiscal and policy information and advice to the Legislature. To request publications call (916) 445-4656. This report and others, as well as an e-mail subscription service, are available on the LAO’s website at www.lao.ca.gov. The LAO is located at 925 L Street, Suite 1000, Sacramento, CA 95814. An LAO RepORt 48 Legislative Analyst’s Office www.lao.ca.gov