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HomeMy WebLinkAbout2012-07-16 City Council Agenda PacketCITY OF PALO ALTO CITY COUNCIL Special Meeting Council Conference Room July 16, 2012 5:30 PM Agenda posted according to PAMC Section 2.04.070. Supporting materials are available in the Council Chambers on the Thursday preceding the meeting. 1 July 16, 2012 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. Call to Order 1. Interview of Henry Wong for the Planning and Transportation Commission for One Unexpired Term Ending on July 31, 2013 COUNCIL CHAMBERS Special Orders of the Day 2. Bay Area Council Yangpu District Presentation 3. Project Safety Net Community Presentation Study Session 4. Cool City Challenge Study Session City Manager Comments Minutes Approval April 9, 2012 Oral Communications Members of the public may speak to any item not on the agenda; three minutes per speaker. Council reserves the right to limit the duration of Oral Communications period to 30 minutes. 2 July 16, 2012 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. Consent Calendar Items will be voted on in one motion unless removed from the calendar by two Council Members. 5. Approval of an Electric Enterprise Fund Contract with Golden State Utility Company for Trenching and Substructure Installation Services in the Amount of $2,677,800 6. Approval of Contract Amendment with Baker & Taylor to Add $40,000 for Digital Format Books for a Total Amount Not to Exceed $1,290,000 7. Approval of a Contract with Con-Quest Contractors, Inc. in the Amount of $518,400 for the Relocation of a 96-Inch Diameter Storm Drain Pipeline on East Bayshore Road Near San Francisquito Creek, Capital Improvement Program Project SD-06101 8. Approval of Change Order Number One to Contract C12142966 with Par Electric, Inc. in the Amount of $85,000 to Rebuild the 60 Kilovolt Electric System for a Total Contract Amount Not to Exceed $1,748,900 9. Approval and Authorization of the City Manager to Execute a Contract with Canus Corporation in a Total Not to Exceed Amount of $7,673,000 for Electric, Water, Gas, Wastewater, Storm Drain and Public Works Construction Inspection Services 10.Adoption of Resolution Placing an Initiative Measure on November 2012 Ballot to Permit Three Medical Marijuana Dispensaries to Operate in Palo Alto 11.Approval of Contract for Goods (Purchase Order) for the Acquisition of Toshiba Laptops 12.Approval of Fiscal Year 2012 Re-appropriation Requests to be Carried Forward into Fiscal Year 2013 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. 3 July 16, 2012 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. Action Items Include: Reports of Committees/Commissions, Ordinances and Resolutions, Public Hearings, Reports of Officials, Unfinished Business and Council Matters. 13.Direction on Downtown Parking Strategies and Approval of Trial Residential Permit Parking Program In and Around the Professorville Neighborhood 14.Utilities Advisory Commission Recommendation that Council Approve a Definition of Carbon Neutrality in Anticipation of Achieving a Carbon Neutral Electric Supply Portfolio by 2015 Council Member Questions, Comments and Announcements Members of the public may not speak to the item(s) Closed Session Public Comments: Members of the public may speak to the Closed Session item(s); three minutes per speaker. 15. CONFERENCE WITH LABOR NEGOTIATORS City Designated Representatives: City Manager and his designees pursuant to Merit System Rules and Regulations (James Keene, Pamela Antil, Dennis Burns, Lalo Perez, Joe Saccio, Kathryn Shen, Sandra Blanch, Marcie Scott, Darrell Murray) Employee Organization: Palo Alto Police Officers Association (PAPOA) Authority: Government Code Section 54957.6(a) 16. CONFERENCE WITH LABOR NEGOTIATORS City Designated Representatives: City Manager and his designees pursuant to Merit System Rules and Regulations (James Keene, Pamela Antil, Dennis Burns, Lalo Perez, Joe Saccio, Kathryn Shen, Sandra Blanch, Marcie Scott, Darrell Murray) Employee Organization: Palo Alto Police Manager’s Association (PAPMA) Authority: Government Code Section 54957.6(a) Adjournment AMERICANS WITH DISABILITY ACT (ADA) Persons with disabilities who require auxiliary aids or services in using City facilities, services or programs or who would like information on the City’s compliance with the Americans with Disabilities Act (ADA) of 1990, may contact (650) 329-2550 (Voice) 24 hours in advance. PUBLIC COMMENT Members of the Public are entitled to directly address the City Council/Committee concerning any item that is described in the notice of this meeting, before or during consideration of that item. If you wish to address the Council/Committee on any issue that is on this agenda, please complete a speaker request card located on the table at the entrance to the Council Chambers, and deliver it to the City Clerk prior to discussion of the item. You are not required to give your name on the speaker card in order to speak to the Council/Committee, but it is very helpful. 4 July 16, 2012 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 Finance Committee Meeting Cancellation Cubberley Policy Advisory Committee July 19, 2012 Schedule of Meetings Schedule of Meetings Tentative Agenda Tentative Agenda Public Letters to Council Public Letters to Council Set One Set Two CITY OF PALO ALTO OFFICE OF THE CITY CLERK July 16, 2012 The Honorable City Council Palo Alto, California Interview of Henry Wong for the Planning and Transportation Commission for One Unexpired Term Ending on July 31, 2013 On July 2, 2012 Council was to vote to appoint one unexpired term on the Planning and Transportation Commission. No candidate received the required majority votes for appointment. Council directed the City Clerk to set an interview with Henry Wong, who was unable to interview previously. On July 16, 2012 Council will interview Henry Wong. On July 23, 2012 Council will vote to appoint a candidate from the remaining pool of candidates, listed below. Michael Alcheck Susan Fineberg Doria Summa Mark Weiss Henry Wong The appointed candidate will serve in the unexpired term beginning immediately and ending on July 31, 2013. ATTACHMENTS:  Wong Application (PDF)  Wong Letter to Council (PDF) Department Head: Donna Grider, City Clerk Garage Technology Ventures5M Henry H. Wong -Venture Partner Henry@garage.com Henry H. Wong has been a prolific and successful entrepreneur, executive, and venture investor in Silicon Valley for over 25 years. Henry applies his operational experience, investment talent, and his China expertise to advise, invest in, and build high technology companies with a global vision. He is the founder of Diamond TechVentures, and was a venture partner at Crystal Ventures, where he was actively involved with companies including SMIC, LGC Wireless & Infmera. As an entrepreneur, Henry has had several significant successes, including SS8 Networks Inc., where he was the founder, CEO and Chairman, as well as IP Communications, XaQti Semiconductor, CNet Technology Inc., and Combinet (ISDN Systems), all of which he co-founded and led. In 2002, Henry was a fmalist for the Ernst & Young "Entrepreneur of the Year Award." He is an advisor to several non-profit organizations and is active in community organizations. Henry holds a B.Sc. degree in Business from the University of Utah and a MBA in Telecom Management from Golden Gate University. He is also a Mentor in the Stanford Graduate School of Business GSB S-356 MBA Program, and a Team Mentor in the Technology Venture Formation course MS&E 273 & E145 at Stanford's School of Engineering. City of Palo Alto (ID # 2944) City Council Staff Report Report Type: Special Orders of the Day Meeting Date: 7/16/2012 July 16, 2012 Page 1 of 1 (ID # 2944) Summary Title: Project Safety Net Community Presentation Title: Project Safety Net Community Presentation From: City Manager Lead Department: Community Services Attachments:  Attachment A - Project Safety Net Fact Sheet (DOCX) Prepared By: Minka VanDerZwaag, Department Head: Greg Betts, Director, Community Services City Manager Approval: ____________________________________ James Keene, City Manager Project Safety Net (PSN) Program Update MISSION Our mission is to develop and implement an effective, comprehensive, community-based mental health plan for overall youth well-being in Palo Alto. PLAN The plan includes education, prevention and intervention strategies that together provide a Safety Net for youth and teens in Palo Alto, and defines our community’s teen suicide prevention efforts. UPDATE In April 2012, Christina Llerena, MSW was hired as the Project Safety Net Director. In her first three months, she has conducted an internal audit and needs assessment and met with over 70 Project Safety Net stakeholders including Steering Committee members, advisors, and members at large including folks from the City of Palo Alto, Palo Alto Unified School District, various non-profit organizations, parents and students. She released her “41 Day Report” at the June 21, 2012 Project Safety Net Collaborative meeting. There are three overarching themes mentioned in her report which will provide a broad base for the upcoming work of the Collaborative. The themes include: 1) Strengthen the partnership with the Palo Alto Unified School District on site and administrative levels; 2) Include, engage and activate youth voice and leadership in PSN at multiple levels, and 3) Maintain a dual focus working on both suicide prevention and youth well-being. At PSN’s upcoming July 26, 2012 collaborative meeting, members will break out into work groups to create three goals and corresponding action plans for the upcoming school year. These include continued work and some new initiatives such as: Gatekeeper (QPR) trainings for adults and youth; a youth-driven web site that centralizes resources and events in the community, Developmental Assets work which includes community banners, outreach to various community groups on the Assets model, neighborhood tool kits for block parties as some examples. Other internal organizational work includes developing a PSN communications plan and a finance committee to create alternatives plan on how to utilize the 2M of Stanford University Medical Center funding for Council consideration. An August 2012 retreat will examine the role and purpose of PSN and how best to implement a messaging campaign to reach a broader audience regarding suicide prevention and youth well-being. Both efforts will fortify past efforts and build on new communication strategies with a clearer purpose. 7/16/12 City of Palo Alto (ID # 3019) City Council Staff Report Report Type: Study SessionMeeting Date: 7/16/2012 July 16, 2012 Page 1 of 3 (ID # 3019) Summary Title: Cool City Challenge Title: Cool City Challenge Study Session From: City Manager Lead Department: City Manager This is a study session where David Gershon of the Empowerment Institute will explain the Cool City Challenge Initiative and take questions from the Council. As a study session, there will be no action. If the City would be interested in participating in the Cool City Challenge, the first step would be to commit to participating via a letter of intent. We would expect that matter to come to the Council after you return from break, if there is interest. The Challenge will only occur if the Empowerment Institute is able to raise the funds to support the initiative. At the point that the initiative proves it will be viable, cities that have signaled their intent to participate will be asked to submit formal applications to be one of the three participating California cities. There thus may be a competition to be a participating city, so a letter of intent may not ensure a city’s automatic participation. The Cool City Challenge is a bold initiative and in staff’s view will require a significant commitment over the approximate three year period that the Challenge requires. In staff’s opinion, Council should understand that this is as much a civic engagement, community building exercise as it is an experiment to advance the reduction of CO2, increased energy efficiency, and other aspects of our climate action goals and environmental initiatives as a community. The City has established ambitious goals through our Climate Action Plan and is a leader, comparatively, in making significant progress in meeting our CO2 reduction targets. In our case, we will want to consider the Cool City Challenge in the context of surpassing our established 15% community wide CO2 reduction goals. How far do we want to go and how much of an effort to we want to commit to? And is the grassroots, household-by-household approach that the Cool City Challenge proposes a vehicle we want to use? These and other questions will help to inform any next steps the City would take in the Cool City Challenge. July 16, 2012 Page 2 of 3 (ID # 3019) We have included a number of summary bullet points below that provide some basic facts and background about the Cool City Challenge. There are also a series of attachments provided by David Gershon that provide more depth and background about the initiative. Staff will also reach out to different community partners from our Green Teams to Acterra and others who have expressed interest in the Cool City Challenge to be sure they are informed about this study session. Summary Facts and Background  It is a global climate change initiative that involves 3 CA cities and 3 neighborhoods of comparable size in San Paulo, Brazil.  It is based on the fact that cities are where a large percentage of the planet’s carbon is generated (70%), and citizens represent a significant part of a city’s footprint (50 to 90%).  If a community model can be built in these 4 demonstration cities and then brought to scale worldwide, it would represent a major global climate change mitigation intervention.  Empowerment Institute, the initiator of the Cool City Challenge and who will provide each of the cities technical assistance in its implementation, has a successful track record in designing and implementing successful behavior change programs and community engagement strategies for cities both in the United States and Europe. The content of these behavior change programs include low carbon and sustainable lifestyles, livable neighborhoods and disaster-resilient communities.  Their Low Carbon Diet Program, core to the Cool City Challenge, has demonstrated that it can help households reduce their carbon footprint by 25% or more. As a result the program is being used in over 300 US cities with 46 of those cities in CA, and 6 countries including China. They have also demonstrated that through their community engagement tools they are able to get a minimum of 25% of the residents on a block to participate in their programs.  One of our Palo Alto citizens, Sandra Slater, heard about the Cool City Challenge, thought Palo Alto would be a great fit, and introduced it to us.  The 3 US cities being selected by EI are based on the following criteria. 1. The cities needed to be in CA because of its strong commitment to GHG reduction as demonstrated by AB 32. 2. Be in reasonably proximity to one another so they can form a learning community and enable easy access for those who will travel here to learn from them. July 16, 2012 Page 3 of 3 (ID # 3019) 3. Be early adopter cities known for taking leadership on the issues of climate change and sustainability. 4. Have either a citizen or local community group and the local government championing the participation of their city in the program.  To enable this project to be most effectively disseminated after this demonstration phase, Empowerment Institute has partnered with Lawrence Berkeley National Laboratory to do a research study and provide the analytics for this initiative. Stanford, UC Berkeley and UC Davis will assist them in this research.  Empowerment Institute realized that cities do not have resources to implement this type of transformative social innovation, as much as we might wish, and has committed to raise the funds in partnership with LBNL for the program’s implementation in the cities selected. Attachments:  Attachment A: Cool City Challenge_City Selection Process (PDF)  Attachment B: Cool City Challenge v1 6 (PDF)  Attachment C: LBNL Cool City Challenge Research Framework v2 1 (PDF)  Attachment D: Local Carbon Reduction Initiatives (PDF)  Attachment E: Changing the World One Household at a Time (PDF) Prepared By: Lorie Camino, Executive Assistant to the City Manager Department Head: James Keene, City Manager City Manager Approval: ____________________________________ James Keene, City Manager ATTACHMENT A COOL CITY CHALLENGE SELECTION PROCESS This document provides a summary of the Cool City Challenge, provides criteria for being invited to participate as a candidate city, and describes the selection process. SUMMARY PURPOSE: To scale up a proven community-based social innovation to achieve dramatic carbon reduction while building a low carbon economy and resilient neighborhoods in three early adopter California cities and three neighborhoods in Sao Paulo, Brazil; and then disseminate this strategy worldwide. The ultimate goal of the Cool City Challenge is to change the game around greenhouse gas reduction in cities and provide a viable path forward to address climate change. NEED AND OPPORTUNITY: With international climate change legislation failing to get traction and the long timeframe required to scale up technological solutions, the world is searching for a feasible and scalable strategy for addressing global warming. Since cities represent 70% of the planet’s CO2 emissions and citizens’ daily lifestyle choices represent between 50 and 90% of these emissions, cities and their citizens provide the world with an unparalleled opportunity to address global warming. Further, this can serve as a demand-side driver for building robust local green economies. STRATEGY: Empowerment Institute—the world’s pre-eminent expert in environmental behavior change and community engagement—over the past two decades has developed a proven methodology to help cities empower citizens to reduce their carbon footprint by 25% through the Low Carbon Diet EcoTeam program and a strategy to achieve between 25 and 75% household participation. This methodology has now spread to over 300 US cities and 6 countries including China. The Cool City Challenge is designed to bring this transformative social innovation to scale. GOALS: Minimum of 25% carbon reduction per household Minimum of 25% participation of citizens in the community Minimum of 40% participation in some form of household retrofit Stimulate green economic development Enable participating households and blocks to become more disaster resilient Build social capital on blocks that can be redeployed to address multiple community issues. Transfer Empowerment Institute’s intellectual capital in behavior change, community engagement and large system transformation to city government agencies and multiple community groups. 2 Help grow participation in existing community programs such as audits, rebates, zero waste, water conservation, as well as leverage the campaign to help create new programs and local business opportunities such as a local carbon offset program. Develop a plan for city to become carbon neutral Do rigorous research on all of the above through Empowerment Institute’s partnership with Lawrence Berkeley National Laboratory to be in a position to take this model to scale in cities across the state of CA, nationally and ultimately globally. DESIGN PRINCIPLES: To enable a scalable behavior change and community engagement initiative to succeed, Empowerment Institute’s research has shown the following elements need to be in place. 1. A structured program with a menu of carefully crafted pro-social behaviors customized to support the outreach efforts of city agencies, community-based organizations, neighborhood and blocks. The Cool City Challenge combines four of Empowerment Institute’s behavior change programs—carbon reduction, green living, disaster resiliency and neighborhood livability—to increase household, block and city benefits. Game mechanics will be applied to enhance participation, social innovation and stickiness among households, blocks, community sectors, community groups and cities. 2. An in-person peer support system to provide the motivation and accountability to take and sustain pro-social behaviors. 3. Neighbor-to-neighbor connectivity based on a block or in a multi-family dwelling that is built around a set of co-benefits that include community building, environment, health, safety and livability improvements. 4. A vision and set of goals that can speak to a broad cross-section of the community and as a consequence engage a wide diversity of stakeholders in the campaign. 5. A web-based feedback system complimented by social media that shows the drops filling the bucket both around the program and participation goals to sustain motivation over time. 6. A formal partnership with the local government to enable program credibility and longevity. 7. Participation of multiple local organizations to recruit members, constituents and customers. These include faith-based organizations, environmental groups, emergency preparedness and safety groups, businesses, schools and various community-based organizations. It is not be up to any one individual or group to recruit all the teams. 8. Staffing from individuals who live in the community, are talented in community organizing, competent in program management, accomplished leaders, well connected to various community organizations, and astute students of social learning and human motivation. 3 9. Empowerment Institute consulting support of the organizing team around the local customization of this social architecture, capacity building training and coaching of local community groups, and on-going coaching of the organizing team as they deploy and evolve this methodology. Empowerment Institute has designed the Cool City Challenge based on the above research. Further it realizes that cities do not have the resources to implement this type of transformative social innovation, as much as they might wish, and has committed to raise the funds in partnership with Lawrence Berkeley National Laboratory for the program’s implementation in the cities selected. IMPLEMENTATION PLAN: Phase 1: Start-up – one year: Build program and technology infrastructure. Phase 2: Campaign – three years: Support cities to achieve the carbon reduction, neighborhood resiliency and green economic development goals. CITY SELECTION BACKGROUND: Over 2011 Empowerment Institute identified several dozen cities across America for consideration as candidates for the Cool City Challenge. It narrowed this selection down to Northern California cities because of the region’s high level of environmental consciousness and leadership, progressive state climate change legislation demonstrated through AB 32, and the ability to serve as a regional hub for national and global dissemination of this transformative social innovation. It then honed in on mid-sized early adopter cities or sub-sections of larger cities in the 50,000 to 75,000-population range that it felt best embodied this environmental leadership. Five criteria were then established to evaluate potential city candidates. 1. Commitment to bold carbon reduction: A proven track record, deep commitment, and measurable goals by the local government to achieve ambitious carbon reduction in the short and mid-term. 2. Commitment to community engagement: Recognition by local government leadership of the need to engage community members in reducing their carbon footprint and a demonstrated track record in doing so. 3. Commitment to the Cool City Challenge goals: Strong buy-in of local government and civic leaders to the Cool City Challenge goals and a willingness to invest political capital in realizing them. 4. Track record as an early adopter city: The characteristics of an early adopter community including a desire to take on big challenges, lead the way for other 4 cities, civic pride in past accomplishments, high tolerance for experimentation, and a can-do community culture. 5. Commitment to be a learning and teaching city: Since this is a bold social learning endeavor each city needs to be a committed partner with Empowerment Institute and Lawrence Berkeley National Laboratory in the research and learning. And when feedback dictates, to be willing to evolve the program. Further, since the goal of this endeavor is to develop a scalable model, to also be willing to serve as a teaching city for other cities to learn from. SELECTION PROCESS: Participation in the Cool City Challenge is invitational based on Empowerment Institute’s evaluation of the city’s ability to meet the above five criteria. Once invited, the candidate city goes through a two-step process. First it submits a letter of intent stating that is has read this document and the Cool City Challenge strategic plan and feels it can meet the five criteria necessary to be successful and agrees to implement the strategy. When Empowerment Institute and Lawrence Berkeley National Laboratory have secured the start-up and first year of campaign funding, the second step in the selection process is initiated. The candidate city is invited to participate in a competitive application process demonstrating it has the on the ground community leadership commitments to make this initiative successful. Empowerment Institute and Lawrence Berkeley National Laboratory will then select the 3 cities with the best application. The cities not selected will be encouraged to participate in the next phase that rolls out the model. CONTACT INFORMATION: David Gershon, Empowerment Institute, dgershon@empowermentinstitute.net ATTACHMENT B          COOL CITY CHALLENGE    REINVENTING OUR CITIES FROM THE BOTTOM UP   TO ACHIEVE DRAMATIC CARBON REDUCTION, DEEP RESILIENCY AND GREEN PROSPERITY     AN INITIATIVE OF EMPOWERMENT INSTITUTE IN PARTNERSHIP   WITH LAWRENCE BERKELEY NATIONAL LABORATORY       THE NEED    “What we do in the next few years to address climate change will determine our future.   This is the defining moment.”  —Dr. Rajendra Pachauri, Chair, UN Intergovernmental Panel on Climate Change    “The world’s cities are responsible for up to 70% of harmful greenhouse gases while occupying  just 2 per cent of its land. They have become the real battleground in the fight against  climate change. What goes on in cities, and how they manage their impact on the  environment, lies at the core of the problem.”  ‘“Hot Cities: Battle Ground for Climate Change” from UN‐HABITAT’s 2011 Global Report     “Cities and citizens can make a global difference. Cities are responsible for the majority of our  harmful greenhouse gases, but they are also places where the greatest efficiencies can be  made. With better urban planning and greater citizen participation we can make our hot cities  cool again.”  —Dr. Joan Clos, Executive Director, UN‐HABITAT        DRAMATIC CARBON REDUCTION: reduce community’s carbon emissions through the mobilization  of a large percentage of citizens to reduce their CO2 footprint by participation in Low Carbon  Diet neighborhood‐based teams and develop a plan for a carbon neutral community.    DEEP RESILIENCY: redeploy the social capital generated by neighborhood teams to increase the  individual and collective resiliency of residents in neighborhoods to address climate‐related  risks and enhance overall sustainability and livability.     GREEN PROSPERITY: create demand for green goods and services enabling the development of  a robust local green economy through bringing neighborhood teams to scale.  2    PURPOSE    To scale up a proven community‐based social innovation to achieve dramatic carbon reduction,  deep resiliency, and green prosperity in three early adopter California cities and three  neighborhoods in Sao Paulo, Brazil and then disseminate worldwide.     AN OPENING FOR CHANGE  With international climate change legislation failing to get traction, as concerned citizens of our  planet we are left to our own devices. But even if legislation had passed, the speed and  magnitude of change our scientists tell us is needed goes well beyond anything political leaders  were contemplating. The social change tools at their disposal—command and control and  financial incentives—at their best are designed for slow, incremental change. If the current  social change tools of carrots and sticks alone are unable to meet our needs, what else do we  have? Are there assumptions we might rethink about what motivates people to change? And  with our national governments unable to lead the way, how might our communities effectively  step into this leadership vacuum?   A VISION OF POSSIBILITY   Imagine for a moment that cities and citizens from the largest per capita carbon‐emitting  country—America—and one the world’s fastest growing economies and a global leader on  climate change abatement—Brazil—came together to develop a game changing social  innovation around global warming. Its goal: rapid and substantial carbon reduction in the short‐ term and carbon neutrality in the long‐term, with deep resiliency and vibrant livability for its  citizens and green prosperity for its businesses.     With a real ticking clock, substantive and timely carbon reduction is critically needed. The fossil  fuels used to power our homes and cars generate between 50 and 90% of a community’s  footprint. In America this represents half of the country’s CO2 emissions. It is also the low‐ hanging fruit because we can make these changes immediately while buying needed time for  the longer‐term technology and renewable energy solutions to scale‐up.   Further, empowering the citizens of a community to lower their carbon footprint builds  demand for the green products and services needed to create local low carbon economies and  the political advocacy needed to become carbon neutral cities – the carbon mitigation end  game for cities. Moreover, this sends a profound message to the world that citizens in a  developed world country are able to reduce their high carbon‐emitting lifestyles and citizens in  a developing world country are able to leapfrog over the inefficient use of natural resources  and develop environmentally sustainable lifestyles. And all while these cities grow their  economies and create greater quality of life for their citizens.   3    Cities and citizens from the north and south coming together as partners to reduce their  greenhouse gas emissions and scaling this approach up city by city worldwide puts a new option  on the table for addressing global warming.   MEETING THE CHALLENGE  While getting people to reduce their carbon footprint – energy efficiency – is the low‐hanging  fruit to CO2 mitigation in the short term, will we be able to pick it? Can we empower citizens to  get out of their comfort zones and adopt low carbon lifestyles? Will cities be willing to expand  their social change tool kit beyond legislation and financial incentives to directly reach out and  engage their citizens? And if cities and citizens are both willing to make these changes can such  an initiative be brought to scale?  In 2006 Empowerment Institute—the world’s foremost expert in environmental behavior  change and community engagement—began attempting to answer these questions by creating  a community‐based environmental behavior‐change program called Low Carbon Diet. The  program consists of twenty‐four actions to reduce one's carbon footprint by at least 5,000  pounds in thirty days and to help others do the same. It is based on two decades of experience  working with several million people in hundreds of cities around the world who are organized  into neighborhood‐based peer support groups of 5 to 8 households called EcoTeams.   The Low Carbon Diet program helped empower the movement that had been building in  America around personal action and community‐based solutions, and immediately took off. It  was driven by the many local governments committed to the issue of climate change who were  wishing to engage their citizens; faith‐based groups like Interfaith Power and Light representing  some 5,000 congregations, wishing to engage congregants; and environmental groups, like Al  Gore's Climate Project, which gave the book to the 1,000 people he trained to lead his “An  Inconvenient Truth” slide show. This interest resulted in the development of a community  engagement strategy called a Cool Community.    There are now over 300 Cool Communities in thirty‐six states across America with participants  achieving a 25 percent carbon footprint reduction and reaching out to fellow citizens to  accomplish the same. Low Carbon Diet and the Cool Community model has also been translated  and culturally adapted for China, Korea, Japan, Australia, Canada and the United Kingdom.     Cool Communities are developing robust long‐term carbon reduction capability by building the  community leadership, carbon‐literate citizenry, and political will necessary to move the  community toward carbon neutrality. However, a Cool Community does more than just address  a city’s carbon footprint; it also enables it to enjoy the immediate practical benefits of green  economic development, more livable and resilient neighborhoods and greater environmental  sustainability.     4    And at the most fundamental level by enabling individuals to become personally part of the  solution, Cool Communities are creating a new dynamic in how we tackle large societal  challenges. They are allowing us to move beyond the traditional social change formula of  business as the problem and government as the solution – the familiar paradigm in which  nonprofits lobby government for better regulations against business while disenfranchised  citizens sit on the sidelines complaining about the coziness between politicians and business.     When citizens are empowered to adopt socially beneficial behaviors, such as a low‐carbon  lifestyle, an opening can occur for traditionally adversarial relationships to establish new  arrangements of cooperation and collaboration. When the whole system begins working  together and there is no “other” to combat or protect against, more innovative and generative  solutions start to emerge. Everyone is now a participant in shaping the future.     THE COOL CITY CHALLENGE GOALS     1. Scale up the Cool Community model in three early adopter California cities and three  neighborhoods in Sao Paulo, Brazil.    2. Build each city or neighborhood’s capacity to engage between 25% and 75% of their  residents over a three‐year period to reduce their carbon footprints 25%.    3. Build each city or neighborhood’s capacity to enable a minimum of 40% of program  participants to do energy efficiency building upgrades on their homes.    4. Support each city or neighborhood, with assistance from Lawrence Berkeley National  Laboratory, to develop a plan to become carbon neutral by 2025.     5. Support each city or neighborhood in developing a green economic development  strategy based on the increased demand generated by the campaign for low carbon  goods and services and renewable energy.     6. Support cities in redeploying the social capital generated through the block‐based teams  to enhance the resiliency, livability and sustainability of the city’s neighborhoods at a  block level.    7. Create the Cool City challenge as a whole system solution through engaging and building  the transformative leadership and community organizing capacity of the local  government, community‐based groups, university and high school students (Cool  Community Corps) and businesses (Cool Corporate Citizen). This approach will not only  enable the campaign to accomplish its neighborhood team recruitment goals, but leave  a legacy of enhanced community leadership, strengthened community partnerships,  and a deepened environmental stewardship ethic.     5    8. Create a formal research study and evaluation of the environmental, economic and  social results of the campaign and its various processes to assist in its future  dissemination. (The lead research partner is Lawrence Berkeley National Laboratory.)     9. Based on the success of this four‐city demonstration, disseminate this model worldwide.      SUMMARY AND TIMELINE     Phase 1 – Start‐Up (1 Year): Create the information technology management system,  communication tools, adaptation of the behavior change programs, and local campaign  management teams. (Begins upon securing financing for this phase and at least the first  year of the campaign.)     Phase 2 – Campaign (3 Years): Implement the Cool City Challenge in the four cities.       PHASE 1 – START‐UP: EMPOWERMENT INSTITUTE KEY TASKS    1. Select the three early adopter California cities. Candidates are Davis, Palo Alto, San  Francisco, San Rafael and Sonoma. This will be done competitively in partnership with  Lawrence Berkeley National Laboratory based on a formal application process.  2. Select the three Sao Paulo, Brazil Neighborhoods. This will be done competitively in  partnership with the city of Sao Paulo based on a competitive application process.  3. Design and build the information management system for carbon aggregation,  participation tracking and results simulation (CAPTIN).   4. Adapt Empowerment Institute’s Low Carbon Diet, Green Living, Disaster Resilient  Communities and Livable Neighborhood programs to electronic format, integrate into a  single program, and customize for each of the cities with localized resources.  5. Integrate into the four‐part program and community organizing strategy game  mechanics to enhance participation, social innovation and stickiness among households,  blocks, community sectors, community groups and cities.    6. Design the Cool Community Corps (student engagement) and Cool Corporate Citizen  (employee volunteers) programs and customize for each of the communities.  7. Create a local green economic development strategy in partnership with each city’s  economic development agency.  6    8. Design and implement the overall communication strategy including branding, written  materials, website, promotional film, and social and traditional media and customize for  each city.   9. Meet with local government leaders, civic and faith‐based groups, and green businesses  in the four cities to understand the unique opportunities offered to each by the  campaign and the points of synergy available through increased collaboration with one  another. Integrate this information into a visioning and strategic planning retreat for  each city.  10. Recruit the local campaign leadership teams for each city.  11. Facilitate a visioning and strategic planning retreat with each community’s campaign  leadership team, key strategic partners and advisors. The outcomes will be a clearly  delineated vision customized to the unique needs and opportunities of each city, three‐ year strategic plan, and alignment of the team around this vision and plan of action.  12. Provide a capacity building training for each community’s campaign’s leadership team to  enable execution of their strategic plan through developing competencies in the Cool  Community organizing methodology, Social Change 2.0 strategies, and transformative  leadership skill‐set.   13. Help each city’s campaign leadership team develop a compelling graphic presentation of  the local campaign including the track record of the Cool Community behavior change  and community engagement methodology being deployed, benefits to the community  at different levels of scale, and the action plan to achieve it.    PHASE 2 – CAMPAIGN: EMPOWERMENT INSTITUTE KEY TASKS PER CITY   Year One  1. Assist local campaign leadership teams in collaboration with city officials in making the  Cool City Challenge presentation in an event to on‐board community leadership from  civic and faith‐based groups, businesses, government agencies high schools and  universities. Each partner organization will be asked to contribute to the formation of  Neighborhood Teams and participate in a capacity building training and learning  community of peer support and coaching. This is the formal launch point of the  campaign.  2. Provide capacity building training and coaching for community partners in neighborhood  team recruitment strategies, empowerment coaching, and utilization of the carbon  aggregation and participation tracking information network (CAPTIN).   7    3. Facilitate monthly master classes for partner organizations to assist them in mastery of  the empowerment tools and achievement of their goals.   4. Provide on‐going consultation and coaching to each community’s campaign leadership  team on strategy, tactics, mastery of the tools, and attainment of their team  recruitment goals and other campaign metrics.  5. Provide consulting and support to each community in implementing the Cool  Community Corps and Cool Corporate Citizen programs, green economic development  strategy and communication plan.   6. Create baseline data and establish local partnerships to support the research study.  7. Establish and facilitate a community of practice between the cities through regular  teleconferences and the web.  Year Two  8. Provide on‐going consultation and coaching to each campaign leadership team on  strategy, tactics, mastery of the tools, attainment of their goals and build out of new  social innovations.  9. Provide on‐going consulting and support to each community in implementing the Cool  Community Corps and Cool Corporate Citizen programs, green economic development  strategy and communication plan.   10. Provide on‐going facilitation of a community of practice between the cities through  regular teleconferences and the web.    11. Conduct an on‐site retreat with each campaign’s leadership team to review progress  against their goals and adjust strategies and tactics based as needed.     12. Lead a multi‐city off‐site retreat to take a deep dive into the best practices and next  practices that are emerging in all aspects of the campaign.    13. Manage and provide continuous upgrades in the CAPTIN information management  system.    14. Continue implementation of the research study.  Year Three  15. Provide on‐going consultation and coaching to each campaign leadership team on  strategy, tactics, mastery of the tools, attainment of their goals and build out of new  social innovations.  8    16. Provide on‐going consulting and support to each community in implementing the Cool  Community Corps and Cool Corporate Citizen programs, green economic development  strategy and communication plan.   17. Facilitate the community of practice between the cities through regular teleconferences  and the web.    18. Conduct an on‐site retreat with each campaign’s leadership team to review progress  against their goals and develop strategies for necessary adjustments.     19. Lead a multi‐city off‐site retreat to take a deep dive into the best practices and next  practices that are emerging in all aspects of the campaign.    20. Manage and provide continuous upgrades in the CAPTIN information management  system.    21. Design and implement Cool City Challenge dissemination strategy.   22. Support cities, in collaboration with local universities, to serve as teaching cities.  23. Present and disseminate the research findings of the Lawrence Berkeley National  Laboratory and other participating universities.       PHASE 1 – START‐UP:  LAWRENCE BERKLEY NATIONAL LABORATORY KEY TASKS    1. Develop methodology for robust data collection and measurement of savings.  2. Collect baseline data and establish local partnerships to support the research study.  3. Develop partnerships and plans for technology demonstrations and pilot projects with  industry.  4. Coordinate partner input for CAPTIN information management system.  5. Develop a whole system model of analysis for the Cool City Challenge as a climate  change mitigation strategy. The focus of this analysis and research will be on how  human and social factors can serve as the catalyst and critical driver needed for  technology adoption, policy adoption and market creation (Figure 1).     9    POLICY TECHNOLOGY MARKETS       (a)  POLICY TECHNOLOGY MARKETS HUMAN/ SOCIAL  FACTORS      (b)      POLICY TECHNOLOGY MARKETS HUMAN/ SOCIAL  FACTORS CULTURE   (c)  Figure 1. Focusing solely on technology, markets, and policy (a) in climate mitigation is incomplete  without including human and social factors (b) which can be a major driver for technology  adoption, policy adoption and market creation.  All of these items reside and must be understood  in a larger cultural context (c).             PHASE 2 – CAMPAIGN:  LAWRENCE BERKLEY NATIONAL LABORATORY KEY TASKS    1. Measurement and evaluation of community participation, behavior change actions,  energy efficiency retrofits, participation in voluntary technology demonstrations and  pilot programs conducted by cities.    10    2. Quantification of energy and carbon savings by action as part of a structured data  collection plan.    3. Semi‐annual feedback of results to city and partners for program adjustment and  improvement.    4. Annual progress report with quantified results for stakeholders, participants and  funding sources.     5. Complete formal research study of the environmental, economic and social results of  the campaign and its various processes to assist in its future dissemination, in  collaboration with partner universities. This includes:      Quantification of behavior change and community participation levels and energy  and carbon savings,     Analysis and recommendations for community engagement “best practices” and  relationships to quantified results,     Community scaling scenarios and non‐energy related impact assessment analysis  e.g. health and air quality impacts,     Analysis of economic and social impact of Cool City Challenge,      Analysis of this whole system approach in creating technology adoption, policy  adoption and market creation,     Cost/benefit analyses of behavior change interventions in comparison to other  forms of GHG reduction strategies,     Potential GHG and economic development impact of scaling the Cool City Challenge  across the state of California and the United States     Development of carbon neutral scenarios for 2025.    PHASE 2 – CAMPAIGN: COMMUNITY CAMPAIGN MANAGEMENT TEAM KEY TASKS   The staffing required to manage the campaign is estimated to be four full‐time people or the  equivalent: a campaign director and three program managers. Volunteers and the various  community stakeholders can enhance these positions.   1. Identify the residential sector carbon footprint, if it does not already exist.  11      2. Recruit partner organizations and block leaders to form Neighborhood Teams. (See Cool  Community organizing model below.)    3. Integrate the campaign into other community‐based carbon reduction, neighborhood  improvement, disaster resiliency and community development initiatives to maximize  synergy.    4. Support partner organizations in staying on track with their Neighborhood Team  formation goals and keep track of their input into the CAPTIN information management  system.    5. Manage implementation of the green economic development strategy.    6. Manage participation in the Cool Community Corps that engages high school and  university students.    7. Manage participation in the Cool Corporate Citizen program that engages employee  volunteers.    8. Manage the local communication strategy.     9. Support research on the carbon neutral city plan.    COOL COMMUNITY ORGANIZING MODEL: A WHOLE SYSTEM APPROACH     ABOUT EMPOWERMENT INSTITUTE    Empowerment Institute—the world’s foremost expert in environmental behavior change and  community engagement—has helped millions of people in hundreds of cities worldwide reduce  their environmental footprint. Since 2006 it has applied this methodology, through its Low  Carbon Diet program, to help tens of thousands of households in the US reduce their carbon  12    footprint and trained over 300 communities in its Cool Community methodology. Over the past  thirty years Empowerment Insitute’s programs have won many awards, and an academic  research study described them as “unsurpassed in changing behavior.”    Empowerment Institute is the principle architect of the Cool City Challenge and responsible for  its overall implementation. This includes the selection of the four cities, building their capacity  in deploying Empowerment Institute’s behavior change and community engagement  methodology, securing and managing the team of content experts who will support various  aspects of the intiative. It is also accountable for raising the financing and disseminating of the  Cool City Challenge after this three‐year demonstration phase.     ABOUT LAWRENCE BERKELY NATIONAL LABRATORY    Lawrence Berkeley National Laboratory (LBNL) addresses the world’s most urgent scientific  challenges including the advancement of more sustainable energy technologies. Founded in  1931, LBNL’s scientific expertise has been recognized with 13 Nobel Prizes. One of their major  initiatives is “Carbon Cycle 2.0” – a multidisciplinary approach to accelerate discovery and  innovation in creating global climate change solutions.    The Cool City Challenge fits under this broad initiative and LBNL will lead the research and  development effort for the duration of the project. LBNL will coordinate research efforts at  participating universities and with corporate sponsors as well as support technology  demonstrations and pilots with industry and other stakeholders. Key issues to be studied  include how the behavior change and community engagement tools promulgated by this  initiative can help catalyze the full spectrum of GHG reduction interventions spanning  technology adoption, policy adoption, and market development; the efficacy of the behavioral  change and community engagement mechanisms for GHG reduction and green economic  development; the potential GHG and economic development impact of scaling the Cool City  Challenge across the state of California and the United States; cost/benefit analyses of behavior  change interventions in comparison to other forms of GHG reduction strategies; and scenario  development for what it would take for the participating cities to become carbon neutral by  2025. LBNL will also assist with securing the financing for the Cool City Challenge.      STRATEGIC PARTNERS    World Wildlife Fund and its Earth Hour City Challenge    World Wildlife Fund is the world’s leading conservation organization, works in 100 countries,  and is supported by 1.2 million members in the United States and close to 5 million globally. In  2007 it started Earth Hour as a symbolic event and a demonstration of solidarity, with cities  turning off their lights for one hour to show support for climate action. By 2011 this symbolic  event had become the world’s largest environmental campaign for the planet with 1.8 billion  people in more than 5,200 cities and towns taking part. Starting in 2012, WWF challenged cities  13    to do more than turn out their lights and created the Earth Hour City Challenge. Its purpose is  to encourage cities and their citizens to reduce their carbon footprints while at the same time  becoming more resilient to climate‐related disasters. Participating US cities will receive  resources and gain recognition for their efforts to address climate change.   Given the shared goals and audience of the Cool City Challenge, World Wildlife Fund reached  out to Empowerment Institute to form a strategic partnership and deploy its behavior change  and community engagement methodology in the selected cities. This partnership will be phased  in as the Cool City Challenge begins scaling this methodology after completion of the  demonstration phase described in this proposal.    In order for the Cool City Challenge to serve as the backend of World Wildlife Fund’s Earth Hour  City Challenge, it will participate in fundraising efforts to support the implementation of this  demonstration phase.  City of Sao Paulo Environment and Health Departments  The City of Sao Paulo, though its community health and environmental education and outreach  program, will provide the staffing and logistics to enable implementation of the Cool City  Challenge. This in‐kind contribution is valued at $1 million dollars. The plan is to embed the  Cool City Challenge in the city’s wider program of behavior change around health, safety and  environment using Empowerment Institute’s Low Carbon Diet, Green Living and Livable  Neighborhood Programs and the PAVS environment and health agent distribution platform. The  Cool City Challenge will build this model in three middle‐income Administrative Districts  (approximately 300,000 people) where its residents can serve as role models for low carbon,  environmentally sustainable lifestyles and more livable neighborhoods that could be emulated  by other parts of the city. It is estimated that approximately 20% of Sao Paulo’s citizens, or  around 2 million people, fall in this category. Since 300,000 people represents 15% of our target  group and it is also the point at which a well designed innovation can achieve a tipping point  and begin diffusing on its own momentum.     Academic Research Partners  University of California, Davis – Energy Efficiency and Sustainable Transportation Centers will  support research around technology adoption, energy efficiency and transportation behavior  change and modeling for carbon neutral city development.    University of California, Berkeley – Renewable and Appropriate Energy Laboratory and Energy  and Resources Group will support development of the carbon calculation aspects of the  information management system and the personal transportation data collection.  14    Stanford University – Precourt Energy Efficiency Center will assist in energy and transportation  efficiency research through the application of gamification and feedback systems to increase  the efficacy of program participant behavior change.  TEAM MEMBERS  David Gershon, co‐founder and CEO of Empowerment Institute, is one of the world’s foremost  authorities on behavior‐change and community engagment and applies this expertise to issues  requiring community, organizational, and societal change. His clients include cities, government  agencies, large corporations, and social entrepreneurs. He has addressed a wide diversity of  issues ranging from low carbon lifestyles, livable neighborhoods, and sustainable communities  to organizational talent development, corporate social engagement and cultural  transformation.     David used this empowerment proficiency to organize at the height of the cold war, in  partnership with the United Nations Children’s Fund and ABC Television, one of the planet’s  first major global consciousness‐raising initiatives—the First Earth Run. Building on his  background as the Director of the Lake Placid Olympic Torch Relay, he used the mythic power  of relaying a torch of peace around the world to engage the participation of twenty‐five million  people in sixty‐two countries, the world’s political leadership and, through the media, an  estimated 20 percent of the planet’s population in an act of global unity. Millions of dollars  were also raised as part of this event to help UNICEF provide care for the neediest children of  the world.    Gershon is the author of eleven books, including the best selling Low Carbon Diet: A 30 Day  Program to Lose 5,000 Pounds and the award‐winning Social Change 2.0: A Blueprint for  Reinventing Our World. He co‐directs Empowerment Institute’s School for Transformative Social  Change which empowers change agents from around the world to design and implement  cutting edge transformative social innovations. He has lectured at Harvard, MIT, and Johns  Hopkins Univeristy and served as an advisor to the Clinton White House and the United Nations  on behavior change and community engagement strategies. David has overall responsibility for  leading this initiative including desgin, management and project financing.    Douglas Davenport leads strategic partnership initiatives for the Lawrence Berkeley National  Laboratory’s Environmental Energy Technology Division, an integrated applied sciences  research program in energy efficiency and environmental quality, energy resources and  storage, and energy policy. Doug’s focus is on the value of LBNL’s R&D programs to their  partners in addressing some of the world’s most pressing technical challenges. He’s spent the  past 23 years as an engineer, leader of a climate consulting practice, renewable energy  developer, and business manager. He is currently starting up new innovation programs and  partnerships on behalf of LBNL for urban sustainability, battery technology, smart grid, and  materials science. Doug will be responsible for management of LBNL’s core team and will assist  15    with Cool City Challenge financing. He will also serve as lead R&D liaison between industry  partners and local government programs and coordinate technology demonstrations and pilots.    Tom McKone Ph.D. is the leader of the Sustainable Energy Systems group and Deputy for  Research Programs in the Energy Analysis and Environmental Impacts Department in the  Environmental Energy Technologies Division at LBNL and has several decades of experience in  scientific analysis and technical management. Tom is an authority on the life cycle  analysis/health impacts of energy production and was a co‐author of the recent National  Academy report, Hidden Costs of Energy: Unpriced Consequences of Energy Production and Use.  He is also an Adjunct Professor in the Environmental Health Sciences group in the Department  of Public Health at the University of California, Berkeley. Tom will lead LBNL’s overall R&D  activities and coordinate the impact assessment analysis team.  Jeffery Greenblatt, Ph.D. is a staff scientist at Lawrence Berkeley National Laboratory’s  Environmental Technologies Division where he leads work on California’s energy future analysis  for the California Energy Commission, and leads the Environmental Energy Analysis Team for  LNBL’s Carbon Cycle 2.0 initiative. He was a major author of California’s Energy Future report.  Prior to his work at LBNL, he was a Climate and Energy Technology Manager at Google.org,  where he screened renewable energy grants and investments. Before coming to Google, Jeff  was a High Meadows fellow at Environmental Defense Fund where he evaluated the technical,  economic and environmental aspects of a wide range of energy technologies. He helped  developed the original "wedge" climate stabilization research and has developed scenarios for  California, the Midwest, and the US. Jeff will be responsible for community scaling scenarios,  health and resource impact assessment analysis and development of carbon neutral city  scenarios.      Max Wei Ph.D. is a Program Manager in the Environmental Energy Technologies Division at  LBNL. His work is focused on modeling medium‐ and long‐term greenhouse gas reduction  scenarios for California, including the potential of long‐term habitual behavior change as a  resource for carbon reduction. He was a key contributor to two recent reports: California’s  Energy Future – The View to 2050, for the California Council on Science and Technology,  and California’s Carbon Challenge: Scenarios for Achieving 80% Emissions Reduction in 2050,  for the California Energy Commission. In 2011 he completed a report on the job creation  potential from sustained investment in energy efficiency and low carbon energy sources, co‐led  successful passage of SB77, a clean energy financing bill in California, and co‐authored a study  on the economic impacts of a state feed‐in‐tariff. Max will be responsible for the Cool City  Challenge behavior change and community participation measurement and assessment,  quantification of carbon savings, and lead analysis of economic and social impact assessment.  Cara Pike is the founder and director of the Social Capital Project and a climate change  communications specialist. She has written two climate change communication guides Climate  Crossroads: A Research‐Based Framing Guide and Climate Communications and Behavior  Change: A Guide for Practitioners. She is also the founder of Climate Access, a network for  practitioners to acquire the latest research and emerging ideas on climate change  16    communications and behavior change. Cara was formerly the Vice President of  Communications for the leading nonprofit environmental law firm Earthjustice, where she  created and ran a full‐service internal communications agency for the organization’s eight  offices and international program. Cara has a deep understanding of environmental issues and  how they intersect with cultural trends and concerns. Cara will manage the development and  implementation the Cool City Challenge communication strategy.  Keya Chatterjee is Director of the World Wildlife Fund Climate Change Program in the US.  Among her responsibilities she runs the Earth Hour City Challenge initiative for WWF in the US  focused on getting cities to reduce their carbon footprint and prepare for adaption. Other  responsibilities include advocacy for international and national climate change legislation. Prior  to joining WWF, Chatterjee served as a Climate Change Specialist at USAID, where she managed  the land‐based carbon portfolio. Chatterjee also worked for three years at NASA Headquarters  in their Earth Science Enterprise. Chatterjee started her career as a Presidential Management  Fellow in the US government, and was a Peace Corps Volunteer in a national park in Morocco  from 1998 to 2000. Keya will manage the partnership between the Earth Hour City Challenge  and the Cool City Challenge.    John Cleveland is former director of the State of Michigan’s industrial extension service where  he worked with over 200 SMEs per year. In 2006 he founded Innovation Network for  Communities to develop and spread scalable innovations that transform the performance of  community systems. He’s been working for over 30 years on large‐scale system change projects  with a focus on the intersection between private markets and public good. His most current  work has been leading The Green Ribbon Commission—a high level group of business, civic and  institutional CEOs whose mission is to support the implementation of the City of Boston Climate  Action Plan and supporting the Urban Sustainability Directors Network. John will provide  strategic planning consultation and help partner cities create localized green economic  development strategies around the Cool City Challenge.  Carrie Armel Ph.D. is a research associate at Stanford’s Precourt Energy Efficiency Center  specializing in behavior and energy research. Her current research includes developing climate‐ positive behavior change interventions; developing tools for measuring climate change relevant  behaviors, for use in evaluating the efficacy of behavior change interventions, and in providing  feedback to individuals; preparing an integrative review that identifies the most effective  behavior change techniques from multiple disciplines so that they may be translated and  applied to addressing climate change; and developing a "Behavior and Energy" website and  literature database, which serves as a central repository for research on climate relevant  behavior. She will be serving as an advisor and assisting us in the use of game mechanics for the  Low Carbon Diet.  Chris Jones is research associate at the UC Berkeley Renewable and Appropriate Energy  Laboratory. His research interests intersect the fields of environmental psychology, ecological  economics and climate change policy. He is lead developer of the CoolClimate Calculator, an  online tool that allows households to calculate their carbon footprint and develop personalized  17    climate action plans. His research is funded by the California Air Resources Board and the  California Institute for Energy and Environment. He is also program manager for the Behavior,  Energy and Climate Change Conference, the premier conference dedicated to understanding  and extending the application of behavioral sciences to solve energy and climate problems.  Chris will assist in the development of the CAPTIN information management system.  Karen Ehrhardt‐Martinez, Ph.D. is the Director of Garrison Institute’s Climate, Mind and  Behavior Program. She has two decades of experience in applied academic research on the  social and behavioral dimensions of energy and climate change. She was a Senior Research  Associate with the Renewable and Sustainable Energy Institute at the University of Colorado  and led the behavior change research program for the American Council for an Energy‐Efficient  Economy. Karen is a cofounder of the Behavior, Energy and Climate Change (BECC) Conference  and served as the BECC Conference Chair in 2009. Karen will assist in applying the latest  behavior change research to optimizing the Low Carbon Diet program.     Peter Byck is the producer and editor of the highly acclaimed documentary film on climate  change, Carbon Nation. Peter has presented Carbon Nation for the White House and many  Fortune 500 companies and universities, and high schools across the country and  internationally. He has over 20 years experience as a director and editor. His first documentary  "Garbage" won the South by Southwest Film Festival. In addition, he has edited documentaries  for Peter Jackson's last two films, "Lord of the Rings" and "King Kong." Peter has also worked as  an editor or director for documentaries and promotional shorts for Warner Bros., Universal  Pictures, 20th Century Fox, Disney and MGM, and for shows and movies including "The West  Wing," "The Matrix," "Scrubs," and many more. He will be developing a short promotional film  and longer documentary on the Cool City Challenge.  Mario Herger is a Senior Innovation Strategist at SAP Labs in Palo Alto, California and global  head of the Gamification Initiative at SAP. In his work as head of the Gamification Initiative he  has supported gamification efforts in the enterprise from multiple levels and departments, like  Sustainability, On Demand, Mobile, HR, Training & Education, Simulation etc. He has driven the  awareness around gamification inside and outside SAP by organizing and leading innovation  events around this topic, working with gamification platform and service‐providers, and by  incorporating gamification into SAP's strategy. Mario will be helping build the gamfication  platform for the Cool City Challenge.    Greg Searle is the North American Executive Director for Bioregional’s One Planet Communities  program. In this position he serves as a strategy consultant on behavior change and low carbon  neighborhoods for municipalities and green real estate developers. Greg applied this expertise  as a consultant to Discovery's Planet Green reality show to help American families achieve a  30% reduction in their carbon footprints in two months. Greg serves as a technical advisor to  the US Green Building Council Regenerative Design Program, Clinton Climate Initiative, and the  Urban Land Institute. Greg is also the co‐founder and former Chief Technology Officer of  Tomoye Corporation, an award‐winning knowledge management software firm. Greg will help  18    in the design of the Cool City Challenge’s carbon neutral block program and knowledge  management system.  Eve Baer has served as Empowerment Institute’s Program Director for the past 20 years and is a  master coach. She has supported hundreds of individuals to form EcoTeams and coached  dozens of program managers in cities across the United States to implement Empowerment  Institute’s behavior change programs. Eve will assist the community campaign management  teams and partner organizations in EcoTeam formation.   John Winter is the founder and president of Social Responsibility Solutions, a consulting firm  specializing in creating climate change reduction programs for businesses. Before John began  his consulting practice he was the Director of Social Responsibility at Green Mountain Coffee  Roasters. In that role, John managed GMCR’s activities in climate change and environmental  quality. Key tasks included measuring the company’s GHG emissions, designing reduction and  alternative energy strategies, and creating emissions offsets. Under his leadership the company  was ranked 2nd in Business Ethics magazine 2005 “100 Best Corporate Citizens.” John will  manage operations for the Cool City Challenge and implementation of the Cool Corporate  Citizen and Cool Community Corps programs.   Sandra Slater has pioneered environmental sustainability and green design in the San Francisco  Bay area for the past two decades. She is the founder of Sandra Slater Environments a design  and consulting firm that works with businesses and private homes. Her home was one of the  first green demonstration homes in the country. Over 3,000 architects, designers, city planners,  and others have toured the home to learn about green building, and it's also been featured in  many TV programs, articles and books. Sandra will assist with overall project management with  a focus on the participating California cities.     Helio Neves Ph.D. is the City of Sao Paulo’s deputy secretary of Environment and director of the  city’s community environmental and health education and outreach program called PAVS  (Green and Healthy Environments Project). He will be responsible for organizing the City of Sao  Paulo’s participation in the Cool City Challenge including the selection of the three  neighborhoods and city staffing.      Rodrigo Lagreca is the managing director of Evolva Projects, leading experts in developing  behavior change programs in Brazil. One such program his organization developed is on low  carbon lifestyles—the first of its kind in South America. Prior to this work Rodrigo served as a  senior executive in a consumer goods company. His background also includes serving as a  professor in Pontifícia Universidade Católica. His research has focused on the impact of gray  markets on consumers, industries and companies, and ways of changing habits related to such  offers. Rodrigo will serve as the program manager for the Cool City Challenge in Brazil, assist in  the adaption of the Low Carbon Diet and other programs and in raising the financing.     Sector 2 ½ is a Brazilian marketing and communication company that works at the intersection  of the corporate and NGO sectors to design mutually supportive communication strategies and  19    programs. It strengthens corporate strategies based on intrinsic and genuine social  environmental beliefs and practices; and civil society organizations and their causes through  planned marketing communication support. Sector 2 1/2 brings these two sectors of society  together to enable mutually beneficial strategic partnerships. Their clients include Pepsi,  Unilever, World Wildlife Fund and UNDP among many others and their team has spent over  forty years in the field of marketing and communications. Sector 2 1/ 2 will implement the  communication strategy for the Cool City Challenge in Brazil and in assist in raising the  financing.     BUDGET     Phase 1 – Start‐Up (1 Year)     Foundation Building of the Campaigns ‐‐ $250,000   (Includes visits to each of the cities to meet with key stakeholders and assess needs and  opportunities, recruitment of campaign management teams, visioning and strategic  planning retreats for campaign teams, development of strategic plans for each city, and  capacity building training for campaign management teams.)     CAPTIN Information Management System ‐‐ $250,000   (Design of the carbon aggregation and participation tracker, cool city simulator,  community‐of‐practice, program management, and mobile app software. This is the  information management backbone for the Cool City Challenge during the  demonstration phase and for its long‐term dissemination.)     Program Development ‐‐ $250,000   (Includes adaptation of EI’s four behavior change programs into electronic format and  customization for each of the cities, development of the Cool Community Corps and  Cool Corporate Citizen programs, and development of the green economic development  and research strategies.)     Communications ‐‐ $200,000   (Creation of the communication strategy including branding, website, promotional film  and outreach materials customized to each city.)     Travel and Lodging ‐‐ $50,000  (Visits to four cities to implement the start‐up tasks.)    Sub Total ‐‐ $1,000,000    Phase 2: Campaign (3 Years)    20     Core Program ‐‐ $7,000,000   ($1 million per city for four staff over 3 years to manage the campaign and other  administration costs. $750,000 per city over three years for Empowerment Institute and  its cadre of content experts to provide capacity building, consultation and coaching.)     Research and Evaluation ‐‐ $3,000,000  (Conducting of the Cool City Challenge research and evaluation by LBNL.)       Communication ‐‐ $1,200,000  (Promotion of the campaigns in the four cities through social and traditional media, local  events to celebrate successes, and development of a film.)     CAPTIN Information Management ‐‐ $300,000  (Management and program upgrades of the information management system.)     Travel and Lodging ‐‐ $300,000  (Visiting cities for training and consulting and off‐site retreats for leadership teams.)     Disseminate Cool City Challenge ‐‐ $200,000  (Design and implementation of the Cool City Challenge diffusion strategy including  development of the teaching cities platform, identification of the next wave of cities,  and dissemination of the research findings of LBNL.)     Sub Total ‐‐ $12,000,000    Project Total: $13,000,000     Note: When the $13 million of core financing is secured, we will seek to raise an additional $12  million for incentive prizes to recognize extraordinary accomplishment of the cities. The Cool  City Challenge will offer cities who meet or exceed their goals: $250,000 for 25% citizen  participation, $500,000 for 50% citizen participation, $750,000 for 75% or more citizen  participation. This will also serve as seed capital to support their efforts to become carbon  neutral. When this $2 million dollars of financing is secured we will seek an additional  $10,000,000 to serve as an “X Prize” to recognize the first city to achieve the goal of carbon  neutrality.      ADDENDUM    Further Information about the Social Change 2.0 Framework and the  Low Carbon Diet and Cool Community Methodologies  21    Review of Social Change 2.0 in Fast Company http://www.fastcompany.com/1576670/social‐ change‐20‐a‐blueprint‐for‐reinventing‐our‐world   Introduction to Social Change 2.0 – “Reinventing Social Change”  http://www.socialchange2.com/index.php/book/excerpts  Low Carbon Diet – Portland Pilot Case Study: “Changing the World One Household at a Time”  http://www.empowermentinstitute.net/files/LowCarbDiet_article.pdf  Huffington Post Series – “Empowering a Climate Change Movement: Low Carbon Diet and the  Cool Community" http://www.socialchange2.com/index.php/author/empowering‐a‐climate‐ change‐movement     FOR FURTHER INFORMATION    David Gershon   (845) 331‐1312  dgershon@empowermentinstitute.net  www.empowermentinstitute.net   www.socialchange2.com    TOWARD BUILDING SCALABLE LOW CARBON CITIES THROUGH IMPLEMENTATION OF A WHOLE SYSTEMS APPROACH IN SEVERAL LEARNING CITIES IN CALIFORNIA AND SAO PAULO, BRAZIL AN APPLIED RESEARCH FRAMEWORK BY LAWRENCE BERKELEY NATIONAL LABORATORY IN COLLABORATION WITH EMPOWERMENT INSTITUTE FOR THE COOL CITY CHALLENGE INTRODUCTION Climate change solutions tend to focus on technologically based solutions and advances in technology. For example 13 or more of the original 15 Socolow climate wedges are technology- based1. This is not surprising, given that by definition climate change science is largely studied, quantified, and parameterized by scientists and engineers and since technologies can be analyzed and their impact quantified in a relatively straightforward manner. But what about people: the interaction between people and technology and the larger cultural context of issues driving energy demand and climate emissions including consumption, growth and modernity? After all, people are the ultimate consumers of energy and their consumption accounts for 50-70% of greenhouse gas emissions. For example, the degree to which and rate at which people and by extension, society as a whole adopts new technologies can be as important as the development of the technology itself. Concurrently the world is becoming more urbanized and cities are becoming critical entities in which to address climate change both because of their dominant contribution to global climate emissions and because of their potential for mobilization compared to larger and more unwieldy federal or national levels of authority. Focusing solely on technology, markets, and policy in climate mitigation strategies is incomplete without including human and social factors, which can be a major driver for technology adoption, policy adoption and market creation (Figure 1). Moreover, all of these items reside in and must be understood in a larger cultural context and ultimately biologically based evolutionary setting. This work describes an innovative new framework for addressing the climate change challenge: a whole systems approach which seeks to comprehend human/behavioral factors, technological approaches, and market factors centered in several learning cities with the objective of building a scalable approach to implementing low carbon cities.                                                                                                                           1 Stephen Pacala, Robert Socolow "Stabilization Wedges: Solving the Climate Problem for the Next 50 Years with Current Technologies". Science 13 August 2004: Vol. 305 no. 5686 pp. 968-972.     2   (a) (b) (c) Figure 1. Focusing solely on technology, markets, and policy (a) in climate mitigation is incomplete without including human and social factors (b) which can be a major driver for technology adoption, policy adoption and market creation. All of these items reside and must be understood in a larger cultural context (c). Technology Markets Policy Human/Social Factors To what degree do human/social factors help/hurt technology adoption? How do we overcome human/technology barriers? To what degree is conservation/habitual behavior limited by market adoption factors (ease of adoption, ease of trial, visibility of benefits, etc.)? What is the potential for the “collaborative consumption” market? What is the sensitivity of “strong policy” knobs and habitual behavior change? What policies support current consumption habits? Education, information To what extent can community engagement drive technology/market/policy adoption? Technology - Test, pilot, deploy, data, marketing, etc. Education, information, incentives, financing, risk mitigation, etc. Markets - - Carbon price, incentives and regulations Table 1. Some interactions and research questions in the interaction of human and social factors with technology, markets and policy. Less explored interactions are shaded. POLICY TECHNOLOGY MARKETS POLICY TECHNOLOGY MARKETS HUMAN/ SOCIAL   FACTORS POLICY TECHNOLOGY MARKETS HUMAN/ SOCIAL   FACTORS CULTURE     3   Technology Markets Policy Human/Social Factors Lack of familiarity with technologies; complexity of technology. Feedback mechanisms for consumption and costs; trust factors and transaction costs; ease of adoption; visibility of benefits Education and awareness Incentives and regulations Technology - First cost issues; planned vs. unplanned (replacement vs. retrofit) Building codes and standards. Incentives and regulations Markets - - Building codes and standards; innovative financing mechanisms, incentives and regulations (a) Technology Markets Policy Human/Social Factors Range concerns; battery safety concerns; lack of engine revving sound; etc. Collaborative consumption car sharing? Charging vehicle-to-grid interactions with driver preferences Higher gasoline tax Education Information Technology - Cost adder; infrastructure – charging, distribution upgrades, etc. Feebates based on carbon emissions Markets - - Carbon price, higher gas tax, incentive and regulations (b) Table 2. The interaction of human and social factors with technology, markets, and policy in (a) Home energy efficiency retrofits; and (b) Electric vehicle adoption—plug in hybrid (PHEV) and battery electric vehicles (BEV). Global warming is a short fuse issue with the time window for effectual strong action receding with each passing year2. There is a lack of coordinated national action or international action. This being the case, much of the leadership in climate change mitigation legislation and policies has devolved to the state and city level. Many cities have climate action plans but lack clear implementation strategies and coordination between disparate agencies (water, utilities, recycling, etc.). Moreover, cities are strapped for resources and budgets are being cut, contributing to persistently high unemployment and a chronic recession since the financial crisis. The net result of all of this is that carbon emissions are not being cut with either the requisite velocity or magnitude needed to meaningfully impact climate change.3                                                                                                                           2 J. Hansen, Target atmospheric CO2: Where should humanity aim? Open Atmos. Sci. J. (2008), vol. 2, pp. 217-231. 3 “A Daunting Emissions Quest for U.S. Cities,” Dylan Walsh, New York Times, April 26, 2012.     4   Climate change solutions in leading states such as California tend to be technologically focused e.g. cleaner power or lower carbon fuels and based on carbon intensity standards rather than absolute energy or carbon reductions. Wider scale programs such as the Better Buildings Program tend to be piecemeal or narrowly focused in scope (e.g. residential efficiency retrofits) or narrowly focused in audience (e.g. single family homeowners). Because of the piecemeal, narrow focus of these programs, they are not widely adopted and thus far not viewed as successful. At the same time, cities and residents in cities are a nexus for energy, resource and carbon consumption with increasing urbanization trends especially in the developing world. Localized climate action plans exist in places such as Berkeley and Davis, California, but often lack implementation strategies with detailed measurements and verification. Instead they tend to focus on high level targets with no methodology for structured implementation, measurement or verification, much less financing. State and local approaches also generally lack strategies that include human and social factors, they focus rather on technology adoption. Further, a persistent and difficult issue to overcome on the path to deep carbon reduction in cities is the lack of demand for energy efficiency services and products, with uptake of home energy retrofit programs chronically low. The direction of programs in general tend to be top down rather than bottom up, based upon extrinsic appeals (such as saving money or saving energy) rather than intrinsic appeals (such as benefiting the community or deeper motivations such as making a difference), and they tend to be scatter shot rather than focused. TOWARD ACHIEVING LOW CARBON CITIES: A NEW PARADIGM The proposed approach is in many ways an inversion of existing paradigms that have met with limited success, with focus on motivations, desires, and psychology rather than conventional policy making based on technocratic and purely economic considerations. This whole system approach rather than piecemeal foci integrates social and human factors such as context, vision and motivations and not just energy efficiency but lifestyle and community factors such as consumption, diet, health, resiliency and safety. A potentially game changing, bottom-up climate change solution using this whole system approach has been developed by Empowerment Institute – experts in the development and implementation of behavior change, community engagement and large system transformation strategies. Participants in their Low Carbon Diet program achieve a 25% carbon footprint reduction and through their neighbor-to-neighbor outreach process are able to recruit 25% of a block to participate. LBNL will partner with Empowerment Institute in an attempt to scale up their carbon reduction and community engagement methodology in three early adopter cities in California and three neighborhoods in Sao Paulo, Brazil. Called the Cool City Challenge (see addendum), its goal over a three-year timeframe is to engage a minimum of 25% of the residents of these communities to reduce their carbon footprint by 25% while providing a platform for the testing and adoption of technologies to enhance the     5   behavior change and community engagement. A rigorous applied R&D learning process led by LBNL will maximize this opportunity for knowledge creation and ultimately success. (a) (b) Figure 2. Schematic of climate action plans illustrating the iterative nature of an action plan, an implementation plan, measurement and feedback, and impact assessment and learning (a). Each of the four key elements can be viewed through the lens of coupled technology, policy, markets, and human and social factors interactions (b). Human/Social Factors Technology Markets Policy Plan and Targets Role of conservation/ habitual behavior change? Education/ Awareness e.g. Eco-driving Role of key technologies (e.g. controls, networks, end use technologies, energy supply technologies) Human/social factor intervention and technology cost effectiveness? What are market adoption barriers and relative importance? What policies can encourage social factor participation and technology adoptions? What is optimal policy trajectory? Key Barriers Identified? Implementation Plan How best to do outreach? How to identify early adoption blocks and neighborhoods? Test/Pilot/ deployment plans. Education Financing issues Policies for human/social factors and technology and markets? Plan to overcome Key Barriers? Measurement and Feedback How to monitor/verify changes? How to capitalize on feedback? Sensor, feedback, networks Demand reduction/ demand shift; more comprehensive product labeling Policies for more feedback Impact Assessment and Learning Impact of implementation and changes? Total cost of ownership with lifecycle analysis impacts Impact of implementation on markets e.g. contractor employment Policy responses Market Analytics: outreach, response, adoption, penetration metrics and quantification What are integrated impacts to local economy, to local health, environment? How might these be integrated into an “urban quality index?” Table 3. Some interactions and research questions for the dynamics of climate action plans and human/social factors, technology, markets and policy. Human and social factors are usually not included in the implementation plan beyond generalized “outreach plans”, and measurement, feedback, impact assessment and learning are not generally addressed. MEASUREMENT   AND  FEEDBACK PLAN  & TARGETS IMPACT   ASSESSMENT   AND  LEARNING IMPLEMENTATION OF  ACTIONS  AND   PLAN POLICY TECHNOLOGY MARKETS HUMAN/ SOCIAL   FACTORS     6   The Cool City Challenge implementation plan is unique in that it will provide a closed loop learning system. Learning by design, rather than a top down approach of “build it and they will come,” e.g. building technology demonstrations and deployments without concomitant seeding of demand at the community level for these new technologies through creating interest in low carbon choices and lifestyle impacts. LBNL and Empowerment Institute’s partnership around the Cool City Challenge brings together for the first time the world-class technology R&D of LBNL in buildings, energy efficiency and energy analysis, IT and technology corporations, and the behavior change, community engagement, large system transformation and scaling strategies championed by the Empowerment Institute. Moreover, the initiative focuses on implementation of carbon reduction plans through specific and quantifiable behavior changes, technologies, and infrastructure in contrast to plans that focus on end states. Similarly, the initiative provides timeframes, locations, and detailed strategies for how to achieve aggressive carbon reduction targets. Further, the Cool City Challenge initiative provides a platform and test bed for deployment of new technologies, behavior change, community engagement and scaling strategies in cities. In particular it provides a learning lab for technology/human interactions and a tie-in to behavioral change experiments. It also extends the more usual “top down” framework to a “whole system” framework that integrates citizen participation, new technologies, and green economic development with the traditional policy tools of legislation and financial incentives. And the initiative offers the opportunity to design a replicable framework for scaling up low carbon implementation plans to other cities. The LBNL/Empowerment Institute Cool City Challenge initiative has six key research areas: 1. Whole System Approach: How to best integrate citizen carbon reduction actions, community engagement tools, green economic development strategies, a scaling mechanism, technology adoption, market development, and public policy tools. 2. Adoption Analytics: How to quantify adoption and penetration for low carbon actions, energy efficiency and technology. 3. Technology/Human Interface: How to maximize the human/technology interface to enable the development of new markets for low carbon technologies. 4. Behavior Change: How to maximize the quality, quantity and magnitude of citizen carbon reduction actions. 5. Co-Benefits: How to measure and quantify the economic, environmental, social and health co-benefits. 6. Carbon Neutral City: How to create a structured pathway to a carbon neutral city.     7   The research focus will include the following case study areas: transportation – vehicle miles traveled (VMT) reduction, residential energy efficiency – household retrofit adoption, and dietary change – eating lower on the food chain and local food. These three areas are chosen because they have either been very difficult to crack as market areas (residential uptake for energy efficiency is smaller than commercial uptake); they represent a large energy and carbon savings opportunity (residential retrofits, VMT reduction, dietary change); and they have not been highly studied or well quantified through citizen participation efforts in the past (VMT reduction and dietary change). KEY LBNL RESEARCH TASKS Start-up Phase The methodology for robust data collection and measurement of savings will be developed in this phase. This will include the definition of an appropriate control group for each city and provisions for collecting both spatial (block level) and temporal quantification (persistence) of behavior actions and community participation. Key household action items to be quantified on a pre- and post- program basis will include VMT, energy efficiency retrofits, carbon reduction actions, purchases, dietary habits, water usage and solid waste generation. Baseline data will be collected and local partnerships established to support the research study. Existing baseline data or statistics from the participating cities will be utilized wherever possible. Partnership with local utilities and/or technology provider companies will be made to collect pre-and post program utility customer data for base lining and ongoing data collection. VMT data collection will rely either on manual data entry or wireless data collection via cell phone/vehicle linkage. Data collection methodology and measurement of savings will be integrated into the Cool City Challenge information management system (“CAPTIN”) and LBNL will coordinate partner input for CAPTIN. One framework that will be employed in the program design is the investigation and possible mitigation of key barriers for actions in transport and energy efficiency (Table 4). For example, neighborhood-based carpooling barriers may include coordination gaps and trust issues and this could be addressed in the EcoTeam framework of increased community trust and a technology partner providing carpooling software integrated into IT and cell phone networks. During this phase, LBNL will also develop relationships and partnerships for technology demonstrations and pilot projects with industry or other technology stakeholders. This might include technology demonstrations for home energy management systems, advanced lighting products or controls, advanced window coatings, or pilot deployment of heat pump based space heating and water heating or integrated systems with thermal storage. Such technology demonstrations would explore issues and/or barriers with technology adoption and leverage the early adopter population segment to provide a seeding area for promising new applications.     8   Barrier Transport: Barrier Mitigation Residential Home Energy Efficiency Retrofit: Barrier Mitigation Motivation EcoTeam framework vs. Control (non-EcoTeam framework) Implementation barriers: coordination/ infrastructure Neighborhood carpooling software Demand reduction like programmable or graphical thermostat Culture Free public transit days City government marketing to create a new social norm Transactional/time Public transport lanes and privileges Utility mandatory audit Financial Incentives/rebates for public transportation Free audits for home energy efficiency Trust Local, dynamic carpooling with EcoTeam or neighborhood Trusted certified contractors recommended from EcoTeam neighbors Table 4. Investigation and possible mitigation of key barriers to citizen carbon reduction actions and technology adoption is enabled with the Cool City Challenge framework and could include some of the above elements in a matrix exploring barriers. Campaign Phase Key issues to be studied include measurement and evaluation of behavior changes, community participation, energy efficiency retrofits, and voluntary technology demonstrations. Central to this is the quantification of overall energy and carbon savings by action as part of the structured data collection plan. Effort will also be made to quantify the spatial distribution of EcoTeams, of savings within and across neighborhoods, as well as across time (persistence effects). Semi-annual feedback of results to city and program partners will be provided for program adjustment and improvement and an annual progress report with quantified progress to data will be written for stakeholders, participants and funding sources. Other issues to be studied include how the behavior change and community engagement tools promulgated by this initiative can help catalyze the full spectrum of GHG reduction interventions spanning technology adoption, policy adoption, and market development; scenario development for what it would take for the participating cities to become carbon neutral by 2025; and the potential GHG and economic development impact of scaling the Cool City Challenge across the state of California and the United States. Through survey frameworks as well as through EcoTeam member participation data, the research team will seek correlations between population segments, demographics or other characteristics with carbon reduction actions and levels of participation. Comparative cost/benefit analyses of behavior change interventions in comparison to other energy efficiency and carbon reduction programs will be done in terms of baseline adoption rates, energy savings and carbon savings versus program costs. A key question to be addressed is the deployment rate and scope of     9   energy efficiency retrofitting for Cool City Challenge participants vs. other programs such as the Better Buildings or Energy Upgrade California. Other key research activities include community-scaling scenarios and non-energy related impact assessments around health, environment, social capital, market development, and local economic development. For example, if higher rates of local energy efficiency retrofits are achieved how would this impact the local rate of employment among contractors and local sales of energy efficient products? Scenarios will also be built to explore the case where Cool City Challenge results are scaled to larger communities and regions for energy, carbon, and economic impacts. Analysis and recommendations for community engagement “best practices” will be summarized based on quantified dissemination results. Finally carbon neutral scenarios or city-specific requirements will be developed for 2025. ABOUT LAWRENCE BERKELEY NATIONAL LABRATORY Lawrence Berkeley National Laboratory addresses the world’s most urgent scientific challenges including the advancement of more sustainable energy technologies and climate change research. Founded in 1931, LBNL’s scientific expertise has been recognized with 13 Nobel Prizes and dozens of Nobel Laureates have either trained at the Lab or had significant collaborations with staff there. Thirteen Lab scientists have won the National Medal of Science, our nation's highest award for lifetime achievement in scientific research. One of LBNL’s major initiatives is “Carbon Cycle 2.0” – a multidisciplinary approach to accelerate discovery and innovation in creating global climate change solutions. The Cool City Challenge fits under this broad initiative and LBNL will lead the research and development effort. LBNL will coordinate research efforts at participating universities and with corporate sponsors as well as support technology demonstrations and pilots with industry and other stakeholders. LBNL will also assist in securing the financing for the Cool City Challenge. CORE RESEARCH TEAM Douglas Davenport leads strategic partnership initiatives for the Lawrence Berkeley National Laboratory’s Environmental Energy Technology Division, an integrated applied sciences research program in energy efficiency and environmental quality, energy resources and storage, and energy policy. Doug’s focus is on the value of LBNL’s R&D programs to their partners in addressing some of the world’s most pressing technical challenges. He’s spent the past 23 years as an engineer, leader of a climate consulting practice, renewable energy developer, and business manager. He is currently leading new innovation programs and partnerships on behalf of LBNL for urban sustainability, smart grid, battery technology, and materials science. Doug will be responsible for management of LBNL’s core team and will assist with Cool City Challenge financing. He will also     10   serve as lead R&D liaison between industry partners and local government programs and coordinate technology demonstrations and pilots. Tom McKone Ph.D. is the leader of the Sustainable Energy Systems Group and Deputy for Research Programs in the Energy Analysis and Environmental Impacts Department in the Environmental Energy Technologies Division at LBNL. Tom has several decades of experience in scientific analysis and technical management and is an authority on the life cycle analysis/health impacts of energy production. He was a co-author of the recent National Academy report, Hidden Costs of Energy: Unpriced Consequences of Energy Production and Use. He is also an Adjunct Professor in the Environmental Health Sciences group in the Department of Public Health at the University of California, Berkeley. Tom will lead LBNL’s overall R&D activities and coordinate the impact assessment analysis team. Jeffery Greenblatt Ph.D. is a staff scientist at Lawrence Berkeley National Laboratory’s Environmental Technologies Division where he leads work on California’s energy future analysis for the California Energy Commission, and leads the Environmental Energy Analysis Team for LNBL’s Carbon Cycle 2.0 initiative. He was a major author of California’s Energy Future report. Prior to his work at LBNL, he was a Climate and Energy Technology Manager at Google.org, where he screened renewable energy grants and investments. Before coming to Google, Jeff was a High Meadows fellow at Environmental Defense Fund where he evaluated the technical, economic and environmental aspects of a wide range of energy technologies. He helped develop the original "wedge" climate stabilization research and has developed scenarios for California, the Midwest, and the US. Jeff will be responsible for community and national scaling scenarios, health and resource impact assessment analysis, and the development of carbon neutral city scenarios. Max Wei Ph.D. is a Program Manager in the Environmental Energy Technologies Division at LBNL. His work is focused on modeling medium- and long-term greenhouse gas reduction scenarios for California, including the potential of long-term habitual behavior change as a resource for carbon reduction. He was a key contributor to two recent reports: California’s Energy Future – The View to 2050, for the California Council on Science and Technology, and California’s Carbon Challenge: Scenarios for Achieving 80% Emissions Reduction in 2050, for the California Energy Commission. In 2011 he completed a report on the job creation potential from sustained investment in energy efficiency and low carbon energy sources, co-led successful passage of SB77, a clean energy financing bill in California, and co-authored a study on the economic impacts of a state feed-in-tariff. Max will be responsible for the Cool City Challenge behavior change and community participation measurement and assessment, quantification of carbon savings, and lead analysis of economic and social impact assessment. For Further Information: Max Wei mwei@lbl.gov www.lbl.gov     11   ADDENDUM COOL CITY CHALLENGE REINVENTING OUR CITIES FROM THE BOTTOM UP TO ACHIEVE DRAMATIC CARBON REDUCTION, DEEP RESILIENCY, AND GREEN PROSPERITY An Initiative of Empowerment Institute in Partnership With Lawrence Berkeley National Laboratory “The world’s cities are responsible for up to 70% of harmful greenhouse gases and have become the real battleground in the fight against climate change. What goes on in cities, and how they manage their impact on the environment, lies at the core of the problem.” UN-HABITAT 2011 Global Report   PURPOSE To scale up a proven community-based social innovation to achieve dramatic carbon reduction while building a low carbon economy and resilient neighborhoods in three early adopter California cities and three neighborhoods in Sao Paulo, Brazil; and then disseminate this strategy worldwide. The ultimate goal of the Cool City Challenge is to change the game around greenhouse gas reduction in cities and provide a viable path forward to address climate change. NEED AND OPPORTUNITY With international climate change legislation failing to get traction and the long timeframe required to scale up technological solutions, the world is searching for a feasible and scalable strategy for addressing global warming. Since cities represent 70% of the planet’s CO2 emissions and citizens’ daily lifestyle choices represent between 50 and 90% of these emissions, cities and their citizens provide the world with an unparalleled opportunity to address global warming. Further, this can serve as a demand-side driver for building robust local green economies. STRATEGY Empowerment Institute—the world’s pre-eminent expert in environmental behavior change and community engagement—over the past two decades has developed a proven methodology to help cities empower citizens to reduce their carbon footprint by 25% through the Low Carbon Diet EcoTeam program and a strategy to achieve between 25 and 75% household participation. This methodology has now spread to over 300 US cities and 6 countries including China. The Cool City Challenge is designed to bring this transformative social innovation to scale. PROJECT SUMMARY Phase 1 Start-up – one year: Build program and technology infrastructure. Phase 2 Campaign – 3 years: Support cities to achieve carbon reduction, neighborhood resiliency and green economic development goals and design global scaling strategy. (A full proposal is available upon request.)   FOR MORE INFORMATION David Gershon dgershon@empowermentinstitute.net www.empowermentinstitute.net www.socialchange2.com City of Palo Alto (ID # 2932) City Council Staff Report Report Type: Consent Calendar Meeting Date: 7/16/2012 July 16, 2012 Page 1 of 3 (ID # 2932) Summary Title: Utility Trench & Substructure Installation Title: Approval of an Electric Enterprise Fund Contract with Golden State Utility Company for Trenching and Substructure Installation Services in the Amount of $2,677,800 From: City Manager Lead Department: Utilities Recommendation Staff recommends that Council approve and authorize the City Manager: 1. To execute the attached contract with Golden State Utility Company (Attachment A) for a period of thirty-six (36) months in the amount of $2,677,800 to provide utility trenching and substructure installation services. 2. To negotiate and execute one or more change orders to the contract with Golden State Utility Company for related, additional but unforeseen work which may develop during the contract term, the total value of which shall not exceed $268,000. Background The Electric Utility establishes a multi-year contract with a general contractor to provide trenching services and to install electric utility substructures such as conduits, boxes, and vaults. The trenching and substructures are for customer service installations, replacements to the existing underground electric system, and for fiber optic, street light, and communication services. Each job is individually quoted, a price agreed upon, and payment made upon completion of work. Discussion The City does not possess the staff resources to provide electric substructure installation and trenching services. Electric substructure and trenching services have been contracted out for over 19 years. Award of the contract is necessary to complete customer connection requests and Capital Improvement Program (CIP) projects in a timely and cost-effective manner. July 16, 2012 Page 2 of 3 (ID # 2932) Summary of Bid Process Bid Name/Number 2012-2013 Utility Trench & Substructure Installation/IFB 145092 Proposed Length of Project 36 months Number of Bids Mailed to Contractors 32 Number of Bids Mailed to Builder’s Exchanges 14 Total Days to Respond to Bid 28 Pre-Bid Meeting? Yes Number of Company Attendees at Pre-Bid Meeting 8 Number of Bids Received: 6* Bid Price Range From a low of $2,677,800 to a high of $4,174,325 *Bid summary provided in Attachment B. Staff has reviewed all bids submitted and recommends that the bid of $2,677,800 submitted by Golden State Utility Company be accepted and that Golden State Utility Company be declared the lowest responsible bidder. The bid is 11 percent below the staff/engineer's estimate of $3,000,000. Staff confirmed with the Contractor's State License Board that the contractor has an active license on file. Staff checked references supplied by the contractor for previous work performed and found no significant complaints. Resource Impact Funds for this project are available in the FY 2012-2013 Electric Capital Improvement Program Budget, Electric Customer Connections Budget (EL 98003 & 89028) and Fiber Optic Program Budget (FO-10000 & 10001). 40% of the funds are designated for the Electric Capital Improvement Program. Another 40% of the funds are designated for the Electric Customer Connections, and the remaining 20% of the funds are designated for the Fiber Optic Program. Continued work under this contract for FY 2013/2014 and FY 2014/2015 will be subject to satisfactory performance by the contractor and appropriation of required funds in the respective fiscal years. This action has no impact on construction work forces since it is being performed by an outside contractor. Policy Implications The approval of this contract is consistent with existing City policies, including the Council approved Utilities Strategic Plan Key Strategy No. 1: Operate distribution system in a cost effective manner and; Strategy No. 2: Invest in utility infrastructure to deliver reliable service. Environmental Review This project is categorically exempt from the California Environment Quality Act (CEQA). July 16, 2012 Page 3 of 3 (ID # 2932) Attachments:  Attachment A: Contract C13145092 (PDF)  Attachment B: Bid Summary IFB 145092 (PDF) Prepared By: Tom Ting, Acting Engr. Manager-Electric Department Head: Valerie Fong, Director City Manager Approval: ____________________________________ James Keene, City Manager   Invitation for Bid (IFB) Package 1                              Rev. May 1, 2012  PART 3 – SAMPLE CONSTRUCTION CONTRACT                CONSTRUCTION CONTRACT    Contract No. C13145092        City of Palo Alto    and    Golden State Utility Company      PROJECT  “Utility Trench & Substructure Installation”   Invitation for Bid (IFB) Package 2                              Rev. May 1, 2012  PART 3 – SAMPLE CONSTRUCTION CONTRACT       CONSTRUCTION CONTRACT             TABLE OF CONTENTS      SECTION 1. INCORPORATION OF RECITALS AND DEFINITIONS……………………………….. ....................5  1.1 Recitals ................................................................................................................ 5  1.2 Definitions ........................................................................................................... 5  SECTION 2. THE PROJECT………………………………………………………………………………..............................5  SECTION 3. THE CONTRACT DOCUMENTS…………………………………………………………. .........................5            3.1           List of Documents …………………………………………………………………………………………......5            3.2           Order of Precedence ……………………………………………………………………………................6  SECTION 4. THE WORK …………………………………………………………………………………..............................7  SECTION 5. PROJECT TEAM …………………………………………………………………………...............................7  SECTION 6. TIME OF COMPLETION …………………………………………………………………............................7  6.1 Time Is of Essence........................................................................................……… 7  6.2 Commencement of Work..................................................................................... 7  6.3 Contract Time....................................................................................................... 7  6.4 Liquidated Damages............................................................................................. 7  6.4.1 Entitlement…………………………………………………………………………………………….   7 6.4.2 Daily Amount………………………………………………………………………………………….   8 6.4.3 Exclusive Remedy…………………………………………………………………………………..   8 6.4.4 Other Remedies…………………………………………………………………………………...     8 6.5 Adjustments to Contract Time........................................................................... … 8  SECTION 7. COMPENSATION TO CONTRACTOR………………………………………………………………………...  8  7.1 Contract Sum ………………………………………………………………………………………………………8  7.2 Full Compensation …………………………………………………………………………………………….. 9  7.3 Compensation for Extra or Deleted Work …………………………………………………………….9  7.3.1 Self Performed Work…………………………………………………………………………………9 7.3.2 Subcontractors………………………………………………………………………………………….9 SECTION 8. STANDARD OF CARE...................................................................................................9  SECTION 9. INDEMNIFICATION......................................................................................................10  9.1 Hold Harmless ……………………………………………………………………………………………………..10  9.2 Survival ……………………………………………………………………………………………………………….10  SECTION 10. NONDISCRIMINATION ..............................................................................................10  SECTION 11. INSURANCE AND BONDS ..........................................................................................10    Invitation for Bid (IFB) Package 3                              Rev. May 1, 2012  PART 3 – SAMPLE CONSTRUCTION CONTRACT  SECTION 12. PROHIBITION AGAINST TRANSFERS..........................................................................11  SECTION 13. NOTICES....................................................................................................................11  13.1 Method of Notice ………………………………………………………………………………………………..11  13.2 Notice Recipients .................................................................................................  11  13.3 Change of Address ............................................................................................... 12  14.1 Resolution of Contract Disputes........................................................................... 12  14.2 Resolution of Other Disputes ............................................................................... 12  14.2.1 Non‐Contract Disputes …………………………………………………………………………………….12  14.2.2 Litigation, City Election …………………………………………………………...........................12  14.3 Submission of Contract Dispute …………………………………………………………………………..13  14.3.1 By Contractor …………………………………………………………………………………………. 13  14.3.2 By City ……………………………………………………………………………………………………. 13  14.4 Contract Dispute Resolution Process...............................................................…… 13  14.4.1 Direct Negotiation…………………………………………………………………………………….13  14.4.2 Deferral of Contract Disputes …………………………………………………………………   14  14.4.3 Mediation …………………………………………………………………………..14 14.4.4 Binding Arbitration ………………………………………………………………..14 14.5 Non‐Waiver …………………………………………………………………………………………………………16  SECTION 15. DEFAULT...................................................................................................................16  15.1 Notice of Default.................................................................................................. 16  15.2 Opportunity to Cure Default ................................................................................ 16  SECTION 16. CITY'S RIGHTS AND REMEDIES..................................................................................16  16.1 Remedies Upon Default ....................................................................................... 16  16.1.1 Delete Certain Services …………………………………………………………...........................16 16.1.2 Perform and Withhold ……………………………………………………………………………. 16  16.1.3 Suspend The Construction Contract ………………………………………………………….16  16.1.4 Terminate the Construction Contract for Default ……………………………………..17  16.1.5 Invoke the Performance Bond ………………………………………………………………….17  16.1.6 Additional Provisions ……………………………………………………………………………….17  16.2 Delays by Sureties................................................................................................ 17  16.3 Damages to City................................................................................................... 17  16.3.1 For Contractor's Default …………………………………………………………………………..17  16.3.2 Compensation for Losses ………………………………………………………………………….17 16.5 Suspension by City for Convenience..................................................................... 18  16.6 Termination Without Cause ................................................................................. 18  16.6.1 Compensation ………………………………………………………………………………………….18 16.6.2 Subcontractors …………………………………………………………………………………………18 16.7 Contractor’s Duties Upon Termination................................................................. 19    Invitation for Bid (IFB) Package 4                              Rev. May 1, 2012  PART 3 – SAMPLE CONSTRUCTION CONTRACT  SECTION 17. CONTRACTOR'S RIGHTS AND REMEDIES...................................................................19  17.1 Contractor’s Remedies......................................................................................... 19  17.1.1 For Work Stoppage …………………………………………………………………………………..19 17.1.2 For City's Non‐Payment …………………………………………………………………………… 19  17.2 Damages to Contractor ........................................................................................ 19  SECTION 18. ACCOUNTING RECORDS............................................................................................19  18.1 Financial Management and City Access..........................................................……. 19  18.2 Compliance with City Requests ........................................................................ …. 20  SECTION 19. INDEPENDENT PARTIES.............................................................................................20  SECTION 20. NUISANCE.................................................................................................................20  SECTION 21. PERMITS AND LICENSES............................................................................................20  SECTION 22. WAIVER....................................................................................................................20  SECTION 23. GOVERNING LAW .....................................................................................................20  SECTION 24. COMPLETE AGREEMENT ...........................................................................................21  SECTION 25. SURVIVAL OF CONTRACT..........................................................................................21  SECTION 26. PREVAILING WAGES..................................................................................................21  SECTION 27. NON APPROPRIATION ..............................................................................................21  SECTION 28. GOVERNMENTAL POWERS........................................................................................21  SECTION 29. ATTORNEY FEES........................................................................................................21  SECTION 30. COUNTERPARTS........................................................................................................22  SECTION 31. SEVERABILITY ...........................................................................................................22            5                  Rev. May 1, 2012    CONSTRUCTION CONTRACT    THIS CONSTRUCTION CONTRACT entered into on July 16, 2012 (“Execution Date”) by and between the CITY  OF PALO ALTO, a California chartered municipal corporation ("City"), and GOLDEN STATE UTILITY  COMPANY ("Contractor"), is made with reference to the following:    R E C I T A L S:    A. City is a municipal corporation duly organized and validly existing under the laws of the State of  California with the power to carry on its business as it is now being conducted under the statutes of the  State of California and the Charter of City.    B. Contractor is a corporation  duly organized and in good standing in the State of Delaware,  Contractor’s License Number 401136. Contractor represents that it is duly licensed by the State of  California and has the background, knowledge, experience and expertise to perform the obligations set  forth in this Construction Contract.    C. On April 17, 2012, City issued an Invitation for Bids (IFB) to contractors for the “Utility Trench &  Substructure Installation” (“Project”).  In response to the IFB, Contractor submitted a bid.    D. City and Contractor desire to enter into this Construction Contract for the Project, and other  services as identified in the Bid Documents for the Project upon the following terms and conditions.    NOW THEREFORE, in consideration of the mutual promises and undertakings hereinafter set forth  and for other good and valuable consideration, the receipt and sufficiency of which are hereby  acknowledged, it is mutually agreed by and between the undersigned parties as follows:    SECTION 1 INCORPORATION OF RECITALS AND DEFINITIONS.    1.1 Recitals.    All of the recitals are incorporated herein by reference.    1.2 Definitions.    Capitalized terms shall have the meanings set forth in this Construction Contract and/or in the  General Conditions.  If there is a conflict between the definitions in this Construction Contract and  in the General Conditions, the definitions in this Construction Contract shall prevail.  SECTION 2 THE PROJECT.    The Project is the construction of the “Utility Trench & Substructure Installation” ("Project").    SECTION 3 THE CONTRACT DOCUMENTS.    3.1  List of Documents.  The Contract Documents (sometimes collectively referred to as “Agreement” or “Bid Documents”) consist  of the following documents which are on file with the Purchasing Division and are hereby incorporated by  reference.       1) Change Orders    2) Field Change Orders          6                  Rev. May 1, 2012    3) Contract    4) Project Plans and Drawings  5) Technical Specifications  6) Special Provisions  7)    Notice Inviting Bids  8)    Instructions to Bidders  9)    General Conditions  10) Bidding Addenda    11) Invitation for Bids    12) Contractor's Bid/Non‐Collusion Affidavit    13)   Reports listed in the Bidding Documents    14)   Public Works Department’s Standard Drawings and Specifications dated 2007 and                updated from time to time    15) Utilities Department’s Water, Gas, Wastewater, Electric Utilities Standards dated 2005  and updated from time to time    16)  City of Palo Alto Traffic Control Requirements    17)  City of Palo Alto Truck Route Map and Regulations    18)  Notice Inviting Pre‐Qualification Statements, Pre‐Qualification Statement, and Pre‐  Qualification Checklist (if applicable)    19)  Performance and Payment Bonds    20)  Insurance Forms      3.2  Order of Precedence.    For the purposes of construing, interpreting and resolving inconsistencies between and among the  provisions of this Contract, the Contract Documents shall have the order of precedence as set forth in the  preceding section.  If a claimed inconsistency cannot be resolved through the order of precedence, the City  shall have the sole power to decide which document or provision shall govern as may be in the best  interests of the City.        7                  Rev. May 1, 2012    SECTION 4 THE WORK.    The Work includes all labor, materials, equipment, services, permits, fees, licenses and taxes, and all other  things necessary for Contractor to perform its obligations and complete the Project, including, without  limitation, any Changes approved by City, in accordance with the Contract Documents and all Applicable  Code Requirements.    SECTION 5 PROJECT TEAM.    In addition to Contractor, City has retained, or may retain, consultants and contractors to provide  professional and technical consultation for the design and construction of the Project.  The Project requires  that Contractor operate efficiently, effectively and cooperatively with City as well as all other members of  the Project Team and other contractors retained by City to construct other portions of the Project.    SECTION 6 TIME OF COMPLETION.  6.1 Time Is of Essence.    Time is of the essence with respect to all time limits set forth in the Contract Documents.    6.2 Commencement of Work.    Contractor shall commence the Work on the date specified in City’s Notice to Proceed.       6.3 Contract Time.    Work hereunder shall begin on the date specified on the City’s Notice to Proceed and shall be  completed on the date specified in the City’s Notice to Proceed.     6.4 Liquidated Damages.    6.4.1 Entitlement.    City and Contractor acknowledge and agree that if Contractor fails to fully and  satisfactorily complete the Work within the Contract Time, City will suffer, as a result of  Contractor’s failure, substantial damages which are both extremely difficult and  impracticable to ascertain.  Such damages may include, but are not limited to:  (i) Loss of public confidence in City and its contractors and consultants.  (ii) Loss of public use of public facilities.  (iii) Extended disruption to public.          8                  Rev. May 1, 2012    6.4.2 Daily Amount.    City and Contractor have reasonably endeavored, but failed, to ascertain the actual  damage that City will incur if Contractor fails to achieve Substantial Completion of the  entire Work within the Contract Time.  Therefore, the parties agree that in addition to all  other damages to which City may be entitled other than delay damages, in the event  Contractor shall fail to achieve Substantial Completion of the entire Work within the  Contract Time, Contractor shall pay City as liquidated damages the amount of $500 per  day for each Day occurring after the expiration of the Contract Time until Contractor  achieves Substantial Completion of the entire Work.  The liquidated damages amount is  not a penalty but considered to be a reasonable estimate of the amount of damages City  will suffer by delay in completion of the Work.    6.4.3 Exclusive Remedy.    City and Contractor acknowledge and agree that this liquidated damages provision shall  be City’s only remedy for delay damages caused by Contractor’s failure to achieve  Substantial Completion of the entire Work within the Contract Time.    6.4.4 Other Remedies.    City is entitled to any and all available legal and equitable remedies City may have where  City’s Losses are caused by any reason other than Contractor’s failure to achieve  Substantial Completion of the entire Work within the Contract Time.    6.5 Adjustments to Contract Time.    The Contract Time may only be adjusted for time extensions approved by City and agreed to by  Change Order executed by City and Contractor in accordance with the requirements of the  Contract Documents.  SECTION 7 COMPENSATION TO CONTRACTOR.    7.1 Contract Sum.    Contractor shall be compensated for satisfactory completion of the Work in compliance with the  Contract Documents the Contract Sum of Two Million Six Hundred Seventy Seven Thousand Eight  Hundred Dollars ($2,677,800).       [This amount includes the Base Bid and Add Alternates.]          9                  Rev. May 1, 2012    7.2 Full Compensation.    The Contract Sum shall be full compensation to Contractor for all Work provided by Contractor  and, except as otherwise expressly permitted by the terms of the Contract Documents, shall cover  all Losses arising out of the nature of the Work or from the acts of the elements or any unforeseen  difficulties or obstructions which may arise or be encountered in performance of the Work until  its Acceptance by City, all risks connected with the Work, and any and all expenses incurred due to  suspension or discontinuance of the Work.  The Contract Sum may only be adjusted for Change  Orders issued, executed and satisfactorily performed in accordance with the requirements of the  Contract Documents.    7.3 Compensation for Extra or Deleted Work.    The Contract Sum shall be adjusted (either by addition or credit) for Changes in the Work involving  Extra Work or Deleted Work based on one or more of the following methods to be selected by  City:  1. Unit prices stated in the Contract Documents or agreed upon by City and Contractor,   which unit prices shall be deemed to include Contractor Markup and   Subcontractor/Sub‐subcontractor Markups permitted by this Section.    2. A lump sum agreed upon by City and Contractor, based on the estimated Allowable   Costs and Contractor Markup and Subcontractor Markup computed in accordance   with this Section.    3. Contractor’s Allowable Costs, plus Contractor Markup and Subcontractor Markups   applicable to such Extra Work computed in accordance with this Section.    Contractor Markup and Subcontractor/Sub‐subcontractor Markups set forth herein are the full  amount of compensation to be added for Extra Work or to be subtracted for Deleted Work that is  attributable to overhead (direct and indirect) and profit of Contractor and of its Subcontractors  and Sub‐subcontractors, of every Tier.  When using this payment methodology, Contractor  Markup and Subcontractor/Sub‐subcontractor Markups, which shall not be compounded, shall be  computed as follows:    7.3.1 Markup Self‐Performed Work.    10% of the Allowable Costs for that portion of the Extra Work or Deleted Work to be  performed by Contractor with its own forces.    7.3.2 Markup for Work Performed by Subcontractors.    15% of the Allowable Costs for that portion of the Extra Work or Deleted Work to be  performed by a first Tier Subcontractor.        SECTION 8 STANDARD OF CARE.    Contractor agrees that the Work shall be performed by qualified, experienced and well‐supervised  personnel.  All services performed in connection with this Construction Contract shall be performed in a  manner consistent with the standard of care under California law applicable to those who specialize in  providing such services for projects of the type, scope and complexity of the Project.           10                  Rev. May 1, 2012    SECTION 9 INDEMNIFICATION.    9.1 Hold Harmless.    To the fullest extent allowed by law, Contractor will defend, indemnify, and hold harmless City, its  City Council, boards and commissions, officers, agents, employees, representatives and volunteers  (hereinafter collectively referred to as "Indemnitees"), through legal counsel acceptable to City,  from and against any and all Losses arising directly or indirectly from, or in any manner relating to  any of, the following:  (i) Performance or nonperformance of the Work by Contractor or its Subcontractors or Sub‐ subcontractors, of any tier;  (ii) Performance or nonperformance by Contractor or its Subcontractors or Sub‐ subcontractors of any tier, of any of the obligations under the Contract Documents;  (iii) The construction activities of Contractor or its Subcontractors or Sub‐subcontractors, of  any tier, either on the Site or on other properties;  (iv) The payment or nonpayment by Contractor to any of its employees, Subcontractors or  Sub‐subcontractors of any tier, for Work performed on or off the Site for the Project; and  (v) Any personal injury, property damage or economic loss to third persons associated with  the performance or nonperformance by Contractor or its Subcontractors or Sub‐ subcontractors of any tier, of the Work.    However, nothing herein shall obligate Contractor to indemnify any Indemnitee for Losses  resulting from the sole or active negligence or willful misconduct of the Indemnitee.  Contractor  shall pay City for any costs City incurs to enforce this provision.  Nothing in the Contract  Documents shall be construed to give rise to any implied right of indemnity in favor of Contractor  against City or any other Indemnitee.    9.2 Survival.    The provisions of Section 9 shall survive the termination of this Construction Contract.    SECTION 10 NONDISCRIMINATION.    As set forth in Palo Alto Municipal Code section 2.30.510, Contractor certifies that in the performance of  this Agreement, it shall not discriminate in the employment of any person because of the race, skin color,  gender, age, religion, disability, national origin, ancestry, sexual orientation, housing status, marital status,  familial status, weight or height of such person. Contractor acknowledges that it has read and understands  the provisions of Section 2.30.510 of the Palo Alto Municipal Code relating to Nondiscrimination  Requirements and the penalties for violation thereof, and will comply with all requirements of Section  2.30.510 pertaining to nondiscrimination in employment.    SECTION 11 INSURANCE AND BONDS.    On or before the Execution Date, Contractor shall provide City with evidence that it has obtained insurance  and Performance and Payment Bonds satisfying all requirements in Article 11 of the General Conditions.   Failure to do so shall be deemed a material breach of this Construction Contract.          11                  Rev. May 1, 2012    SECTION 12 PROHIBITION AGAINST TRANSFERS.    City is entering into this Construction Contract based upon the stated experience and qualifications of the  Contractor and its subcontractors set forth in Contractor’s Bid.  Accordingly, Contractor shall not assign,  hypothecate or transfer this Construction Contract or any interest therein directly or indirectly, by  operation of law or otherwise without the prior written consent of City. Any assignment, hypothecation or  transfer without said consent shall be null and void.    The sale, assignment, transfer or other disposition of any of the issued and outstanding capital stock of  Contractor or of any general partner or joint venturer or syndicate member of Contractor, if the Contractor  is a partnership or joint venture or syndicate or co‐tenancy shall result in changing the control of  Contractor, shall be construed as an assignment of this Construction Contract. Control means more than  fifty percent (50%) of the voting power of the corporation or other entity.     SECTION 13 NOTICES.    13.1 Method of Notice.    All notices, demands, requests or approvals to be given under this Construction Contract shall be given in  writing and shall be deemed served on the earlier of the following:  (i) On the date delivered if delivered personally;  (ii) On the third business day after the deposit thereof in the United States mail, postage prepaid, and   addressed as hereinafter provided;   (iii) On the date sent if sent by facsimile transmission;   (iv) On the date sent if delivered by electronic mail; or   (v) On the date it is accepted or rejected if sent by certified mail.     13.2 Notice Recipients.    All notices, demands or requests (including, without limitation, Claims) from Contractor to City   shall include the Project name and the number of this Construction Contract and shall be   addressed to City at:      To City:  City of Palo Alto     City Clerk     250 Hamilton Avenue     P.O. Box 10250     Palo Alto, CA 94303     Copy to:  City of Palo Alto    Utilities Engineering    250 Hamilton Avenue    Palo Alto, CA 94301    Attn: Jim Thompson       In addition, copies of all Claims by Contractor under this Construction Contract shall be provided  to the following:    Palo Alto City Attorney’s Office  250 Hamilton Avenue  P.O. Box 10250  Palo Alto, California 94303       All Claims shall be delivered personally or sent by certified mail.          12                  Rev. May 1, 2012    All notices, demands, requests or approvals from City to Contractor shall be addressed to:    Jim Thompson      13.3 Change of Address.    In the event of any change of address, the moving party shall notify the other party of the change  of address in writing.  Each party may, by written notice only, add, delete or replace any  individuals to whom and addresses to which notice shall be provided.    SECTION 14 DISPUTE RESOLUTION.     14.1 Resolution of Contract Disputes.     Contract Disputes shall be resolved by the parties in accordance with the provisions of this   Section 14, in lieu of any and all rights under the law that either party have its rights  adjudged  by a trial court or jury.  All Contract Disputes shall be subject to the Contract  Dispute Resolution Process  set forth in this Section 14, which shall be the exclusive  recourse of Contractor and City for such  Contract Disputes.    14.2 Resolution of Other Disputes.     14.2.1 Non‐Contract Disputes.    Contract Disputes shall not include any of the following:  (i) Penalties or forfeitures prescribed by statute or regulation imposed by a  governmental agency;  (ii) Third party tort claims for personal injury, property damage or death relating to  any Work performed by Contractor or its Subcontractors or Sub‐subcontractors  of any tier;  (iii) False claims liability under California Government Code Section 12650, et. seq.;  (iv) Defects in the Work first discovered by City after Final Payment by City to  Contractor;  (v) Stop notices; or  (vi) The right of City to specific performance or injunctive relief to compel  performance of any provision of the Contract Documents.    14.2.2 Litigation, City Election.    Matters that do not constitute Contract Disputes shall be resolved by way of an action  filed in the Superior Court of the State of California, County of Santa Clara, and shall not  be subject to the Contract Dispute Resolution Process. However, the City reserves the  right, in its sole and absolute discretion, to treat such disputes as Contract Disputes.  Upon written notice by City of its election as provided in the preceding sentence, such  dispute shall be submitted by the parties and finally decided pursuant to the Contract  Dispute Resolution Process in the manner as required for Contract Disputes, including,  without limitation, City’s right under Paragraph 14.4.2 to defer resolution and final  determination until after Final Completion of the Work.          13                  Rev. May 1, 2012    14.3 Submission of Contract Dispute.    14.3.1 By Contractor.    Contractors may commence the Contract Dispute Resolution Process upon City's written  response denying all or part of a Claim pursuant to Paragraph 4.2.9 or 4.2.10 of the  General Conditions.  Contractor shall submit a written Statement of Contract Dispute (as  set forth below) to City within seven (7) Days after City rejects all or a portion of  Contractor's Claim.  Failure by Contractor to submit its Statement of Contract Dispute in a  timely manner shall result in City’s decision by City on the Claim becoming final and  binding.  Contractor’s Statement of Contract Dispute shall be signed under penalty of  perjury and shall state with specificity the events or circumstances giving rise to the  Contract Dispute, the dates of their occurrence and the asserted effect on the Contract  Sum and the Contract Time.  The Statement of Contract Dispute shall include adequate  supporting data to substantiate the disputed Claim.  Adequate supporting data for a  Contract Dispute relating to an adjustment of the Contract Time shall include both of the  following:  (i) All of the scheduling data required to be submitted by Contractor under the  Contract Documents to obtain extensions of time and adjustments to the  Contract Time and  (ii) A detailed, event‐by‐event description of the impact of each event on  completion of Work.  Adequate data to support a Statement of Contract Dispute  involving an adjustment of the Contract Sum must include both of the following:   (a) A detailed cost breakdown and   (b) Supporting cost data in such form and including such information and   other supporting data as required under the Contract Documents for   submission of Change Order Requests and Claims.  14.3.2 By City.    City's right to commence the Contract Dispute Resolution Process shall arise at any time  following City's actual discovery of the circumstances giving rise to the Contract Dispute.   City asserts Contract Disputes in response to a Contract Dispute asserted by Contractor.   A Statement of Contract Dispute submitted by City shall state the events or  circumstances giving rise to the Contract Dispute, the dates of their occurrence and the  damages or other relief claimed by City as a result of such events.    14.4 Contract Dispute Resolution Process.    The parties shall utilize each of the following steps in the Contract Dispute Resolution  Process in the sequence they appear below.  Each party shall participate fully and in good  faith in each step in the Contract Dispute Resolution Process, and good faith effort shall  be a condition precedent to the right of each party to proceed to the next step in the  process.    14.4.1 Direct Negotiations.    Designated representatives of City and Contractor shall meet as soon as possible (but not  later than ten (10) Days after receipt of the Statement of Contract Dispute) in a good  faith effort to negotiate a resolution to the Contract Dispute.  Each party shall be  represented in such negotiations by an authorized representative with full knowledge of  the details of the Claims or defenses being asserted by such party in the negotiations,  and with full authority to resolve such Contract Dispute then and there, subject only to  City’s obligation to obtain administrative and/or City Council approval of any agreed  settlement or resolution.  If the Contract Dispute involves the assertion of a right or claim  by a Subcontractor or Sub‐subcontractor, of any tier, against Contractor that is in turn  being asserted by Contractor against City (“Pass‐Through Claim”), then the Subcontractor  or Sub‐Subcontractor shall also have a        14                  Rev. May 1, 2012    representative attend the negotiations, with the same authority and knowledge as  described above.  Upon completion of the meeting, if the Contract Dispute is not  resolved, the parties may either continue the negotiations or any party may declare  negotiations ended.  All discussions that occur during such negotiations and all  documents prepared solely for the purpose of such negotiations shall be confidential and  privileged pursuant to California Evidence Code Sections 1119 and 1152.    14.4.2 Deferral of Contract Disputes.    Following the completion of the negotiations required by Paragraph 14.4.1, all  unresolved Contract Disputes shall be deferred pending Final Completion of the Project,  subject to City’s right, in its sole and absolute discretion, to require that the Contract  Dispute Resolution Process proceed prior to Final Completion.  All Contract Disputes that  have been deferred until Final Completion shall be consolidated within a reasonable time  after Final Completion and thereafter pursued to resolution pursuant to this Contract  Dispute Resolution Process. The parties can continue informal negotiations of Contract  Disputes; provided, however, that such informal negotiations shall not be alter the  provisions of the Agreement deferring final determination and resolution of unresolved  Contract Disputes until after Final Completion.    14.4.3 Mediation.    If the Contract Dispute remains unresolved after negotiations pursuant to Paragraph  14.4.1, the parties shall submit the Contract Dispute to non‐binding mediation before a  mutually acceptable third party mediator.    .1 Qualifications of Mediator.  The parties shall endeavor to select a mediator who  is a retired judge or an attorney with at least five (5) years of experience in  public works construction contract law and in mediating public works  construction disputes.  In addition, the mediator shall have at least twenty (20)  hours of formal training in mediation skills.    .2 Submission to Mediation and Selection of Mediator.  The party initiating  mediation of a Contract Dispute shall provide written notice to the other party  of its decision to mediate.  In the event the parties are unable to agree upon a  mediator within fifteen (15) Days after the receipt of such written notice, then  the parties shall submit the matter to the American Arbitration Association  (AAA) at its San Francisco Regional Office for selection of a mediator in  accordance with the AAA Construction Industry Mediation Rules.    .3 Mediation Process.  The location of the mediation shall be at the offices of City.   The costs of mediation shall be shared equally by both parties.  The mediator  shall provide an independent assessment on the merits of the Contract Dispute  and recommendations for resolution.  All discussions that occur during the  mediation and all documents prepared solely for the purpose of the mediation  shall be confidential and privileged pursuant to California Evidence Code  Sections 1119 and 1152.    14.4.4 Binding Arbitration.    If the Contract Dispute is not resolved by mediation, then any party may submit the  Contract Dispute for final and binding arbitration pursuant to the provisions of California  Public Contract Code Sections 10240, et seq.  The award of the arbitrator therein shall be  final and may be entered as a judgment by any court of competent jurisdiction.  Such  arbitration shall be conducted in accordance with the following:          15                  Rev. May 1, 2012    .1 Arbitration Initiation.  The arbitration shall be initiated by filing a complaint in  arbitration in accordance with the regulations promulgated pursuant to  California Public Contract Code Section 10240.5.    .2 Qualifications of the Arbitrator.  The arbitrator shall be approved by all parties.  The arbitrator shall be a retired judge or an attorney with at least five (5) years  of experience in public works construction contract law and in arbitrating public  works construction disputes.  In addition, the arbitrator shall have at least  twenty (20) hours of formal training in arbitration skills.  In the event the parties  cannot agree upon an arbitrator, the provisions of California Public Contract  Code Section 10240.3 shall be followed in selecting an arbitrator possessing the  qualifications required herein.    .3 Hearing Days and Location.  Arbitration hearings shall be held at the offices of  City and shall, except for good cause shown to and determined by the arbitrator,  be conducted on consecutive business days, without interruption or  continuance.    .4 Hearing Delays.  Arbitration hearings shall not be delayed except upon good  cause shown.    .5 Recording Hearings.  All hearings to receive evidence shall be recorded by a  certified stenographic reporter, with the costs thereof borne equally by City and  Contractor and allocated by the arbitrator in the final award.    .6 Limitation of Depositions.  The parties may conduct discovery in accordance  with the provisions of section 10240.11 of the Public Contract Code; provided,  however, that depositions shall be limited to both of the following:    (i) Ten (10) percipient witnesses for each party and 5 expert witnesses per  party.      Upon a showing of good cause, the arbitrator may increase the number of  permitted depositions.  An individual who is both percipient and expert shall, for  purposes of applying the foregoing numerical limitation only, be deemed an  expert.  Expert reports shall be exchanged prior to receipt of evidence, in  accordance with the direction of the arbitrator, and expert reports (including  initial and rebuttal reports) not so submitted shall not be admissible as  evidence.    .7 Authority of the Arbitrator.  The arbitrator shall have the authority to hear  dispositive motions and issue interim orders and interim or executory awards.    .8 Waiver of Jury Trial.  Contractor and City each voluntarily waives its right to a  jury trial with respect to any Contract Dispute that is subject to binding  arbitration in accordance with the provisions of this Paragraph 14.4.4.   Contractor shall include this provision in its contracts with its Subcontractors  who provide any portion of the Work.          16                  Rev. May 1, 2012    14.5 Non‐Waiver.    Participation in the Contract Dispute Resolution Process shall not waive, release or compromise  any defense of City, including, without limitation, any defense based on the assertion that the  rights or Claims of Contractor that are the basis of a Contract Dispute were previously waived by  Contractor due to Contractor’s failure to comply with the Contract Documents, including, without  limitation, Contractor’s failure to comply with any time periods for providing notice of requests  for adjustments of the Contract Sum or Contract Time or for submission of Claims or supporting  documentation of Claims.    SECTION 15 DEFAULT.    15.1 Notice of Default.    In the event that City determines, in its sole discretion, that Contractor has failed or refused to  perform any of the obligations set forth in the Contract Documents, or is in breach of any  provision of the Contract Documents, City may give written notice of default to Contractor in the  manner specified for the giving of notices in the Construction Contract.    15.2 Opportunity to Cure Default.  Except for emergencies, Contractor shall cure any default in performance of its obligations under  the Contract Documents within two (2) Days (or such shorter time as City may reasonably require)  after receipt of written notice.  However, if the breach cannot be reasonably cured within such  time, Contractor will commence to cure the breach within two (2) Days (or such shorter time as  City may reasonably require) and will diligently and continuously prosecute such cure to  completion within a reasonable time, which shall in no event be later than ten (10) Days after  receipt of such written notice.    SECTION 16 CITY'S RIGHTS AND REMEDIES.    16.1 Remedies Upon Default.    If Contractor fails to cure any default of this Construction Contract within the time period set forth  above in Section 15, then City may pursue any remedies available under law or equity, including,  without limitation, the following:    16.1.1 Delete Certain Services.    City may, without terminating the Construction Contract, delete certain portions of the  Work, reserving to itself all rights to Losses related thereto.    16.1.2 Perform and Withhold.     City may, without terminating the Construction Contract, engage others to perform the  Work or portion of the Work that has not been adequately performed by Contractor and  withhold the cost thereof to City from future payments to Contractor, reserving to itself  all rights to Losses related thereto.    16.1.3 Suspend The Construction Contract.     City may, without terminating the Construction Contract and reserving to itself all rights  to Losses related thereto, suspend all or any portion of this Construction Contract for as  long a period of time as City determines, in its sole discretion, appropriate, in which  event City shall have no obligation to adjust the Contract Sum or Contract Time, and shall  have no liability to Contractor for damages if City directs Contractor to resume Work.          17                  Rev. May 1, 2012    16.1.4 Terminate the Construction Contract for Default.    City shall have the right to terminate this Construction Contract, in whole or in part, upon  the failure of Contractor to promptly cure any default as required by Section 15.  City’s  election to terminate the Construction Contract for default shall be communicated by  giving Contractor a written notice of termination in the manner specified for the giving of  notices in the Construction Contract.  Any notice of termination given to Contractor by  City shall be effective immediately, unless otherwise provided therein.    16.1.5 Invoke the Performance Bond.    City may, with or without terminating the Construction Contract and reserving to itself all  rights to Losses related thereto, exercise its rights under the Performance Bond.    16.1.6 Additional Provisions.    All of City’s rights and remedies under this Construction Contract are cumulative, and  shall be in addition to those rights and remedies available in law or in equity.   Designation in the Contract Documents of certain breaches as material shall not waive  the City’s authority to designate other breaches as material nor limit City’s right to  terminate the Construction Contract, or prevent the City from terminating the  Agreement for breaches that are not material.  City’s determination of whether there has  been noncompliance with the Construction Contract so as to warrant exercise by City of  its rights and remedies for default under the Construction Contract, shall be binding on  all parties.  No termination or action taken by City after such termination shall prejudice  any other rights or remedies of City provided by law or equity or by the Contract  Documents upon such termination; and City may proceed against Contractor to recover  all liquidated damages and Losses suffered by City.    16.2 Delays by Sureties.    Without limiting to any of City’s other rights or remedies, City has the right to suspend the  performance of the Work by Contractor’s sureties in the event of any of the following:  (i) The sureties’ failure to begin Work within a reasonable time in such manner as to insure  full compliance with the Construction Contract within the Contract Time;  (ii) The sureties’ abandonment of the Work;  (iii) If at any time City is of the opinion the sureties’ Work is unnecessarily or unreasonably  delaying the Work;  (iv) The sureties’ violation of any terms of the Construction Contract;  (v) The sureties’ failure to perform according to the Contract Documents; or  (vi) The sureties’ failure to follow City’s instructions for completion of the Work within the  Contract Time.    16.3 Damages to City.    16.3.1 For Contractor's Default.    City will be entitled to recovery of all Losses under law or equity in the event of  Contractor’s default under the Contract Documents.     16.3.2 Compensation for Losses.    In the event that City's Losses arise from Contractor’s default under the Contract  Documents, City shall be entitled to withhold monies otherwise payable to Contractor  until Final Completion of the Project.  If City incurs Losses due to Contractor’s default,  then the amount of Losses shall be deducted from the amounts withheld.  Should the  amount withheld exceed the amount deducted, the balance will be paid to Contractor or  its designee upon Final Completion of the Project.  If the Losses incurred by City exceed  the amount withheld, Contractor shall be liable to City for the difference and shall  promptly remit same to City.          18                  Rev. May 1, 2012    16.4 Suspension by City for Convenience.    City may, at any time and from time to time, without cause, order Contractor, in writing, to  suspend, delay, or interrupt the Work in whole or in part for such period of time, up to an  aggregate of fifty percent (50%) of the Contract Time.  The order shall be specifically identified as  a Suspension Order by City.  Upon receipt of a Suspension Order, Contractor shall, at City’s  expense, comply with the order and take all reasonable steps to minimize costs allocable to the  Work covered by the Suspension Order.  During the Suspension or extension of the Suspension, if  any, City shall either cancel the Suspension Order or, by Change Order, delete the Work covered  by the Suspension Order.  If a Suspension Order is canceled or expires, Contractor shall resume  and continue with the Work.  A Change Order will be issued to cover any adjustments of the  Contract Sum or the Contract Time necessarily caused by such suspension.    A Suspension Order  shall not be the exclusive method for City to stop the Work.    16.5 Termination Without Cause.    City may, at its sole discretion and without cause, terminate this Construction Contract in part or  in whole by giving thirty (30) Days written notice to Contractor. The compensation allowed under  this Paragraph 16.5 shall be the Contractor’s sole and exclusive compensation for such  termination and Contractor waives any claim for other compensation or Losses, including, but not  limited to, loss of anticipated profits, loss of revenue, lost opportunity, or other consequential,  direct, indirect or incidental damages of any kind resulting from termination without cause.      16.5.1 Compensation.    Following such termination and within forty‐five (45) Days after receipt of a billing from  Contractor seeking payment of sums authorized by this Paragraph 16.5, City shall pay the  following to Contractor as Contractor’s sole compensation for performance of the Work :    .1 For Work Performed.  The amount of the Contract Sum allocable to the portion  of the Work properly performed by Contractor as of the date of termination,  less sums previously paid to Contractor.    .2 For Close‐out Costs.  Reasonable costs of Contractor and its Subcontractors and  Sub‐subcontractors for:  (i) Demobilizing and  (ii) Administering the close‐out of its participation in the Project (including,  without limitation, all billing and accounting functions, not including  attorney or expert fees) for a period of no longer than thirty (30) Days  after receipt of the notice of termination.    .3 For Fabricated Items.  Previously unpaid cost of any items delivered to the  Project Site which were fabricated for subsequent incorporation in the Work.    16.5.2 Subcontractors.      Contractor shall include provisions in all of its subcontracts, purchase orders and other  contracts permitting termination for convenience by Contractor on terms that are  consistent with this Construction Contract and that afford no greater rights of recovery  against Contractor than are afforded to Contractor against City under this Section.          19                  Rev. May 1, 2012    16.6 Contractor’s Duties Upon Termination.    Upon receipt of a notice of termination for default or for convenience, Contractor shall, unless the  notice directs otherwise, do the following:  (i) Immediately discontinue the Work to the extent specified in the notice;  (ii) Place no further orders or subcontracts for materials, equipment, services or facilities,  except as may be necessary for completion of such portion of the Work that is not  discontinued;  (iii) Provide to City a description, in writing no later than fifteen (15) days after receipt of the  notice of termination, of all subcontracts, purchase orders and contracts that are  outstanding, including, without limitation, the terms of the original price, any changes,  payments, balance owing, the status of the portion of the Work covered and a copy of  the subcontract, purchase order or contract and any written changes, amendments or  modifications thereto, together with such other information as City may determine  necessary in order to decide whether to accept assignment of or request Contractor to  terminate the subcontract, purchase order or contract;  (iv) Promptly assign to City those subcontracts, purchase orders or contracts, or portions  thereof, that City elects to accept by assignment and cancel, on the most favorable terms  reasonably possible, all subcontracts, purchase orders or contracts, or portions thereof,  that City does not elect to accept by assignment; and  (iii) Thereafter do only such Work as may be necessary to preserve and protect Work already  in progress and to protect materials, plants, and equipment on the Project Site or in  transit thereto.  SECTION 17 CONTRACTOR'S RIGHTS AND REMEDIES.    17.1 Contractor’s Remedies.    Contractor may terminate this Construction Contract only upon the occurrence of one of the  following:    17.1.1 For Work Stoppage.    The Work is stopped for sixty (60) consecutive Days, through no act or fault of Contractor, any  Subcontractor, or any employee or agent of Contractor or any Subcontractor, due to issuance of  an order of a court or other public authority other than City having jurisdiction or due to an act of  government, such as a declaration of a national emergency making material unavailable.  This  provision shall not apply to any work stoppage resulting from the City’s issuance of a suspension  notice issued either for cause or for convenience.    17.1.2 For City's Non‐Payment.    If City does not make pay Contractor undisputed sums within ninety (90) Days after receipt of  notice from Contractor, Contractor may terminate the Construction Contract (30) days following a  second notice to City of Contractor’s intention to terminate the Construction Contract.    17.2 Damages to Contractor.   In the event of termination for cause by Contractor, City shall pay Contractor the sums provided  for in Paragraph 16.5.1 above.  Contractor agrees to accept such sums as its sole and exclusive  compensation and agrees to waive any claim for other compensation or Losses, including, but not  limited to, loss of anticipated profits, loss of revenue, lost opportunity, or other consequential,  direct, indirect and incidental damages, of any kind.  SECTION 18 ACCOUNTING RECORDS.    18.1 Financial Management and City Access.    Contractor shall keep full and detailed accounts and exercise such controls as may be necessary  for proper financial management under this Construction Contract in accordance with generally        20                  Rev. May 1, 2012    accepted accounting principles and practices. City and City's accountants  during normal business  hours, may  inspect, audit and copy Contractor's records, books, estimates, take‐offs, cost reports,  ledgers, schedules, correspondence, instructions, drawings, receipts, subcontracts, purchase  orders, vouchers, memoranda and other data relating to this Project. Contractor shall retain these  documents for a period of three (3) years after the later of (i) final payment or (ii) final resolution  of all Contract Disputes and other disputes, or (iii) for such longer period as may be required by  law.    18.2 Compliance with City Requests.    Contractor's compliance with any request by City pursuant to this Section 18 shall be a condition  precedent to filing or maintenance of any legal action or proceeding by Contractor against City  and to Contractor's right to receive further payments under the Contract Documents.  City many  enforce Contractor’s obligation to provide access to City of its business and other records referred  to in Section 18.1 for inspection or copying by  issuance of a writ or a provisional or permanent  mandatory injunction by a court of competent jurisdiction based on affidavits submitted to such  court, without the necessity of oral testimony.    SECTION 19 INDEPENDENT PARTIES.    Each party is acting in its independent capacity and not as agents, employees, partners, or joint ventures’  of the other party.  City, its officers or employees shall have no control over the conduct of Contractor or  its respective agents, employees, subconsultants, or subcontractors, except as herein set forth.    SECTION 20 NUISANCE.    Contractor shall not maintain, commit, nor permit the maintenance or commission of any nuisance in  connection in the performance of services under this Construction Contract.    SECTION 21 PERMITS AND LICENSES.    Except as otherwise provided in the Special Provisions and Technical Specifications, The Contractor shall  provide, procure and pay for all licenses, permits, and fees, required by the City or other government  jurisdictions or agencies necessary to carry out and complete the Work.  Payment of all costs and expenses  for such licenses, permits, and fees shall be included in one or more Bid items. No other compensation  shall be paid to the Contractor for these items or for delays caused by non‐City inspectors or conditions set  forth in the licenses or permits issued by other agencies.    SECTION 22 WAIVER.    A waiver by either party of any breach of any term, covenant, or condition contained herein shall not be  deemed to be a waiver of any subsequent breach of the same or any other term, covenant, or condition  contained herein, whether of the same or a different character.    SECTION 23 GOVERNING LAW.    This Construction Contract shall be construed in accordance with and governed by the laws of the State of  California.          21                  Rev. May 1, 2012    SECTION 24 COMPLETE AGREEMENT.    This Agreement represents the entire and integrated agreement between the parties and supersedes all  prior negotiations, representations, and contracts, either written or oral. This Agreement may be amended  only by a written instrument, which is signed by the parties.  SECTION 25 SURVIVAL OF CONTRACT.    The provisions of the Construction Contract which by their nature survive termination of the Construction  Contract or Final Completion, including, without limitation, all warranties, indemnities, payment  obligations, and City’s right to audit Contractor’s books and records, shall remain in full force and effect  after Final Completion or any termination of the Construction Contract.  SECTION 26 PREVAILING WAGES.         This Project is not subject to prevailing wages. The Contractor is not required to pay prevailing wages in the  performance and implementation of the Project, because the City, pursuant to its authority as a chartered  city, has adopted Resolution No. 5981 exempting the City from prevailing wages.  The City invokes the  exemption from the state prevailing wage requirement for this Project and declares that the Project is  funded one hundred percent (100%) by the City of Palo Alto.    SECTION 27 NON APPROPRIATION.    This Agreement is subject to the fiscal provisions of the Charter of the City of Palo Alto and the Palo Alto  Municipal Code. This Agreement will terminate without any penalty (a) at the end of any fiscal year in the  event that the City does not appropriate funds for the following fiscal year for this event, or (b) at any time  within a fiscal year in the event that funds are only appropriated for a portion of the fiscal year and funds  for this Construction Contract are no longer available.  This section shall take precedence in the event of a  conflict with any other covenant, term, condition, or provision of this Agreement.   SECTION 28 AUTHORITY.    The individuals executing this Agreement represent and warrant that they have the legal capacity and  authority to do so on behalf of their respective legal entities.  SECTION 29 ATTORNEY FEES.    Each Party shall bear its own costs, including attorney’s fees through the completion of mediation. If the  claim or dispute is not resolved through mediation and in any dispute described in Paragraph 14.2, the prevailing party in any action brought to enforce the provision of this Agreement may recover its  reasonable costs and attorney’s fees expended in connection with that action.  The prevailing party shall be  entitled to recover an amount equal to the fair market value of legal services provided by attorneys  employed by it as well as any attorney’s’ fees paid to third parties.  SECTION 30 COUNTERPARTS  This Agreement may be signed in multiple counterparts, which shall, when executed by all the parties,  constitute a single binding agreement.        22                  Rev. May 1, 2012    SECTION 31 SEVERABILITY.    In case a provision of this Construction Contract is held to be invalid, illegal or unenforceable, the validity,  legality and enforceability of the remaining provisions shall not be affected.        IN WITNESS WHEREOF, the parties have caused this Construction Contract to be executed the   date and year first above written.             CITY OF PALO ALTO    ____________________________  City Manager      APPROVED AS TO FORM:    ___________________________  Senior Asst. City Attorney          GOLDEN STATE UTILITY COMPANY    By:___________________________    Name:_________________________    Title:________________________      BID SUMMARY CITY OF PALO ALTO Invitation for Bid: 145092 Title: 2012-2013 Utility Trench & Substructure Installation Date: May 8, 2012 List of Bidders (Company Name)Base Bid Total Optional Bid Item B Optional Bid Item C Grand Total Golden State $866,450.00 $892,975.00 $918,375.00 $2,677,800.00 Arrow Const $882,225.00 $904,300.00 $932,050.00 $2,718,575.00 Casey Const. $978,700.00 $1,030,050.00 $1,081,850.00 $3,090,600.00 Daleo Inc. $1,026,124.00 $1,031,989.00 $1,061,259.25 $3,119,372.25 West Valley Const. $1,327,036.25 $1,374,043.75 $1,407,888.50 $4,108,968.50 Underground Const. $1,332,225.00 $1,393,700.00 $1,448,400.00 $4,174,325.00 City of Palo Alto (ID # 2955) City Council Staff Report Report Type: Consent Calendar Meeting Date: 7/16/2012 July 16, 2012 Page 1 of 2 (ID # 2955) Summary Title: Amendment to Contract for Library Materials Title: Approval of Contract Amendment with Baker & Taylor to Add $40,000.00 for Digital Format Books for a Total Amount Not to Exceed $1,290,000.00 From: City Manager Lead Department: Library RECOMMENDATION Staff recommends that Council approve Contract Amendment No. 2 to Contract C11137900A Library Books & Related Services with Baker & Taylor to increase the contractual compensation by $40,000 for a total contract amount not to exceed $1,290,000. EXECUTIVE SUMMARY The contract amendment enables the Library to continue working with Baker & Taylor as a vendor to provide an additional service of books in digital format. BACKGROUND The Library Department has been purchasing print and audio-visual materials as well as selection and processing services from Baker & Taylor (contracts C11137900A and C11137900D). Recently Baker & Taylor started providing books in digital format via its Axis 360 digital media library. Axis 360 also provides libraries with an integrated selection acquisitions workflow. The Library staff reviewed the product as well as the services the product can provide. Neighboring city libraries, including Mountain View and San Jose, have either started providing or will soon provide Axis 360 digital media library to customers. DISCUSSION The Library has experienced a largely increased demand for books in digital format. Staff's evaluation of Axis 360 digital media library determined that the quality and quantity of titles included in Axis 360 would help the Library meet that July 16, 2012 Page 2 of 2 (ID # 2955) demand. The evaluation also determined that the new work process introduced by Axis 360 would enable the Library staff to increase work efficiency. Baker & Taylor has been able to meet the Library's expectations for providing collections to meet customer needs. With Axis 360, the same level of services is expected. Of the $40,000 increase, $38,000 will be used for purchasing digital books and $2,000 will be used for online access. TIMELINE Staff will begin working with Baker & Taylor to implement Axis 360 upon Council approval of the contract amendment. RESOURCE IMPACT The compensation increase for the above referenced contract amendment will have no direct fiscal impact to the City's budget, as the increase is covered by the existing Library collection FY2013 operating budget. POLICY IMPLICATIONS This recommendation does not represent any change to existing City policies. ENVIRONMENTAL REVIEW Approval of contracts to purchase library materials does not constitute a project under the California Environmental Quality Act. Therefore, no environmental assessment is needed. Attachments: Attachment A: Baker & Taylor Contract Amendment #2 for Books and Related Services (PDF) Attachment B: Axis360 Contract (PDF) Prepared By: Diane Lai, Division Head Department Head: Monique le Conge, Library Director City Manager Approval: ____________________________________ James Keene, City Manager City of Palo Alto (ID # 2963) City Council Staff Report Report Type: Consent Calendar Meeting Date: 7/16/2012 July 16, 2012 Page 1 of 5 (ID # 2963) Summary Title: Award of Contract for Relocation of 96-Inch Storm Drain on East Bayshore Road Title: Approval of a Contract with Con-Quest Contractors, Inc. in the Amount of $518,400 for the Relocation of a 96-Inch Diameter Storm Drain Pipeline on East Bayshore Road Near San Francisquito Creek, Capital Improvement Program Project SD-06101 From:City Manager Lead Department: Public Works Recommendation Staff recommends that Council: 1.Approve and authorize the City Manager or his designee to execute the attached contract with Con-Quest Contractors, Inc.(Attachment A) in the amount of $518,400 for the Relocation of a 96-Inch Storm Drain Pipeline on East Bayshore Road near San Francisquito Creek, Capital Improvement Program Project SD-06101; and 2.Authorize the City Manager or his designee to negotiate and execute one or more change orders to the contract with Con-Quest Contractors, Inc.for related, additional but unforeseen work which may develop during the project, the total value of which shall not exceed $51,840. Background In the early 1970s, the City installed a 96-inch storm drain pipeline beneath Highway 101 to drain a large area of northeastern Palo Alto. The pipeline was tunneled in an alignment running from Edgewood Drive to East Bayshore Road and then connected to San Francisquito Creek. Since Highway 101 is under the jurisdiction of the California Department of Transportation (Caltrans), the City was July 16, 2012 Page 2 of 5 (ID # 2963) required to obtain a Caltrans encroachment permit prior to installing the pipeline beneath the freeway. Although a copy of the original 1971 encroachment permit could not be located, standard permit conditions include a revocation clause requiring owners to remove or relocate permitted encroachments at their expense upon Caltrans’ request. Caltrans is currently designing a project to replace the Highway 101, East Bayshore Road, and West Bayshore Road bridges over San Francisquito Creek in order to accommodate auxiliary traffic lanes and to provide increased creek flow capacity. Caltrans is working closely with the San Francisquito Creek Joint Powers Authority (JPA) and its partner agencies on the design of the new bridges to ensure that they are compatible with the JPA’s proposed San Francisquito Creek flood management projects. Caltrans is funding the entire $9 million cost of the bridge replacement project. Caltrans bridge designers have determined that the City’s existing 96-inch storm drain pipeline will conflict with the footprint of the widened bridges. Staff have reviewed the bridge replacement plans and concur that it is not possible to widen the bridges without impacting the storm drain pipeline. As a result of the conflict between the pipeline and the proposed bridge, Caltrans has notified the City that a portion of the storm drain must be rerouted in order to clear the bridge construction zone. Discussion Project Description City staff and our engineering consultant have designed a project to relocate the 96-inch storm drain pipeline in two construction phases. During the initial phase to be conducted under this contract, the City’s contractor will relocate the portion of the pipeline that is outside the freeway traffic lanes. The project limits are depicted on the attached Location Map (Attachment B). The remainder of the pipeline will be relocated by Caltrans’ contractor at Caltrans’ expense when traffic lanes are shifted during the Caltrans bridge replacement project in 2014. This first phase of pipeline relocation is being coordinated with the Caltrans auxiliary lane construction project currently underway. The pipeline relocation work within the Caltrans right-of-way will be performed in the construction zone behind the temporary concrete barrier placed by the Caltrans auxiliary lane contractor. Due to the depth of the excavation and the large dimensions of the pipeline materials, the work in East Bayshore Road will July 16, 2012 Page 3 of 5 (ID # 2963) require the full closure of the street to ensure the safety of the public. In order to minimize the traffic impact of closing East Bayshore Road, the work will be performed during up to four weekend street closure periods (continuous work from 9:00 pm on Friday to 5:00 am on Monday). The street closure has been coordinated with the City of East Palo Alto, and a signigicant public outreach campaign (including the posting of advance notification signage along the route and the issuance of press releases to local media) will be conducted prior to the start of the work. The weekend closure strategy was used succesfully in 2007 during the installation of the large box culvert draining to the San Francisquito Creek Storm Water Pump Station. At the conclusion of this project, Caltrans will issue a recorded utility easement to the City for the entire length of the storm drain pipeline crossing the Caltrans right-of-way. To better protect the City from future capital expenditures for pipeline relocation, staff will attempt to negotiate easement terms that would require Caltrans to compensate the City for future relocation costs in the event Caltrans requests another move. Bid Process On June 4, 2012, a notice inviting formal bids for the Relocation of the 96-Inch Storm Drain Pipeline on East Bayshore Road near San Francisquito Creek was posted at City Hall and sent to 12 builder’s exchanges and 14 contractors. The bidding period was twenty-two days. Bids were received from three qualified contractors on June 26, 2012, as listed on the attached Bid Summary (Attachment C). Summary of Bid Process Bid Name/Number Relocation of 96-Inch Storm Drain Pipeline on East Bayshore Road Near San Francisquito Creek, SD-06101 / IFB #146339 Proposed Length of Project 60 calendar days Number of Bids Mailed to Contractors 14 Number of Bids Mailed to Builder’s Exchanges 12 Total Days to Respond to Bid 22 July 16, 2012 Page 4 of 5 (ID # 2963) Pre-Bid Meeting?No Number of Company Attendees at Pre-Bid Meeting Not applicable Number of Bids Received:3 Bid Price Range $518,400 to $685,507 Staff has reviewed all bids submitted and recommends that the bid of $518,400 submitted by Con-Quest Contractors, Inc.be accepted and that Con-Quest Contractors, Inc.be declared the lowest responsible bidder. The low bid is 17 percent above the engineer's estimate of $444,000. The change order amount of $51,840 (which equals 10 percent of the total contract) is requested for related, additional but unforeseen work which may develop during the project. Staff confirmed with the Contractor's State License Board that the contractor has an active license on file. Staff also contacted the listed references for Con-Quest Contractors, Inc.and found that they have performed satisfactorily on past construction projects for other clients. Project Coordination The relocation of 96-inch storm drain pipeline has been coordinated with other capital projects during the monthly Utilities/Public Works Department street work coordination meetings and by use of the Geographic Information System-based project coordination program. The work has also been coordinated with the San Francisquito Creek JPA and Caltrans to ensure that it is compatible with their current and planned projects. This project does not conflict with any upcoming Public Works or Utilities Department projects. Resource Impact Funding for the Relocation of a 96-Inch Storm Drain Pipeline on East Bayshore Road near San Francisquito Creek is available in the Storm Drain Replacement and Rehabilitation Project, Capital Improvement Program Project SD-06101. Policy Implications The recommendation does not represent any changes to existing City policies. Environmental Review This project is categorically exempt from the provisions of the California Environmental Quality Act (CEQA) under Section 15301 of the CEQA Guidelines as July 16, 2012 Page 5 of 5 (ID # 2963) repair, maintenance and/or minor alteration of existing facilities and no further environmental review is necessary. Courtesy Copies Storm Drain Oversight Committee Len Materman, SanFrancisquito Creek JPA Ron Moriguchi, Caltrans Chris Elias, Santa Clara Valley Water District Kamal Falaha, City of East Palo Alto Attachments: ·A -Contract #13146339 with Con-Quest Contractors, Inc.(PDF) ·B -Location Map (PDF) ·C -Bid Summary (PDF) Prepared By:Joe Teresi, Senior Engineer Department Head:J. Michael Sartor, Director City Manager Approval: ____________________________________ James Keene, City Manager   Invitation for Bid (IFB) Package 1                              Rev. May 1, 2012  CONSTRUCTION CONTRACT                CONSTRUCTION CONTRACT    Contract No. 13146339        City of Palo Alto    and    Con‐Quest Contractors, Inc.      PROJECT  Relocation of a 96‐Inch Storm Drain Pipeline on   East Bayshore Road Near San Francisquito Creek   Invitation for Bid (IFB) Package 2                              Rev. May 1, 2012  CONSTRUCTION CONTRACT       CONSTRUCTION CONTRACT             TABLE OF CONTENTS      SECTION 1. INCORPORATION OF RECITALS AND DEFINITIONS……………………………….. ....................5  1.1 Recitals ................................................................................................................ 5  1.2 Definitions ........................................................................................................... 5  SECTION 2. THE PROJECT………………………………………………………………………………..............................5  SECTION 3. THE CONTRACT DOCUMENTS…………………………………………………………. .........................5            3.1           List of Documents …………………………………………………………………………………………......5            3.2           Order of Precedence ……………………………………………………………………………................6  SECTION 4. THE WORK …………………………………………………………………………………..............................6  SECTION 5. PROJECT TEAM …………………………………………………………………………...............................7  SECTION 6. TIME OF COMPLETION …………………………………………………………………............................7  6.1 Time Is of Essence........................................................................................……… 7  6.2 Commencement of Work..................................................................................... 7  6.3 Contract Time....................................................................................................... 7  6.4 Liquidated Damages............................................................................................. 7  6.4.1 Entitlement…………………………………………………………………………………………….   7 6.4.2 Daily Amount………………………………………………………………………………………….   8 6.4.3 Exclusive Remedy…………………………………………………………………………………..   8 6.4.4 Other Remedies…………………………………………………………………………………...     8 6.5 Adjustments to Contract Time........................................................................... … 8  SECTION 7. COMPENSATION TO CONTRACTOR………………………………………………………………………...  8  7.1 Contract Sum ………………………………………………………………………………………………………1  7.2 Full Compensation …………………………………………………………………………………………….. 9  7.3 Compensation for Extra or Deleted Work …………………………………………………………….9  7.3.1 Self Performed Work…………………………………………………………………………………9 7.3.2 Subcontractors………………………………………………………………………………………….9 SECTION 8. STANDARD OF CARE...................................................................................................9  SECTION 9. INDEMNIFICATION......................................................................................................10  9.1 Hold Harmless ……………………………………………………………………………………………………..10  9.2 Survival ……………………………………………………………………………………………………………….10  SECTION 10. NONDISCRIMINATION ..............................................................................................10  SECTION 11. INSURANCE AND BONDS ..........................................................................................10    Invitation for Bid (IFB) Package 3                              Rev. May 1, 2012  CONSTRUCTION CONTRACT  SECTION 12. PROHIBITION AGAINST TRANSFERS..........................................................................11  SECTION 13. NOTICES....................................................................................................................11  13.1 Method of Notice ………………………………………………………………………………………………..11  13.2 Notice Recipients .................................................................................................  11  13.3 Change of Address ............................................................................................... 12  14.1 Resolution of Contract Disputes........................................................................... 12  14.2 Resolution of Other Disputes ............................................................................... 12  14.2.1 Non‐Contract Disputes …………………………………………………………………………………….12  14.2.2 Litigation, City Election …………………………………………………………...........................13  14.3 Submission of Contract Dispute …………………………………………………………………………..13  14.3.1 By Contractor …………………………………………………………………………………………. 13  14.3.2 By City ……………………………………………………………………………………………………. 13  14.4 Contract Dispute Resolution Process...............................................................…… 13  14.4.1 Direct Negotiation…………………………………………………………………………………….13  14.4.2 Deferral of Contract Disputes …………………………………………………………………   14  14.4.3 Mediation …………………………………………………………………………..14 14.4.4 Binding Arbitration ………………………………………………………………..15 14.5 Non‐Waiver …………………………………………………………………………………………………………16  SECTION 15. DEFAULT...................................................................................................................16  15.1 Notice of Default.................................................................................................. 16  15.2 Opportunity to Cure Default ................................................................................ 16  SECTION 16. CITY'S RIGHTS AND REMEDIES..................................................................................16  16.1 Remedies Upon Default ....................................................................................... 16  16.1.1 Delete Certain Services …………………………………………………………...........................16 16.1.2 Perform and Withhold ……………………………………………………………………………. 16  16.1.3 Suspend The Construction Contract ………………………………………………………….16  16.1.4 Terminate the Construction Contract for Default ……………………………………..17  16.1.5 Invoke the Performance Bond ………………………………………………………………….17  16.1.6 Additional Provisions ……………………………………………………………………………….17  16.2 Delays by Sureties................................................................................................ 17  16.3 Damages to City................................................................................................... 17  16.3.1 For Contractor's Default …………………………………………………………………………..17  16.3.2 Compensation for Losses ………………………………………………………………………….17 16.5 Suspension by City for Convenience..................................................................... 18  16.6 Termination Without Cause ................................................................................. 18  16.6.1 Compensation ………………………………………………………………………………………….18 16.6.2 Subcontractors …………………………………………………………………………………………18 16.7 Contractor’s Duties Upon Termination................................................................. 19    Invitation for Bid (IFB) Package 4                              Rev. May 1, 2012  CONSTRUCTION CONTRACT  SECTION 17. CONTRACTOR'S RIGHTS AND REMEDIES...................................................................19  17.1 Contractor’s Remedies......................................................................................... 19  17.1.1 For Work Stoppage …………………………………………………………………………………..19 17.1.2 For City's Non‐Payment …………………………………………………………………………… 19  17.2 Damages to Contractor ........................................................................................ 19  SECTION 18. ACCOUNTING RECORDS............................................................................................19  18.1 Financial Management and City Access..........................................................……. 19  18.2 Compliance with City Requests ........................................................................ …. 20  SECTION 19. INDEPENDENT PARTIES.............................................................................................20  SECTION 20. NUISANCE.................................................................................................................20  SECTION 21. PERMITS AND LICENSES............................................................................................20  SECTION 22. WAIVER....................................................................................................................20  SECTION 23. GOVERNING LAW .....................................................................................................20  SECTION 24. COMPLETE AGREEMENT ...........................................................................................21  SECTION 25. SURVIVAL OF CONTRACT..........................................................................................21  SECTION 26. PREVAILING WAGES..................................................................................................21  SECTION 27. NON APPROPRIATION ..............................................................................................21  SECTION 28. GOVERNMENTAL POWERS........................................................................................21  SECTION 29. ATTORNEY FEES........................................................................................................21  SECTION 30. COUNTERPARTS........................................................................................................22  SECTION 31. SEVERABILITY ...........................................................................................................22      Invitation for Bid (IFB) Package    5                  Rev. May 1, 2012  CONSTRUCTION CONTRACT    CONSTRUCTION CONTRACT    THIS CONSTRUCTION CONTRACT entered into on July 16, 2012 (“Execution Date”) by and between the CITY  OF PALO ALTO, a California chartered municipal corporation ("City"), and CON‐QUEST CONTRACTORS, INC.  ("Contractor"), is made with reference to the following:    R E C I T A L S:    A. City is a municipal corporation duly organized and validly existing under the laws of the State of  California with the power to carry on its business as it is now being conducted under the statutes of the  State of California and the Charter of City.    B. Contractor is a Corporation duly organized and in good standing in the State of California,  Contractor’s License Number 818668. Contractor represents that it is duly licensed by the State of  California and has the background, knowledge, experience and expertise to perform the obligations set  forth in this Construction Contract.    C. On June 4, 2012, City issued an Invitation for Bids (IFB) to contractors for the Relocation Of The  96‐Inch Storm Drain Pipeline On East Bayshore Road Near San Francisquito Creek (“Project”).  In response  to the IFB, Contractor submitted a bid.    D. City and Contractor desire to enter into this Construction Contract for the Project, and other  services as identified in the Bid Documents for the Project upon the following terms and conditions.    NOW THEREFORE, in consideration of the mutual promises and undertakings hereinafter set forth  and for other good and valuable consideration, the receipt and sufficiency of which are hereby  acknowledged, it is mutually agreed by and between the undersigned parties as follows:    SECTION 1 INCORPORATION OF RECITALS AND DEFINITIONS.    1.1 Recitals.    All of the recitals are incorporated herein by reference.    1.2 Definitions.    Capitalized terms shall have the meanings set forth in this Construction Contract and/or in the  General Conditions.  If there is a conflict between the definitions in this Construction Contract and  in the General Conditions, the definitions in this Construction Contract shall prevail.  SECTION 2 THE PROJECT.    The Project is the construction of the Relocation of the 96‐Inch Storm Drain Pipeline on East Bayshore Road  Near San Francisquito Creek ("Project").    SECTION 3 THE CONTRACT DOCUMENTS.    3.1  List of Documents.  The Contract Documents (sometimes collectively referred to as “Agreement” or “Bid Documents”) consist  of the following documents which are on file with the Purchasing Division and are hereby incorporated by  reference.       1) Change Orders    Invitation for Bid (IFB) Package    6                  Rev. May 1, 2012  CONSTRUCTION CONTRACT    2) Field Change Orders    3) Contract    4) Project Plans and Drawings    5) Technical Specifications    6) Special Provisions  7)    Notice Inviting Bids  8)    Instructions to Bidders  9)    General Conditions  10) Bidding Addenda  11) Invitation for Bids    12) Contractor's Bid/Non‐Collusion Affidavit    13)   Reports listed in the Bidding Documents    14)   Public Works Department’s Standard Drawings and Specifications dated 2007 and                updated from time to time    15) Utilities Department’s Water, Gas, Wastewater, Electric Utilities Standards dated 2005  and updated from time to time    16)  City of Palo Alto Traffic Control Requirements    17)  City of Palo Alto Truck Route Map and Regulations    18)  Notice Inviting Pre‐Qualification Statements, Pre‐Qualification Statement, and Pre‐  Qualification Checklist (if applicable)    19)  Performance and Payment Bonds    20)  Insurance Forms      3.2  Order of Precedence.    For the purposes of construing, interpreting and resolving inconsistencies between and among the  provisions of this Contract, the Contract Documents shall have the order of precedence as set forth in the  preceding section.  If a claimed inconsistency cannot be resolved through the order of precedence, the City  shall have the sole power to decide which document or provision shall govern as may be in the best  interests of the City.  SECTION 4 THE WORK.    The Work includes all labor, materials, equipment, services, permits, fees, licenses and taxes, and all other  things necessary for Contractor to perform its obligations and complete the Project, including, without  Invitation for Bid (IFB) Package    7                  Rev. May 1, 2012  CONSTRUCTION CONTRACT    limitation, any Changes approved by City, in accordance with the Contract Documents and all Applicable  Code Requirements.    SECTION 5 PROJECT TEAM.    In addition to Contractor, City has retained, or may retain, consultants and contractors to provide  professional and technical consultation for the design and construction of the Project.  The Project requires  that Contractor operate efficiently, effectively and cooperatively with City as well as all other members of  the Project Team and other contractors retained by City to construct other portions of the Project.    SECTION 6 TIME OF COMPLETION.  6.1 Time Is of Essence.    Time is of the essence with respect to all time limits set forth in the Contract Documents.    6.2 Commencement of Work.    Contractor shall commence the Work on the date specified in City’s Notice to Proceed.       6.3 Contract Time.    Work hereunder shall begin on the date specified on the City’s Notice to Proceed and shall be  completed    not later than      .   within Sixty  calendar days (60) after the commencement date specified in City’s   Notice to Proceed.    6.4 Liquidated Damages.    6.4.1 Entitlement.    City and Contractor acknowledge and agree that if Contractor fails to fully and  satisfactorily complete the Work within the Contract Time, City will suffer, as a result of  Contractor’s failure, substantial damages which are both extremely difficult and  impracticable to ascertain.  Such damages may include, but are not limited to:  (i) Loss of public confidence in City and its contractors and consultants.  (ii) Loss of public use of public facilities.  (iii) Extended disruption to public.    Invitation for Bid (IFB) Package    8                  Rev. May 1, 2012  CONSTRUCTION CONTRACT    6.4.2 Daily Amount.    City and Contractor have reasonably endeavored, but failed, to ascertain the actual  damage that City will incur if Contractor fails to achieve Substantial Completion of the  entire Work within the Contract Time.  Therefore, the parties agree that in addition to all  other damages to which City may be entitled other than delay damages, in the event  Contractor shall fail to achieve Substantial Completion of the entire Work within the  Contract Time, Contractor shall pay City as liquidated damages the amount of $500 per  day for each Day occurring after the expiration of the Contract Time until Contractor  achieves Substantial Completion of the entire Work.  The liquidated damages amount is  not a penalty but considered to be a reasonable estimate of the amount of damages City  will suffer by delay in completion of the Work.    6.4.3 Exclusive Remedy.    City and Contractor acknowledge and agree that this liquidated damages provision shall  be City’s only remedy for delay damages caused by Contractor’s failure to achieve  Substantial Completion of the entire Work within the Contract Time.    6.4.4 Other Remedies.    City is entitled to any and all available legal and equitable remedies City may have where  City’s Losses are caused by any reason other than Contractor’s failure to achieve  Substantial Completion of the entire Work within the Contract Time.    6.5 Adjustments to Contract Time.    The Contract Time may only be adjusted for time extensions approved by City and agreed to by  Change Order executed by City and Contractor in accordance with the requirements of the  Contract Documents.  SECTION 7 COMPENSATION TO CONTRACTOR.    Invitation for Bid (IFB) Package    1                  Rev. May 1, 2012  CONSTRUCTION CONTRACT    7.1 Contract Sum.    Contractor shall be compensated for satisfactory completion of the Work in compliance with the  Contract Documents the Contract Sum of Five Hundred Eighteen Thousand, Four Hundred Dollars  ($518,400).       [This amount includes the Base Bid and Add Alternates      .]                                    / /    / /    Invitation for Bid (IFB) Package    9                  Rev. May 1, 2012  CONSTRUCTION CONTRACT    7.2 Full Compensation.    The Contract Sum shall be full compensation to Contractor for all Work provided by Contractor  and, except as otherwise expressly permitted by the terms of the Contract Documents, shall cover  all Losses arising out of the nature of the Work or from the acts of the elements or any unforeseen  difficulties or obstructions which may arise or be encountered in performance of the Work until  its Acceptance by City, all risks connected with the Work, and any and all expenses incurred due to  suspension or discontinuance of the Work.  The Contract Sum may only be adjusted for Change  Orders issued, executed and satisfactorily performed in accordance with the requirements of the  Contract Documents.    7.3 Compensation for Extra or Deleted Work.    The Contract Sum shall be adjusted (either by addition or credit) for Changes in the Work involving  Extra Work or Deleted Work based on one or more of the following methods to be selected by  City:  1. Unit prices stated in the Contract Documents or agreed upon by City and Contractor,   which unit prices shall be deemed to include Contractor Markup and   Subcontractor/Sub‐subcontractor Markups permitted by this Section.    2. A lump sum agreed upon by City and Contractor, based on the estimated Allowable   Costs and Contractor Markup and Subcontractor Markup computed in accordance   with this Section.    3. Contractor’s Allowable Costs, plus Contractor Markup and Subcontractor Markups   applicable to such Extra Work computed in accordance with this Section.    Contractor Markup and Subcontractor/Sub‐subcontractor Markups set forth herein are the full  amount of compensation to be added for Extra Work or to be subtracted for Deleted Work that is  attributable to overhead (direct and indirect) and profit of Contractor and of its Subcontractors  and Sub‐subcontractors, of every Tier.  When using this payment methodology, Contractor  Markup and Subcontractor/Sub‐subcontractor Markups, which shall not be compounded, shall be  computed as follows:    7.3.1 Markup Self‐Performed Work.    10% of the Allowable Costs for that portion of the Extra Work or Deleted Work to be  performed by Contractor with its own forces.    7.3.2 Markup for Work Performed by Subcontractors.    15% of the Allowable Costs for that portion of the Extra Work or Deleted Work to be  performed by a first Tier Subcontractor.        SECTION 8 STANDARD OF CARE.    Contractor agrees that the Work shall be performed by qualified, experienced and well‐supervised  personnel.  All services performed in connection with this Construction Contract shall be performed in a  manner consistent with the standard of care under California law applicable to those who specialize in  providing such services for projects of the type, scope and complexity of the Project.     Invitation for Bid (IFB) Package    10                  Rev. May 1, 2012  CONSTRUCTION CONTRACT    SECTION 9 INDEMNIFICATION.    9.1 Hold Harmless.    To the fullest extent allowed by law, Contractor will defend, indemnify, and hold harmless City, its  City Council, boards and commissions, officers, agents, employees, representatives and volunteers  (hereinafter collectively referred to as "Indemnitees"), through legal counsel acceptable to City,  from and against any and all Losses arising directly or indirectly from, or in any manner relating to  any of, the following:  (i) Performance or nonperformance of the Work by Contractor or its Subcontractors or Sub‐ subcontractors, of any tier;  (ii) Performance or nonperformance by Contractor or its Subcontractors or Sub‐ subcontractors of any tier, of any of the obligations under the Contract Documents;  (iii) The construction activities of Contractor or its Subcontractors or Sub‐subcontractors, of  any tier, either on the Site or on other properties;  (iv) The payment or nonpayment by Contractor to any of its employees, Subcontractors or  Sub‐subcontractors of any tier, for Work performed on or off the Site for the Project; and  (v) Any personal injury, property damage or economic loss to third persons associated with  the performance or nonperformance by Contractor or its Subcontractors or Sub‐ subcontractors of any tier, of the Work.    However, nothing herein shall obligate Contractor to indemnify any Indemnitee for Losses  resulting from the sole or active negligence or willful misconduct of the Indemnitee.  Contractor  shall pay City for any costs City incurs to enforce this provision.  Nothing in the Contract  Documents shall be construed to give rise to any implied right of indemnity in favor of Contractor  against City or any other Indemnitee.    9.2 Survival.    The provisions of Section 9 shall survive the termination of this Construction Contract.    SECTION 10 NONDISCRIMINATION.    As set forth in Palo Alto Municipal Code section 2.30.510, Contractor certifies that in the performance of  this Agreement, it shall not discriminate in the employment of any person because of the race, skin color,  gender, age, religion, disability, national origin, ancestry, sexual orientation, housing status, marital status,  familial status, weight or height of such person. Contractor acknowledges that it has read and understands  the provisions of Section 2.30.510 of the Palo Alto Municipal Code relating to Nondiscrimination  Requirements and the penalties for violation thereof, and will comply with all requirements of Section  2.30.510 pertaining to nondiscrimination in employment.    SECTION 11 INSURANCE AND BONDS.    On or before the Execution Date, Contractor shall provide City with evidence that it has obtained insurance  and Performance and Payment Bonds satisfying all requirements in Article 11 of the General Conditions.   Failure to do so shall be deemed a material breach of this Construction Contract.    Invitation for Bid (IFB) Package    11                  Rev. May 1, 2012  CONSTRUCTION CONTRACT    SECTION 12 PROHIBITION AGAINST TRANSFERS.    City is entering into this Construction Contract based upon the stated experience and qualifications of the  Contractor and its subcontractors set forth in Contractor’s Bid.  Accordingly, Contractor shall not assign,  hypothecate or transfer this Construction Contract or any interest therein directly or indirectly, by  operation of law or otherwise without the prior written consent of City. Any assignment, hypothecation or  transfer without said consent shall be null and void.    The sale, assignment, transfer or other disposition of any of the issued and outstanding capital stock of  Contractor or of any general partner or joint venturer or syndicate member of Contractor, if the Contractor  is a partnership or joint venture or syndicate or co‐tenancy shall result in changing the control of  Contractor, shall be construed as an assignment of this Construction Contract. Control means more than  fifty percent (50%) of the voting power of the corporation or other entity.     SECTION 13 NOTICES.    13.1 Method of Notice.    All notices, demands, requests or approvals to be given under this Construction Contract shall be given in  writing and shall be deemed served on the earlier of the following:  (i) On the date delivered if delivered personally;  (ii) On the third business day after the deposit thereof in the United States mail, postage prepaid, and   addressed as hereinafter provided;   (iii) On the date sent if sent by facsimile transmission;   (iv) On the date sent if delivered by electronic mail; or   (v) On the date it is accepted or rejected if sent by certified mail.     13.2 Notice Recipients.    All notices, demands or requests (including, without limitation, Claims) from Contractor to City   shall include the Project name and the number of this Construction Contract and shall be   addressed to City at:      To City:  City of Palo Alto     City Clerk     250 Hamilton Avenue     P.O. Box 10250     Palo Alto, CA 94303     Copy to:  City of Palo Alto     Public Works Administration     250 Hamilton Avenue     Palo Alto, CA 94301     Attn: Joe Teresi        Or  Invitation for Bid (IFB) Package    12                  Rev. May 1, 2012  CONSTRUCTION CONTRACT        City of Palo Alto    Utilities Engineering    250 Hamilton Avenue    Palo Alto, CA 94301    Attn:             In addition, copies of all Claims by Contractor under this Construction Contract shall be provided  to the following:    Palo Alto City Attorney’s Office  250 Hamilton Avenue  P.O. Box 10250  Palo Alto, California 94303       All Claims shall be delivered personally or sent by certified mail.    All notices, demands, requests or approvals from City to Contractor shall be addressed to:    Con‐Quest Contractors, Inc.  290 Toland Street  San Francisco, Ca  94124  Attn:  Paul Loukianoff      13.3 Change of Address.    In the event of any change of address, the moving party shall notify the other party of the change  of address in writing.  Each party may, by written notice only, add, delete or replace any  individuals to whom and addresses to which notice shall be provided.    SECTION 14 DISPUTE RESOLUTION.     14.1 Resolution of Contract Disputes.     Contract Disputes shall be resolved by the parties in accordance with the provisions of this   Section 14, in lieu of any and all rights under the law that either party have its rights  adjudged  by a trial court or jury.  All Contract Disputes shall be subject to the Contract  Dispute Resolution Process  set forth in this Section 14, which shall be the exclusive  recourse of Contractor and City for such  Contract Disputes.    14.2 Resolution of Other Disputes.     14.2.1 Non‐Contract Disputes.    Contract Disputes shall not include any of the following:  (i) Penalties or forfeitures prescribed by statute or regulation imposed by a  governmental agency;  (ii) Third party tort claims for personal injury, property damage or death relating to  any Work performed by Contractor or its Subcontractors or Sub‐subcontractors  of any tier;  (iii) False claims liability under California Government Code Section 12650, et. seq.;  (iv) Defects in the Work first discovered by City after Final Payment by City to  Contractor;  (v) Stop notices; or  (vi) The right of City to specific performance or injunctive relief to compel  performance of any provision of the Contract Documents.    Invitation for Bid (IFB) Package    13                  Rev. May 1, 2012  CONSTRUCTION CONTRACT    14.2.2 Litigation, City Election.    Matters that do not constitute Contract Disputes shall be resolved by way of an action  filed in the Superior Court of the State of California, County of Santa Clara, and shall not  be subject to the Contract Dispute Resolution Process. However, the City reserves the  right, in its sole and absolute discretion, to treat such disputes as Contract Disputes.  Upon written notice by City of its election as provided in the preceding sentence, such  dispute shall be submitted by the parties and finally decided pursuant to the Contract  Dispute Resolution Process in the manner as required for Contract Disputes, including,  without limitation, City’s right under Paragraph 14.4.2 to defer resolution and final  determination until after Final Completion of the Work.    14.3 Submission of Contract Dispute.    14.3.1 By Contractor.    Contractors may commence the Contract Dispute Resolution Process upon City's written  response denying all or part of a Claim pursuant to Paragraph 4.2.9 or 4.2.10 of the  General Conditions.  Contractor shall submit a written Statement of Contract Dispute (as  set forth below) to City within seven (7) Days after City rejects all or a portion of  Contractor's Claim.  Failure by Contractor to submit its Statement of Contract Dispute in a  timely manner shall result in City’s decision by City on the Claim becoming final and  binding.  Contractor’s Statement of Contract Dispute shall be signed under penalty of  perjury and shall state with specificity the events or circumstances giving rise to the  Contract Dispute, the dates of their occurrence and the asserted effect on the Contract  Sum and the Contract Time.  The Statement of Contract Dispute shall include adequate  supporting data to substantiate the disputed Claim.  Adequate supporting data for a  Contract Dispute relating to an adjustment of the Contract Time shall include both of the  following:  (i) All of the scheduling data required to be submitted by Contractor under the  Contract Documents to obtain extensions of time and adjustments to the  Contract Time and  (ii) A detailed, event‐by‐event description of the impact of each event on  completion of Work.  Adequate data to support a Statement of Contract Dispute  involving an adjustment of the Contract Sum must include both of the following:   (a) A detailed cost breakdown and   (b) Supporting cost data in such form and including such information and   other supporting data as required under the Contract Documents for   submission of Change Order Requests and Claims.  14.3.2 By City.    City's right to commence the Contract Dispute Resolution Process shall arise at any time  following City's actual discovery of the circumstances giving rise to the Contract Dispute.   City asserts Contract Disputes in response to a Contract Dispute asserted by Contractor.   A Statement of Contract Dispute submitted by City shall state the events or  circumstances giving rise to the Contract Dispute, the dates of their occurrence and the  damages or other relief claimed by City as a result of such events.    14.4 Contract Dispute Resolution Process.    The parties shall utilize each of the following steps in the Contract Dispute Resolution  Process in the sequence they appear below.  Each party shall participate fully and in good  faith in each step in the Contract Dispute Resolution Process, and good faith effort shall  be a condition precedent to the right of each party to proceed to the next step in the  process.    14.4.1 Direct Negotiations.    Designated representatives of City and Contractor shall meet as soon as possible (but not  later than ten (10) Days after receipt of the Statement of Contract Dispute) in a good  Invitation for Bid (IFB) Package    14                  Rev. May 1, 2012  CONSTRUCTION CONTRACT    faith effort to negotiate a resolution to the Contract Dispute.  Each party shall be  represented in such negotiations by an authorized representative with full knowledge of  the details of the Claims or defenses being asserted by such party in the negotiations,  and with full authority to resolve such Contract Dispute then and there, subject only to  City’s obligation to obtain administrative and/or City Council approval of any agreed  settlement or resolution.  If the Contract Dispute involves the assertion of a right or claim  by a Subcontractor or Sub‐subcontractor, of any tier, against Contractor that is in turn  being asserted by Contractor against City (“Pass‐Through Claim”), then the Subcontractor  or Sub‐Subcontractor shall also have a  representative attend the negotiations, with the same authority and knowledge as  described above.  Upon completion of the meeting, if the Contract Dispute is not  resolved, the parties may either continue the negotiations or any party may declare  negotiations ended.  All discussions that occur during such negotiations and all  documents prepared solely for the purpose of such negotiations shall be confidential and  privileged pursuant to California Evidence Code Sections 1119 and 1152.    14.4.2 Deferral of Contract Disputes.    Following the completion of the negotiations required by Paragraph 14.4.1, all  unresolved Contract Disputes shall be deferred pending Final Completion of the Project,  subject to City’s right, in its sole and absolute discretion, to require that the Contract  Dispute Resolution Process proceed prior to Final Completion.  All Contract Disputes that  have been deferred until Final Completion shall be consolidated within a reasonable time  after Final Completion and thereafter pursued to resolution pursuant to this Contract  Dispute Resolution Process. The parties can continue informal negotiations of Contract  Disputes; provided, however, that such informal negotiations shall not be alter the  provisions of the Agreement deferring final determination and resolution of unresolved  Contract Disputes until after Final Completion.    14.4.3 Mediation.    If the Contract Dispute remains unresolved after negotiations pursuant to Paragraph  14.4.1, the parties shall submit the Contract Dispute to non‐binding mediation before a  mutually acceptable third party mediator.    .1 Qualifications of Mediator.  The parties shall endeavor to select a mediator who  is a retired judge or an attorney with at least five (5) years of experience in  public works construction contract law and in mediating public works  construction disputes.  In addition, the mediator shall have at least twenty (20)  hours of formal training in mediation skills.    .2 Submission to Mediation and Selection of Mediator.  The party initiating  mediation of a Contract Dispute shall provide written notice to the other party  of its decision to mediate.  In the event the parties are unable to agree upon a  mediator within fifteen (15) Days after the receipt of such written notice, then  the parties shall submit the matter to the American Arbitration Association  (AAA) at its San Francisco Regional Office for selection of a mediator in  accordance with the AAA Construction Industry Mediation Rules.    .3 Mediation Process.  The location of the mediation shall be at the offices of City.   The costs of mediation shall be shared equally by both parties.  The mediator  shall provide an independent assessment on the merits of the Contract Dispute  and recommendations for resolution.  All discussions that occur during the  mediation and all documents prepared solely for the purpose of the mediation  shall be confidential and privileged pursuant to California Evidence Code  Sections 1119 and 1152.    Invitation for Bid (IFB) Package    15                  Rev. May 1, 2012  CONSTRUCTION CONTRACT    14.4.4 Binding Arbitration.    If the Contract Dispute is not resolved by mediation, then any party may submit the  Contract Dispute for final and binding arbitration pursuant to the provisions of California  Public Contract Code Sections 10240, et seq.  The award of the arbitrator therein shall be  final and may be entered as a judgment by any court of competent jurisdiction.  Such  arbitration shall be conducted in accordance with the following:    .1 Arbitration Initiation.  The arbitration shall be initiated by filing a complaint in  arbitration in accordance with the regulations promulgated pursuant to  California Public Contract Code Section 10240.5.    .2 Qualifications of the Arbitrator.  The arbitrator shall be approved by all parties.  The arbitrator shall be a retired judge or an attorney with at least five (5) years  of experience in public works construction contract law and in arbitrating public  works construction disputes.  In addition, the arbitrator shall have at least  twenty (20) hours of formal training in arbitration skills.  In the event the parties  cannot agree upon an arbitrator, the provisions of California Public Contract  Code Section 10240.3 shall be followed in selecting an arbitrator possessing the  qualifications required herein.    .3 Hearing Days and Location.  Arbitration hearings shall be held at the offices of  City and shall, except for good cause shown to and determined by the arbitrator,  be conducted on consecutive business days, without interruption or  continuance.    .4 Hearing Delays.  Arbitration hearings shall not be delayed except upon good  cause shown.    .5 Recording Hearings.  All hearings to receive evidence shall be recorded by a  certified stenographic reporter, with the costs thereof borne equally by City and  Contractor and allocated by the arbitrator in the final award.    .6 Limitation of Depositions.  The parties may conduct discovery in accordance  with the provisions of section 10240.11 of the Public Contract Code; provided,  however, that depositions shall be limited to both of the following:    (i) Ten (10) percipient witnesses for each party and 5 expert witnesses per  party.      Upon a showing of good cause, the arbitrator may increase the number of  permitted depositions.  An individual who is both percipient and expert shall, for  purposes of applying the foregoing numerical limitation only, be deemed an  expert.  Expert reports shall be exchanged prior to receipt of evidence, in  accordance with the direction of the arbitrator, and expert reports (including  initial and rebuttal reports) not so submitted shall not be admissible as  evidence.    .7 Authority of the Arbitrator.  The arbitrator shall have the authority to hear  dispositive motions and issue interim orders and interim or executory awards.    Invitation for Bid (IFB) Package    16                  Rev. May 1, 2012  CONSTRUCTION CONTRACT    .8 Waiver of Jury Trial.  Contractor and City each voluntarily waives its right to a  jury trial with respect to any Contract Dispute that is subject to binding  arbitration in accordance with the provisions of this Paragraph 14.4.4.   Contractor shall include this provision in its contracts with its Subcontractors  who provide any portion of the Work.    14.5 Non‐Waiver.    Participation in the Contract Dispute Resolution Process shall not waive, release or compromise  any defense of City, including, without limitation, any defense based on the assertion that the  rights or Claims of Contractor that are the basis of a Contract Dispute were previously waived by  Contractor due to Contractor’s failure to comply with the Contract Documents, including, without  limitation, Contractor’s failure to comply with any time periods for providing notice of requests  for adjustments of the Contract Sum or Contract Time or for submission of Claims or supporting  documentation of Claims.    SECTION 15 DEFAULT.    15.1 Notice of Default.    In the event that City determines, in its sole discretion, that Contractor has failed or refused to  perform any of the obligations set forth in the Contract Documents, or is in breach of any  provision of the Contract Documents, City may give written notice of default to Contractor in the  manner specified for the giving of notices in the Construction Contract.    15.2 Opportunity to Cure Default.  Except for emergencies, Contractor shall cure any default in performance of its obligations under  the Contract Documents within two (2) Days (or such shorter time as City may reasonably require)  after receipt of written notice.  However, if the breach cannot be reasonably cured within such  time, Contractor will commence to cure the breach within two (2) Days (or such shorter time as  City may reasonably require) and will diligently and continuously prosecute such cure to  completion within a reasonable time, which shall in no event be later than ten (10) Days after  receipt of such written notice.    SECTION 16 CITY'S RIGHTS AND REMEDIES.    16.1 Remedies Upon Default.    If Contractor fails to cure any default of this Construction Contract within the time period set forth  above in Section 15, then City may pursue any remedies available under law or equity, including,  without limitation, the following:    16.1.1 Delete Certain Services.    City may, without terminating the Construction Contract, delete certain portions of the  Work, reserving to itself all rights to Losses related thereto.    16.1.2 Perform and Withhold.     City may, without terminating the Construction Contract, engage others to perform the  Work or portion of the Work that has not been adequately performed by Contractor and  withhold the cost thereof to City from future payments to Contractor, reserving to itself  all rights to Losses related thereto.    16.1.3 Suspend The Construction Contract.     City may, without terminating the Construction Contract and reserving to itself all rights  to Losses related thereto, suspend all or any portion of this Construction Contract for as  Invitation for Bid (IFB) Package    17                  Rev. May 1, 2012  CONSTRUCTION CONTRACT    long a period of time as City determines, in its sole discretion, appropriate, in which  event City shall have no obligation to adjust the Contract Sum or Contract Time, and shall  have no liability to Contractor for damages if City directs Contractor to resume Work.    16.1.4 Terminate the Construction Contract for Default.    City shall have the right to terminate this Construction Contract, in whole or in part, upon  the failure of Contractor to promptly cure any default as required by Section 15.  City’s  election to terminate the Construction Contract for default shall be communicated by  giving Contractor a written notice of termination in the manner specified for the giving of  notices in the Construction Contract.  Any notice of termination given to Contractor by  City shall be effective immediately, unless otherwise provided therein.    16.1.5 Invoke the Performance Bond.    City may, with or without terminating the Construction Contract and reserving to itself all  rights to Losses related thereto, exercise its rights under the Performance Bond.    16.1.6 Additional Provisions.    All of City’s rights and remedies under this Construction Contract are cumulative, and  shall be in addition to those rights and remedies available in law or in equity.   Designation in the Contract Documents of certain breaches as material shall not waive  the City’s authority to designate other breaches as material nor limit City’s right to  terminate the Construction Contract, or prevent the City from terminating the  Agreement for breaches that are not material.  City’s determination of whether there has  been noncompliance with the Construction Contract so as to warrant exercise by City of  its rights and remedies for default under the Construction Contract, shall be binding on  all parties.  No termination or action taken by City after such termination shall prejudice  any other rights or remedies of City provided by law or equity or by the Contract  Documents upon such termination; and City may proceed against Contractor to recover  all liquidated damages and Losses suffered by City.    16.2 Delays by Sureties.    Without limiting to any of City’s other rights or remedies, City has the right to suspend the  performance of the Work by Contractor’s sureties in the event of any of the following:  (i) The sureties’ failure to begin Work within a reasonable time in such manner as to insure  full compliance with the Construction Contract within the Contract Time;  (ii) The sureties’ abandonment of the Work;  (iii) If at any time City is of the opinion the sureties’ Work is unnecessarily or unreasonably  delaying the Work;  (iv) The sureties’ violation of any terms of the Construction Contract;  (v) The sureties’ failure to perform according to the Contract Documents; or  (vi) The sureties’ failure to follow City’s instructions for completion of the Work within the  Contract Time.    16.3 Damages to City.    16.3.1 For Contractor's Default.    City will be entitled to recovery of all Losses under law or equity in the event of  Contractor’s default under the Contract Documents.     16.3.2 Compensation for Losses.    In the event that City's Losses arise from Contractor’s default under the Contract  Documents, City shall be entitled to withhold monies otherwise payable to Contractor  until Final Completion of the Project.  If City incurs Losses due to Contractor’s default,  then the amount of Losses shall be deducted from the amounts withheld.  Should the  amount withheld exceed the amount deducted, the balance will be paid to Contractor or  Invitation for Bid (IFB) Package    18                  Rev. May 1, 2012  CONSTRUCTION CONTRACT    its designee upon Final Completion of the Project.  If the Losses incurred by City exceed  the amount withheld, Contractor shall be liable to City for the difference and shall  promptly remit same to City.    16.4 Suspension by City for Convenience.    City may, at any time and from time to time, without cause, order Contractor, in writing, to  suspend, delay, or interrupt the Work in whole or in part for such period of time, up to an  aggregate of fifty percent (50%) of the Contract Time.  The order shall be specifically identified as  a Suspension Order by City.  Upon receipt of a Suspension Order, Contractor shall, at City’s  expense, comply with the order and take all reasonable steps to minimize costs allocable to the  Work covered by the Suspension Order.  During the Suspension or extension of the Suspension, if  any, City shall either cancel the Suspension Order or, by Change Order, delete the Work covered  by the Suspension Order.  If a Suspension Order is canceled or expires, Contractor shall resume  and continue with the Work.  A Change Order will be issued to cover any adjustments of the  Contract Sum or the Contract Time necessarily caused by such suspension.    A Suspension Order  shall not be the exclusive method for City to stop the Work.    16.5 Termination Without Cause.    City may, at its sole discretion and without cause, terminate this Construction Contract in part or  in whole by giving thirty (30) Days written notice to Contractor. The compensation allowed under  this Paragraph 16.5 shall be the Contractor’s sole and exclusive compensation for such  termination and Contractor waives any claim for other compensation or Losses, including, but not  limited to, loss of anticipated profits, loss of revenue, lost opportunity, or other consequential,  direct, indirect or incidental damages of any kind resulting from termination without cause.      16.5.1 Compensation.    Following such termination and within forty‐five (45) Days after receipt of a billing from  Contractor seeking payment of sums authorized by this Paragraph 16.5, City shall pay the  following to Contractor as Contractor’s sole compensation for performance of the Work :    .1 For Work Performed.  The amount of the Contract Sum allocable to the portion  of the Work properly performed by Contractor as of the date of termination,  less sums previously paid to Contractor.    .2 For Close‐out Costs.  Reasonable costs of Contractor and its Subcontractors and  Sub‐subcontractors for:  (i) Demobilizing and  (ii) Administering the close‐out of its participation in the Project (including,  without limitation, all billing and accounting functions, not including  attorney or expert fees) for a period of no longer than thirty (30) Days  after receipt of the notice of termination.    .3 For Fabricated Items.  Previously unpaid cost of any items delivered to the  Project Site which were fabricated for subsequent incorporation in the Work.    16.5.2 Subcontractors.      Contractor shall include provisions in all of its subcontracts, purchase orders and other  contracts permitting termination for convenience by Contractor on terms that are  consistent with this Construction Contract and that afford no greater rights of recovery  against Contractor than are afforded to Contractor against City under this Section.    Invitation for Bid (IFB) Package    19                  Rev. May 1, 2012  CONSTRUCTION CONTRACT    16.6 Contractor’s Duties Upon Termination.    Upon receipt of a notice of termination for default or for convenience, Contractor shall, unless the  notice directs otherwise, do the following:  (i) Immediately discontinue the Work to the extent specified in the notice;  (ii) Place no further orders or subcontracts for materials, equipment, services or facilities,  except as may be necessary for completion of such portion of the Work that is not  discontinued;  (iii) Provide to City a description, in writing no later than fifteen (15) days after receipt of the  notice of termination, of all subcontracts, purchase orders and contracts that are  outstanding, including, without limitation, the terms of the original price, any changes,  payments, balance owing, the status of the portion of the Work covered and a copy of  the subcontract, purchase order or contract and any written changes, amendments or  modifications thereto, together with such other information as City may determine  necessary in order to decide whether to accept assignment of or request Contractor to  terminate the subcontract, purchase order or contract;  (iv) Promptly assign to City those subcontracts, purchase orders or contracts, or portions  thereof, that City elects to accept by assignment and cancel, on the most favorable terms  reasonably possible, all subcontracts, purchase orders or contracts, or portions thereof,  that City does not elect to accept by assignment; and  (v) Thereafter do only such Work as may be necessary to preserve and protect Work already   in progress and to protect materials, plants, and equipment on the Project Site or in   transit thereto.  SECTION 17 CONTRACTOR'S RIGHTS AND REMEDIES.    17.1 Contractor’s Remedies.    Contractor may terminate this Construction Contract only upon the occurrence of one of the  following:    17.1.1 For Work Stoppage.    The Work is stopped for sixty (60) consecutive Days, through no act or fault of Contractor, any  Subcontractor, or any employee or agent of Contractor or any Subcontractor, due to issuance of  an order of a court or other public authority other than City having jurisdiction or due to an act of  government, such as a declaration of a national emergency making material unavailable.  This  provision shall not apply to any work stoppage resulting from the City’s issuance of a suspension  notice issued either for cause or for convenience.    17.1.2 For City's Non‐Payment.    If City does not make pay Contractor undisputed sums within ninety (90) Days after receipt of  notice from Contractor, Contractor may terminate the Construction Contract (30) days following a  second notice to City of Contractor’s intention to terminate the Construction Contract.    17.2 Damages to Contractor.   In the event of termination for cause by Contractor, City shall pay Contractor the sums provided  for in Paragraph 16.5.1 above.  Contractor agrees to accept such sums as its sole and exclusive  compensation and agrees to waive any claim for other compensation or Losses, including, but not  limited to, loss of anticipated profits, loss of revenue, lost opportunity, or other consequential,  direct, indirect and incidental damages, of any kind.  SECTION 18 ACCOUNTING RECORDS.    18.1 Financial Management and City Access.    Contractor shall keep full and detailed accounts and exercise such controls as may be necessary  for proper financial management under this Construction Contract in accordance with generally  Invitation for Bid (IFB) Package    20                  Rev. May 1, 2012  CONSTRUCTION CONTRACT    accepted accounting principles and practices. City and City's accountants  during normal business  hours, may  inspect, audit and copy Contractor's records, books, estimates, take‐offs, cost reports,  ledgers, schedules, correspondence, instructions, drawings, receipts, subcontracts, purchase  orders, vouchers, memoranda and other data relating to this Project. Contractor shall retain these  documents for a period of three (3) years after the later of (i) final payment or (ii) final resolution  of all Contract Disputes and other disputes, or (iii) for such longer period as may be required by  law.    18.2 Compliance with City Requests.    Contractor's compliance with any request by City pursuant to this Section 18 shall be a condition  precedent to filing or maintenance of any legal action or proceeding by Contractor against City  and to Contractor's right to receive further payments under the Contract Documents.  City many  enforce Contractor’s obligation to provide access to City of its business and other records referred  to in Section 18.1 for inspection or copying by  issuance of a writ or a provisional or permanent  mandatory injunction by a court of competent jurisdiction based on affidavits submitted to such  court, without the necessity of oral testimony.    SECTION 19 INDEPENDENT PARTIES.    Each party is acting in its independent capacity and not as agents, employees, partners, or joint ventures’  of the other party.  City, its officers or employees shall have no control over the conduct of Contractor or  its respective agents, employees, subconsultants, or subcontractors, except as herein set forth.    SECTION 20 NUISANCE.    Contractor shall not maintain, commit, nor permit the maintenance or commission of any nuisance in  connection in the performance of services under this Construction Contract.    SECTION 21 PERMITS AND LICENSES.    Except as otherwise provided in the Special Provisions and Technical Specifications, The Contractor shall  provide, procure and pay for all licenses, permits, and fees, required by the City or other government  jurisdictions or agencies necessary to carry out and complete the Work.  Payment of all costs and expenses  for such licenses, permits, and fees shall be included in one or more Bid items. No other compensation  shall be paid to the Contractor for these items or for delays caused by non‐City inspectors or conditions set  forth in the licenses or permits issued by other agencies.    SECTION 22 WAIVER.    A waiver by either party of any breach of any term, covenant, or condition contained herein shall not be  deemed to be a waiver of any subsequent breach of the same or any other term, covenant, or condition  contained herein, whether of the same or a different character.    SECTION 23 GOVERNING LAW.    This Construction Contract shall be construed in accordance with and governed by the laws of the State of  California.    Invitation for Bid (IFB) Package    21                  Rev. May 1, 2012  CONSTRUCTION CONTRACT    SECTION 24 COMPLETE AGREEMENT.    This Agreement represents the entire and integrated agreement between the parties and supersedes all  prior negotiations, representations, and contracts, either written or oral. This Agreement may be amended  only by a written instrument, which is signed by the parties.  SECTION 25 SURVIVAL OF CONTRACT.    The provisions of the Construction Contract which by their nature survive termination of the Construction  Contract or Final Completion, including, without limitation, all warranties, indemnities, payment  obligations, and City’s right to audit Contractor’s books and records, shall remain in full force and effect  after Final Completion or any termination of the Construction Contract.  SECTION 26 PREVAILING WAGES.          This Project is not subject to prevailing wages. The Contractor is not required to pay prevailing wages in  the performance and implementation of the Project, because the City, pursuant to its authority as a  chartered city, has adopted Resolution No. 5981 exempting the City from prevailing wages.  The City  invokes the exemption from the state prevailing wage requirement for this Project and declares that the  Project is funded one hundred percent (100%) by the City of Palo Alto.    Or     The Contractor is required to pay general prevailing wages as defined in Subchapter 3, Title 8 of the  California Code of Regulations and Section 16000 et seq. and Section 1773.1 of the California Labor Code.   Pursuant to the provisions of Section 1773 of the Labor Code of the State of California, the City Council has  obtained the general prevailing rate of per diem wages and the general rate for holiday and overtime work  in this locality for each craft, classification, or type of worker needed to execute the contract for this  Project from the Director of the Department of Industrial Relations.  Copies of these rates may be obtained  at cost at the Purchasing office of the City of Palo Alto.  Contractor shall provide a copy of prevailing wage  rates to any staff or subcontractor hired, and shall pay the adopted prevailing wage rates as a minimum.   Contractor shall comply with the provisions of Sections 1775, 1776, 1777.5, 1810, and 1813 of the Labor  Code.  SECTION 27 NON APPROPRIATION.    This Agreement is subject to the fiscal provisions of the Charter of the City of Palo Alto and the Palo Alto  Municipal Code. This Agreement will terminate without any penalty (a) at the end of any fiscal year in the  event that the City does not appropriate funds for the following fiscal year for this event, or (b) at any time  within a fiscal year in the event that funds are only appropriated for a portion of the fiscal year and funds  for this Construction Contract are no longer available.  This section shall take precedence in the event of a  conflict with any other covenant, term, condition, or provision of this Agreement.   SECTION 28 AUTHORITY.    The individuals executing this Agreement represent and warrant that they have the legal capacity and  authority to do so on behalf of their respective legal entities.  SECTION 29 ATTORNEY FEES.    Each Party shall bear its own costs, including attorney’s fees through the completion of mediation. If the  claim or dispute is not resolved through mediation and in any dispute described in Paragraph 14.2, the prevailing party in any action brought to enforce the provision of this Agreement may recover its  reasonable costs and attorney’s fees expended in connection with that action.  The prevailing party shall be  Invitation for Bid (IFB) Package    22                  Rev. May 1, 2012  CONSTRUCTION CONTRACT    entitled to recover an amount equal to the fair market value of legal services provided by attorneys  employed by it as well as any attorney’s’ fees paid to third parties.  SECTION 30 COUNTERPARTS  This Agreement may be signed in multiple counterparts, which shall, when executed by all the parties,  constitute a single binding agreement.  SECTION 31 SEVERABILITY.    In case a provision of this Construction Contract is held to be invalid, illegal or unenforceable, the validity,  legality and enforceability of the remaining provisions shall not be affected.        IN WITNESS WHEREOF, the parties have caused this Construction Contract to be executed the   date and year first above written.             CITY OF PALO ALTO    ____________________________   Purchasing Manager   City Manager      APPROVED AS TO FORM:    ___________________________  Senior Asst. City Attorney    APPROVED:    ___________________________  Director Public Works        CONTRACTOR    CON‐QUEST CONTRACTORS, INC.    By:___________________________    Name:_________________________    Title:________________________      Attachment B Relocation of 96-Inch Storm Drain Pipeline East Bayshore Road near San Francisquito Creek Location Map Attachment C Storm Drain Rehabilitation & Replacement Project SD-06101-96" Pipe Relocation Bid Comparison Schedule I - General No. Description Qty Unit Engr. Estimate Con-Quest W.R. Forde Ranger Pipeline 1 Mobilization 1 LS $19,000 $25,000 $25,000 $24,000 2 Site Preparation, Pavement Removal, Clearing and Grubbing 1 LS $10,000 $6,000 $50,000 $26,952 3 Sheeting, Shoring and Bracing 1 LS $100,000 $78,000 $50,000 $15,000 4 Excavation and Backfill 1 LS $60,000 $24,000 $100,000 $210,000 5 Storm Drain Demolition 1 LS $10,000 $10,000 $60,000 $95,000 6 Bypass Pumping 1 LS $5,000 $20,000 $35,000 $10,000 7 Pollution Prevention, Erosion Control and Dewatering 1 LS $20,000 $13,000 $15,000 $7,500 8 Traffic Control 1 LS $15,000 $28,000 $15,000 $5,000 9 36" RCP SD 1 LS $1,000 $5,500 $1,500 $3,200 10 36" HDPE SD 1 LS $3,000 $28,000 $6,000 $8,600 11 8' x 8' RCB SD 1 LS $48,000 $66,000 $65,000 $65,000 12 8' x 8' RCB/ 96" RCP Storm Drain Junction Structure 1 LS $35,000 $42,500 $40,000 $69,000 13 8' x 8' RCB/8' x 8' RCB/36" RCP Junction Structure W/ Manhole 1 LS $40,000 $38,500 $40,000 $79,000 14 96" RCP Cast In Place Concrete Bulkhead 1 LS $2,000 $11,500 $7,500 $15,000 15 Paving and Site Restoration 1 LS $5,000 $42,500 $45,000 $6,500 16 T & D of Non Hazardous Soils at a Class III Landfill 1455 Ton $35,000 $46,560 $65,475 $11,640 17 T & D of Non Hazardous Soils at a Class II Landfill 240 Ton $10,000 $11,040 $18,000 $3,840 18 T & D California Hazardous Non-RCRA Soils at a Class I Landfill 75 Ton $12,000 $6,300 $11,250 $7,275 19 Demobilization 1 LS $14,000 $16,000 $10,000 $23,000 Total $444,000 $518,400 $659,725 $685,507 City of Palo Alto (ID # 2965) City Council Staff Report Report Type: Consent Calendar Meeting Date: 7/16/2012 July 16, 2012 Page 1 of 3 (ID # 2965) Summary Title: Amendment to Par Electric Contract for 60kV Reconductoring Title: Approval of Change Order Number One to Contract C12142966 with Par Electric, Inc. in the Amount of $85,000 to Rebuild the 60 Kilovolt Electric System for a Total Contract Amount Not to Exceed $1,748,900 From: City Manager Lead Department: Utilities Recommendation Staff recommends that Council approve Change Order Number One to Contract C12142966 with PAR Electrical Contractors, Inc. (PAR) to increase the contingency in the amount of $85,000 and to modify the scope of the 60 kilovolt (kV) Rebuilding Project to provide an alternative source of power to certain customers during the Project, for a total not to exceed amount of $1,748,900. Background This is the first phase of a multiyear CIP project, EL-11015, to rebuild a section of the 60kV electric system. This project will install higher capacity conductor in a section of the 60kV system and eliminate an existing emergency capacity deficiency. The original contract for this project (SR 2373) was awarded to PAR in the amount of $1,512,636. In addition, the project included a 10% contingency ($151,264) for unforeseen work that might develop during construction of the project. Approval of this Change Order would increase the contingency total by $85,000 or about 5.6% of the base construction contract amount. Discussion On February 6, 2012, the City Council approved a contract with PAR Electrical Contractors, Inc. for reconductoring the overhead 60 kV line from Quarry Substation to Park Boulevard Substation. During discussions with PAR about the scope of work and process to complete the construction, PAR and staff determined that the 12 kV distribution system along Alma Street would need to be de-energized to provide safe work conditions. De-energizing the 12kV system along Alma Street requires two extended outages lasting up to 10 hours each for many customers including the Town and Country Shopping Center, two schools, and other July 16, 2012 Page 2 of 3 (ID # 2965) commercial businesses on Alma Street. Outages of this length would have a significant financial impact on the businesses in the area. To minimize the impact, staff issued a field change order to extend the existing distribution system to provide an alternate source of power to the Town and Country Shopping Center, Castilleja School, and commercial businesses on Alma. The distribution system extension will occur in existing underground substructure and on overhead pole lines. Our City crews do not have sufficient resources to complete this work in advance of the timeline required to keep the 60kV Reconductoring Project on schedule. In addition, PAR Electric has already mobilized to the job location and additional costs will be incurred if the project is delayed. For these reasons, staff used $77,000 of the original contingency funds to construct the distribution extension to reduce the impacts on customers leaving an insufficient contingency for other unforeseen field changes. The 60kV reconductoring of the transmission line will leave the Stanford Hospital, Stanford Shopping Center, portions of Downtown, and other facilities in the Sand Hill Road area on a radial transmission feed. In this configuration any interruption in the remaining 60kV line feeding this area could result in a loss of power. Staff is recommending that overtime work be used to accelerate the construction and minimize the time that the transmission system is in a radial configuration. The overtime work is expected to cost approximately $104,000. Staff has made critical customers in the area aware of this project and has been working closely with Stanford Hospital to reduce any possible impacts from this construction work. It is projected that the contingency funds for this project in the amount of $151,264 will be insufficient to cover cost of the distribution line extension, overtime work, and any other additional unforeseen work for the remainder of the project. The distribution system extension and the overtime work is estimated to cost $181,000, which is greater than the contingency funds for this project. Staff is requesting that an additional $85,000 be added to the contingency funds to cover existing costs as wells as any other unforeseen work that may develop during the project. Timeline Construction is scheduled began in early June and is to be completed within 90 days of the start of construction. Resource Impact There are sufficient funds in existing CIP, EL-11015 (Reconductor 60kV Line) to fund the proposed Change Order. Policy Implications The approval of this Change Order is consistent with existing City policies, including the Council approved Utilities Strategic Plan Key Strategy No. 1 to ensure a high level of system reliability in July 16, 2012 Page 3 of 3 (ID # 2965) a cost effective and timely manner and, Objective No. 1, to enhance customer satisfaction and utility infrastructure. Environmental Review This project is categorically exempt from California Environmental Quality Act (CEQA) pursuant to CEQA Guidelines section 15302, (replacement or reconstruction of existing utility systems and/or facilities involving negligible or no expansion of capacity). Prepared By: Tomm Marshall, Assistant Director Department Head: Valerie Fong, Director City Manager Approval: ____________________________________ James Keene, City Manager City of Palo Alto (ID # 2973) City Council Staff Report Report Type: Consent Calendar Meeting Date: 7/16/2012 July 16, 2012 Page 1 of 4 (ID # 2973) Summary Title: Electric, Water, Gas, Wastewater, Storm Drain, and Public Works Construction Inspection Services Title: Approval and Authorization of the City Manager to Execute a Contract with Canus Corporation in a Total Not to Exceed Amount of $7,673,000 for Electric, Water, Gas, Wastewater, Storm Drain and Public Works Construction Inspection Services From: City Manager Lead Department: Utilities Recommendation Staff recommends that Council: 1. Approve and authorize the City Manager or his designee to execute the attached contract with Canus Corporation for a period of three years in the amount of $6,975,000 for Electric, Water, Gas, Wastewater, Storm Drain and Public Works Construction Inspection Services. 2. Authorize the City Manager to negotiate for additional services up to $698,000 (10%) of the contract amount) over the life of the contract. Background The City’s Utilities and Public Works Departments inspect the construction of their Capital Improvement Projects (“CIP”) to ensure safety, reliability, contractor performance and compliance with contract specifications. Construction inspection of CIP projects has traditionally been performed by Utilities Operations and Public Works Operations staff. Quality assurance and quality control compliance with the construction documents, while preserving scheduling constraints, cannot be accomplished with City’s staff for the accelerated and increased magnitude of construction activity. Increased project workload results from the 2-year crossbore gas pipeline and sewer inspection program; the replacement and elimination of ABS and Aldyl-A gas services and gas mains; backlog of water-gas-wastewater main replacements (gas – 70,000 LF, wastewater collection – 34,000 LF, water – 20,000LF); electric underground district rebuild; electric transmission system improvements; 4 to 12 kilovolt voltage electric conversions; and street resurfacing and storm July 16, 2012 Page 2 of 4 (ID # 2973) drain projects. These projects will require 8 additional inspectors (5 water-gas-wastewater, 2 electric and 1 public works). The inspection tasks are being bundled together into one contract to ensure efficient management of, and qualified inspection services for all inspection phases of the projects, as well as competitive pricing for the work. Discussion This contract is to provide additional resources for the construction inspection of Utilities and Public Works CIPs and development-related projects throughout the City. The Utilities CIP projects typically consist of the replacement of overhead and underground electric distribution cables and equipment, and water, gas and wastewater pipeline replacement. The Public Works projects typically consist of CIP improvements to streets and storm drains and work performed by private contractors in the public right-of-way related to private land development. The term of the contract is three years with an option for the City Manager to terminate the contract with or without cause with 10 days written notice. Staff is also requesting contingency funds, for additional services, not to exceed 10% of the contract amount. The Request for Proposal (RFP) for these services anticipated needing 8 inspectors totaling approximately 17,000 hours of work annually. The following table is a summary of the Solicitation process: Proposer Name / Number Electric, Water, Gas, Wastewater, Storm Drain and Public Works Construction Inspection Services / IFB – 145442 Proposed Length of Project 3 years Number of Proposals Mailed to Contractors 9 Number of Proposals Mailed to Builder’s Exchanges 2 Total Days to Respond to Proposal 21 Pre-Proposal Meeting Yes Number of Company Attendees at Pre- Proposal Meeting 3 Number of Proposals Received 2* Proposal Price Range From $133.82/hr to $140.00/hr * Bid summary provided in Attachment B. The selection criteria for this proposal were as follows:  Quality and Completeness of Proposal  Quality, performance, and effectiveness of the services to be provided.  Proximity to Palo Alto  Project management history  Bid price  Proposer’s Experience July 16, 2012 Page 3 of 4 (ID # 2973) There were 2 proposals submitted. Canus Corporation was the only proposer that could perform the required work and meet the licensing requirements in the RFP. Canus Corporation also demonstrated in an interview that it has the experience to perform the work required in this contract. Staff has evaluated all proposals submitted based on the selection criteria and recommends that the proposal of $133.82/hr submitted by Canus Corporation be accepted. Staff confirmed with the Contractor’s State License Board that the contractor has the required active licenses on file. Staff checked references supplied by the contractor for previous work performed and found all to be satisfactory. Timeline Inspection services will be required beginning in August 2012 and continuing for three years on an as-needed basis. Resource Impact Funds for this capital improvement project are available from the following approved budgets: EL-89028 – Electric Customer Connections - $785,000 EL-98003 – Electric System Improvement - $1,175,000 WS-11000 – Water Main Replacement Project 25 - $1,630,000 GS-09002 – Gas System Replacement 19 - $1,630,000 WC-10002 – WW Collection System Rehab Project 23 - $1,630,000 SD-06101 – Storm Drain System Replacement and Rehabilitation - $50,000 Public Works Department Internal Order #130120 - $75,000 Policy Implications The approval of this contract is consistent with existing City policies, including the Council approved Utilities Strategic Plan to operate the distribution system in a cost effective manner and to invest in utility infrastructure to deliver reliable serivce. Environmental Review This project is categorically exempt from California Environmental Quality Act (CEQA) under Public Resources Code Section 15301 (existing facilities). Reviewed By: TOMM MARSHALL, Assistant Director – Engineering EDWARD WU, Acting Engineering Manager - WGW TOM FINCH, Senior Electrical Engineer JOE TERESI, JR., Senior Engineer Attachments:  Attachment A: Contract C13145442 (PDF) July 16, 2012 Page 4 of 4 (ID # 2973)  Attachment B: Electric WGW inspection bid list (PDF) Prepared By: Tom Ting, Acting Engr. Manager-Electric Department Head: Valerie Fong, Director City Manager Approval: ____________________________________ James Keene, City Manager Professional Services Rev. June 2, 2010 CITY OF PALO ALTO CONTRACT NO. C13145442 AGREEMENT BETWEEN THE CITY OF PALO ALTO AND CANUS CORPORATION FOR PROFESSIONAL SERVICES This Agreement is entered into on this 9TH day of July, 2012, (“Agreement”) by and between the CITY OF PALO ALTO, a California chartered municipal corporation (“CITY”), and CANUS CORPORATION, a California corporation, located at 27 Spectrum Pointe Drive, Suite 302, Lake Forest, CA 92630 (“CONSULTANT"). RECITALS The following recitals are a substantive portion of this Agreement. A. CITY intends to inspect its electrical, water, gas, wastewater, storm drain, and public works projects (e.g. trench excavation & backfill; curb, gutter, and sidewalk; paving, etc.) (“Project”) and desires to engage a consultant to provide these inspection services in connection with the Project (“Services”). B. CONSULTANT has represented that it has the necessary professional expertise, qualifications, and capability, and all required licenses and/or certifications to provide the Services. C. CITY in reliance on these representations desires to engage CONSULTANT to provide the Services as more fully described in Exhibit “A”, attached to and made a part of this Agreement. NOW, THEREFORE, in consideration of the recitals, covenants, terms, and conditions, this Agreement, the parties agree: AGREEMENT SECTION 1. SCOPE OF SERVICES. CONSULTANT shall perform the Services described in Exhibit “A” in accordance with the terms and conditions contained in this Agreement. The performance of all Services shall be to the reasonable satisfaction of CITY. SECTION 2. TERM. The term of this Agreement shall be from the date of its full execution through July 30, 2015 unless terminated earlier pursuant to Section 19 of this Agreement. SECTION 3. SCHEDULE OF PERFORMANCE. Time is of the essence in the performance of Services under this Agreement. CONSULTANT shall complete the Services within the term of this Agreement and in accordance with the schedule set forth in Exhibit “B”, attached to and made a part of this Agreement. Any Services for which times for performance are not specified in this Agreement shall be commenced and completed by CONSULTANT in a reasonably prompt and timely manner based upon the circumstances and direction communicated to the CONSULTANT. Professional Services Rev. June 2, 2010 CITY’s agreement to extend the term or the schedule for performance shall not preclude recovery of damages for delay if the extension is required due to the fault of CONSULTANT. SECTION 4. NOT TO EXCEED COMPENSATION. The compensation to be paid to CONSULTANT for performance of the Services described in Exhibit “A”, including both payment for professional services and reimbursable expenses, shall not exceed Six Million Nine Hundred Seventy Five Thousand Dollars ($6,975,000). In the event Additional Services are authorized, the total compensation for services and reimbursable expenses shall not exceed Six Hundred Ninety Eight Thousand Dollars ($698,000). The applicable rates and schedule of payment are set out in Exhibit “C-1”, entitled “HOURLY RATE SCHEDULE,” which is attached to and made a part of this Agreement. Additional Services, if any, shall be authorized in accordance with and subject to the provisions of Exhibit “C”. CONSULTANT shall not receive any compensation for Additional Services performed without the prior written authorization of CITY. Additional Services shall mean any work that is determined by CITY to be necessary for the proper completion of the Project, but which is not included within the Scope of Services described in Exhibit “A”. SECTION 5. INVOICES. In order to request payment, CONSULTANT shall submit monthly invoices to the CITY describing the services performed and the applicable charges (including an identification of personnel who performed the services, hours worked, hourly rates, and reimbursable expenses), based upon the CONSULTANT’s billing rates (set forth in Exhibit “C-1”). If applicable, the invoice shall also describe the percentage of completion of each task. The information in CONSULTANT’s payment requests shall be subject to verification by CITY. CONSULTANT shall send all invoices to the City’s project manager at the address specified in Section 13 below. The City will generally process and pay invoices within thirty (30) days of receipt. SECTION 6. QUALIFICATIONS/STANDARD OF CARE. All of the Services shall be performed by CONSULTANT or under CONSULTANT’s supervision. CONSULTANT represents that it possesses the professional and technical personnel necessary to perform the Services required by this Agreement and that the personnel have sufficient skill and experience to perform the Services assigned to them. CONSULTANT represents that it, its employees and subconsultants, if permitted, have and shall maintain during the term of this Agreement all licenses, permits, qualifications, insurance and approvals of whatever nature that are legally required to perform the Services. All of the services to be furnished by CONSULTANT under this agreement shall meet the professional standard and quality that prevail among professionals in the same discipline and of similar knowledge and skill engaged in related work throughout California under the same or similar circumstances. SECTION 7. COMPLIANCE WITH LAWS. CONSULTANT shall keep itself informed of and in compliance with all federal, state and local laws, ordinances, regulations, and orders that may affect in any manner the Project or the performance of the Services or those engaged to perform Services under this Agreement. CONSULTANT shall procure all permits and licenses, pay all charges and fees, and give all notices required by law in the performance of the Services. Professional Services Rev. June 2, 2010 SECTION 8. ERRORS/OMISSIONS. CONSULTANT shall correct, at no cost to CITY, any and all errors, omissions, or ambiguities in the work product submitted to CITY, provided CITY gives notice to CONSULTANT. If CONSULTANT has prepared plans and specifications or other design documents to construct the Project, CONSULTANT shall be obligated to correct any and all errors, omissions or ambiguities discovered prior to and during the course of construction of the Project. This obligation shall survive termination of the Agreement. SECTION 9. COST ESTIMATES. If this Agreement pertains to the design of a public works project, CONSULTANT shall submit estimates of probable construction costs at each phase of design submittal. If the total estimated construction cost at any submittal exceeds ten percent (10%) of the CITY’s stated construction budget, CONSULTANT shall make recommendations to the CITY for aligning the PROJECT design with the budget, incorporate CITY approved recommendations, and revise the design to meet the Project budget, at no additional cost to CITY. SECTION 10. INDEPENDENT CONTRACTOR. It is understood and agreed that in performing the Services under this Agreement CONSULTANT, and any person employed by or contracted with CONSULTANT to furnish labor and/or materials under this Agreement, shall act as and be an independent contractor and not an agent or employee of the CITY. SECTION 11. ASSIGNMENT. The parties agree that the expertise and experience of CONSULTANT are material considerations for this Agreement. CONSULTANT shall not assign or transfer any interest in this Agreement nor the performance of any of CONSULTANT’s obligations hereunder without the prior written consent of the city manager. Consent to one assignment will not be deemed to be consent to any subsequent assignment. Any assignment made without the approval of the city manager will be void. SECTION 12. SUBCONTRACTING. CONSULTANT shall not subcontract any portion of the work to be performed under this Agreement without the prior written authorization of the city manager or designee. CONSULTANT shall be responsible for directing the work of any subconsultants and for any compensation due to subconsultants. CITY assumes no responsibility whatsoever concerning compensation. CONSULTANT shall be fully responsible to CITY for all acts and omissions of a subconsultant. CONSULTANT shall change or add subconsultants only with the prior approval of the city manager or his designee. SECTION 13. PROJECT MANAGEMENT. CONSULTANT will assign Greg Ricks as the Project Supervisor to have supervisory responsibility for the performance, progress, and execution of the Services to represent CONSULTANT during the day-to-day work on the Project. If circumstances cause the substitution of the project director, project coordinator, or any other key personnel for any reason, the appointment of a substitute project director and the assignment of any key new or replacement personnel will be subject to the prior written approval of the CITY’s project manager. CONSULTANT, at CITY’s request, shall promptly remove personnel who CITY finds do not perform the Services in an acceptable manner, are uncooperative, or present a threat to the Professional Services Rev. June 2, 2010 3 adequate or timely completion of the Project or a threat to the safety of persons or property. The City’s project manager is Tom Finch, Utilities Department, Engineering Division, 1007 Elwell Court, Palo Alto, CA 94303, Telephone(650)566-4515. The project manager will be CONSULTANT’s point of contact with respect to performance, progress and execution of the Services. The CITY may designate an alternate project manager from time to time. SECTION 14. OWNERSHIP OF MATERIALS. Upon delivery, all work product, including without limitation, all writings, drawings, plans, reports, specifications, calculations, documents, other materials and copyright interests developed under this Agreement shall be and remain the exclusive property of CITY without restriction or limitation upon their use. CONSULTANT agrees that all copyrights which arise from creation of the work pursuant to this Agreement shall be vested in CITY, and CONSULTANT waives and relinquishes all claims to copyright or other intellectual property rights in favor of the CITY. Neither CONSULTANT nor its contractors, if any, shall make any of such materials available to any individual or organization without the prior written approval of the City Manager or designee. CONSULTANT makes no representation of the suitability of the work product for use in or application to circumstances not contemplated by the scope of work. SECTION 15. AUDITS. CONSULTANT will permit CITY to audit, at any reasonable time during the term of this Agreement and for three (3) years thereafter, CONSULTANT’s records pertaining to matters covered by this Agreement. CONSULTANT further agrees to maintain and retain such records for at least three (3) years after the expiration or earlier termination of this Agreement. SECTION 16. INDEMNITY. 16.1. To the fullest extent permitted by law, CONSULTANT shall protect, indemnify, defend and hold harmless CITY, its Council members, officers, employees and agents (each an “Indemnified Party”) from and against any and all demands, claims, or liability of any nature, including death or injury to any person, property damage or any other loss, including all costs and expenses of whatever nature including attorneys fees, experts fees, court costs and disbursements (“Claims”) resulting from, arising out of or in any manner related to performance or nonperformance by CONSULTANT, its officers, employees, agents or contractors under this Agreement, regardless of whether or not it is caused in part by an Indemnified Party. 16.2. Notwithstanding the above, nothing in this Section 16 shall be construed to require CONSULTANT to indemnify an Indemnified Party from Claims arising from the active negligence, sole negligence or willful misconduct of an Indemnified Party. 16.3. The acceptance of CONSULTANT’s services and duties by CITY shall not operate as a waiver of the right of indemnification. The provisions of this Section 16 shall survive the expiration or early termination of this Agreement. SECTION 17. WAIVERS. The waiver by either party of any breach or violation of any covenant, term, condition or provision of this Agreement, or of the provisions of any ordinance or law, will not be deemed to be a waiver of any other term, covenant, condition, provisions, ordinance or law, or of any subsequent breach or violation of the same or of any other term, covenant, condition, provision, Professional Services Rev. June 2, 2010 ordinance or law. SECTION 18. INSURANCE. 18.1. CONSULTANT, at its sole cost and expense, shall obtain and maintain, in full force and effect during the term of this Agreement, the insurance coverage described in Exhibit "D". CONSULTANT and its contractors, if any, shall obtain a policy endorsement naming CITY as an additional insured under any general liability or automobile policy or policies. 18.2. All insurance coverage required hereunder shall be provided through carriers with AM Best’s Key Rating Guide ratings of A-:VII or higher which are licensed or authorized to transact insurance business in the State of California. Any and all contractors of CONSULTANT retained to perform Services under this Agreement will obtain and maintain, in full force and effect during the term of this Agreement, identical insurance coverage, naming CITY as an additional insured under such policies as required above. 18.3. Certificates evidencing such insurance shall be filed with CITY concurrently with the execution of this Agreement. The certificates will be subject to the approval of CITY’s Risk Manager and will contain an endorsement stating that the insurance is primary coverage and will not be canceled, or materially reduced in coverage or limits, by the insurer except after filing with the Purchasing Manager thirty (30) days' prior written notice of the cancellation or modification, CONSULTANT shall be responsible for ensuring that current certificates evidencing the insurance are provided to CITY’s Purchasing Manager during the entire term of this Agreement. 18.4. The procuring of such required policy or policies of insurance will not be construed to limit CONSULTANT's liability hereunder nor to fulfill the indemnification provisions of this Agreement. Notwithstanding the policy or policies of insurance, CONSULTANT will be obligated for the full and total amount of any damage, injury, or loss caused by or directly arising as a result of the Services performed under this Agreement, including such damage, injury, or loss arising after the Agreement is terminated or the term has expired. SECTION 19. TERMINATION OR SUSPENSION OF AGREEMENT OR SERVICES. 19.1. The City Manager may suspend the performance of the Services, in whole or in part, or terminate this Agreement, with or without cause, by giving ten (10) days prior written notice thereof to CONSULTANT. Upon receipt of such notice, CONSULTANT will immediately discontinue its performance of the Services. 19.2. CONSULTANT may terminate this Agreement or suspend its performance of the Services by giving thirty (30) days prior written notice thereof to CITY, but only in the event of a substantial failure of performance by CITY. 19.3. Upon such suspension or termination, CONSULTANT shall deliver to the City Manager immediately any and all copies of studies, sketches, drawings, computations, and other data, whether or not completed, prepared by CONSULTANT or its contractors, if any, or given to CONSULTANT or its contractors, if any, in connection with this Agreement. Such materials will become the property of CITY. Professional Services Rev. June 2, 2010 19.4. Upon such suspension or termination by CITY, CONSULTANT will be paid for the Services rendered or materials delivered to CITY in accordance with the scope of services on or before the effective date (i.e., 10 days after giving notice) of suspension or termination; provided, however, if this Agreement is suspended or terminated on account of a default by CONSULTANT, CITY will be obligated to compensate CONSULTANT only for that portion of CONSULTANT’s services which are of direct and immediate benefit to CITY as such determination may be made by the City Manager acting in the reasonable exercise of his/her discretion. The following Sections will survive any expiration or termination of this Agreement: 14, 15, 16, 19.4, 20, and 25. 19.5. No payment, partial payment, acceptance, or partial acceptance by CITY will operate as a waiver on the part of CITY of any of its rights under this Agreement. SECTION 20. NOTICES. All notices hereunder will be given in writing and mailed, postage prepaid, by certified mail, addressed as follows: To CITY: Office of the City Clerk City of Palo Alto Post Office Box 10250 Palo Alto, CA 94303 With a copy to the Purchasing Manager To CONSULTANT: Attention of the project director at the address of CONSULTANT recited above SECTION 21. CONFLICT OF INTEREST. 21.1. In accepting this Agreement, CONSULTANT covenants that it presently has no interest, and will not acquire any interest, direct or indirect, financial or otherwise, which would conflict in any manner or degree with the performance of the Services. 21.2. CONSULTANT further covenants that, in the performance of this Agreement, it will not employ subconsultants, contractors or persons having such an interest. CONSULTANT certifies that no person who has or will have any financial interest under this Agreement is an officer or employee of CITY; this provision will be interpreted in accordance with the applicable provisions of the Palo Alto Municipal Code and the Government Code of the State of California. 21.3. If the Project Manager determines that CONSULTANT is a “Consultant” as that term is defined by the Regulations of the Fair Political Practices Commission, CONSULTANT shall be required and agrees to file the appropriate financial disclosure documents required by the Palo Alto Municipal Code and the Political Reform Act. SECTION 22. NONDISCRIMINATION. As set forth in Palo Alto Municipal Code section 2.30.510, CONSULTANT certifies that in the performance of this Agreement, it shall not Professional Services Rev. June 2, 2010 discriminate in the employment of any person because of the race, skin color, gender, age, religion, disability, national origin, ancestry, sexual orientation, housing status, marital status, familial status, weight or height of such person. CONSULTANT acknowledges that it has read and understands the provisions of Section 2.30.510 of the Palo Alto Municipal Code relating to Nondiscrimination Requirements and the penalties for violation thereof, and agrees to meet all requirements of Section 2.30.510 pertaining to nondiscrimination in employment. SECTION 23. ENVIRONMENTALLY PREFERRED PURCHASING AND ZERO WASTE REQUIREMENTS. CONSULTANT shall comply with the City’s Environmentally Preferred Purchasing policies which are available at the City’s Purchasing Department, incorporated by reference and may be amended from time to time. CONSULTANT shall comply with waste reduction, reuse, recycling and disposal requirements of the City’s Zero Waste Program. Zero Waste best practices include first minimizing and reducing waste; second, reusing waste and third, recycling or composting waste. In particular, Consultant shall comply with the following zero waste requirements:  All printed materials provided by Consultant to City generated from a personal computer and printer including but not limited to, proposals, quotes, invoices, reports, and public education materials, shall be double-sided and printed on a minimum of 30% or greater post-consumer content paper, unless otherwise approved by the City’s Project Manager. Any submitted materials printed by a professional printing company shall be a minimum of 30% or greater post-consumer material and printed with vegetable based inks.  Goods purchased by Consultant on behalf of the City shall be purchased in accordance with the City’s Environmental Purchasing Policy including but not limited to Extended Producer Responsibility requirements for products and packaging. A copy of this policy is on file at the Purchasing Office.  Reusable/returnable pallets shall be taken back by the Consultant, at no additional cost to the City, for reuse or recycling. Consultant shall provide documentation from the facility accepting the pallets to verify that pallets are not being disposed. SECTION 24. NON-APPROPRIATION 24.1. This Agreement is subject to the fiscal provisions of the Charter of the City of Palo Alto and the Palo Alto Municipal Code. This Agreement will terminate without any penalty (a) at the end of any fiscal year in the event that funds are not appropriated for the following fiscal year, or (b) at any time within a fiscal year in the event that funds are only appropriated for a portion of the fiscal year and funds for this Agreement are no longer available. This section shall take precedence in the event of a conflict with any other covenant, term, condition, or provision of this Agreement. SECTION 25. MISCELLANEOUS PROVISIONS. 25.1. This Agreement will be governed by the laws of the State of California. 25.2. In the event that an action is brought, the parties agree that trial of such action will be vested exclusively in the state courts of California in the County of Santa Clara, State of California. Professional Services Rev. June 2, 2010 25.3. The prevailing party in any action brought to enforce the provisions of this Agreement may recover its reasonable costs and attorneys' fees expended in connection with that action. The prevailing party shall be entitled to recover an amount equal to the fair market value of legal services provided by attorneys employed by it as well as any attorneys’ fees paid to third parties. 25.4. This document represents the entire and integrated agreement between the parties and supersedes all prior negotiations, representations, and contracts, either written or oral. This document may be amended only by a written instrument, which is signed by the parties. 25.5. The covenants, terms, conditions and provisions of this Agreement will apply to, and will bind, the heirs, successors, executors, administrators, assignees, and consultants of the parties. 25.6. If a court of competent jurisdiction finds or rules that any provision of this Agreement or any amendment thereto is void or unenforceable, the unaffected provisions of this Agreement and any amendments thereto will remain in full force and effect. 25.7. All exhibits referred to in this Agreement and any addenda, appendices, attachments, and schedules to this Agreement which, from time to time, may be referred to in any duly executed amendment hereto are by such reference incorporated in this Agreement and will be deemed to be a part of this Agreement. 25.8 If, pursuant to this contract with CONSULTANT, City shares with CONSULTANT personal information as defined in California Civil Code section 1798.81.5(d) about a California resident (“Personal Information”), CONSULTANT shall maintain reasonable and appropriate security procedures to protect that Personal Information, and shall inform City immediately upon learning that there has been a breach in the security of the system or in the security of the Personal Information. CONSULTANT shall not use Personal Information for direct marketing purposes without City’s express written consent. 25.9 All unchecked boxes do not apply to this agreement. 25.10 The individuals executing this Agreement represent and warrant that they have the legal capacity and authority to do so on behalf of their respective legal entities. IN WITNESS WHEREOF, the parties hereto have by their duly authorized representatives executed this Agreement on the date first above written. Professional Services Rev. June 2, 2010 EXHIBIT “A” SCOPE OF SERVICES “ELECTRIC, WATER, GAS, WASTEWATER, STORM DRAIN AND PUBLIC WORKS CONSTRUCTION INSPECTION SERVICES” Project Overview Contractor shall provide professional contract inspection services for electrical, water, gas, wastewater, storm drain, and general public works (e.g. trench excavation & backfill; curb, gutter, and sidewalk; paving, etc.) inspection services to support upcoming overhead and underground construction projects within the City of Palo Alto on the City’s electric distribution system, water, gas, wastewater, and storm drain Capital Improvement Projects and improvements in the public right-of-way related to private land development. The inspection work for the Public Works Department may also include inspection of and sign-off of work associated with Street Work, Encroachment, Dewatering, Grading and Excavation Permits. In addition to the inspection of infrastructure improvements, the Contractor shall also be responsible for review of construction- related Best Management Practices; storm water pollution prevention plans; installation of permanent storm water treatment measures, and compliance with traffic control and logistics plans. The selected Contractor will have a strong background and experience in electric, water, gas, wastewater, and storm drain utility construction practices and standards as well as general public works construction practices. Throughout this document, the term ‘Contractor’ will refer to both the firm and also the specific person that will be assigned to perform this contract. Inspection services will be provided on an “as requested” basis. It is expected that the inspector(s) will be available on-site in Palo Alto within 4 hours of the time services are requested. It is expected that the majority of services will be required during normal working hours of 7am-4pm; however, work may be required night and/or day, on weekends, holidays and/or on a split shift basis. Work weeks may be in excess of or less than the standard 40-hour week. The total expenditure for the initial term is estimated at $2,200,000 (+ $50,000 for storm drain work + $75,000 for public works inspection) based on 5 full-time water-gas-wastewater inspectors, 2 full- time electric inspectors, 1 full-time public works inspector, and 1 part-time storm drain inspector, however, the City makes no guarantee as to the actual amount of services to be requested under any resulting inspection services contract. Construction Standards Electric: Construction inspection shall be in accordance with the City of Palo Alto Utilities (CPAU) Electric Construction Standards manual; CPAU Electric Service Requirements manual; CPAU Safety Rules manual; CPAU plans, permits and other documents governing the construction of the project; and California Public Utilities Commission (CPUC) General Orders 95, 128, & 165, rules for construction and maintenance of overhead and underground electric supply and communication systems. Professional Services Rev. June 2, 2010 Water-Gas-Wastewater: Construction inspection shall be in accordance with the City of Palo Alto Utility Standards for WGW construction. The Contractor shall have knowledge of and be familiar with the applicable rules for construction from the Department of Public Health regulations governing water main installation and Department of Transportation regulations governing gas installations. Public Works & Storm Drain: Construction inspection shall be in accordance with the City of Palo Alto Standard Drawings and Specifications as published by the Public Works Department. Labor, Materials, Vehicles & Equipment The Contractor shall furnish their personnel with all materials, equipment (including all Personal Protective Equipment [PPE]), and transportation required to perform the work. The Contractor’s personnel shall have appropriate vehicles, cellular phones, computers, and miscellaneous equipment and supplies required to perform the work as assigned. The cost of materials, vehicles, equipment, meals, lodging and travel expenses shall be included in the standard hourly rate of $133.82 (straight time) and $158.58 (overtime). The Contractor’s work shall be under the direction of, and shall be reviewed by, the City’s Project Engineer/Project Manager as specified in the contract. The Contractor shall assign specific person(s) for the duration of the Contract, unless otherwise approved by the City’s Project Engineer. Back-up Contractor resources should be available in case of loss of staff, sickness, or vacations, or as required by the work. A copy of work experience and/or licensing shall be provided before work begins to the City’s Project Engineer. Contractor’s personnel who do not meet all of the specified requirements, or who fail to perform their work in an acceptable manner, shall be removed from the work when determined and directed by the City’s Project Engineer. General Work Description The Field Inspector shall inspect new overhead and underground utility and public works construction, alterations and repairs to insure compliance with plans, specifications and codes. The Inspector’s responsibilities may include, but are not limited to the following:  Performs duties described in the CPAU Inspector Checklist.  Maintains a daily log of construction project activity, tracks job status and submits progress reports as required.  Insures that all applicable utility rules, codes and safety regulations are complied with.  Insures all facilities are constructed in accordance with applicable plans and specifications.  Notifies contractors and the City’s project Engineer of non-compliance with the contract plans and specifications in a timely manner.  Reports and documents safety and compliance infractions and unsafe work procedures.  Prepares inspection documentation for development of progress payments for the project construction contractor.  Assists in preparing punch lists of uncompleted work, non-conformance reports, and deficiency notices. Professional Services Rev. June 2, 2010  Certifies as to the acceptability of each project upon its completion.  Conducts and generates minutes of weekly field meetings.  Documents installed work on the as built/record drawings on a daily basis (This may include the use of GPS equipment for data acquisition).  Documents with photographs whenever possible. Qualifications The Electrical Field Inspector or Water-Gas-Wastewater Field Inspector assigned to work on CPAU’s projects shall have a minimum of 10 -15 years experience working for an Investor Owned Electric Utility and/or a Municipal Public Utility in the areas of overhead and underground construction, installation and rehabilitation of water-gas-wastewater pipelines, maintenance and inspection with a working knowledge of CPUC General Orders 95, 128, & 168. The Public Works/Storm Drain Field Inspector assigned to work on general public works and storm drain projects shall have a minimum of 10 -15 years experience working in the area of public works and underground construction. The Contractor must have the ability to make sound decisions and to communicate with others and to assimilate and understand information in a manner consistent with the essential job functions. The Contractor must maintain the physical condition appropriate to the performance of the assigned duties which may include walking or standing for extended periods of time. Personnel qualifications and staffing levels for City projects shall be subject to the approval of the Project Engineer. The Project Engineer shall reserve the right to review the resume and interview any new proposed Contractors for City projects. References of inspection experience shall be available for all staff, and may be requested at any time during the Contract. Documentation & Deliverables Inspection work shall conform to the City’s Construction Standards, Project Drawings and the Inspector Checklist. The Contractor’s field inspector shall maintain a daily journal/diary for each day the inspector performs work on the project. The contents of the diary shall consist of brief, accurate statements of progress and conditions encountered during the prosecution of the work. A copy of the daily diary/report shall be given to the Project Engineer within five (5) working days of its date and will become a part of the permanent project record. Any safety violations and inspection infractions found are to be communicated to the field construction crews and the Project Engineer in real time as they are discovered. Once a week an electronic summary (web-based or in MS Word or MS Excel format) shall be sent to the Project Engineer summarizing the Contractors work hours, the equipment inspected and any infractions found. Professional Services Rev. June 2, 2010 EXHIBIT “B” SCHEDULE OF PERFORMANCE CONSULTANT shall perform the Services so as to complete each milestone within the number of days/weeks specified below. The time to complete each milestone may be increased or decreased by mutual written agreement of the project managers for CONSULTANT and CITY so long as all work is completed within the term of the Agreement. CONSULTANT shall provide a detailed schedule of work consistent with the schedule below within 2 weeks of receipt of the notice to proceed. Milestones Completion No. of Days/Weeks From NTP 1. On-call Inspection Services 4 hours Professional Services Rev. June 2, 2010 EXHIBIT “C” COMPENSATION The CITY agrees to compensate the CONSULTANT for professional services performed in accordance with the terms and conditions of this Agreement based on the hourly rate schedule attached as Exhibit C-1. The compensation to be paid to CONSULTANT under this Agreement for all services described in Exhibit “A” (“Services”) and reimbursable expenses shall not exceed $6,975,000. CONSULTANT agrees to complete all Services, including reimbursable expenses, within this amount. In the event CITY authorizes any Additional Services, the maximum compensation shall not exceed $7,673,000. Any work performed or expenses incurred for which payment would result in a total exceeding the maximum amount of compensation set forth herein shall be at no cost to the CITY. ADDITIONAL SERVICES The CONSULTANT shall provide additional services only by advanced, written authorization from the CITY. The CONSULTANT, at the CITY’s project manager’s request, shall submit a detailed written proposal including a description of the scope of services, schedule, level of effort, and CONSULTANT’s proposed maximum compensation, including reimbursable expenses, for such services based on the rates set forth in Exhibit C-1. The additional services scope, schedule and maximum compensation shall be negotiated and agreed to in writing by the CITY’s Project Manager and CONSULTANT prior to commencement of the services. Payment for additional services is subject to all requirements and restrictions in this Agreement. Professional Services Rev June 2, 2010 EXHIBIT “C-1” HOURLY RATE SCHEDULE Straight Time $133.82 / hour Premium Time $158.58 / hour Professional Services Rev June 2, 2010 EXHIBIT “D” INSURANCE REQUIREMENTS CONTRACTORS TO THE CITY OF PALO ALTO (CITY), AT THEIR SOLE EXPENSE, SHALL FOR THE TERM OF THE CONTRACT OBTAIN AND MAINTAIN INSURANCE IN THE AMOUNTS FOR THE COVERAGE SPECIFIED BELOW, AFFORDED BY COMPANIES WITH AM BEST’S KEY RATING OF A-:VII, OR HIGHER, LICENSED OR AUTHORIZED TO TRANSACT INSURANCE BUSINESS IN THE STATE OF CALIFORNIA. AWARD IS CONTINGENT ON COMPLIANCE WITH CITY’S INSURANCE REQUIREMENTS, AS SPECIFIED, BELOW: MINIMUM LIMITS REQUIRED TYPE OF COVERAGE REQUIREMENT EACH OCCURRENCE AGGREGATE YES YES WORKER’S COMPENSATION EMPLOYER’S LIABILITY STATUTORY STATUTORY YES GENERAL LIABILITY, INCLUDING PERSONAL INJURY, BROAD FORM PROPERTY DAMAGE BLANKET CONTRACTUAL, AND FIRE LEGAL LIABILITY BODILY INJURY PROPERTY DAMAGE BODILY INJURY & PROPERTY DAMAGE COMBINED. $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 YES AUTOMOBILE LIABILITY, INCLUDING ALL OWNED, HIRED, NON-OWNED BODILY INJURY - EACH PERSON - EACH OCCURRENCE PROPERTY DAMAGE BODILY INJURY AND PROPERTY DAMAGE, COMBINED $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 PROFESSIONAL LIABILITY, INCLUDING, ERRORS AND OMISSIONS, MALPRACTICE (WHEN APPLICABLE), AND NEGLIGENT PERFORMANCE ALL DAMAGES $1,000,000 YES THE CITY OF PALO ALTO IS TO BE NAMED AS AN ADDITIONAL INSURED: CONTRACTOR, AT ITS SOLE COST AND EXPENSE, SHALL OBTAIN AND MAINTAIN, IN FULL FORCE AND EFFECT THROUGHOUT THE ENTIRE TERM OF ANY RESULTANT AGREEMENT, THE INSURANCE COVERAGE HEREIN DESCRIBED, INSURING NOT ONLY CONTRACTOR AND ITS SUBCONSULTANTS, IF ANY, BUT ALSO, WITH THE EXCEPTION OF WORKERS’ COMPENSATION, EMPLOYER’S LIABILITY AND PROFESSIONAL INSURANCE, NAMING AS ADDITIONAL INSUREDS CITY, ITS COUNCIL MEMBERS, OFFICERS, AGENTS, AND EMPLOYEES. I. INSURANCE COVERAGE MUST INCLUDE: A. A PROVISION FOR A WRITTEN THIRTY DAY ADVANCE NOTICE TO CITY OF CHANGE IN COVERAGE OR OF COVERAGE CANCELLATION; AND B. A CONTRACTUAL LIABILITY ENDORSEMENT PROVIDING INSURANCE COVERAGE FOR CONTRACTOR’S AGREEMENT TO INDEMNIFY CITY. C. DEDUCTIBLE AMOUNTS IN EXCESS OF $5,000 REQUIRE CITY’S PRIOR APPROVAL. II. CONTACTOR MUST SUBMIT CERTIFICATES(S) OF INSURANCE EVIDENCING REQUIRED COVERAGE. III. ENDORSEMENT PROVISIONS, WITH RESPECT TO THE INSURANCE AFFORDED TO “ADDITIONAL INSUREDS” A. PRIMARY COVERAGE WITH RESPECT TO CLAIMS ARISING OUT OF THE OPERATIONS OF THE NAMED INSURED, INSURANCE AS AFFORDED BY THIS POLICY IS PRIMARY AND IS NOT ADDITIONAL TO OR CONTRIBUTING WITH ANY OTHER INSURANCE CARRIED BY OR FOR THE BENEFIT OF THE ADDITIONAL INSUREDS. B. CROSS LIABILITY Professional Services Rev June 2, 2010 THE NAMING OF MORE THAN ONE PERSON, FIRM, OR CORPORATION AS INSUREDS UNDER THE POLICY SHALL NOT, FOR THAT REASON ALONE, EXTINGUISH ANY RIGHTS OF THE INSURED AGAINST ANOTHER, BUT THIS ENDORSEMENT, AND THE NAMING OF MULTIPLE INSUREDS, SHALL NOT INCREASE THE TOTAL LIABILITY OF THE COMPANY UNDER THIS POLICY. C. NOTICE OF CANCELLATION 1. IF THE POLICY IS CANCELED BEFORE ITS EXPIRATION DATE FOR ANY REASON OTHER THAN THE NON-PAYMENT OF PREMIUM, THE ISSUING COMPANY SHALL PROVIDE CITY AT LEAST A THIRTY (30) DAY WRITTEN NOTICE BEFORE THE EFFECTIVE DATE OF CANCELLATION. 2. IF THE POLICY IS CANCELED BEFORE ITS EXPIRATION DATE FOR THE NON-PAYMENT OF PREMIUM, THE ISSUING COMPANY SHALL PROVIDE CITY AT LEAST A TEN (10) DAY WRITTEN NOTICE BEFORE THE EFFECTIVE DATE OF CANCELLATION. NOTICES SHALL BE MAILED TO: PURCHASING AND CONTRACT ADMINISTRATION CITY OF PALO ALTO P.O. BOX 10250 PALO ALTO, CA 94303 City of Palo Alto (ID # 3000) City Council Staff Report Report Type: Consent Calendar Meeting Date: 7/16/2012 July 16, 2012 Page 1 of 8 (ID # 3000) Summary Title: Medical Marijuana Dispensaries Initiative Measure Title: Adoption of Resolution Placing an Initiative Measure on November 2012 Ballot to Permit Three Medical Marijuana Dispensaries to Operate in Palo Alto From: City Manager Lead Department: City Attorney Recommendation In order to implement a ministerial duty under state law, staff recommends that the City Council adopt a Resolution Calling a Special Election for November 6, 2012 on the Initiative Measure to Permit Three Medical Marijuana Dispensaries in Palo Alto. (Attachment A.) Background In 1996, California voters enacted Proposition 215, the Compassionate Use Act (CUA), now codified in California Health and Safety Code §11362.5. The CUA exempts patients and their primary caregivers from criminal liability under State law for possession and cultivation of marijuana for personal medical use. In 2004, the State Legislature adopted SB 420, entitled the Medical Marijuana Program Act (MMPA), codified in Health and Safety Code §11362.7 et seq. The intent of the MMPA was to clarify the scope of the CUA. In addition, the MMPA provided patients and caregivers access to medical marijuana through “collective, cooperative cultivation projects.” The MMPA also provided that cities may adopt and enforce laws consistent with these State laws. In contrast to State law, the Federal Controlled Substances Act, codified at 21 U.S.C. §801 et seq., prohibits all activities related to marijuana, including possession, cultivation, and distribution. Federal law contains no exception for medical use. July 16, 2012 Page 2 of 8 (ID # 3000) In 1996 in response to the CUA, the City Council adopted an ordinance prohibiting Medical Marijuana Dispensaries in Palo Alto. This uncodified ordinance is contained in Attachment B. Currently, there are no medical marijuana dispensaries operating in Palo Alto. Given the conflict between State and Federal law, the CUA and MMPA have been the subject of extensive litigation and the current state of the law is in flux. For cities, there are two basic issues regarding medical marijuana. First, to what extent do California’s medical marijuana laws preempt local regulation or prohibitions of medical marijuana establishments? Second, to what extent does the federal Controlled Substances Act preempt local regulations that allow medical marijuana establishments? California cities have taken a variety of approaches with regard to medical marijuana dispensaries. By one advocacy group’s recent count, 76 cities and 9 counties have adopted moratoria prohibiting dispensaries and 178 cities and 20 counties have adopted permanent bans or prohibitions. In addition, 46 cities and 10 counties have adopted regulatory ordinances that allow dispensaries subject to various permit, location, and operation requirements. Some cities and counties have also adopted medical marijuana business taxes. A number of these local ordinances have been challenged in Court, with somewhat mixed results regarding the permissible scope of local regulations. In City of Riverside v. Inland Empire Patient’s Health and Wellness Center, Inc., and City of Lake Forest v. Evergreen Holistic Collective, the Fourth District Court of Appeal issued directly conflicting opinions on whether local governments can prohibit medical marijuana dispensaries completely: Inland Empire held that the CUA and MMPA did not preempt local prohibitions, while Evergreen reached the opposite conclusion and held a city could not ban dispensaries altogether. With regard to the federal preemption issue, the Second District Court of Appeal held in Pack v. Superior Court (Long Beach) that a local permitting scheme actually conflicts with federal law because it allows activities that the CSA prohibits and, thus, may not be implemented and enforced. The California Supreme Court has granted review in each of these cases as well as one additional case from San Bernardino County in which the Court of Appeal upheld a local dispensary prohibition (People v. G3 Holistic, Inc.). A summary of July 16, 2012 Page 3 of 8 (ID # 3000) the four pending Supreme Court cases prepared by the Medical Marijuana Committee of the City Attorneys’ Department of the League of California Cities is included as Attachment C. In addition to court case developments, the area of medical marijuana continues to be the subject of new legislative developments. On September 1, 2011, the Governor signed AB 1300, which amends Health and Safety Code §11362.83, to clarify that cities have the authority to regulate the location, operation, or establishment of medical marijuana dispensaries (MMD). July 16, 2012 Page 4 of 8 (ID # 3000) Discussion On July 25, 2011 proponents submitted to the City Clerk a signed Initiative to Permit Three Medical Marijuana Dispensaries in Palo Alto (Initiative Measure). (Exhibit 1 to Attachment A). Summary of Proposed Initiative Measure The proposed Initiative Measure adds three new sections to the Palo Alto Municipal Code pertaining to business permits, zoning regulations and taxation of medical marijuana dispensaries. Business Permits The most prominent component of the Initiative Measure is the requirement that the City “shall as soon as practicable following the operative date of this ordinance, issue three (3) medical marijuana dispensary permits.” (Initiative Measure, Section 4.20.050(a).) To be eligible for one of the first three permits, an applicant must file an application no later than 15 days after the effective date of the Initiative Measure. (Section 4.20.040(b).) Following the issuance of the initial permits, the City “shall have no fewer than, and no more than, three (3) dispensary permits issued and outstanding at all times.” (Section 4.20.040(c).) The Initiative Measure specifies the type of information that must be contained in a permit application and specifies limited grounds for denial of a permit. (Sections 4.20.070 and 4.20.100.) The permit is good for one year, but can be renewed in one year increments. The Initiative Measure contains detailed operating requirements. Among these are that dispensaries may only operate between 9:00am and 10:00pm; that no- one under 18 may be admitted unless such person is a patient and accompanied by a parent or guardian; that no marijuana may be ingested on the premises; that cultivation may occur on the premises provided it occurs in a “secure, locked and fully enclosed structure, including a ceiling, roof or top.” Additionally; no alcoholic beverages would be allowed, the facility must have adequate security, and the proprietors must clean the area around the front door every day during an operating week. All facilities would need to comply with the Americans with Disabilities Act (ADA). Finally, all facilities would be precluded from cultivating, distributing or selling marijuana for profit. (Section 4.20.140.) July 16, 2012 Page 5 of 8 (ID # 3000) Zoning Regulations Second, the Initiative Measure would amend the Zoning Code to provide for the placement of medical marijuana dispensaries. The Initiative Measure defines a medical marijuana dispensary to mean “a cooperative or collective1 of four or more members who associate at a particular location or real property to collectively or cooperatively distribute marijuana to members for medical purposes, and operate on a not-for-profit bases, consistent with California Health and Safety Code section 11362.5 and 11362.7 et seq.), the Guidelines for the Security and Non-Diversion of Marijuana Grown for Medical Use issued by the California Attorney General in August 2008, and this chapter.” (Section 18.45.020(o).) The Initiative Measure provides that a medical marijuana dispensary would be a permitted use in any commercial or industrial zone, but contains the following exceptions for “sensitive uses”: No dispensary permitted within 150 feet of any residential zone; No dispensary permitted within 600 feet of any public or private school; and No dispensary permitted within 500 feet of any public library, public park, licensed day care center, or substance abuse rehabilitation center. These distances requirements are to be measured in a straight line from the primary entrance of the medical marijuana dispensary to the property line of the sensitive use. A dispensary may not be approved as an accessory use to any other permitted use in Palo Alto, and no more than one dispensary may occupy a single building. (Section 18.45.030.) 1The MMPA provides a criminal defense to “qualified patients, persons with valid identification cards, and the designated primary caregivers of qualified patients and persons with identification cards, who associate within the State of California in order to collectively or cooperatively to cultivate marijuana for medical purposes.” Health & Safety Code Section 11362.775 (emphasis added). The terms “cooperative” is a statutory entity that must abide by strict rules laid out in the California Corporations Code, § 12200, et seq. A “collective,” on the other hand, is not defined by statute. However, the idea behind both organizations is the same: they must exist as a not-for-profit “closed-circuit” for the benefit of its members. As such, they “should not purchase marijuana from, or sell to, non- members; instead, it should only provide a means for facilitating or coordinating transactions between members.” Atty. Gen’l. Instructions (2007) IV(a)(1), (2). Recent case law, however, has cast some doubt on the Attorney General’s interpretation. In People v. Colvin, 203 Cal. App. 4th 1029 (2012), the Attorney General argued that a cooperative must involve “some united action or participation among all” members and that the collective in question was too big to allow any “meaningful” participation in the cooperative process and therefore was not a “cooperative” or a “collective” in the way §11362.775 intended. The court rejected this argument and instead held that §11362.775 does not require a certain number of members to engage in “united action or participation” in order to qualify as a collective or cooperative under the section. It is likely that this area of law will also continue to evolve. July 16, 2012 Page 6 of 8 (ID # 3000) Gross Receipts Tax Finally, the ordinance adds Section 2.49 to the Municipal Code to add a new gross receipts tax on dispensaries. In essence, this provision would levy a 4 cent per dollar tax on the gross receipts of all medical marijuana dispensaries, for general government purposes.2 The section also sets forth the relevant procedural steps of paying the tax, and powers of the City to collect the tax. The Charter provides that initiative measures go into effect 10 days after the Council conducts the official canvass of the election. Unresolved Legal Issues As discussed above, the California Supreme Court has accepted review of several cases that present legal issues that may, depending on the resolution, impact the validity of the Initiative Measure and/or the City’s current uncodified ban on dispensaries. If the Supreme Court follows the analysis in Evergreen and holds that local prohibitions are preempted by the CUA and MMPA, the City’s current ban may be vulnerable to challenge under state law preemption principles. On the other hand, if the Supreme Court upholds Pack’s federal preemption analysis, the Initiative Measure may be unenforceable.3 In summary, depending on the outcome of the 4 cases pending with the Supreme Court, if the Initiative Measure is adopted by the voters, it is possible that it would be vulnerable to judicial challenge. Similarly, if the Initiative Measure is not adopted, the City’s existing ban may also be vulnerable to challenge. 2The Initiative Measure defines gross receipts as “the total amount actually received or receivable from all donations, transactions and sales; the total amount or compensation actually received or receivable for performance of any act or service, of whatever nature it may be, for which a charge is made or credit allowed, whether or not such act or service is down as a part of or in connection with the sale of materials, goods, wares or merchandise; discounts rents royalties, fees, commissions, dividends and gains realized from trading in stocks and bonds, however designated. Included in “gross receipts” shall be all receipts, cash, credits and property of any kind or nature, without any deduction therefrom on account of the cost of the property sold, the cost of materials used, labor or service costs, interest paid or payable, or losses or other expenses whatsoever.” The ordinance lists 13excluded expenses. Initiative Measure Section 2.49.020(b)(1)-(13). 3Especially troubling to cities and their employees, the Pack court questioned whether the City staff person responsible for issuing the permits could be subject to criminal liability for “aiding and abetting” in a federal offense (i.e. cultivation and sale of marijuana).] The California Supreme Court has granted review of this case so that it is currently no longer binding legal precedent. However, the Supreme Court’s review of the matter indicates this issue is still an open one. July 16, 2012 Page 7 of 8 (ID # 3000) Election Requirements On October 3, 2011, the City Council accepted the Certificate of Sufficiency of the Initiative Ballot and directed staff to return with a resolution putting the measure on the November 2012 ballot. Palo Alto Charter Article VI, Section 2 requires the City Council to adopt the initiative ordinance verbatim or place it on the ballot. This initiative is primarily a land use initiative that requires a simple majority vote of the electorate (50% + 1). The tax component of the Initiative Measure (4 cents tax) does not alter this voting requirement as it would be a General Tax and thus subject to a majority vote of the electorate. The election schedule for the November 6, 2012 election is as follows: August 10, 2012: Deadline for submitting measure to County August 14, 2012: Deadline for direct arguments August 21, 2012: Deadline for rebuttal arguments and impartial analyses Council Options Council could direct staff to prepare a companion measure to the Initiative Ordinance to be placed before the voters that would stay the Initiative Ordinance unless and until there is a definitive judicial decision removing any question that local jurisdictions may lawfully regulate medical marijuana dispensaries in the manner that the Initiative Ordinance regulates, including by adopting land use measures and operational requirements, and levying business taxes.4 At this point, it is difficult to predict how long this will be. Briefing is underway in the cases accepted by the California Supreme Court. Because at least some of the issues involve federal preemption they may be resolved by the United States Supreme Court. Resource Impact The Registrar of Voters has estimated that this election will cost approximately $75,000. Furthermore, the city Clerk estimates a cost of approximately $50,000 for publishing requirements of the Election Code. 4 If two measures on the same topic are both adopted by the voters at the same election, the courts will try to harmonize. However, if the provisions of two or more ordinances adopted at the same election conflict, the ordinance receiving the highest number of affirmative votes shall control. (Elections Code Section 9221.) July 16, 2012 Page 8 of 8 (ID # 3000) Environmental Impact Initiative measures are statutorily exempt from the California Environmental Quality Act pursuant to Public Resources Code Section 21080(b)(1). Attachments:  Attachment A - Resolution Calling Election  Attachment B - Uncodified Ordinance Prohibiting Medical Marijuana Dispensaries  Attachment C - League of California Cities Summary of Pending Supreme Court Cases Attachments:  A: Resolution Calling Election (PDF)  B: Uncodified Ordinance Prohibiting Medical Marijuana Dispensaries (PDF)  C: League of California Cities Summary of Pending Supreme Court Cases (PDF) Prepared By: Janet Billups, Sr. Legal Secretary Department Head: Molly Stump, City Attorney City Manager Approval: ____________________________________ James Keene, City Manager Not Yet Approved 120702 cs RESO Special Election on Marijuana Initiative 1 Resolution No. _______ Resolution of the Council of the City of Palo Alto Calling a Special Election for November 6, 2012 on the Initiative Ordinance to Permit Three Medical Marijuana Dispensaries to Operate in Palo Alto WHEREAS, an initiative petition to amend the City of Palo Alto Municipal Code to Permit Three Medical Marijuana Dispensaries to Operate in Palo Alto has been submitted to the City in accordance with the requirements of Article VI of the Charter of the City of Palo Alto; and WHEREAS, by its Resolution No. 9254, the City Council called a general municipal election for November 6, 2012 (“Election”); WHEREAS, on October 3, 2011, the City Council accepted the Certificate of Sufficiency of the Initiative Ballot and directed staff to return with a resolution putting the measure on the November 2012 ballot; WHEREAS, elections are scheduled to be held on November 6, 2012, in certain school districts and certain special districts in Santa Clara County; and WHEREAS, under Part 3 of Division 10 of the Elections Code, commencing at Section 10400, and Education Code Section 5342, elections called by various governing bodies may be partially or completely consolidated; NOW, THEREFORE, the City Council of the City of Palo Alto does hereby RESOLVE as follows: SECTION 1. Special Election. A special municipal election is called for the City of Palo Alto to be held on Tuesday, November 6, 2012, under Charter Article VI for the purpose of submitting the following question to the voters at the election: CITY OF PALO ALTO INITIATIVE MEASURE ________: Shall the Palo Alto Municipal Code be amended to permit three medical marijuana dispensaries to operate in Palo Alto in any commercial or industrial zone subject to prescribed zoning criteria? For the Ordinance ____ Against the Ordinance ____ SECTION 2. Adoption of Measure. The measure to be submitted to the voters is attached to this Resolution as Exhibit “1” and incorporated by this reference. If a majority of Not Yet Approved 110628 cs RESO Special Election on Marijuana Initiative 2 qualified electors voting on such measure shall vote in favor of City of Palo Alto Initiative Measure “___”, it shall be deemed ratified and shall read as provided in Exhibit “1”. SECTION 3. Notice of Election. Notice of the time and place of holding the election is hereby given, and the City Clerk is authorized, instructed and directed to give further or additional notice of the election in time, form, and manner as required by law. SECTION 4. Impartial Analysis. The City Council hereby directs the City Clerk to transmit a copy of the measure to the City Attorney. The City Attorney shall prepare an impartial analysis of the measure, not to exceed 500 words in length, showing the effect of the measure on the existing law and the operation of the measure, and transmit such impartial analysis to the City Clerk on or before August 21, 2012. SECTION 5. Ballot Arguments. Arguments in favor of or against the measure shall be submitted to the City Clerk on or before August 14, 2012 at 5:30 p.m. under Elections Code section 9286 et seq.. If the City Clerk receives more than one argument for and/or against, the priorities established by Elections Code section 9287 shall control. SECTION 6. Rebuttal Arguments. Rebuttal arguments shall be controlled by the provisions of Elections Code section 9285. The deadline for filing rebuttal arguments shall be August 21, 2012, at 5:30 p.m. SECTION 7. Duties of City Clerk. The Palo Alto City Clerk shall do all things required by law to effectuate the November 6, 2012, general municipal election, including but not limited to causing the posting, publication and printing of all notices or other election materials under the requirements of the Charter of the City of Palo Alto and the California Elections and Government Codes. SECTION 8. Request and Consent to Consolidate. The Council of the City of Palo Alto requests the governing body of any other political subdivision, or any officers otherwise authorized by law, to partially or completely consolidate such elections and the City Council consents to such consolidation. The Council requests the Board of Supervisors of Santa Clara County to include on the ballots and sample ballots, all qualified measures submitted by the City Council to be ratified by the qualified electors of the City of Palo Alto. SECTION 9. Request for County Services. Under Section 10002 of the California Elections Code, the Council of the City of Palo Alto requests the Board of Supervisors of Santa Clara County to permit the Registrar of Voters to render services to the City of Palo Alto relating to the conduct of Palo Alto’s General Municipal and Special Elections which are called to be held on Tuesday, November 6, 2012. The services shall be of the type normally performed by the Registrar of Voters in assisting the clerks of municipalities in the conduct of elections including but not limited to checking registrations, mailing ballots, hiring election officers and arranging for polling places, receiving absentee voter ballot applications, mailing and receiving absent voter ballots and opening and counting same, providing and distributing election supplies, and furnishing voting machines. Not Yet Approved 110628 cs RESO Special Election on Marijuana Initiative 3 SECTION 10. Transmittal of Resolution. The City Clerk shall submit a certified copy of this resolution to the Board of Supervisors of the County of Santa Clara. SECTION 11. CEQA. Initiative measures are exempt from the California Environmental Quality Act. INTRODUCED AND PASSED: AYES: NOES: ABSENT: ABSTENTIONS: ATTEST: ____________________________ _____ City Clerk Mayor APPROVED AS TO FORM: APPROVED: ____________________________ Senior Asst. City Attorney City Manager Notice of Intent to Circulate Initiative Petition Notice is hereby given of the intention of the persons whose names appear hereon to circulate an initiative petition within the City of Palo Alto tor the purpose of authorizing three medical marijuana dispensaries within the city, taxing sales, and regulating die time, place and manner of sales. A statement of the reasons of the proposed action as contemplated in said petition is as tollows: THIS ORDINANCE WILL HELP THE TERMINALL Y ILL IN OUR COMMUNITY This proposed ordinance would allow our neighbors, who are seriously or terminally ill, to legally and safely obtain marijuana near their home, if they have the approval of their physician. Proposition 215 WdS pas.sed by California voters in 1996 with over 5 million votes, and yet Palo Alto has failed to implement the law. 15 years is long enough. Terminally ill patients, many of whom are elderly, are faced with a Hobson's choice of buying marijuana illegally, or traveling many miles to a city that has a dispensary. Marijuana is not a cure, but it can help cancer patients. Many have severe reactions to the disease and chemotherapy, including nausea One in three patients discontinues chemo due to these side effects, despite a significant chance of improvement When standard anti-nausea drugs fail, marijuana often eases patients' nausea and allows continued treatment. THE TAXES GENERA TED BY SALES CAN SAVE MANY JOBS OF OUR PUBLIC SAFETY WORKERS AND TEACHERS A similar ordinance in San Jose generated $290,000 in the tirst month! Think how many police, firetighters, teachers and libraries that would support. We have a choice: capture these taxes for our city or continue to lose them to neighboring municipalities. The ordinance will lax marijuana sales and place the revenue in the city's general fund. This will be in addition to any local sales taxes geoerated. The ordinance urges the City Council to use the revenue for public safety and education. . THE THREE DISPENSARIES WILL BE RESTRICTED TO APPROPRIA TE LOCATIONS The law will limit the number of dispensaries to three. The dispensaries cannot be located in a residential area, or near a school, park or day care center. Anyone wishing to operate a dispensary must meet strict qualification requirements. MARIJUANA HELPS MORE THAN CANCER PATIENTS University doctors and researchers have found that marijuana is also effective m: lowering the pressure inside the eye associated with glaucoma, slowing the onset of blindness, and alleviating muscle problems and chronic pain due to multiple sclerosis, epIlepsy and spinal cord injuries. Shouldn't our city support physicians who prescribe a medicine capable of relieving suffering? Marijuana is not a cure. But often it is the only way to get reliet'. A Harvard University survey found that almost half of oncologists nationwide would prescribe marijuana to their patients if it were legal in their state. PLEASE JOIN US BY SIGNING THE PETITION! Thomas Gale Moore, PhD. Cassandra Chrones Moore, Ph. D. Petition (or Submission to Voters of Proposed Amendments to tbe Municipal Code oftbe City o(Palo Alto To the City Council of the City of Palo Alto: We, the undersigned, registered and qualified voters o!'the Slate of California, residents of the City of Palo Alto, California, hereby propose amendments to the Palo Alto Municipal Code, relating to medical marijuana, and present to the City Council this petition and request that tlie City Council either pass the ordinance without alteration or submit the same to the registered and qualified voters of the City for their adoption or rejection at a special election held in 20 II, if the petition contains sufficient signatures. The proposed amendments read as follows: Text of Proposed Ordinance ORDINANCE OF THE CJlY OF PALO ALTO AMENDING TITLE 2 OF THE PAW ALTO MUNICIPAL CODE TO ADD A NEW CHAYfER2.49 MEDICAL MARUUANA DISPENSARY GROSS RECEIPTS TAX; AMENDING TITLE 4 OF THE PAW ALTO MUNICIPAL CODE TO ADD A NEW CHAPTER 4.20 MEDICAL MARIJUANA DISPENSARJFS; AND AMENDING TITLE 180F THE PAW ALTO MUNICIPAL CODE TO ADDA NEW CHAPTER 111.45 MEDICAL MARUUANA DISPENSARIES. WHEREAS, California voters approved Proposition 215 in 1996, the Compassionate Use Act C"CUA"), to exempt seriously ill patients and their primary caregivers from criminal liability for possession and cultivation of marijuana for medical purposes; and WHEREAS. the legislature enacted the Medical Marijuana Program Act of 2003 ("MMPA") providing for the association of primary caregivers and qualified patients 10 cultivate marijuana for specified medical purposes and also authorizing local governments to adopt and enforce laws consistent with its provisions; and WHEREAS, the City of Palo Alto has a compelling interest in ensuring that marijuana is not distributed in an illicit manner, in protecting the public health, safely and welfare of its residents and businesses, in preserving the peace and quiet of the areas in which medical marijuana cooperatives and collectives operate, and in providing compassionate access to medical marijuana to its seriously and terminally ill residents; and WHEREAS. the People of the City of Palo Alto express their preference that the City Council consider using the general tax funds generated by this ordinance for education and public safety, two areas hit very hard by the recent recession; < NOW. THEREFORE, the People of the City of Palo Alto do ORDAIN as follows:' SECTION 1: TITLE 2 of the Palo Alto Municipal Code is amended by adopting a new Chapter 2.49 to read as follows: 2.49 MEDICAL MARIJUANA DISPENSARY GROSS RECElPTS TAX. 2.49.010 Purpole and Intent. • (a) Through the passage of the Compassionate Use Act of 1996 ("'CUA"), codified as Health and Safety Code section 11362.5, the voters of California authorized the limited use of marijuana for medical purposes. (b) The City of Palo Allo desires to tax medical marijuana dispensary donations. transactions and sales as a specific category subject to a gross receipts tax, in addilion to any otherwise generally applicable tax, imposed on businesses within the City of Palo Alto. 2.49.020 Definitions and Construction. Any reference to California statutes includes any regulations promulgated thereunder and is deemed to include any successor or amended version of the referenced statute. All definitions set forth in Health & Safety Code section 11362.7, including but not limited to the tetmS "attending physician," "person with an identification card," "primary caregiver," "qualified patient," "identification card," and "serious medical condition," shall apply under this chapter in addition to the definitions set forth as follows: . (a) "City Manager" means the City Manager for the City of Palo Alto or designee. (b) "Gross receipts," except as otherwise specifically provided, means the total amount actually received or receivable from all donations, transactions. and sales; the total amount or compensation actually received or receivable for the performance of any act or service, of whatever nature it may be, for which a charge is made or credit allowed, whether or not such act or service is done as a part of or in connection with the sale of materials, goods, wares or merchandise; discounts, rents, royalties, fees, commissions, dividends, and gains realized from trading in stocks or bonds, however designated. Included in "gross receipts" shall be all receipts, cash, credits and property of any kind or nature, without any deduction therefrom on account of the cost of the property sold, the cost of materials used, labor or service costs, interest paid or payable, or losses or other expenses whatsoever, except that the following shall be excluded therefrom: I. Cash discounts allowed and taken on sales; 2. Credit allowed on property accepted as part of the purchase price, and which property may later be sold. at which time the sales price shall be included as gross receipts; 3. Any tax required by law to be included in or added to the purchase price and collected from the consumer or purchaser; 4. Such part of the sale price of any property returned by purchasers to the seller as refunded by the seller by way of cash or credit allowances or return of refundable deposits previously included in gross receipts; 5. Receipts from investments where the holder of the investment receives only interest and/or dividend" royalties, annuities and gains from the sale or exchange of stock or securities solely for a person's own account, not derived in the ordinary course of a business; 6. Receipts derived from the occasional sale of used, obsolete or surplus trade fixtures, machinery or other equipment used by the taxpayer in the regular course of the taxpayer's business; 7. Cash value of sales, trades or transactions between departments or units of the same business; S. Whenever there are included within the gross receipts amounts which reflect sales for which credit is extended and such amount proved uncollectible in a subsequent year, those amounts may be excluded from the gross receipts in the year they prove to be uncollectible; provided, however, if the whole or portion of such amounts excluded as uncollectible are subsequently collected, they shall be included in the amount of gross receipts for the period when they are recovered; 9. Transactions between a partnership and its partners; 2 10. Receipts from services or sales in transactions between affiliated corporations. An affil iated corporation is a corporation: (i) The voting and nonvoting stock of which is owned at least eighty percent (80%) by such other corporation with which such transaction is had; (ii) Which owns at least eighty percent (80%) of the voting and nonvoting stock of such other corporation; or (iii) At least eighty percent (8oo!') of the voting and nonvoting stock of which is owned by a common parent corporation which also has such ownership of the corporation with which such transaction is had. II. Transactions between a limited liability company and its member(s), provided the limited liability company has elected 10 file as a subchapter K entity under the Internal Revenue Code and that such transaction(s) shall be treated the same as between a partnership and its partner(s); 12. Receipts of refundable deposits, except that such deposits when forfeited and taken into income of .. the business shall not be excluded when in excess of one dollar ($ 1); and 13. Amounts collected for others where the business is acting as an agent or trustee and to the extent that such amounts are paid to those for whom collected. These agents or trustees musl provide the City Manager with the names and the addresses of the others and the amounts paid to them. This exclusion shall not apply to any ~ fees, percentages, or other payments retained by the agent or trustees. "Gross receipts" subject to the medical marijuana dispensary tax shall be only that portion of gross receipts relating to business conducted within the City of Palo Alto. (c) "Marijuana" shall have the same definition as set forth in Health and Safety Code 11018. (d) "Medical marijuana" is defined in Title 4, section 4.20.020. (e) "Medical marijuana dispensary" is defined in Title 4, section 4.20.020. (f) "Medical marijuana dispensary tax" means the gross receipts tax payable to the City by a medical marijuana dispensary pursuant to this chapter. (g) "Person" mellllS, without limitation, any natural individual, organization, firm, trust, common law trust, estate, partnership of any kind, association, syndicate, club, joint. stock company, joint venture, limited liability company, corporation (including foreign, domestic, and nonprofit), municipal corporation (other than the City of Palo Alto), cooperative, receiver, trustee. guardian, or other representative appointed by order of any court. 2.49.030 Medical Marijuana Dispensary Groll Receipts Tal[. (a) Every medical marijuana dispensary shall pay a medical marijuana tax of four percent (4%) for each dollar of its gross receipts. (b) The tax imposed by this section i~imposed for general governmental purposes. 2.49.040 Payment; Time Limits. The tax imposed by this Chapter shall be due and payable as follows: (a) Each person owing a tax under this Chapter shall, on or before the last day of each calendar month. prepare a tax return to the City Manager of the total gross receipts and the amount of tax owed for the preceding calendar month. At the time the tax return is filed, the full amount of the tax owed for the preceding calendar month shall be remitted. (b) All tax returns shall be completed on forms provided by the City Manager, which shall elicit only that information necessary to calculate and collect the taxes due under this chapter. (c) Tax returns and payments for all outstanding taxes owed the City are immediately due the City Manager upon cessation of business fur any reason. 2.49.050 Payment; When Taxes Deemed Delinquent; Penalties and Interest; Audit. (a) Unless otherwise specifically provided under other provisions of this Chapter, the taxes required to be paid pursuant to this Chapter shall be deemed delinquent if not paid on or before the due date· specified in Section 2.49.040. (b) Any person who fails or refuses to pay the tax required to be paid pursuant to this Chapter for more than fifteen days after the due date shall pay a penalty equal to five percent (5%) of the amount of the tax in addition to the amount of the tax. plus inierest on the unpaid tax calculated from the due date of the tax at a rate of ten percent (10%) per annum. 3 (c) Whenever a check is submitted in payment orthe tax, and the check is subsequently returned unpaid by the bank upon which the check is drawn, and the check is not redeemed prior to the due date, the taxpayer will be liable for the tax amount due plus penalties and interest as provided for in Subsection (a) above. (d) The tax due shall be that amount due and payable from the first date on which the person was issued a permit by the City. (e) The City Manager may waive the penalties imposed upon any person, if the person provides evidence that failure to pay timely was due to circumstances beyond the control of the person and occurred notwithstanding the exercise of ordinary care and the absence of willful neglect, and the person paid the delinquent tax and accrued interest owed the City prior to applying for a waiver. (0 The City Manager shall have the power to audit and examine quarterly the relevant books and records of a medical marijuana dispensary, including both state and federal income tax returns, California sales tax returns, or other evidence documenting the dispensary's gross receipts. SECTION 2: Title 4 of the Palo Alto Municipal Code is amended by adopting a new Chapter 4.20 to read as follows: 4.20 MEDICAL MARLRJANA DISPENSARIES. 14.20.010 Purpose and fntent. (a) It is the purpose and intent of this ordinance to promote the health, safety, and general welfare of the residents and businesses within the City of Palo Alto by taxing, regulating, and limiting the number of medical marijuana dispensaries. It is neither the intent nor elfect of this ordinance to restrict or deny qualified patients access to marijuana for medical purposes as intended by the passage of the Compassionate Use Act of 1996. (b) The Medical Marijuana Program Act of 2003 allows cities to adopt and enforce rules and regulations consistent with the Compassionate Use Act. The impacts of medical marijuana dispensaries are documented in the "White Paper on Marijuana Dispensaries" published by the California Police Chiefs Association' s Task Force on Marijuana Dispensaries (April 22, 2009), and the United States Depanment of Justice's CalilOrnia Medical Marijuana Information report (October 19,2009). The City of Palo Alto neither condones nor condemns the use of marijuana. This ordinance is enacted as a health and safety measure pursuant to the City's police powers as prescribed in Article XI, Section 7 of the California Constitution. 4.20.020 Definitions and Construction. Any reference to California statutes includes any regulations promulgated thereunder and is deemed to include any successor or amended version of the referenced statute. All detlnitions set forth in Health and Safety Code section 11362.7, including, but not limited to, the terms "attending physician," "person with an identification card," "primary caregiver," ·'qualified patient," "identification card," and "serious medical condition," shall apply under this chapter, in addition to the definitions set forth as follows: (a) "Applicant" means a person who files an application for a medical marijuana dispensary permit under this chapter. (b) "City Clerk" means the City Clerk for the City of Palo Alto or designee. (c) "City Manager" means the City Manager for the City of Palo Alto or designee. (d) "Cultivation of Medical Marijuana" means the growing of medical marijuana for medical purposes in accordance with Health and Safety Code sections 11362.5 and 11365.7 III seq. (e) "Dispensary" shall have the same definition as "medical marijuana dispensary," as set forth in this section. (I) property. (g) operated. (h) "Dispensary area" means the dispensary property and the area within 100 teet of the dispensary "Dispensary building" means the building or portion of a building within which a dispensary is "Dispensary permit" means a medical marijuana dispensary permit (i) "Dispensary property" means the parcel of real property or portion of the parcel of real property that is owned or leased by a dispensary and upon which a dispensary is operated. (j) "Guidelines" means the "(".J\Iidelines For The Security and Non-Diversion of Marijuana Grown for Medical Use," issued by the California Attorney General in August 2008, as may be amended from time to time. (k) "Management member" means a member with responsibility for the establishment. registration, supervision, or oversight of the operations of a medical marijuana dispensary, including but not limited to, a member who is, or performs the functions of, a board member, director, officer, owner, operating officer, or manager of the dispensary. 4 (I) "Marijuana" shall have the same definition as set forth in Health and Safety Code section 11018. (m) "Medical Marijuana" means marijuana used for medical purposes in accordance with Health and Safety Code sections 11362.5 and 11362.7 el seq. (n) "Medical marijuana dispensary" means a cooperative or collective of four or more members who . associate at a particular location or real property to collectively 01 cooperatively distribute marijuana to members for medical purposes, and operate on a not-for-profit basis, consistent with California Health and Safety Code section 11362.5 and 11362.7 et seq., the Guidelines for the Security and Non-Diversion of Marijuana Grown for Medical Use issued by the Cltlifomia Attorney General in August 2008, and this chapter. A medical marijuana dispensary shall not include the following uses: a clinic licensed pursuant to Chapter I of Division 2 of the Health and Safety Code; a health care filcility licensed pursuant to Chapter 2 of Division 2 of the Health and Safety Code; a resi<\ential care facility for persons with chronic life-threatening illness licensed pursuant to Chapter 3.01 of Division 2 of the Health and Safety Code; a residential care facility for the elderly licensed pursuant to Chapter 3.2 of Division 2 of the Health and Safety Code; and a residential hospice or a home health agency licensed pursuant to Chapter 8 of Division 2 of the Health and Safety Code, as long as any such use complies with applicable laws including, but not limited to, California Health and Safety Code section 11362.5 and 11362.7 el seq., and the City of Palo Alto Charter and Municipal Code. (0) "Medical Marijuana Dispensary Permit" means a permit that authorizes a medical marijuana I dispensmy to operate within the City. (p) "Member" means any qualified patient, primary caregiver, or person with an identification card who is registered with a medical marijuana dispensary. (q) "Operate a dispensary" means to engage in or conduct the business of a dispensary, including, but not limited to, distributing medical marijuana and maintaining the facilities of a dispensary. (r) Palo Alto. "Perminee" means a person that holds a valid medical marijuana disPensary permit from the City of (s) "Person" means, without limitation, any natural individual, organization, firm, trust, common law trust, estate, partnership of any kind, association, syndicate, club, joint stock company, joint venture, limited liability company, corporation (including foreign, domestic, and nonprofit), municipal corporation (other than the City of Palo Alto), cooperative, receiver, trustee, guardian, or other representative appointed by order of any court. (t) "Physician" means a licensed medical doctor as defined in California Business and Professions Code section 4039. 4.20.030 Enforcement of Chapter. The City Manager shall have the responsibility and duty for enforcement of this chapter. 4.20.040 Medical Marijuana Dispensary Pennit; Deadline for Applications. (a) No person shall operate a medical marijuana dispensary unless the person holds a medical marijuana dispensary permit issued by the city pursuantto-this chapter. (b) An applicant for a proposed medical marijuana dispensary shall apply for a medical marijuana dispensary permilon an application form provided by the City and shall submit a non-refundable dispensary permit application fee of ten thousand dollars ($ I 0,000). To be eligible to receive one of the City's three (3) medical marijuana dispensary permits, applicants must submit to the City Clerk a medical marijuana dispensary application and dispensary application fee no later than fifteen (15) days after the operative date of this ordinance. (c) The fact that an applicant possesses other types of permits or licenses from the State of Cali fomi a, County of Santa Clara or City of Palo Alto shall not exempt the applicant from the obligation to obtain a medical marijuana dispensary permit under this chapter, nor shall the terms and conditions of any other such permit or license modify the requirements I1f a dispensary permit granted under this chapter. 4.20.050 Limit on Number of Penn its; Dates of lasuRnee. (a) The City of Palo Alto shall, as soon as is practicable following the operative date of this ordinance, issue three (3) medical marijuana dispensary permits. (b) No person shall receive more than one (I) medical marijuana dispensary permit. (c) The City of Palo Alto shall have no fewer than, and no more than, three (3) dispensary permits issued and outstanding at aU times after the initial period described in Subsection (a). 4.20.060 Applicant QualiflCJltiollL (a) submitted: L Every management member of a dispensary shall be at the time the application or renewal is At least twenty-one (21) years of age; and 5 2, A resident of the State of Cali fomi a (b) To ensure the health, safety, and welfare of the citizens andbusinesses of the City of Palo Alto, an applicant shall meet the following qualifications, and affirm the truthfulness of each separately on the application or renewal form: I, No management member of the applicant has ever operated, managed, or participated in a medical marijuana dispensary in the City of Palo Alto without a permit, license, authorization, or other entitlement for use issued by the City of Palo A Ito; 2, A management member of the applicant has at least twelve (12) months of experience as a board member, director, officer, owner or operating officer of a medical marijuana cooperative or collective registered or permitted as a medical marijuana dispensary by a city. wunty, or city and county within the State of California; and 3, No management member of the applicant has been convicted of a misdemeanor involving moral turpitude, or a felony, This requirement shall not apply to any conviction or plea of guilty or nolo contendere under federal law for an act that was lawful at the time under the Compassionate Use Act or The Medical Marijuana Program Act. 4.20.070 Applications. (a) The applicant for a medical marijuana dispensary permit or renewal shall submit to the City j Manager an application. provided by the City Manager, The application shall be made under penalty of perjury and shall include the following infonnation: I, A description of the statutory entity or business form that will serve as the legal structure for the medical marijuana dispensary and a copy of its business formation and organizing documents, 2, The name. address, telephone number, title, function(s) and copy of a valid government issued form of photo identification for each management member, 3, The address to which notice of action on the application is to be mailed; 4, Written proof that the applicant and all management members are at least twenty-one (2 I) years of age; 5, A list of each misdemeanor involving moral turpitude or felony conviction, if any, of any management member of the applicant; 6, Number of employees, volunteers, and other persons who will work or provide seIVices at the medical marijuana dispensary; 7, A plan deSCribing how the medical marijuana dispensary will operate consistent with state law and the provisions of this chapter, including controls to ensure medical marijuana is only distributed to qualified patients or primary caregivers; and (b) Each management member shall consent to fingerprinting and a criminal background check, (c) The applicant shall include a description of the proposed location, including the street address and parcel number, the square footage, the number of expected members, and the characteristics of the neighborhood or surrounding area, (d) The applicant shall provide a current copy of its business operations tax certificate and state sales tax seller's permit. (e) The applicant shall authorize the City Manager to seek verification of the information contained in the application, (f) If the applicant has completed the application improperly, or if the application is incomplete, the City Manager shall within ten (10) business days of receipt of the original application notifY the applicant of such fact in writing, detailing any deficiencies, and allow the applicant a reasonable amount of time to submit an amended application correcting any deficiencies, 4.20.080 Granting or Denial of Penult Application. The City Manager shall either grant or deny a dispensary permit within 30 days from the date the application is submitted to the city and deemed complete, 4.20.090 Priority of Applicants. If there are more than three (3) applicWlts for dispensary permits who meet all of the requirements of this ordinance, the City Manager shall give priority in awarding the dispensary pennits to any applicant that provides documentary evidence that, at any time after the passage of the Compassionate Use Act (Proposition 215) in 19%, the applicant applied for and was denied or refused a permit, business license. use or occupancy permit, zoning permit, other entitlement for use, or its equivalent by the City of Palo Alto to operate a medical marijuana dispensary in the City. Such applicants shall be given priority in the order of denial or refusal, from earliest to most recent. For example, an applicant who applied for a permit on May I, 1997, shall be given priority over an applicant who applied for a permit on May I, 2000. 6 4.20.100 Grounds for Denial of Permit A medical marijuana dispensary permit shall be granted or renewed unless the applicant or permit holder has not complied with the requirements of this ordinance, or any of the following apply: (a) The applicant knowingly made a false statement of material fact or has knowingly omitted to state a material fact in the application for a medical marijUlUla dispensary permit. (b) The applicant or permit holder has not paid any applicable application or renewal fees. (c) The City of Palo Alto already has three (3) medical marijuana dispensary permits in use. 4.20.110 Requests for Reconsideration. (a) If the City Manager denies. suspends. revokes. or does not renew a dispensary permit, written notice of such action shall be served on the applicant or permit holder. The notice shall contain: I. A brief statement of the grounds for the action. 2. A statement that the applicant may request reconsideration of the action. in writing to the City Manager, within ten (10) days of the date of service of the notice. 3. A statement that the failure to request reconsideration of the action will constitute a waiver of all rights to further City or judicial review. and that the action will become linal. (b) If the applicant properly mes a request for reconsideration, the City Manager shall set the date of the bearing within 30 days from the date the request is med. The hearing shall be conducted by the City Manager. (c) Failure to properly me a Written request for reconsideration of the notice of denial within ten days oftbe date of service of the notice shall constitute a waiver of all rights to a hearing. and the City Manager's decision shall be linal. Failure to properly and timely me a request for reconsideration of the notice of the action of the City Manager shall also constitute a failure to exhaust administrative remedies and bar any judicial action pertaining to the City Manager's decision. (d) If the applicant tiles a proper request for reconsideration but filils to appear at the hearing, the request for reconsideration is deemed abandoned. and the decision of the City Manager is tinal and may not be further appealed. Failure to appear at the hearing constitutes a waiver of all rights to a hearing and shall also constitute a failure to exhaust administrative remedies and bar to any judicial action pertaining to the City Manager's decision. (e) Hearings need not be conducted according to the technical rules relating to evidence and witnesses. Government Code section 11513. subdivisions (a), (b) and (c) shall apply to hearings under this chapter. (0 Oral evidence shall be taken only upon oath or affirmation. (g) Each party shall have these rights: I. To call and examine witnesses on any matter relevant to the issues of the hearing; 2. To introduce documentary and physical evidence; 3. To cross-examine opposing witnesses on any matter relevant to the issues of the hearing; 4. To impeach any witness regardless of which party first called the witness to testifY; 5. To rebut the evidence presented against the party; and 6. To represent himself, herself. or itself or to be represented by anyone of his. her, or its choosing. regardless of whether the person is an attorney. (h) In reaching a decision after reconsideration, otlicial notice may be taken. either before or after submission of the case for decision. of any fact that may be judicially noticed by the courts of this state or that may appear in any of the official records of the City or any of its departments. (i) [fit is shown. by clear and convincing evidence. that one or more grounds exist to deny, suspend, revoke, or not renew a dispensary permit, the City Manager shall uphold the original decision. The decision of the City Manager shall be in writing and shall contain findings of fact and a determination of the issues presented. U) The. decision shall inform the appellant that the decision is a final decision and that the time for judicial review is governed by California Code of Civil Procedure Section 1094.6. Copies of the decision shall be delivered to the parties personally or sent by certified mall to the address shown on the appeal. The decision shall be linal when signed by the hearing examiner and served as provided in this section. (k) Written notice of the decision of the City Manager shall be served on the applicant within ten days following the hearing. 7 4.20.120 .Judicial Review. Judicial review of a final decision after reconsideration may be had by filing a petition for a writ of mandate with the Superior Court in accordance with Code of Civil Procedure section 1094.5 and 1094.6. Any such petition shall be filed within ninety (90) calendar days after the day the decision becomes final. 4.20.130 Commencement of Operations; Plan Submilslon Requirements. (a) A permitted dispenS8l)' shall provide the following to the City within 45 days of commencing operations: I. Accessibility Plan. A written evaluation of accessibility by the physically disabled to and within the building and identification of any planned accessibility improvements to comply with all state and federal disability access laws, including, but not limited to, Title 24 of the California Code of Regulations and the Americans with Disabilities Act. The evaluation must be prepared by a licensed civil engineer or architect. 2. Security Plan. A security plan, prepared by a qualified professional, outlining the measures that will be taken to ensure the safety of persons and to protect the dispensary property from theft. 3. Floor Plan. A scaled floor plan for each level of the entire building showing the interior confib'llration of the dispensary building, including a statement of the total floor area occupied by the dispensary. The "floor plan must include entrances, exits, restroQms, waiting area, otlice space, storage, and area for distributing Imarijuana to members. The flQQr plan must be prepared by a licensed civil engineer or architect. 4. Site Plan. A scaled site plan Qf the parcel of real property on which the dispensary building is located, including the outline of all structures, driveways, parking and landscape areas, and ooundaries of the parcel. The site plan must be prepared by a licensed civil engineer or architect. 5. Neighborhood Context Map. An accurate straight-line drawing depicting the boundaries of the dispensary property, the ooundaries of all other properties within 1000 feet of the dispensary property. The map must be prepared by a licensed civil engineer or architect. 6. Lighting Plan. A lighting plan showing existing and proposed exterior and interior lighting levels that would be the minimum necessary to provide adequate security lighting for the use. 7. A copy of the dispensary's commercial general liability insurance policy. (b) [fthe applicant fails to submit any of the information required by this section by the deadline. the City Manager shall notify the dispensary to cease operations until the information is submitted. 4.20.140 Operating Requirements. A medical marijuana dispensary, once permitted by the City Manager, shall meet the following operating standards: (a) A medical marijuana dispel1sary shall be open for business only between the hours of9:00 a.m. and 10:00 p.m. on any particular day. (b) A medical marijuana dispensary shall maintain a current register of the names of all employees employed by the medical marijuana dispensary. (c) A medical marijuana dispensary shall maintain a current register of all qualified patients, persons with identitication cards and primary care givers to whom it provides or distributes medical marijuana. Once documented the qualified patients, persons with identification cards and primary caregivers shall be "members" of the medical marijuana dispensary. The medical marijuana dispensary shall further maintain records of all patients and primary caregivers using the identification card number only when issued by the county, or its agent, pursuant to California Health and Safety Code section 11362.7 e4 seq .. so as to a protect the confidentiality of the cardholders, or a copy of the written recommendation from a physician stating the need for medical marijuana. (d) The building entrance to a medical marijuana dispensary shall clearly and legibly have posted a notice indicating that persons under the age of eighteen (18) years are precluded from entering the medical marijuana dispensary, unless they are a qualified patient and accompanied by their parent or guardian. (e) No marijuana shall be smoked, ingested or otherwise consumed on the premises of the medical marijuana dispensary. The term "premises" includes the actual building, as well as any accessory structures, parking areas, or other immediate surroundings. Notice shall be clearly and legibly posted within the premises of a medical marijuana dispensary that smoking, ingesting or consuming marijuana on the premises of the medical marijuana dispensary or in the vicinity of the medical marijuana dispensary is prohibited (t) Any cultivation of medical marijuana or processing of medical marijuana conducted by the medical marijuana dispensary shall at all times occur in a secure, locked, and fully enclosed structure, including a ceiling, roof or top. 8 (g) No medical marijuana dispensary shall sell, provide or dispense alcoholic beverages at the medical marijuana dispensary. (h) A medical marijuana dispensary shall provide adequate security on the medical marijuana dispensary premises, including lighting and alarms, to ensure the safety of persons and to protect the premises from theft. (i) A medical marijuana dispensary shall provide litter removal services once during each day of operations on and in front of the premises and, if necessary, on public sidewalks within one hundred (100) feet of the medical marijuana dispensary premises. (j) A medical marijuana dispensary shall not cultivate, distribute or sell medical marijuana for a profit. A medical marijuana dispensary may receive compensation for its actual expenses, including reasonable compensation for service provided, or for payment of out-of-pocket expenses incurred in providing those services. However, any such medical marijuana dispensary must pay the applicable sales or use tax on such sales or services and maintain the applicable seller's permit or similar permit from the Stale Franchise Tax Board or other applicable agency. (k) A medical marijuana dispensary shall meet all of the operating criteria for the dispensing of medical marijuana required by California Health and Safety Code sections 11362.5 and I 1362.7 el seq. (I) A medical marijuana dispensary shall comply with all applicable laws and regulations related to the A'lmericans with Disability Act. Failure to comply with any of the above operating requirements shall result in the City of Palo Alto informing the permittee of any violation of this chapter, and revocation of the medical marijuana permit ifthe permittee does not remedy the violation within fourteen (14) calendar days. 4.20.150 Suspension· or Revocation o(Pennit. The City Manager may suspend or revoke a dispensary permit if the permittee engages in any act or conduct that would be grounds for denial of the permit in the first instance. 4.20.160 Term, RenewaIa and Fees. (a) A medical marijuana dispensary permit shall be renewed annually, The City Manager shall renew a medical marijuana dispensary permit unless grounds exist in this ordinance for denial of the permit. (b) The City Manager shall renew each dispensary permit upon tender of a nonrefundable fee of ten thousand dollars ($ I 0,000). 4.20.170 Zoning and Development Standards. The provisions of Chapter 18.45 of Title 18 ("'Zoning") of the Palo Alto Municipal Code, adopted in this ordinance, are applicable to medical marijuana dispensaries and compliance with those provisions shall be considered additional requirements for issuance of a dispensary permit. 4.20.180 Minors. (a) It shall be unlawful for any dispensary to employ, or allow to volunteer, any person who is under the age of twenty-one (2 I). (b) Persons under the age of eighteen (18) years shall not be allowed on the premises of a medical marijuana dispensary unless they are a qualified patient and accompanied by their parent or guardian. 4.20.190 Display of Permit. Every medical marijuana dispensary permittee shall display the medical marijuana dispensary permit at all times during business hours. The dispensary permit shall be displayed in a conspicuous place so all persons entering the medical marijuana dispensary may readily see the permit. 4.20.200 Location; Tran8fer of permits. (a) A permittee shall not operate a medical marijuana dispensary under the authority of a medical marijuana dispensary permit at any place other that the address of the medical marijuana dispensary stated in the application for the permit. (b) A permittee shall not transfer ownership or control of a medical marijuana dispensary permit to another person unless and until the transferee obtains an amendment to the permit from the City Manager, which shall not be unreasonably withheld, stating that the transferee is now the permittee. Such an amendment may be obtained only if the transferee tiles an application with the City Manager in accordance with the provisions of this Chapter, and the City Mangerdeternlines that the transferee meets all of the requirements of applicants pursuant to this chapter. 9 (c) Any transfer or attempt to transfer a permit in violation of this section shall be void, and the unlawfully transferred permit shall be deemed revoked by operation of law. 4.20.210 Operation Without. Permit. The operation of a medical marijuana dispensary without first having obtained a permit from the City of Palo Alto pursuant to the provisions of this chapter shall constitute a violation of this chapter and shall be deemed a public nuisance. 4.20.220 Violations of Chapter; Enforcement. (a) Any permittee who violates any provision of this chapter shall be given written notice of the violation. Notice of the violation of any provision of this chapter shall be delivered to the permittee by overnight mail. The permittee shall have fourteen (14) calendar days following notice of any violation of this chapter to cure the violation prior to any penalty or adverse action being taken against the permittee. (b) Any permittee who violates any provision ofthis chapter and fails to cure the violation within fourteen (14) calendar days following notice of the violation shall be subject to a five hundred dollar ($500) fine for each day the violation persists. (c) Any permittee who violates any provision of this chapter and fails to cure the violation within ~irty (30) calendar days following notice of the violation shall be declared a public nuisance that may be summarily mated by the City of Palo Alto pursuant to the Palo Alto Municipal Code. SECTION 3: Title 18 ofthe Palo Alto Municipal Code is amended by adopting a new Chapter 18.45 to read as follows: Chapter 18.45 MEDICAL MARIJUANA DISPENSARIES. 18.45.010 Purpose and Intent. (a) It is the purpose and intent of this ordinance to promote the health, safety, and general welfare of the residents and businesses within tile City of Palo Alto by regulating the location and manner of development of three medical marijuana dispensaries within the City. It is neither the intent nor effect of this ordinance to restrict or deny qualified patients access to marijuana for medical purposes as intended by the passage of the Compassionate Use Act of 1996, codified as Health and Safety Code section 11362.5- (b) The Medical Marijuana Program Act of 2003, codified as Health and Safety Code section 11362.7 e/ seq., allows cities to adopt and enforce rules and regulations consistent with the Compassionate Use Act. The impacts of medical marijuana dispensaries are documented in the "White Paper on Marijuana Dispensaries" published by the CalifOrnia Police Chiefs Association's Task Force on Marijuana Dispensaries (ApriI22, 2009), and the United States DepartmentofJustice's California Medical Marijuana Information report (October 19, 2009). The City of Palo Alto does not condon~ or' condemn the use of marijuana: It is the intent of this chapter, however, to prevent secondary adverse impacts brought about by the close proximity of medical marijuana dispensaries to incompatible uses, such as schools, parks and residentially zoned districts and uses, while allowing for the location of medical marijuana dispensaries in suitable areas. in compliance with Compassionate Use Act and the Medical Marijuana Program Act. 18.45.020 Definitions and Construction. Any reference to California statutes includes any regulations promUlgated thereunder and is deemed to include any successor or amended version of the referenced statute. All definitions set forth in Health & Safety Code section 11362.7, as may be amended, including but not limited to the terms "attending physician," "person with an identification card," "primary caregiver," "qualified patient," "identification card," and "serious medical condition," shall apply under this section in addition to the definitions set forth as follows: . (a) "Applicant" means a person who tiles an applicarion for a medical marijuana dispensary permit under Ihis chapter. (b) "City Clerk" means the City Clerk for the City of Palo Alto or designee. (.e) "City Manager" means the City Manager for the City of Palo Alto or designee. (d) "Collective or Cooperative Cultivation" means the association within California of qualified patients, persons with valid identification cards, and designated primary care givers to cultivate marijuana for medical purposes as defined in strict accordance with California Health and Safety Code sections 11362.5 and 11362.7 el seq. (e) "Cultivation of Medical Marijuana" means the growing of medical marijuana for medical purposes in accordance with Health and Safety Code sections 11362.5 and 11365.7 el seq (f) "Dispensary" shall have the same definition as "medical marijuana dispensary," as set forth in this section. (g) "Dispensary area" means the dispensary property and the area within 100 feet of the dispensary property. to (h) operated. (i) "Dispensary building" means the building or portion of a building within which a dispensary is "Dispensary permit" means a medical marijuana dispensary permit. (j) "Dispensary property" means the parcel of real property or portion of the parcel of real property that is owned or leased by a dispensary and upon which a dispensary is operated. lk) "Guidelines" means the "Guidelines For The Security and Non-Diversion of Marijuana Grown for Medical Use," issued by the California Attorney General in August 2008, as may be amended from time to time. (I) "Management member" means a member with responsibility for the establishment, registration, supervision. or oversight of the operations of a medical marijuana dispensary, including but not limited to, a member who is. or pertorms the func..1ions of, a board member. director, otlicer. owner. operating offi~er, or manager of the dispensary. (m) "Marijuana" shall have the same detinition as set torth in Health and Safety Code I \0 18. (n) "Medical Marijuana" means marijuana used for medical purposes in accordance with Health and Safety Code sections 11362.S and 11362.7 el seq. (0) "Medical marijuana dispensary" means a cooperative or collective of four or more members who " associate at a particular location or real property to collectively or cooperatively distribute marijuana to members for t medical purposes, and operate on a not-for-profit basis. consistent with Califomia Health and Safety Code'section 11362.S and 11362.7 el.req.). the Guidelines for the Security and Non-Diversion of Marijuana Grown for Medical Use issued by the California Attorney General in August 2008, and this chapter. A medical marijuana dispensary shall not include the following uses: a clinic licensed pursuant to Chapter I of Division 2 of the Health and Safety Code; a health care facility licensed pursuant to Chapter 2 of Division 2 of the Health and Safety Code; a residential care facility for persons with chronic life-threatening illness licensed pursuant to Chapter 3.01 of Division 2 of the Health and Safety Code; a residential care facility for the elderly licensed pursuant to Chapter 3.2 of Division 2 of . the Health and Safety Code; and a residential hospice or a home health agency licensed pursuant to Chapter 8 of Division 2 of the Health and Safety Code, as long as any such use complies with applicable laws including. but not limited to, California Health and Safety Code section 11362.5 and 11362.7 el ,req.), and the City of Palo Alto Charter and Municipal Code. (p) "Medical Marij uana Dispensary Permit" means a permit that authorizes a medical marijuana dispenswy to operate within the City. (q) "Member" means any qualified patient, primary caregiver, or person with an identification card who is registered with a medical marijuana dispensary. (r) "Operate a dispensary" means to engage in or conduct the business of a dispensary, including, but not limited to, distributing medical marijuana and maintaining the facilities of a dispensary. (s) Palo Alto. "Permittee" means a pelSOn that holds a valid medical marijuana dispensary permit from the City of (t) "Person" means, without limitation, any natural individual, organization, firm, trust, common law trust, estate, partnership of any kind, association, syndicate, club. joint stock company, joint venture, limited liability company, corporation (including foreign, domestic, and nonprofit), municipal corporation (other than the City of Palo Alto), cooperative, receiver. trustee. guardian, or other representative appointed by order of any court. 18.45.030 Pennitted Zones; Minimum Proximity; Other Requirements. (a) Except as set forth in subsection (b) of this section, a medical marijuana dispensary shall be allowed to operate in any commercial or industrial lone, or equivalent, in the City of Palo Alto. (b) Notwithstanding subsection A of this Section, no medical marijuana dispensary shall be located: I. Within 150 feet of any residential zone; 2. Within 600 feet of any public or private school; or 3. Within 500 feet of any public library, public park, licensed day care center, or substance abuse rehabilitation center. Subsections (b)I., (b)2., and (b)3. of this section shall be collectively known as "sensitive uses." The distance between a medical marijuana dispensary and a sensitive use shall be measured in a straight line, without regard to the intervening structures or objects, from the primary entrance of the medical marijuana dispensary to the property line in which the sensitive use is located. (c) A medical marij uana dispensary is not and may not be approved as an accessory use to any other use permitted by the Palo Alto Municipal Code. (d) No more than one medical marijuana dispensary may operate out of a single building. 11 The following message is being sent on behalf of the Medical Marijuana Committee of the City Attorneys' Department of the League: On January 19, 2012, the California Supreme Court granted review in four cases involving cities' regulation of medical marijuana dispensaries/collectives. The cases are as follows: • Pack v. Superior Court (2011) 199 Cal. App. 4th 1070 ("Pacl<') (Long Beach's ordinance allowing dispensaries subject to permit provisions, application fee, renewal fees, and lottery system for permits were preempted by the federal Controlled Substances Act). • City of Riverside v. Inland Empire Patient's Health & WeI/ness Center, Inc. (2011) 200 Cal. App. 4th 885 ("Riverside") (Riverside's zoning ordinance banning dispensaries was a lawful regulation and restriction on the location and establishment of dispensaries, and was not preempted by the Compassionate Use Act of 1996 ("CUA"), Health & Safety Code § 11362.5, or the Medical Marijuana Program Act ("MMPA"), Health & Safety Code §§ 11362.7-11362.83). • People v. G3 Holistic (2011) 2011 Cal. App. Unpub. LEXIS 8634 ("G3") (Upland's zoning and business license ordinance banning dispensaries was not preempted by the CUA or the MMPA). • Traudt v. City of Dana Point (2011) 199 Cal. App. 4th 886 ("Traudf') (an individual dispensary patron does not have standing to challenge Dana Point's zoning ordinance prohibiting cooperative or collective entities engaged in the production and distribution of marijuana to their members for medicinal purposes). This memorandum sets forth the Committee's preliminary observations in response to the grant of review in these four cases. This memorandum is provided for general information only and is not offered or intended as legal advice. Readers should seek the advice of an attorney when confronted 1 with legal issues and attorneys should perform an independent evaluation of the issues raised in this memorandum. 1. The legal effect of the Supreme Court's order granting review is to effectively depublish those appellate decisions that had been published. A Supreme Court order granting review has "the effect of depublishing" the Court of Appeal's decision. (See, e.g., Quintano v. Mercury Casualty Co. (1995) 11 Cal.4th 1049,1067, fn. 6.) Unpublished California appellate decisions may not be cited in or relied on by any court. (Cal. Rules of Court, Rule 8.1115.) Thus, the Pack, Riverside and Traudt decisions may no longer be cited or relied on. The G3 decision, previously unreported, remains so. None of the four has any precedential value until the Supreme Court issues a decision. 2. Do cities still have authority to enact dispensary prohibitions following the order granting review in Riverside? Yes. Following the Court of Appeal's decision in Riverside, cities had clear authority to adopt zoning provisions prohibiting dispensaries outright, without concern of CUA or MMPA preemption. The question arises whether, in light of Riverside's effective depublication, cities still may adopt such a permanent prohibition. (Because it was unpublished even before the Supreme Court granted review, G3 never provided precedential authority.) Answering this question requires resort to both the decisional law prior to Riverside, as well as statutory changes since. The case law decided prior to Riverside and G3 strongly suggests that the answer is "yes." County of Los Angeles v. Hill (2011) 192 Cal.App.4th 861 ("Hilt') involved an ordinance that prohibited dispensaries without a permit, not a permanent total prohibition, and City of Claremont v. Kruse (2009) 177 Cal.App.4th 1153 ("Kruse") involved a temporary as opposed to a permanent prohibition. Both cases upheld the challenged ordinances against claims that they were preempted by the CUA and MMPA. Following these decisions, marijuana advocates argued that neither Hill nor Kruse would support a total permanent prohibition against preemption challenge. Without engaging in an extended discussion of this issue, it is the consensus view of the Committee that the analysis and conclusions in both Hill and Kruse would apply with equal force to ordinances imposing total permanent prohibitions. In addition, the 2011 statute, AB 1300, amended part of the MMPA, Health & Safety Code § 11362.83, to explicitly authorize the enactment and civil and criminal enforcement of local laws regulating dispensaries. That section now provides: Nothing in this article shall prevent a city or other local governing body from adopting and enforcing any of the following: (a) Adopting local ordinances that regulate the location, operation, or establishment of a medical marijuana cooperative or collective. (b) The civil and criminal enforcement of local ordinances described in subdivision (a). (c) Enacting other laws consistent with this article. (This Amendment of Section 11362.83, and its reference to civil and criminal enforcement, were in response to the issue considered in Qualified Patients Assn. v. City of Anaheim (2010) 187 Cal.App.4th 734 ("Qualified Patients").) 2 The Hill Court considered similar language in Section 11362.768 ("Nothing in this section shall prohibit a [county] from adopting ordinances or policies that further restrict the location or establishment of a medical marijuana ... dispensary .... "). Hill held that this language authorized not only local regulations allowing dispensaries, but also those prohibiting those that have not complied with permit requirements. (192 CaLApp.4th at 868.) Even after the grant of review in Riverside, Hill remains good law. Again, although Hill involved a prohibition only against non-permitted dispensaries, and not a total permanent prohibition, the Committee's view is that Hill's analysis in this regard will apply with equal force to whether Section 11362.83 authorizes total permanent prohibitions. It unquestionably allows regulations similar to those in Hill. 3. Do cities have authority to enact and enforce ordinances allowing dispensaries subject to permit. fee, operational and other regulations following grant of review in Pack? The answer is unclear, and there are risks in doing so. The Committee set forth its observations with respect to the effect of the Court of Appeal's decision in Pack in its memorandum dated October 26, 2011, which is available on the League's website. (http://www.cacities.org/resource files/30268.Pack%20Memo Final· 2011.10.26.pdf.) The memorandum raised and answered several questions. Most prominently, the memorandum concluded that under Pack, cities no longer could require a permit as a condition of operating a dispensary or collective. Nor could cities adopt or enforce zoning or business license ordinances that effectively "authorize" dispensaries or make dispensaries permitted or "enumerated" uses. Following the grant of review in Pack, there is currently no reported appellate authority precluding such ordinances. In addition, prior to Pack, the appellate courts that had in some manner considered an argument that the federal CSA preempts the CUA and/or MMPA had rejected it (albeit in different contexts not involving a local ordinance allowing marijuana dispensaries). (See, e.g., Qualified Patients, 187 CaLApp.4th 734; County of San Diego v. San Diego NORML (2008) 165 CaLApp.4th 798; County of Butte v. Superior Court (2009) 175 CaLApp.4th 729; City of Garden Grove v. Superior Court (2007) 157 Cal.App.4th 355.) (This point is noted in the City Attorney's Municipal Law Handbook.) The recent amendment of Section 11362.83, discussed above in the context of local prohibitions, also bears on the issue. Clearly, Section 11362.83 expresses the Legislature's intent that cities be allowed to regulate the operation of dispensaries. The Committee's view, however, is that cities nevertheless should remain cautious in recognizing that neither the effective depublication of Pack following the grant of review, nor AB 1300's amendment of Section 11362.83, eliminates the strong possibility that claims of federal preemption will continue to be made. Moreover, if the Supreme Court ultimately upholds the Pack Court of Appeal's decision and analysis, cities with regulatory ordinances permitting dispensaries will again face the risks and concerns (e.g. arguments about fees already collected, vesting for operators previously granted permits) that followed the issuance of the Pack decision last year. Moreover, the Committee cautions cities to bear in mind that United States Attorneys have continued to enforce the CSA against dispensary operations in various parts of the state, and have in some instances threatened enforcement against local government. Those issues are not resolved either by the grant of review in Pack or the amendment of Section 11362.83. 4. Pending the Supreme Court's further guidance, cities may look to violations of the CUA and MMPA as a basis for enforcement. 3 City of Palo Alto (ID # 2997) City Council Staff Report Report Type: Consent Calendar Meeting Date: 7/16/2012 July 16, 2012 Page 1 of 3 (ID # 2997) Summary Title: Toshiba Laptops Title: Approval of Contract for Goods (Purchase Order) for the Acquisition of Toshiba Laptops From: City Manager Lead Department: IT Department Recommendation Staff recommends that the Council approve the contract for goods (by Purchase Order) with Golden Gate Systems LLC, a California Corporation, for the purchase of Toshiba Laptops, docking stations, and security software and authorize the City Manager or his designee to execute Purchase Order 4513000001 for the purchase of the equipment in the amount of $303,020.87. Staff also recommends that the Council authorize the City Manager or his designee to execute change orders up to 10% of the contract price (or $30,020) for any additionally required laptop-related equipment. Discussion The City currently has approximately 1,000 computers in its inventory. The City replaces computers after a four year-life cycle and staggers the purchases. Therefore, each year approximately 25 percent of the City’s computer inventory is replaced. As part of a new mobile initiative, Information Technology is transitioning to a “majority laptop” environment. This means that when staff computers are eligible for replacement, they will receive a laptop unless there is a business need for a desktop computer. By replacing many end-of -life desktops with laptops, staff can recognize the following benefits: 1. Up to 20% productivity gain per week per employee (ability to take device to meetings and work remotely) July 16, 2012 Page 2 of 3 (ID # 2997) 2. Up to 90% less energy consumed than a desktop 3. Untethers employees from fixed locations, boosts effectiveness 4. Dramatic boost in workflow and organizational efficiency 5. Laptop has a built-in UPS in the event of power outage 6. Less downtime as a hot-swap or temporary device becomes a possibility 7. Offer significant conveniences for access to technology resources 8. Price & performance difference is largely negligible between desktops and laptops 9. Supports softphone access with new telephone implementation 10. Video conferencing is built into device In June 2012, the City conducted a Request for Quotation for laptop and peripheral equipment. Seven vendors submitted responses to the RFQ. Vendor City/State Quotation Business Services Longboat Key, FL $318,594.15 OM Office Supply Mechanicsburg, PA $319,778.62 Computerland San Jose, CA $312,212.16 CDW-G Vernon Hills, IL $319,196.34 Ascent Rugged Mobile El Cajon, CA $310,141.66 Golden Gate Systems, LLC Milpitas, CA $303,020.07 EDX Information Systems Fremont, CA $324,239.66 Based upon the quotations submitted, Golden Gate Systems, LLC was selected as the lowest responsive bidder and the recommended vendor. Resource Impact Funding for this equipment is allocated in the Tech Fund Operating budget. Prepared By: Lisa Bolger, Manager, IT Department Head: Jonathan Reichental, Chief Information Officer July 16, 2012 Page 3 of 3 (ID # 2997) City Manager Approval: ____________________________________ James Keene, City Manager City of Palo Alto (ID # 3021) City Council Staff Report Report Type: Consent Calendar Meeting Date: 7/16/2012 July 16, 2012 Page 1 of 2 (ID # 3021) Summary Title: Reappropriations to Council Title: Approval of Fiscal Year 2012 Reappropriation Requests to be Carried Forward into Fiscal Year 2013 From: City Manager Lead Department: Administrative Services Recommendation Staff recommends that the Council approve the Fiscal Year 2012 reappropriations to be carried forward into Fiscal Year 2013 (Attachment A). When the Fiscal Year 2012 audit is complete, as we always do, staff will return to Council in December 2012 with the Comprehensive Annual Financial Report (CAFR) for confirmation of these reappropriations. Background As a part of the fiscal year-end process, staff reviews the City’s unencumbered and unspent appropriations of the fiscal year just ended, along with the City’s spending plans. Encumbered amounts are those subject to the legal claims of other parties due to contractual obligations (for example, commitments made through purchase orders). The City has a process for carrying forward encumbrances. However, each year there are a small number of important projects the City carries forward into the next year with unencumbered funds. The reappropriations process is used for these projects. Although the Municipal Code also requires that the Council provide final approval at mid-year, once the accounting books are closed, the Council must provide a preliminary approval at this time to allow the reappropriations to move forward,. In 1995, the Municipal Code was amended to allow the Council to preliminarily approve the reappropriations (Chapter 2.28, Section 2.28.090) because projects may need funding in the first part of the fiscal year. The Municipal Code also states that unless amended by Council, the appropriations of capital improvement funds for project expenditures shall continue in full force and effect until the purpose for which each was made has been accomplished or abandoned. The purpose of any capital appropriation is deemed abandoned if two years pass without any expenditure from the appropriation. July 16, 2012 Page 2 of 2 (ID # 3021) Discussion As noted above, the Municipal Code allows the “preliminary” approval of reappropriations as long as final approval is included with the normal year-end closing ordinance. The preliminary reappropriation action allows for an early review of uncommitted funds in a just-concluded fiscal year. Attachment A identifies those reappropriation requests that staff recommends for preliminary approval. Included are capital projects that have had no expenditures within the last two years. Resource Impact The requested items have been previously reviewed and approved by City Council as part of the Fiscal Year 2012 budget process. Staff has determined that sufficient funds exist to allow for the approval of the attached Fiscal Year 2012 reappropriations list (Attachment A). General Fund proposed operating budget reappropriations total $1,017,394. Enterprise Fund proposed operating budget reappropriations total $1,926,688 and Internal Service Fund proposed operating budget reappropriations total $343,064. Reappropriations for capital projects total $8,936,212. Policy Implications This recommendation is consistent with adopted Council policy. Environmental Review The action recommended is not a project for the purposes of the California Environmental Quality Act. Attachments: Attachment A: Reappropriations attachment (DOC) Attachments: Attachment A: Reappropriations attachment (DOC) Prepared By: Sherry Nikzat, Senior Financial Anlyst Department Head: Lalo Perez, Chief Financial Officer City Manager Approval: ____________________________________ James Keene, City Manager Page 1 of 7 FY 2012 REAPPROPRIATION REQUESTS SUMMARY OF REQUESTS Total Requests Total Recommended GENERAL FUND $1,017,394 $1,017,394 ENTERPRISE FUND $1,926,688 $1,926,688 INTERNAL SERVICE FUND $343,064 $343,064 CAPITAL IMPROVEMENT PROJECTS $5,649,066 $5,649,066 TOTAL $8,936,212 $8,936,212 $ AMOUNT INTENDED USE COMMENTS/REASONS FOR NOT COMPLETING IN FY 2012 STATUS City Manager’s Office $162,300 Office/space reconfigurations in City Hall This reappropriation is requested to carry over unused Fiscal Year 2012 City Manager contingency to the City Manager’s Fiscal Year 2013 contingency. The request will be used to continue needed space/office planning and office reconfigurations to improve public counter, general operations and meeting spaces in City Hall. Recommended $162,300: This request is funded by unused Fiscal Year 2012 City Manager Contingency Funds and there is sufficient balance that can be reappropriated. Administrative Services $59,545 Cost of services study This reappropriation is being requested to continue the cost of services study initiated in Fiscal Year 2012. A consultant was hired to update the cost allocation plan, municipal fee schedule, and development impact fees. Part of that work is now complete, some still remains to be completed. Recommended $59,545. There is sufficient balance in the Fiscal Year 2012 budget that can be reappropriated. Community Services $8,491 Children’s Theater This reappropriation is requested to carry forward the remaining, unused portion of a donation. Recommended $8,491. There is sufficient balance in the Fiscal Year 2012 budget that can be reappropriated. Library $3,250 Parenting Program This reappropriation is requested to carry forward the remaining, unused portion of a federal grant. The grant funds the Parenting Program Series at the Palo Alto City Library. Funds will be spent on speaker fees and supplies for lectures and workshops given by parenting experts. Recommended $3,250. There is sufficient balance in the Fiscal Year 2012 budget that can be reappropriated Attachment A Page 2 of 7 $ AMOUNT INTENDED USE COMMENTS/REASONS FOR NOT COMPLETING IN FY 2012 STATUS $100,000 Mitchell Park This reappropriation is requested to carry forward the unused portion of a gift from the Palo Alto Library Foundation for the purchase of library collection materials (Staff Report 2258; BAO 5137). Materials will be purchased close to the time of the library opening, providing customers with the most current productions and publications. Recommended $100,000. There is sufficient balance in the Fiscal Year 2012 budget that can be reappropriated Planning and Community Environment $105,373 Development Center Blueprint Process This reappropriation is being requested for furnishings for implementation of the Development Center Blueprint Process. In FY 2012, Staff Report 2364 and BAO 5134 increased the budget for the Blueprint Process by $155,639 for workstations, carpeting, and furniture moving. Shortly thereafter, the approval of Staff Report 2389 authorized the rent of the second floor of the Development Center. To maximize purchasing power and end up with more cohesive functionality, furnishing and carpeting was delayed until second floor plans could be made. Reappropriations of these funds will be combined with an expected request for funding to complete furnishing the second floor. Recommended $105,373. There is sufficient balance in the Fiscal Year 2012 budget that can be reappropriated. Public Safety $88,435 Fire - Uniforms and protective gear This reappropriation is requested for uniforms and protective gear for the new staff hires. Upon review of the Fire budget, the Office of Management and Budget did not recommend Fire’s request for a midyear budget amendment in Fiscal Year 2012 and requested that Fire instead release budget from an over-budgeted contract. Because the contract budgeting was released too late in the Fiscal Year to encumber, this budget needs to be reappropriated. Recommended $88,435. There is sufficient balance in the Fiscal Year 2012 budget that can be reappropriated. $490,000 Office of Emergency Services This reappropriation is to reappropriate unused budget from Fiscal Year 2012 approved for the establishment of an Office of Emergency Services (OES). The Director of OES was hired halfway through Fiscal Year 2012, allowing only six months to staff the office and undertake program plans. Recruitment is currently underway to provide capacity for project management. Projects are expected to include: sustainable power for generator; backup data links; solar powered WiFi links; emergency management software and systems; voice and data systems in support of PAPD communications and regional projects; GIS entry of infrastructure and key resources; new computer systems; vulnerability assessment. Recommended $490,000. There is sufficient balance in the Fiscal Year 2012 budget that can be reappropriated Public Works Department- Storm Drainage Fund Page 3 of 7 $ AMOUNT INTENDED USE COMMENTS/REASONS FOR NOT COMPLETING IN FY 2012 STATUS $40,631 Storm Drain Innovative Improvements This reappropriation is being requested for innovative storm drain improvements. These funds must be reappropriated because they were specifically earmarked for innovative storm drain improvements per the 2005 Storm Drainage ballot measure approved by Palo Alto property owners. These funds have been budgeted for a stormwater rebate program that offers incentives to residents and businesses to reduce stormwater runoff. Recommended $40,631. There is sufficient balance in the Fiscal Year 2012 budget that can be reappropriated. Utilities Department- Electric Fund $1,886,057 Electric Efficiency loans Council approved a multi-year program to be funded from the Calaveras Reserve (CMR 430:09). Beginning in Fiscal Year 2011, this program was to be used for four years to provide no interest loans to Palo Alto businesses that are implementing electric energy efficiency projects. The program continues in Fiscal Year 2013. Recommended $1,886,057. There is sufficient balance in the Fiscal Year 2012 budget that can be reappropriated Information Technology $140,879 Server replacement and network monitoring The reappropriation is being requested for server replacement and a network monitoring application. Due to some unanticipated problems, these funds did not get encumbered in a timely manner to be able to move forward into the next Fiscal Year. Recent server problems have caused significant delays to city operations underscoring the critical nature of this need. Recommended $140,879. There is sufficient balance in the Fiscal Year 2012 budget that can be reappropriated. $97,674 Wireless connectivity This is the remaining balance of the $104,000 amount granted midyear for wireless access points. Due to timing, this project was not completed in Fiscal Year 2012. Recommended $97,674. There is sufficient balance in the Fiscal Year 2012 budget that can be reappropriated. $104,511 Public Safety Mobile Systems This reappropriation is requested to cover: the costs of moving to a new wireless provider with a more secure platform in order to meet the requirements of the U.S. Department of Justice for public safety mobile systems; installing monitors for Councilmembers in Council Chambers; the purchase of a Project Management application for the reporting, diagnostics, and managing of various projects; and, 10 Track-It software licenses and Change Management module for the tracking of work orders and inventory. These activities were not completed in Fiscal Year 2012 due to workload issues. Recommended $104,511. There is sufficient balance in the Fiscal Year 2012 budget that can be reappropriated. Page 4 of 7 CAPITAL IMPROVEMENT PROJECTS (CIP) CIP $ AMOUNT INTENDED USE COMMENTS /REASONS FOR NOT COMPLETING IN FY 2012 STATUS Police Department- Technology Fund TE-11002 $305,535 Police Mobile In-Car Video System Replacement This reappropriation is being requested for the replacement of the mobile in-car video system deployed in all of the police patrol cars. The current system is over five years old and is at the end of its lifecycle. Newer technology with better resolution and enhanced storage and retrieval capabilities is available. The system was not replaced during FY 2012 because staff was managing competing priorities and multiple projects. The initial product evaluation process has been started and several demonstrations have been evaluated in the vehicles. Recommended $305,535. There is sufficient balance in the Fiscal Year 2012 budget that can be reappropriated. Public Works Department- Capital Projects Fund PF-09000 $100,000 Children’s Theater Improvements This reappropriation is being requested to replace or upgrade mechanical and electrical systems, and replace building finishes at the Children’s Theater. The project was not completed in FY 2012 due to staff workload constraints. A consultant will be hired to design the improvements in Summer 2012. Recommended $100,000. There is sufficient balance in the Fiscal Year 2012 budget that can be reappropriated. Community Services Department- Capital Projects Fund OS-09002 $175,000 Baylands Emergency Access Levee Repair This reappropriation is being requested to restore the width and height of the earthen flood levee between Harbor Road near the Baylands Nature Center and the perimeter levee of the airport to 6 inches above its original height. This project was delayed to coincide with the San Francisquito Creek Joint Powers Authority’s flood control project. However, as the timing of the JPA’s project is still undetermined, staff will move forward with the Baylands levee repair in FY 2013 separately. Recommended $175,000. There is sufficient balance in the Fiscal Year 2012 budget that can be reappropriated. PG-11002 $250,000 Monroe Park Improvements This reappropriation is being requested to provide necessary upgrades to pathways, benches, trash and recycling receptacles and play equipment at Monroe Park. Due to various unforeseen emergency repair projects in FY 2012, this project was not completed. Improvements will include the renovation of existing playground to comply with ADA standards. Recommended $250,000. There is sufficient balance in the Fiscal Year 2012 budget that can be reappropriated. Page 5 of 7 CAPITAL IMPROVEMENT PROJECTS (CIP) CIP $ AMOUNT INTENDED USE COMMENTS /REASONS FOR NOT COMPLETING IN FY 2012 STATUS AC- 09001 $100,000 Replacement of Children’s Theater Audio and Visual Monitoring Systems This reappropriation is being requested to replace the non-functioning Children Theater audio and visual monitoring systems, and expand the monitoring systems to the Wang Library/Rehearsal Hall and the Magic Castle Stage. The project will include an audio and video monitoring system, paging system, and intercom system. This project was not completed in FY 2012 due to staffing shortages. The project is now expected to be completed by January 2013. Recommended $100,000. There is sufficient balance in the Fiscal Year 2012 budget that can be reappropriated. AC- 09002 $200,000 New Sound System for Lucie Stern Community Theater This reappropriation is being requested to provide a new sound system that includes sound mixer, house speakers (including a new center luster), audio snake system to connect the booth and the right back-of-house, amplifiers, audio patch for microphones and speakers, hard drive audio editing/storage unit and CD recorder/player, and monitor speakers in the costume shop and rehearsal hall. This project was not completed in FY 2012 due to scheduling conflicts and staffing shortages. The project is now expected to be completed by November 2012. Recommended $200,000. There is sufficient balance in the Fiscal Year 2012 budget that can be reappropriated. Information Technology Department- Technology Fund TE-07006 $95,694 SAP Continuous Improvement This reappropriation is being requested to support a comprehensive security assessment and to implement the City Auditor’s recommendations related to the security of the City’s information systems. Staff worked on security audit recommendations in FY 2012, and additional work to be performed in FY 2013 requires the attention of the newly hired Information Security Manager. Recommended $95,694. There is sufficient balance in the Fiscal Year 2012 budget that can be reappropriated. TE-01012 $578,337 IT Disaster Recovery Plan This reappropriation is being requested to provide the means to promptly resume mission critical and business operations should a natural disaster occur that renders the City’s primary computer system infrastructure inoperable. The project was not addressed in FY 2012 due to a lack of resources and other competing priorities. With the hiring of the Information Security Manager, the project will be initiated in FY 2013 and is expected to be a multi-year project. Recommended $578,337. There is sufficient balance in the Fiscal Year 2012 budget that can be reappropriated. Page 6 of 7 CAPITAL IMPROVEMENT PROJECTS (CIP) CIP $ AMOUNT INTENDED USE COMMENTS /REASONS FOR NOT COMPLETING IN FY 2012 STATUS Administrative Services Department- Capital Projects Fund AS-10001 $100,000 Sustainability Contingency This reappropriation is being requested to provide funding for elements of General Fund CIP projects that meet the criteria for Sustainability. This project will be used for specific measures that are either cost-effective, resource- efficient projects or sustainability measures identified under nationally recognized standards. Funding will be transferred out from this project into the qualifying project. Recommended $100,000. There is sufficient balance in the Fiscal Year 2012 budget that can be reappropriated. Utilities Department- Water Fund WS- 11001 $275,000 Vacuum Excavation Equipment This reappropriation is being requested for the purchase of a new vacuum excavation machine for new water service installations. This purchase will include all auxiliary equipment to provide keyhole excavation and minimize pavement disruption associated with service line installations. The equipment purchase requires specifications from Fleet staff acceptance by WGW Operations, and review by the Fleet Review Committee. These processes are expected to occur in FY 2013. Recommended $275,000. There is sufficient balance in the Fiscal Year 2012 budget that can be reappropriated. Utilities Department- Wastewater Collection Fund WC- 11000 $3,119,500 Wastewater Collection Rehabilitation / Augmentation Project 24 This reappropriation is being requested to implement high priority rehabilitation, augmentation, and lateral replacement work, which reduces inflow of rainfall and ground water into the collection system. This project was delayed due to the cross-bore inspection project which took priority over wastewater CIP projects. Recommended $3,119,500. There is sufficient balance in the Fiscal Year 2012 budget that can be reappropriated. Utilities Department- Technology Fund TE-11003 $150,000 Recurring Credit Card Payments This reappropriation is being requested to implement recurring credit card payments in the Utilities online customer service program. Resources were not available to implement the project in FY 2012. The recurring credit card feature will lower transaction fees for credit card processing. Recommended $150,000. There is sufficient balance in the Fiscal Year 2012 budget that can be reappropriated. Page 7 of 7 CAPITAL IMPROVEMENT PROJECTS (CIP) CIP $ AMOUNT INTENDED USE COMMENTS /REASONS FOR NOT COMPLETING IN FY 2012 STATUS TE-11005 $200,000 Implementation of New Utility Rate Structures This reappropriation is being requested to reconfigure Pitney Bowes bill print software to allow new rate structures and time differentiated pricing. The project also includes the development of a customized bill design for time-of-use customers. Resources were not available to implement the project in FY 2012. Recommended $200,000. There is sufficient balance in the Fiscal Year 2012 budget that can be reappropriated. City of Palo Alto (ID # 2957) City Council Staff Report Report Type: Action ItemsMeeting Date: 7/16/2012 July 16, 2012 Page 1 of 17 (ID # 2957) Summary Title: Downtown Parking and Residential Permit Parking Title: Direction on Downtown Parking Strategies and Approval of Trial Residential Permit Parking Program In and Around the Professorville Neighborhood From: City Manager Lead Department: Planning and Community Environment Recommendation Staff recommends that Council: 1. Authorize the implementation of a trial residential permit parking program (RPP) in the Professorville area, and direct staff to return to Council within 6 months with recommendations for a permanent RPP program, including costs and fees that result in no net cost to the City; and 2. Direct staff to proceed with additional studies and actions related to parking in downtown, including but not limited to: a. Study of potential new public parking garage sites, capacities and costs; b. Methods to increase capacity in existing garages, such as attendant parking and adjustments to the permit/public distribution of spaces; c. Technology enhancements, such as gate controls, parking space identification systems, and parking permit processing improvements, etc. d. Evaluation of additional opportunities for residential permit parking (RPP), particularly in the downtown North area, pursuant to the policy framework outlined by staff; and e. Zoning studies and revisions, including study of the downtown cap on nonresidential space, the use of bonuses and transfer rights, variable July 16, 2012 Page 2 of 17 (ID # 2957) parking ratios for office uses, and how to treat nonconforming parking sites. Executive Summary This staff report provides an update to the City Council on parking strategies developed during the first half of 2012, including recommendations for a trial residential parking permit program (RPP) in the Professorville area south of downtown. In the Spring of 2011, the City began an update of the City’s Parking Program, focused initially on monitoring and modifying the distribution process for parking permits in both the University Avenue and California Avenue Business Districts. This effort included the establishment of an online parking permit management program and expansion of the number of parking spaces available within the districts. Ongoing efforts have also included initiating a study of (a) potential new garage(s) downtown and exploring other means of attaining more efficient use of existing parking spaces, including the use of “attendant” parking and a variety of technology enhancements to better identify available spaces for customers and employees of downtown. Following a City Council Study Session in September of 2011, staff initiated the formation of a Downtown Parking Study Group comprised of self-appointed representatives from Professorville, the Palo Alto Downtown (PAD) Business & Professional Association Parking Committee, and staff to focus on the development of a pilot RPP program in Professorville in response to resident requests. This staff report focuses on the findings and recommendations of the Study Group and provides a recommendation for the implementation of a pilot RPP program in Professorville. A policy outline for future RPP programs has been presented as well, and will be used to coordinate such efforts with neighborhoods such as Downtown North. Additional information on parking strategies being developed by the City are outlined at the end of the report discussion and in an information memo provided to the City Council on December 19, 2011 (Attachment A). A brief discussion is also included on parking issues relevant to the City’s zoning ordinance, and the need for further study and revisions to address those concerns. Background Upon implementation of an effort to update the City’s Parking Program, an July 16, 2012 Page 3 of 17 (ID # 2957) extensive parking data collection process was developed to establish baseline data to help monitor the progress and effectiveness of strategies. Initial efforts focused on parking occupancy data that measures the number of vehicles parked on the street and within public parking lots and garages. In the Downtown, parking data was collected from Palo Alto Avenue to the North, Embarcadero Road to the South, Alma Street to the West, and Middlefield Road to the East. In the California Avenue Business District, data was collected from Stanford Avenue to the North, Page Mill Road to the South, El Camino Real to the West, and Park Boulevard to the East. Baseline data collected in the Spring of 2011 validated concerns expressed by residents in Professorville that parking structures in downtown were not being efficiently utilized and that intrusion onto adjacent residential streets may be occurring due to increase in on-street parking occupancy during the noon peak period. The City staff reported the findings to the community, the Palo Alto Downtown (PAD) Parking Committee, the Planning & Transportation Commission, and the City Council. Staff then implemented modifications to the permit distribution practices of the City, including the establishment of maximum permit sales per parking facility versus quarterly evaluations for consideration of permit distribution. The City also modified the permit parking supply at Lot S/L (Bryant Street Parking Garage) by converting the 4th floor of the garage from hourly spaces to permit spaces providing an additional 102 permit parking spaces for use by members of the University Avenue parking assessment district. Parking occupancy both on-street and at off-street parking facilities was measured again in the Fall of 2011 to help determine whether modifications being implemented were having a helpful effect. Table 1 highlights the noon peak-hour comparisons of occupancy data following the initial modifications to the City’s permit distribution methodology and supply changes at the four largest downtown parking structures. Table 1 shows that the permit distribution practices implemented by the City were effective in increasing the noon peak period occupancy of the parking structures with an average 20% increase in parking permit usage. A complete summary of occupancy findings is provided in Attachments B, C, and D for the Baseline Spring 2011, Fall 2011 and Winter 2011-12 seasons for all surface parking lots and garages by time-of-day. July 16, 2012 Page 4 of 17 (ID # 2957) Table 1 Downtown Garages – Peak Hour Letter/Name Parking Space Summary Max # Permits Sold Wait List1 Spring 2011 Fall 2011 Winter 2011-12 # Hourly Spaces # Permit Spaces Total Space s Permit Volume Occ- upancy Permit Volume Occ- upancy Permit Volume Occ- upancy Lot R Alma/High South 77 134 211 200 180 103 77% 107 80% 127 95% Lot S Bryant Street 381 307 688 575 122 209 53% 280 95% 222 76% Lot WC Cowper- Webster 201 388 589 630 65 256 66% 292 75% 316 81% Lot CC City Hall 187 519 706 820 148 483 93% 477 92% 485 95% 1 – Wait List as of May 29, 2012 In addition to permit distribution practice modifications, staff has also focused on increasing the on-street parking supply through simple roadway marking modifications, conversion of underutilized 30-minute parking spaces, and reduction in oversized red curb restriction zones, helping to provide an additional 32 parking spaces, six bicycle corrals with 60 on-street bicycle parking spaces; and 15 bicycle arc/standard bike rack facilities. Two of the 32 new parking spaces were used to accommodate the installation of the six new bicycle corral facilities providing a net 30 new on-street parking spaces (valued at $1,800,000 compared to new construction). Additional improvements include the installation of parking banners to highlight parking facilities throughout the downtown. Residents in both Professorville and Downtown North continued to express concerns, however, regarding parking intrusion and some City Council members noted an interest during a September 12, 2011 study session on parking strategies in establishing a Downtown Parking Study Group to focus on a potential pilot RPP program in Professorville. Staff formed the working group in December 2011, and met regularly with the group through June 2012. Key proponents from Professorville and the Palo Alto Downtown (PAD) Parking Committee were each asked to identify up to five members to represent the interests of the neighborhood and downtown business interests, along with staff representatives and a liaison from the Planning & Transportation Commission (Commissioner Tanaka) and the City Council (Councilmember Scharff). The group met regularly July 16, 2012 Page 5 of 17 (ID # 2957) starting on December 21, 2011, holding eight meetings through June 7, 2012. Discussion The Downtown Parking Study Group focused on four goals during its six month process: 1) Monitor the effects of parking strategies developed and implemented by the City; 2) Evaluate the reasons that people are not using existing parking; 3) Outline options to pursue, including pilot RPP approaches; and 4) Develop an RPP Policy that outlines participation requirements, fee structure and process, and how to treat various land use types other than single-family residential (multi-family, commercial, institutional). Monitoring of Parking Strategies Staff was responsible for reporting regularly on parking strategies being implemented by the City. During this period staff focused on the following strategies:  Adjustments to the maximum permit sales threshold for each parking facility, including modifications to the current caps identified in Attachments B, C, and D.  Implementation of bicycle parking facilities around downtown to encourage reductions in single-occupant trips. Five additional bicycle corral facilities were implemented in the Spring 2012 at locations requested by downtown merchants and property owners bringing the total number of bicycle corral facilities to six.  Implementation of a new Parking Permit Management System to allow permit holders and interested parties to renew and apply for permits online. The implementation of this project is on-going with the launch of an online wait list planned in August 2012.  Participate in the establishment of a new Regional Bicycle Share program funded by the Metropolitan Transportation Commission (MTC) with management assistance by the Santa Clara County – Valley Transportation Authority (VTA) providing 100 bike share bicycles within Palo Alto during the Fall 2012 with stations at the University Avenue Caltrain Station, downtown locations, Stanford University, and along California Avenue at the Park Boulevard Park Plaza. July 16, 2012 Page 6 of 17 (ID # 2957)  Establishment of Transportation Demand Management (TDM) requirements for active development projects to encourage public transit use and reduce single-occupant vehicle use. The City helped establish Caltrain Go-Pass and VTA EcoPass participation for the recently approved Lytton Gateway project at the intersection of Alma Street & Lytton Avenue along with similar project conditions for other active planned projects. Evaluate the Reasons that People are Not Using Existing Parking The Downtown Parking Study Group helped in the development of a windshield survey that included the placement of survey cards on vehicles parked on-street through the Greater Downtown to help determine who was parking in and around downtown and why. The City had not previously attempted to collect this type of information with prior parking data collection efforts always focused on parking occupancy. The survey included the distribution of labeled survey cards within the three distinct zones of the downtown:  Group A – Downtown North, North of Lytton Avenue  Group B – Downtown Core  Group C – South of Forest Avenue The study group felt it was important to be able to identify survey responses by region of the downtown so that survey findings could be measured by region and to help provide baseline data for future parking strategies in downtown north. Staff distributed 2,000 survey cards in January 2012 during periods leading to and immediately following the noon peak period, and received over 750 responses, providing a 38% response rate, a highly successful response for this type of survey. A copy of the survey is provided in Attachment E with the survey results provided in Attachment F. The survey findings show that, of the respondents in the downtown north group, that more downtown employees were parked on the street than residents (114 vs. 95) while in the South of Forest Avenue group that more residents were parked on the street than downtown employees (181 vs. 162). A majority of respondents admitted to being familiar with the City’s downtown parking permit program but did not purchase one because they believed the permit cost to be July 16, 2012 Page 7 of 17 (ID # 2957) too high (particularly compared to the “free” cost of parking in neighborhoods). The cost of a downtown parking permit is $135 per quarter or discounted if purchased annually at $420. Within the Downtown Core Group B, respondents who identified themselves as visitors or employees were almost equal at 58 vs. 54 respectively but visitors responded with notes that parking availability for them was generally not a challenge and that no changes to the on-street parking strategies should be considered. Only 5 respondents identified themselves as Caltrain commuters and 2 respondents identified themselves as Palo Alto Medical Foundation employees or visitors. In response to comments that the cost of the downtown parking permits are too costly, the City will be implementing a more flexible monthly purchase rate of $45 (currently permits are only available on an annual ($420) and quarterly ($135) basis) to help make it more convenient to both obtain and maintain a parking permit. Reductions in the rate of the parking permit are not being considered at this time as the permit rates are considered highly discounted compared to other Bay Area cities and because revenues from permit sales are used to operate and maintain parking facilities within the University Avenue Assessment District. The Downtown Parking Study Group also focused on the high number of resident vehicles parked on-street within the South of Forest Avenue area, with staff conducting a walking survey of each residence within a target area in and around Professorville to determine the number of parcels with no on-site parking garage or driveway. The housing inventory findings (Attachment G) show that a majority of the households in the area do have either a driveway or on-site garage with only 11 parcels identified that have neither a driveway or garage. Outline Options to Pursue including Pilot Residential Permit Parking Approaches Following the collection and analysis of the windshield survey data, housing inventory data, and review of previously collected parking occupancy data, the Study Group considered several options for next steps to respond to resident concerns regarding parking intrusion:  Do nothing  Parking strategies for the SOFA district bound by Forest Avenue, Alma Street, Ramona Street, and Addison Avenue  Pursue additional downtown parking strategies July 16, 2012 Page 8 of 17 (ID # 2957)  Focused pilot RPP project in and near Professorville The group agreed that the Do Nothing option would not be acceptable to the community. Strategies in SOFA were discussed but found not to be feasible because the SOFA District has not organized to establish an assessment district similar to that of the University Avenue and California Avenue Business Districts, in which properties are assessed on a per square-foot basis to help establish a fund for the development and implementation of parking strategies. The Study Group believed that additional downtown parking strategies should continue to be pursued and that recent modifications and projects were beginning to have marginal benefits, but that a pilot RPP project in and near Professorville would be necessary to respond to resident concerns. The downtown business interest members of the study group indicated that the pilot should be focused to measure any residential impact to both the downtown and adjacent residents and to avoid any potential significant impact to the vibrancy of downtown, and that the cost of a program should be consistent with permit fees paid by downtown employees, and at a minimum should be cost “neutral” to avoid any impact to existing parking programs. The Professorville resident members consented to focus the study area to the core Professorville area, but emphasized the need for most permits to be allocated to residents and for a low-cost permit and enforcement system, at least as part of the pilot. RPP Policy and Pilot Professorville RPP Project Staff recommended four key program areas for use in the development of a Residential Permit Parking Framework and ultimate policy to help establish consistency in the establishment of future RPP districts around downtown and other areas in the city where residents may request similar solutions, including: 1) A minimum one-block buffer from commercial or revenue-generating uses must be established from potential RPP districts to avoid impacts to existing businesses; 2) RPP Programs should be focused on local streets only; arterial and residential arterial streets should not be considered for RPP strategies; 3) RPP Programs should be focused on residential streets with majority single-family home uses; streets with majority multi-family uses should not be considered for RPP strategies; and 4) Existing and future RPP Districts revenues should be collected in one city- July 16, 2012 Page 9 of 17 (ID # 2957) managed fund to ensure cost-recovery operations and to help maintain reduced RPP permit fees for participating districts. The complete staff-recommended framework for RPP Policy is provided in Attachment H and includes a recommended process by which a neighborhood may solicit a program and the requirements for survey responses. Proposed Professorville Trial RPP Program Based on the program areas above, the study group focused on the development of a pilot Professorville RPP program area using parking occupancy data and a field survey during the noon peak period. The study group identified and approved a survey of residents and property owner interest of the properties identified in the study area, as delineated in Figure 1. The area bounded as shown in Figure 1 includes 190 on-street parking spaces, including one handicap-accessible parking space located on Lincoln Avenue west of Ramona Street, and 87 dwelling units with 16 separate trustee (landlord) interests. Trustees represent parcels where a separate mailing address is provided for the property owner within the proposed pilot area. The study group discussed in detail a few options for the type of parking management and limitations within the pilot RPP area, including:  Resident only parking during program hours;  One block face per street as resident only parking during program hours with the opposing block face as 4-Hour time-limit parking; and/or  Short-term hourly parking (2-hours) with RPP permits for residents and non-residents. The use of resident only parking during normal program hours of 8:00AM – 5:00PM was identified to be restrictive and found to privatize public space, resulting in an impact to both adjacent resident and commercial uses. The hybrid concept of using only one block face per street for RPP operations with the opposite side of the street having a higher on-street parking limit of 4-hours yielded a lot of discussion and consideration by the study group, but failed to gain a consensus because determining which side of the street would have which of the two operations was found to be difficult. There were also concerns that July 16, 2012 Page 10 of 17 (ID # 2957) residents would not purchase permits, choosing instead to take advantage of the 4-hour parking and jeopardizing the cost-recoverable requirement of the program. The study group formed a consensus around a parking management strategy that provides a 2-hour parking limit for all vehicles without a valid RPP permit. The number of spaces available for permit parking would be divided between residents (two-thirds) and non-residents (one-third), and only 80% of available spaces would be permitted to provide some buffer for the program and to better ensure protection of the neighborhood character. The study group agreed to a staff recommendation that each residence within the project area would receive one vehicle-specific permit for use during the trial period, using fees from previously collected developer funding (Lytton Gateway) to recover the cost of the trial. Figure 1 Pilot Professorville RPP Study Area To determine the number of non-resident permits for allowance within the trial area, staff would make available 80% of the on-street parking supply (152 spaces) and would provide two-thirds (101) of these for residents and one-third (51) for nonresident use. Enforcement would be random throughout the trial period. July 16, 2012 Page 11 of 17 (ID # 2957) Staff recommends a rate of $50 per permit for additional resident permits (after the initial no-charge permit) and all non-resident permits during a trial period of up to 6 months. The trial period will allow staff and the community to measure the response to permit sales, the impact on neighborhoods outside the RPP boundaries, and citation revenue to help estimate the long-term RPP permit costs. Staff expects to report in with the Study Group after 3 months to assess whether any mid-course corrections are needed. Pilot Professorville RPP Survey Results The City delivered 103 silent mailer surveys to the individual dwelling units and trustee interests on June 12, 2012 and sent out Second Notice surveys on June 25, 2012 to residents who did not immediately respond to the initial survey request. The survey suggested that a minimum 60% support response from returned surveys would be needed in order for a positive recommendation for the consideration of a pilot RPP survey to be considered by Council. The City has received 59 responses out of the 103 surveys distributed to the study area, a 57% response rate. Eighty-three percent (83%) of the respondents (49) support the implementation of the pilot Professorville RPP project, well in excess of the 60% suggested for implementation (staff notes, however, that this represents only a confirmed 48% support of the project area total, since 44 surveys were not returned). Seventeen percent (17%) of the respondents (10) did not support the implementation of the project. Some who supported implementation did not favor sale of permits to non-residents, but nevertheless preferred the trial. Most of the respondents supporting the implementation of the project, however, did not express a concern with the sale of non-resident permits within the pilot area. Residents living adjacent to the pilot area have expressed concerns with the boundaries of the pilot project either because of concerns from parking intrusion being potentially displaced onto the streets that they live on or because they support RPP but prefer for their street to be included within the pilot. Staff recommends the implementation of the pilot Professorville RPP project within the boundaries and conditions developed with the Downtown Parking Study Group. Staff believes that the trial will help to: July 16, 2012 Page 12 of 17 (ID # 2957) a) better allow residents access to their homes during the day; b) maintain a more residential character to the area; c) assess the appropriate balance of parking on public streets between residents and downtown employees; d) allow staff to assess the “spillover” effects to other areas of downtown to better define a permanent program; e) provide better administration and enforcement information to determine ultimate permit parking fees; and f) contribute to a better understanding of issues identified (or not) to apply here on a permanent basis or in downtown north or other neighborhoods. Other Parking Program Efforts The discussion above briefly touched on some of the other related potential parking solutions under review or implementation by staff. These and others include:  New parking structure(s) The City negotiated a public benefit improvement on the recently improved Lytton Gateway project to provide $60,000 towards the study of future parking structures in the Downtown. This fall, staff will study up to four existing surface lots to determine which locations may be appropriate for consideration of a new parking structure to further increase the availability of parking permits spaces for downtown employees and visitors. The study will identify massing of structures, number of potential parking spaces that can be provided at each site, and consider both benefits and impacts such as accessibility and construction staging, respectively.  Attendant parking The study this fall to determine the feasibility of new parking structures will include an element to measure the effectiveness of attendant parking at existing garages to help increase the parking permit supply. Attendant parking includes a motorist leaving their vehicle with an attendant who then double-parks the vehicle behind existing parked vehicles while maintaining a drive aisle for circulation. Attendant parking can increase parking supply by up to 30%. Tiered pricing for permit parking that arrives late in the day can also be considered as it may be considered less convenient for users. July 16, 2012 Page 13 of 17 (ID # 2957)  Permit vs. Hourly Parking Space Distribution Staff will work with the Parking Assessment District to determine where permit parking supply can be increased by consolidating permit versus hourly parking spaces in individual surface lots or garages.  Technology enhancements This fall, staff will release a Request for Proposals (RFP) to identify gate- control technologies that can easily integrate with the City’s new permit management system to allow the extension of hourly parking at existing garages. Staff will review this option with the Parking Assessment District and return to the Council in the fall with the results of the RFP and include a recommendation for tiered hourly parking rates above the existing free 3- hour parking. Staff is also investigating the option to distribute parking availability information online at surface lots, garages, and on street signage.  Information/permit processing The City’s new online permit management system is currently being deployed. Existing permit holders have been successfully integrated into the new system. Deployment of the online wait list and renewal is scheduled for completion this summer. Zoning and Planning Approaches to Parking Solutions The Council and staff are aware that recent downtown projects (Lytton Gateway, 278 University Avenue, Casa Olga, etc.) as well as recent conversions of uses to more intensive office space have highlighted concerns about increasing parking deficits downtown. Many of the downtown developments during the past decade have taken advantage of the Zoning Code’s (very successful) incentives for historic preservation and seismic upgrades to use bonus or transferable space to increase development intensity, space that is not subject to parking requirements. Additionally, staff reported to Council during the Lytton Gateway discussions that the Zoning Code provides a nonresidential “cap” of 350,000 square feet (since 1985) downtown, and that, with the approval of that project and one upcoming proposal, the 235,000 square foot “study threshold” will have been reached. Staff proposes, given the downtown parking concerns and the provisions of the Zoning Code, that staff initiate the “downtown cap” study and look at several other zoning-related parking issues over the next 6-12 months. This would July 16, 2012 Page 14 of 17 (ID # 2957) include, at a minimum, the following:  Review and report on the “downtown cap,” including an assessment of the current parking deficit downtown, potential for increased parking capacity, and likely potential for increases in intensity downtown (note: the 27 University site is not located within the Downtown Commercial zoning district, but will be recognized in the study);  Potential zoning considerations related to floor area bonuses and transferable development rights and their potential on future parking demands;  Parking ratios for downtown development, with recognition of the changing nature of the office environment and its implications for parking;  How to treat nonconforming parking sites as they are redeveloped; and  Opportunities for a downtown-wide transportation demand management (TDM) program to more comprehensively compel transit passes, shuttles, car-sharing and bike-sharing programs, and other efforts to reduce vehicle use to the downtown area. Staff has already begun taking a closer look at land use conversions and discretionary permits for downtown to assess parking impacts and TDM options, particularly outside of the parking assessment district. The most recent Downtown Monitoring report, describing development pursuant to the downtown “cap,” is available on the City’s website at: http://www.cityofpaloalto.org/civica/filebank/blobdload.asp?BlobID=30421. Timeline Staff recommends implementing the pilot Professorville RPP project over the month of August 2012, including sign fabrication and installation and permit procurement and distribution. The pilot project can be ready for enforcement by early September but staff recommends beginning enforcement activities in mid- September to allow for a two-week period for education and outreach through windshield notices. During the first half of September, non-resident permit sales would also be available on a first-come, first-served basis through the City’s online permit management system. The pilot Professorville RPP project would be monitored by staff through on- July 16, 2012 Page 15 of 17 (ID # 2957) street parking occupancy data collection for which seasonal data over the past year is already available for comparison. Staff also recommends holding at least two community meetings during the pilot to allow an opportunity for residents and downtown business interests to provide feedback on the program. During this period, staff will also monitor citation revenues and permit sales to help determine on-going RPP permit costs in combination with the existing RPP district in College Terrace. In the Spring of 2013 staff can present the results of the survey and introduce a final policy for the council to consider for the implementation of future RPP districts. The other projects outlined, including zoning-related analysis, will be completed over the next 6-12 month period. Resource Impact Funds for the implementation of the pilot Professorville RPP project are available within the Capital Improvement Program – PL-1200 (Parking & Transportation Projects). Expenses incurred during the pilot will include sign fabrication/installation, RPP permit procurement and adminstration, and enforcement equipment and operations expenses. Any costs not covered by the permit fees will be reimbursed from the funding from the Lytton Gateway project. The on-going costs of the program if found to be successful and supported for implementation by the community and Council will be identified through the trial project process, including setting permit fees at an appropriate level to recover administration and enforcement costs. Staff is assuming that Council direction is that all City costs be recovered through permit fees and fines, and budgeting and fees will be developed to accomplish that goal. Additionally, the approval of the Lytton Gateway (335/355 Alma) project included requirements for $250,000 to be provided for neighborhood parking protection efforts, and $60,000 for a feasibility study of potential new parking facilities (garage) sites. These fees will be paid at the time of building permit issuance, expected within the next 2-3 months. The neighborhood parking funding will be dedicated entirely to implementation of efforts in the Professorville (and nearby south of downtown neighborhoods) and downtown north areas for development and initial implementation phase costs. Staff will retain a parking consultant with the use of the $60,000 parking study funding, to examine the potential capacity July 16, 2012 Page 16 of 17 (ID # 2957) and costs of new garage construction on 3 or 4 sites in downtown. Staff also notes that a downtown property owner, Chop Keenan, has also brought forward to staff a concept for a shared public/private garage at the current Lot P parking lot located on High Street between University Avenue and Hamilton Avenue. While details are not yet available for review, this option would also be examined by staff and brought forward to Council if there appears to be a financial benefit to the City while substantively addressing the parking issues of concern. Planning and zoning studies and ordinance revisions will be undertaken within existing staff and contract planning constraints. If additional funding is necessary for further contractual services, staff will return to Council with the appropriate budget amendments. Policy Implications The City’s Comprehensive Plan does not specifically identify Residential Permit Parking as a strategy for use within the downtown but the Comprehensive Plan supports the implementation of innovative parking strategies through the following policy: Policy T-47: Protect residential areas from the parking impacts of nearby business districts. The development of new parking strategies in and around Downtown is also generally consistent with the goals of the 13-Point University Avenue/Downtown Parking Program in the Comprehensive Plan. Environmental Review The proposed pilot program and further studies and recommended work plan is exempt from the California Environmental Quality Act under Section 15301 and 15262 of the CEQA Guidelines. At such time as specific measures are taken for physical changes or impacts, such as zoning changes or proposed new parking facilities, appropriate environmental review will be conducted pursuant to the California Environmental Quality Act (CEQA). July 16, 2012 Page 17 of 17 (ID # 2957) Attachments:  Attachment A: Dec. 19, 2011 Informational Report to Council on Downtown Parking Program Activities (PDF)  Attachment B: Spring 2011 Downtown Parking Occupancy Data (PDF)  Attachment C: Fall 2011 Downtown Parking Occupancy Data (PDF)  Attachment D: Holiday 2011 Downtown Parking Occupancy Data (PDF)  Attachment E: Downtown On-Street Parking Survey Card (PDF)  Attachment F: Downtown On-Street Parking Survey Results (PDF)  Attachment G: Professorville Housing Inventory Summary (PDF)  Attachment H: Draft Residential Permit Parking Policy Framework (PDF)  Attachment I: Public Correspondence (PDF) Prepared By: Jaime Rodriguez, Chief Transportation Official Department Head: Curtis Williams, Director City Manager Approval: ____________________________________ James Keene, City Manager City of Palo Alto (ID # 2354) City Council Staff Report Report Type: Informational Report Meeting Date: 12/19/2011 December 19, 2011 Page 1 of 9 (ID # 2354) Summary Title: Downtown Parking Program Activities Title: Update on Downtown Parking Program Activities From:City Manager Lead Department: Planning and Community Environment This is an informational report and no Council action is required. Executive Summary This staff report provides an update to the City Council on the status of the Parking Program elements underway and planned for 2012 including a schedule of key milestones. The City began an analysis of the City’s Parking Program in Spring 2011 to identify strategies to help more efficiently manage the City’s parking infrastructure in the City’s Downtown and California Avenue parking assessment districts. Current efforts to date have been focused in the Downtown, including assessing the use of surface lots, parking garages, and on-street parking. Program elements in Downtown and outreach to the California Avenue Business District will continue into next year as outlined in this report with Council consideration of the Residential Permit Parking Program no later than July 2012. A Downtown Parking Community Group of business representatives and Professorville and other nearby residents will work collaboratively and in parallel with staff to access the impacts of parking on in downtown residential areas and to develop recommendations for the Residential Permit Parking Program. Background The City has two parking assessment districts, one in the Downtown (University Avenue) and one in the California Avenue area. Each district has developed unique strategies to manage its parking supply and demand, including the use of permit parking for employees within each district, designated parking spaces for permit holders, and hourly parking enforcement. The City is responsible for the oversight and development of parking management strategies. In addition, the Palo Alto Downtown (PAD) Business and Professional Association -Parking Committee (Downtown Parking Committee) and the California Avenue Business District (BACA) help guide the development of parking strategies with staff. Attachment A provides additional information on the City’s current parking management system, and roles of the PAD Downtown December 19, 2011 Page 2 of 9 (ID # 2354) Parking Committee and the California Avenue Business District in developing the City’s parking management program. Many residents of the Downtown District, Professorville neighborhood and nearby streets are affected by non-residential neighborhood traffic and parking and have voiced strong concerns to the City about parking overload in the neighborhoods. Visitor parking along the streets prevent residents from parking in proximity to their homes affecting neighborhood livability. Staff’s parking analysis supports the contention that these streets are heavily parked during weekday working hours, and believe that most of the overflow is coming from downtown or SOFA employees. The business community has also voiced strong concerns about the availability of on-street parking and maximizing the efficiency of parking resources to support the vitality of the downtown business district. An analysis of the City's parking management strategies began in April as part of the Transportation Work Plan for 2011. Staff held a study session with the Planning and Transportation Commission in August 2011, a Study Session with Council in September 2011, and a series of meetings with the community to solicit input on parking strategies. Staff identified and began work on a number of enhancements, primarily focused on elements in the Downtown District, to make the City’s Parking Program more efficient, allow for improved enforcement, provide more accessibility to employees who rely on parking availability, preserve valuable on-street parking for patrons of each district, and to preserve the quality of life of adjacent residential neighborhoods. Discussion Since the City Council Study Session on September 12, 2011, staff has continued to advance a number of elements of the City’s Parking Program. An update on the development of the Residential Permit Parking Program, California Avenue Parking Program, current and planned parking management enhancements, and the schedule for developing the ongoing elements planned for 2012 are discussed below. Residential Permit Parking (RPP) Program During the City Council Study Session on the parking management strategies held in September 2011 several Council members expressed interest in the formation of a Downtown Parking Community Group to help provide direct feedback to staff on proposed parking management strategies and to allow residents an opportunity to share their insight regarding the potential parking intrusion impacts to their quality of life directly to merchants. Staff initiated the formation of a Downtown Parking Community Group and has outreached to select residents to participate on a new group. The PAD Parking Committee has also expressed interest in participating in the new group and has identified representatives. The first meeting of the new Downtown Parking Community Group is scheduled for December 22, 2011. The timing of the new Downtown Parking Community Group aligns with the parking management work plan for the new year outlined in this report. December 19, 2011 Page 3 of 9 (ID # 2354) The Downtown Parking Community Group’s schedule of work will proceed in parallel to other parking management objectives and the purpose of the group is to: ·Monitor the effects of parking strategies developed and implemented by the City; ·Evaluate the reasons that people are not using existing parking; ·Outline options to pursue, including pilot RPP approaches; and ·Developing an RPP Policy that outlines participation requirements, fee structure, process, and how to treat various land use types other than single-family residential (multi-family, commercial, institutional). The Downtown Parking Community Group will be comprised of up to five members from the Downtown residential neighborhoods (self-appointed) and up to five members from the Parking Committee or other downtown businesses (appointed by Palo Alto Downtown and the Chamber of Commerce). Staff members from the Department of Planning and Community Environment, the Police Department, Administrative Services, and the Manager’s Office would participate as needed. Staff also expects that any program, if implemented, would be revenue- neutral to the City, as directed previously by Council. Staff will also seek input from other neighborhoods, particularly Downtown North, but the focus of this effort will be Professorville, since there is a strong core interest among residents there. At the initial meeting of the Downtown Parking Community Group a schedule for future meetings will be discussed. Staff expects that the group to meet three to four times and then staff will report to the Planning and Transportation Commission and present recommendations to the City Council no later than July 2012. Staff believes that the Downtown Parking Community Group can provide valuable insight to help build consensus within the community on projects before they are considered for policy implementation. California Avenue Parking Program The California Avenue Business District does not currently have a business committee similar to the Downtown Parking Committee, through which parking strategy and policy can be easily discussed. Staff believes that the newly formed Business Association of California Avenue (BACA) will be a valuable partner in helping to provide a forum for merchants to meet regularly on projects of interest and for staff to solicit insight and merchant perspective on proposed projects. Staff is working with the new BACA representatives to schedule regular meetings at which Parking Management Strategies can be discussed. Staff anticipates developing recommendations for California Avenue parking strategies in October 2012. Prior to the formation of BACA, staff conducted outreach to California Avenue area merchants in July to discuss potential parking management strategies for their consideration including wayfinding signage and permit distribution solutions. The input from merchants was extremely valuable and there was a strong interest in collecting more data to help make better informed December 19, 2011 Page 4 of 9 (ID # 2354) decisions. Since that initial meeting staff has collected additional parking occupancy and permit use data that will be shared upon the first BACA meeting in the year. Parking Program elements to be discussed with the California Avenue community will include: ·Parking Permit Management System, which will also cover California Avenue permits ·Parking Wayfinding Banners and Signs, similar to that proposed for Downtown ·Enhancing the number of spaces available off-street and in garages ·Limited day permit use distribution to minimize abuse and misuse with the current system ·Improved distinction between permit and visitor parking spaces to make most efficient and equitable use of each Parking Permit Management System Replacement The City completed a Request for Proposals process in November 2011 and selected Progressive Solutions to develop and implement its Parking Permit Management System for Palo Alto. Existing permit holders from Downtown will, in the first quarter of 2012, be asked to update their contact and Downtown employer information. Possession of a parking permit in Downtown is a benefit to the businesses located within the Parking Assessment District. The City has never validated the Downtown employment status of permit holders. Having accurate parking permit holder data as part of the new system implementation is absolutely critical in making the distribution of permits more efficient and ensures that additional parking strategies can be considered for discussion with stakeholders such as the PAD Parking Committee. The updated system is also just a necessary improvement independent of parking permit space usage to demonstrate effective parking management. Permit holders who cannot validate their downtown employer status will not be renewed at their renewal date. The City anticipates the new permit management system to be completed and implemented by Spring 2012. The new system will offer permit holders an online renewal option and potential permit holders will be able to register online. Currently, existing permit holders and potential permit holders may register for a Wait List for any two parking facilities. After the system implementation, Wait List registration will be limited to one facility only to help ensure more efficient distribution of permits. The new system will automatically notify persons on the Wait List of their permit availability. The new system will provide the City’s two Parking Assessment Districts to explore opportunities for new parking permit fee structures previously not feasible due to technology limitations. The PAD Parking Committee will be asked to consider several new parking permit distribution strategies in the spring 2012 so that new policy recommendations can then be considered by the City Council as part of the new Fee Schedule Program for 2012-13: ·Top Floor Only Permits:These permits can be offered at a discount to persons whom are not able to pay for a normal permit but restrict their parking to the top floor of a parking garage. December 19, 2011 Page 5 of 9 (ID # 2354) ·Employer Bank of Permits:These permits introduce an opportunity for permits to be registered to a business rather than an employee so that as the company grows its staff, new employees can immediately begin parking at permit facilities rather than having to wait for distribution off a Wait List. Larger employers in Downtown have already expressed an interested in this type of permit to accommodate growth and visitor needs. As gate control systems are introduced into parking facilities, Employer Bank of Permits also offer flexibility for multiple permits to be distributed but with limited access to accommodate business employee shift requirements. ·Fleet Vehicle Permits:Provide for employers with vehicle fleets that require overnight storage within a parking structure. ·Non District Permits:Proposed for distribution on a trial basis with the support of the Parking Assessment Districts, can provide access to selected parking structures to benefit employees in the South of Forest Avenue (SOFA) district which has seen increased office use over the past several years. Employees in SOFA currently cannot obtain parking permits. ·Tiered Hourly Parking:Tiered pricing allows visitors to park in facilities beyond the 3-hour Free parking limit for a fee up to the maximum $16.00 per day fee. The rate structure for parking beginning in the 4th hour will require merchant and parking assessment district input. ·Tiered Permit Fee Cost:Permits are currently offered on a quarter or annual basis. Pricing for monthly permits will be introduced and considerations for the continuation of annual discounts discussed to ensure maximum distribution flexibility to new employees of the Parking Assessment Districts. December 19, 2011 Page 6 of 9 (ID # 2354) Way-Finding Signage to Parking Facilities On November 3, 2011, the Architectural Review Board reviewed and approved the design of new banners designed to highlight the location of Free Public Parking facilities at surface lots and parking garages, see Figure 3 –Downtown Parking Banner Sample. The Phase I deployment of the new parking banners will be installed in December 2011 and be placed on streetlights within the surface lots and adjacent to streetlights at parking garages. Staff estimates that approximately 50 banners will be installed as part of Phase 1 deployment. Phase 2 will include the installation of banner poles at locations where existing streetlights were not available or feasible for use as part of Phase I. Phase 2 will benefit facilities such as Ramona/University (Lot B) and the 801 High Street garages located beneath retail or residential structures. In the Spring of 2012, staff will return to the Architectural Review Board for their input on wayfinding signage to replace the existing industry standards “White P on Green Background” signs. The new signs will match the color and modern architecture of the new banners, laying the foundation for the development of new marketing materials to highlight parking facilities. For the California Avenue Business District, the use of similar banners and wayfinding signage will be proposed to merchants and members of the new Business Association of California Avenue (BACA) in January 2012. Daily Parking Permit Distribution Beginning in January 2012 the City will be replacing its existing paper Daily Permit forms sold to businesses or persons seeking daylong parking at on-or off-street facilities. During discussions with Community Service Officers (CSOs) who conduct parking enforcement in the City, the use of illegally fabricated paper Daily Permits was identified as a frequent occurrence. The new Coded Scratcher Daily Permits will allow for only one day use and easier validation by CSOs. This modification is being implemented immediately to help ensure that the City’s parking management program is managed efficiently. The new Coded Scratcher Daily Permits will be used for both the Downtown and California Avenue Business Districts. Within Downtown, two parking garages currently have Day Permit distribution machines that allow visitors to purchase a Day Permit on-site at a fee of $16 per day. The machines are currently located in the Bryant St Garage (Lots S/L) and the Cowper/Webster Garage (Lot CW). The distribution of additional Day Permit distribution machines has been discussed with the Figure 3 Downtown ParkingBanner Sample December 19, 2011 Page 7 of 9 (ID # 2354) Parking Committee. Staff is recommending the deferral of additional machines until Pilot Gate Control and Hourly Parking Fee Structures are considered by the PAD Parking Committee because if gate control systems would provide the same function as the Day Permit distribution machines. As technology is researched it will be presented to the PAD Parking Committee for input prior to the distribution of Requests for Proposals from vendors. Pilot Gate Control and Hourly Parking Fee Structure The existing Downtown Palo Alto Color Zone Parking Management System provides for three- hour parking within Visitor parking spaces in garages. Staff will work with the Parking Community Group and the PAD Parking Committee to consider the installation of gate access controls to at least one parking garage next year, the Bryant Street Garage (Lot S/L). The gate controls will allow visitors to park beyond the existing three hour parking limit for a fee, beginning with the fourth hour and up to the daily parking rate of $16/day, allowing for longer stays within the downtown for shopping activities. The tiered hourly fee structure will also be included in the discussions with the Parking Committee and the PAD Parking Committee. Permit holders within garages with gate controls would gain entry through either a manual scan card or automatic card reader,depending upon a selected system vendor. Color-coded permit stickers affixed to vehicles will still be required initially to easily identify normal permit holders, new Top Floor Only permit holders, and to discourage permit holder use of Visitor parking spaces. A policy restricting permit holder parking in Visitor parking spaces will be required. Access gate controls also offer the benefit of estimating parking garage capacity to help develop and implement Parking Guidance System (PGS) Signage technology discussed below. Depending upon the final resolution of the various proposed parking fee structures with the Parking Committee in the Spring, proposals for the pilot access gate control projects will be solicited in the Summer for implementation of a pilot project in the Fall. A two-year pilot may be necessary to monitor and measure effects of the system. Parking Guidance System (PGS) Technology Development Staff is currently researching technology that will allow the City to monitor the time-use of both on-street and off-street parking spaces. Parking data collected by staff to-date has been focused on “occupancy” to determine the number of vehicles parked on the street or in off- street facilities during various times of the day. The City has no data or cost-effective method to determine how long vehicles are parked. Existing technology from companies such as Streetline networks (www.streetline.com) allow for the monitoring and distribution of parking space availability information to users of the system through smartphone applications. The City has investigated the use of such a system for Palo Alto, but the system requires a monthly fee for parking spaces monitored. Palo Alto does not currently charge a fee for on-street parking and allows time-limit free parking at off-street December 19, 2011 Page 8 of 9 (ID # 2354) facilities, making the use of such a system infeasible due to cost with no offsetting revenues. Staff is researching the development of its own monitoring infrastructure that is built on the National Transportation Communications for ITS Protocol (NTCIP), allowing for potential integration with separate traffic signal management system projects scheduled for the calendar year 2012. Parking Occupancy Monitoring Staff has completed the collection of parking occupancy data for both the Downtown and California Avenue Business Districts for the spring 2011 and fall 2011 seasons. Additional parking occupancy data for off-street parking facility in Downtown for the Holiday shopping season is being collected in December. Data collection on parking trends and driver behavior is critical as decisions on future parking strategies are developed. The City is committed to providing accurate data to the PAD Parking Committee, future BACA members, and City Council so that we can work in partnership with each other to manage our resources. Timeline A timeline for implementing the Parking Program update reflecting the various tasks above is provided in Table 1. below and included as Attachment B. Table 1. Parking Program Activities Schedule & Key Milestones ACTIVITY SCHEDULE City Council Study Session September 2011 Permit Management System September 2011 -February 2012 Fall Occupancy Data Collection #2 October 2011 Parking Banners October 2011 -January 2012 Winter Occupancy Data Collection #3 December 2011 Residential Permit Parking (Working Group)December 2011 -July 2012 Way Finding Signage January 2012 -April 2012 California Avenue Parking Strategies January 2012 -October 2012 Permit Fee Development February 2012 -September 2012 Downtown Community Meeting March 2012 Garage Access Controls Pilot April 2012 -October 2012 Parking Monitoring June 2012 -April 2013 City Council Considers Residential Permit Parking Program July 2012 Install Bike Parking and Corrals Ongoing Parking Technology Research & Development On-going December 19, 2011 Page 9 of 9 (ID # 2354) Resource Impacts The Parking Program Update 2012 effort is primarily funded through the City’s Capital Improvements Program (CIP PL-12000, Parking & Transportation Improvements) and Downtown Parking Assessment District funds. Moving forward into 2012, the same fund sources will be used to further advance new parking management strategies. As program enhancements are identified and approved for implementation within the California Avenue Business District, the California Avenue Assessment District may also be used to help fund improvements. Environmental Review The Parking Program Update 2012 outlined in this report does not at this point require review pursuant to the California Environmental Quality Act (CEQA). As individual parking program projects are approved for implementation, they will be evaluated for compliance with CEQA as necessary. Attachments: ·Attachment A (PDF) ·Attachment B: Parking Program Timeline 2012 (PDF) Prepared By:Jaime Rodriguez, Chief Transportation Official Department Head:Curtis Williams, Director City Manager Approval: ____________________________________ James Keene, City Manager Attachment A Page 1 The following provides additional information on the City’s current parking management system, and roles of the PAD Downtown Parking Committee and the California Avenue Business District in developing the City’s parking management program. Palo Alto Downtown (PAD) Business and Professional Association –Parking Committee In the Downtown, the PAD Parking Committee guides the development of parking strategies with staff and helps to provide perspective regarding the performance and trends of the Downtown economic engine so that it can be taken into consideration during the development of policy. This collaboration with the PAD Parking Committee is on-going through monthly meetings to discuss varying types of concerns including on-street and off-street parking, public safety, etc. The Downtown Parking Committee was instrumental in the development of the existing Color Zone Parking Management System which was designed to prevent employee parking in the downtown area and to increase the supply o f convenient customer parking Employee parking is provided in the seven parking garages in and around Downtown and the twelve surface lot facilities at a fee of $135 per quarter or on an annual discount basis of $420 per year. Figure 1 and Table 1highlight the Downtown Palo Alto Color Zone Parking Management System boundaries and Number of Parking Spaces in Off-Street Parking Facilities, respectively. Business Association of California Avenue (BACA) The California Avenue Business District has recently reconstituted its business association, which will hopefully provide input on parking strategies in the coming year.Staff will be organizing monthly meeting with BACA starting next year to build a partnership similar to the PAD Parking Committee to allow an open communication forum for parking and other issues of interest to merchants on and along California Avenue. Figure 1 Downtown Palo Alto Color Zone Management System Attachment A Page 2 Table 1 Number of Parking Spaces in Downtown Off-Street Parking Facilities Garages Surface Lots Letter Name Hourly Permit Total Letter Name Hourly Permit Total Q Alma/High (North)-134 134 O Emerson/High 78 -78 R Alma/High (South)77 134 211 A Emerson/Lytton 68 -68 S/L Bryant St 381 307 688 C Ramona/Lytton 18 32 50 WC Cowper/Webster 201 388 589 F Florence/Lytton 46 -46 CC City Hall 187 519 706 T Lytton/Kipling 25 25 50 B Ramona/University 63 -63 H Cowper/Hamilton 90 -90 800 High Street 10 53 63 D Hamilton/Waverly 86 -86 Totals:919 1,535 2,454 E Gilman/Bryant -34 34 G Gilman/Waverly -53 53 P High/Hamilton 51 -51 K Lytton/Waverly 15 42 57 N Emerson/Ramona 48 -48 525 186 711 Within the California Avenue Business District, the Permit Management program does not include restrictions on where vehicles are permitted to park, with the exception of the Sherman Avenue & Ash Street surface parking lot,where 30 designated parking spaces exist. Vehicles with designated placards may park at all other sites within any parking space. The permit cost in the California Avenue Business District is $43 per quarter or may be purchased on an annual discount basis of $123 per year. Figure 2 and Table 2 highlight the California Avenue Business District Parking Facilities and Number of Parking Spaces in Off-Street Parking Facilities respectively. Figure 2 California Avenue Off-Street Parking Facility Locations Attachment A Page 3 Table 2 Number of Parking Spaces in California Avenue Off-Street Parking Facilities Garages Surface Lots LOT Name Hourly Permit Total LOT Name Hourly Permit Total 3 Cambridge West 183 183 1 Cambridge/Park 27 -27 5 Cambridge East 157 157 2 Cambridge/Birch 27 -27 Totals:340 340 4 Cambridge/Birch 89 89 6 Sherman/Park 154 -154 7 Sherman/Birch 161 161 8 Sherman/Ash 89 30 119 9 Birch/Cambridge 28 -28 575 30 605 Sep-11 Apr-13 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 2012 Parking Program Activities Permit Management System Residential Permit Parking (Working Group) Permit Fee Development Way Finding Signage Parking Monitoring Garage Access Controls Pilot Install Bike Parking and Corrals Sep-11 City Council Study Session Oct-11 Fall Occupancy Data Collection #2 Dec-11 Winter Occupancy Data Collection #3 Mar-12 Downtown Community Meeting Jun-12 City Council Considers Residential Permit Parking Program Parking Banners California Avenue Parking Strategies Parking Technology Research & Development Downtown Parking Committee meets Monthly with Staff Attachment - B R 77 134 211 21 10% St H 90 90 4 4% E K 15 42 57 N Emerson/Ramona 48 48 Total 524 189 713 54 •• No Data Collected City of Palo Alto Downtown Off-Street Parking Facilities Occupancy Analysis 10 13% 26 19% 77 86% 148 80 75 97% 78 87% 395 Spring 2011 103 77% 182 86% 52 25% 91 101% 91 101% 110 497 430 Attachment - C Total 932 1522 2454 K 15 42 57 Total 527 186 713 278 11 19% 82 City of Palo Alto Downtown Off-Street Parking Facilities Occupancy Analysis 206 22% 718 23 55% 181 107 Fall 2011 689 74% 1292 928 38% 12 21% 32 76% 25 44% 14 25% 452 141 586 579 Attachment - D cc Hall 187 519 B 63 800 800 i St 10 53 Total 932 1522 c 18 32 F 46 T 27 25 G 53 p 51 K 15 42 Total 527 186 City of Palo Alto Downtown Off-Street Parking Facilities Occupancy Analysis 706 88 47% 348 63 18 29% 63 2 20% 42 2454 239 26% 724 50 5 28% 7 46 2 4% 52 8 30% 2 53 23 51 2% 57 24 713 141 82 Holiday 2011 67% 186 99% 485 93% 57 90% 67% 10 16% 51 96% 48% 715 77% 1300 85% 22% 18 100% 27 84% 48 104% 8% 27 100% 22 88% 46% 42 79% 48 94% 57% 15 100% 30 71% 512 153 Attachment E The City of Palo A~o is seeking your assistance in the completion of this short survey to help plan for future parking projects. The survey is a pre-paid postal card that can be returned to any postal mailbox. Thankyou. 1) Are you parking in this location because yo u are a: o Resident 0 Caltrain Commuter o Downtow n Visitor 0 PAMF Employee/Visitor o Downtown Emp loyee 0 other: 2) If you are an Employee/Local Business Owner, in which Downtown Zone do you work? (See map) o A-North ofLytton Avenue o B -Lytton Avenue to Forest Avenue (Downtown Core) o C -South of Forest Avenue 3) If you work in t he Downtown Core (Zo ne B), are you familiar with the City's Permit Parking Program? Yes 0 No 0 4) Do you current ly own a Permit to park in one of t he Downtown garages or surface lots? Yes 0 No 0 5) If you do not own a Parking Permit, why not? o Didn't know about the Permit Program o My business is located outside of Zone B, I cannot get a permit o Too cost ly 0 Not interested Comments/ Suggestions: Downtown Palo Alto Zone Map 1/18/2012 Card Zone ABC Zone Response 215 133 404 TOTAL 752 Question #1 Answer A B C Resident 95 19 181 Downtown Visitor 24 58 32 Downtown Employee 114 54 162 Caltrain Commuter 5 - - PAMF Employee/Visitor 2 - - Other 20 - - Question #2 Zone A Zone B Zone C Which Zone do you work? 43 209 86 Question #3 Yes No Work in Zone B, Permits 172 119 Question #4 Yes No Own a Permit 15 418 Question #5 Answer Don't know Permit Program 66 Outside of Zone B 73 Too Costly 172 Not Inaterested 79 Other 25 Questions: RESPONSE University/Neighborhood Parking Survey #1 - Are you parking in this location because you are a: #2 - If you are an Employee/Local Business Owner, in which Downtown Zone do you work?y()yyg Program #4 - Do you currently own a Permit to park in one of the Downtown garages or surface lots? #5 - If ;you don not won a Parking Permit, why not? Attachment G Housing Inventory Summary Total # of parcels 179 Parcels with no driveways or parking pads 11 Parcels with one garage 26 Parcels with one garage plus driveway - 2 car length or more 47 Parcels with two car garages 14 Parcels with two car garages plus driveway - 2 car length or more 27 Parcels with driveway only 39 Parcels with 3 car garages plus driveway or no driveway 8 Parcels with parking pads only 6 Residential Driveway/Garage Study Area No. of On-Street Parking Spaces in Study Area: 670 1 DRAFT ‐ PROPOSED  RESIDENTIAL PERMIT PARKING PROGRAM  GUIDELINES (4/27/12)      The City of Palo Alto establishes Residential Permit Parking (RPP) districts to protect neighborhood  quality of life against intrusion from adjacent land uses. RPP Districts are only considered on residential  neighborhoods that are a minimum of one block away from existing commercial business districts and  on streets that do not have any multi‐dwelling unit uses such as apartment and condominium  complexes.  RPP Districts on Neighborhood Collector Streets are not permitted.  RPP program expenses  and revenues must be cost neutral to the City. The RPP District establishment process is outlined below.          1. RPP District Petition Process  The first step in establishing an RPP District is for residents to submit a Petition of Interest for review  and consideration by the City.  The Petition should be signed by at least 50% of the residents (or  property owners) of the neighbor’s proposed RPP District.  Only one signature per household is  required. RPP District proponents may contact the City to help them in establishing a Petition of  Interest signature list.    2. Neighborhood Interest Community Meeting  The City will organize a community meeting within 90 days of receipt and validation of the Petition  of Interest so that parking data may be collected.  The City at its discretion will also invite residents  and business owners of adjacent streets.  A preliminary estimate of fees for the RPP District will be  presented at this time along with signage requirements.    3. Pilot RPP District Projects  Upon agreement of a preferred RPP District and support from the City Council the City may choose  to implement a Pilot RPP Project to evaluate the benefits and unforeseen impacts of a project.   Residents within the proposed Pilot RPP District will be surveyed to determine the overall  community support for a project using a “Silent Vote” post card process.  A minimum 60% support  from responses is required to establish neighborhood support for consideration of a trial project.    An evaluation period of up to one (1) year may be required before permanent retention of an RPP  District is finalized.  Monitoring will be conducted by the City.  A RPP vehicle permit fee may be  administered by the City during the pilot project..    4. RPP District Implementation or Retention  Following the completion of monitoring, the City will hold a minimum of one additional community  meeting with the RPP District and adjacent neighbors (for a boundary to be identified by the City).  A  second Silent Vote post card process (using the same support requirements of the Pilot Project) will  be administered by the City with appropriate RPP Permit Fees identified.  The results of the survey  will be presented at a separate community meeting.  If community support is not identified, pilot  projects will be removed.    5. No Net Cost to City  A RPP program must be cost neutral to the City, in other words, there is no net cost to the City.  \ CITY CLERK'S OFFICE 14 Minor, Beth From: Donald A. Barr <barr@stanford.edu> Sent: Tuesday, July 10, 2012 10:32 AM 12 JUL I 0 PM 4= 41 To: Council, City; Transportation Subject: Proposed Residential Parking Permit District To: Members ofthe Palo Alto City Council I would like to share with you my deep concern about the seriously flawed process with which City staff, working with a relatively small number of my neighbors, have developed the proposed Residential Parking Permit District for a small section of Professorville. While I personally support the overall concept of parking permits, I believe the proposal that will come before you on Monday, July 16, should not be approved. Rather, staff should be asked to develop a more open and representative process to explore this issue: It is clear that street parking during business hours has become a scarce commodity in many neighborhoods of Palo Alto, including ours. Parking on city streets is a common good, shared by residents and workers alike. I believe it is your job to develop a process that allocates that scarce good fairly and equitably. The current proposal does not do this. Many of you will remember the process by which the SOFA Area Plan was developed, starting in 1997. Through a series of open, fully noticed meetings, residents of our neighborhood discussed with City staff, business representatives, and each other how development in our neighborhood should proceed. That process proved highly successful. I urge you to ask staff to replicate such an open process that includes all affected, and does not pit neighbor against neighbor. I ask that you refer the issue of a potential Residential Parking Permit District back to staff, and instruct them be more inclusive in their process. Thank you. Don Barr 948 Ramona Street 1 Gonsalves, Ronna From: Sent: To: Subject: July 10, 2012 Dena Mossar <dmossar@yahoo.com> Monday, July 09, 2012 11:29 AM Council, City 12 JUL -9 PM t.: 05 July 16, 2012, Agenda Item: Professorville Neighborhood Permit Parking To: Palo Alto City Council Members From: Dena Mossar, Former Mayor and City Council Member Subject: Agenda Item: Professorville Neighborhood Permit Parking During the ten years that I served on the Palo Alto City Council, successful proposals always required full discussion with all affected parties. The proposal for a permit parking trial in Professorville does not meet this criterion for success. The process used to create the proposed permit parking trial is flawed. Neighborhood participants in the planning process were self-appointed. The proposal supports a privileged attitude and is not representative of the neighborhood as a whole. Meetings were not noticed or open to the public and a complete set of minutes is unavailable for review. I have lived in this neighborhood for over thirty years. I choose to live here because I like living in the downtown area. I enjoy the diverse mix of employees and residents. I often walk and bicycle. When I drive, I park my car in my driveway if I need a parking space that is close to home. The proposed trial pits neighbor against neighbor. My home is included within the proposed trial boundaries. It would be downright un-neighborly for me to support the proposal, since permit parking in such a limited area will certainly negatively impact those neighbors who live outside of the proposed boundaries. This proposal is also unfair to those service employees who work for the local retailers, restaurants, coffee shops and markets-services that enhance the livability of my neighborhood. Lastly, there are no agreed upon criteria that might define the success of this proposed trial. At the end of the trial period, we won't be able to agree on how to proceed. In short, this is a proposal that does not deserve to move forward. Dena Mossar 1 Gonsalves, Ronna CIT Y CLEKK'S f ~It From: Debra Satz <dsatz@stanford.edu> Sent: Saturday, July 07,20121:22 PM t 2 JUL -9 PM 4: 05 To: Council, City Cc: Transportation Subject: proposal for a pilot residential permit parking program in the Professorville area To the members of the City Council, I am writing to express my concerns regarding the proposed residential permit parking program which will be discussed at your July 16 meeting. Unfortunately I will be out of town and cannot attend the meeting. But I want to make my opposition to this proposal known to you. I have a diversity of objections to the proposal. 1. The process used to create the proposed permit parking trial was flawed. Participants in the planning process were self-appointed and did not represent the neighborhood at large. The meetings were not noticed or open to the public. 2. Parking is a scarce pUblic good. The decision to allocate this good must be made on the basis of efficiency and equity. Neither ground supports the permit proposal. It is not efficient. In the proposed trial area, there are only 4 houses without off street parking. All the other houses have approximately 2.3 spaces per household. [There are 80 homes in the area with approximately 180 off-street parking spaces.] At the same time, there are thousands of downtown workers who need access to parking. It is not an efficient use of space to redistribute more parking to the residents. Rather, it is catering to an expensive taste: the taste of some residents to use their off street parking for other purposes. Nor is it equitable. I am especially concerned that low wage workers who have to commute here from a long distance away will be further burdened by losing access to a public space. If the proposal is implemented, this is a concern that will need to be addressed. 3. It is unclear how the boundaries of this proposal were determined. The parking permit proposal appears to apply to a gerrymandered area. 4. There is no indication of what data will be collected by the City staff during the trial period or how the proposal will be monitored. What will count as success? What type of enforcement will there be? [Who, for example, has enforced against those residents who now illegally put cones in the street to "occupy" public parking?] 6 There are, of course, times when the privatization or semi-privatization of a public good is justified. This is not one of them. Sincerely yours, Debra Satz Debra Satz Marta Sutton Weeks Professor of Ethics in Society, Professor of Philosophy and, by courtesy, Political Science Director, Bowen H. McCoy Family Center for Ethics in Society Senior Associate Dean for the Humanities and Arts School of Humanities and Sciences Stanford University Stanford, CA 94305-2070 Tel: 650-736-2133 Fax: 650-723-3255 dsatz@?stanford.edu 7 Gonsalves, Ronna From: Sent: Paul Goldstein <marmot@stanford;edu> UL -9 PM 4: Oi Sunday, July 08,20128:36 PM ,2. J To: Council, City Subject: Professorville Residential Parking Permit Trial -Agenda Item July 16, 2012 To: Honorable Members of the Palo Alto City Council Re: Professorville Residential Parking Permit Trial-Agenda Item July 16, 2012 As a resident in the proposed trial area, I urge you to reject the trial Professorville residential parking program. Here are the reasons I object to this proposal: 1. The proposed program and trial area have not been subject to public discussion or scrutiny. This proposal was developed by a small group and does not represent the diversity of opinion in the neighborhood, and certainly not the opinions of the many people who do not live in the neighborhood but who would be affected. 2. The street is a public asset. On-street parking is not, and should not be, an exclusive privilege for neighborhood residents. Most of the residents in the proposed trial area have at least one designated parking place on their property (the building code requires two parking places on the property.) Many residents have converted garages to other purposes, but this is their choice. This is no reason for the city to provide them with privileged parking. 3. The proposed trial area is poorly conceived. Designating a small area for the permit program will only make the problem worse in the surrounding blocks. I have been a resident of this neighborhood for 40 years. I choose to live at this location because it is close to downtown and I enjoy the advantages that that offers. I generally walk or bicycle for my short trips. During the day, when I do need to use my car, I often cannot find a parking place in front of my house, but I have never had to park more than a block and a half away. This is a small inconvenience for the many advantages I have in living downtown. If the city wants to solve the problems associated with the parking deficit in the downtown area, a more comprehensive program needs to be developed using an open and inclusive public process. Sincerely. Paul Goldstein 1024 Emerson St 1 Gonsalves, Ronna From: Sent: To: Karen Smestad <ksmestad@yahoo.com> Wednesday, July 11, 2012 10:33 AM Council, City 1,1 8,.,)y· )'i,l "', :',' ',', ',,' ',\ U in L ,i tfl tI." S OFFICE f 2 JUl 'f AM IO~ r.. 0 Subject: Professorville Residential Parking Permit Trial -Agenda Item July 16, 2012 To: Honorable Members of the Palo Alto City Council Re: Professorville Residential Parking Permit Trial-Agenda Item July 16, 2012 As residents in the proposed trail area, we urge you to reject the trial Professorville residential parking program for a number of reasons. 1, The process used to create the proposed permit parking trial was flawed. Participants in the planning process were self-appointed and do not represent the neighborhood at large. Planning meetings were not noticed or open to the public. 2. On-street parking is for both residents and area workers, Residents do not own the parking space in front of their home. Street parking is a shared commodity and those of us who live in the downtown area both appreciate and benefit from those businesses who share in it's use. 3. The parking permit proposal represents a privileged attitude and is not representative of the neighborhood as a whole. Many residents in the proposed trial area have converted their garage and/or designated off street parking area to other purposes. We do not feel Professorville residents should subsidize this practice with the proposed trial of permit parking. Our family has lived in the Professorville neighborhood for nearly 30 years. We utilize 3 off-street parking spaces and find that the parking situation is only occasionally problematic. We recognize that street parking during peak business hours is an increasing problem and concern to our neighbors, but encourage the council to reject the current proposed trial and refer the issue of deficit parking back to staff for a more open and inclusive public process. Sincerely, Tom and Karen Smestad 1023 Emerson Street 1 Betten, Zariah Subject: FW: pilot Residential Permit Parking program From: Robert Heilmayr [mailto:rheilmayr@gmail.com] Sent: Monday, July 09, 2012 10:20 AM To: Transportation Subject: Re: pilot Residential Permit Parking program Dear City of Palo Alto, I am a resident of Palo Alto, living at 160 Lincoln Avenue. I wanted to express my concern about a proposed pilot program for residential permits. Although the permit program is not intended to include my block, it does include many of the nearby streets that I often use for parking when parking on my block is filled. I am concerned that the proposed pilot program will restrict my parking options, while simultaneously pushing . additional parking demand onto my street. I am still not convinced that permit parking is necessary for this part of Palo Alto -only very rarely have I had to park more than 1 block away from my house due to high demand. However, the proposed pilot program threatens to make life more difficult. Thanks for considering my views, Robert Heilmayr 1 Betten. Zariah From: Sent: To: Subject: epernas.giz@gmail.com on behalf of The Battles Family <mattlena@matthewbattles.com> . Monday/ June 25/ 2012 9:53 AM Rodriguez/ Jaime Professorville RPP Dear Mr. Rodriquez, We are Professorville residents writing in support of the Residentfal Permit Parking program. It has come to our attention that a pilot has been proposed for this program; we also support that pilot. In addition, we request that all Professorville residents be kept informed of the RPP development, pilot, and results. Currently, only pilot participants are being kept informed. As Professorville residents, we should also be included these information/decisions that directly 'impact our neighborhood. Thank you, Elena & Matt Battles 1010 Waverley Street, Palo Alto mattlena@matthewbattles.com 1 Betten, Zariah Subject: FW: pilot Residential Permit Parking program From: Karina Kloos [mailto:karinakloos@gmail.com] Sent: Saturday, July 07, 2012 6:24 PI"1 To: Transportation Subject: Re: pilot Residential Permit Parking program Dear City of Palo Alto, I am a Palo Alto resident, residing at 160 Lincoln Ave, at the comer of Lincoln and High. I understand and appreciate the logic behind RPP as I often face the problem of finding parking when I return home in the middle of the day. I am concerned about both the pilot as well as any eventual permanent arrangement, because the area indicated for RPP does not include my address. This of course means that displaced would-be parkers will park even more disproportionatly in front of my home, creating an even worse parking problem for n1e. We ask that you please consider extending the boundary of your pilot program (and any subsequent programs) to include my address, to avoid worsening my already tight parking situation. Sincerely, Karina Kloos 160 Lincoln Ave Palo Alto 1 Betten, Zariah From: Sent: To: Cc: Subject: Attachments: Rob Steinberg <rsteinberg@steinberg.us.com> MondaYt June 18t 2012 10:12 AM Rodriguez, Jaime Burt, Patrick; Espinosa, Sid (internal); Holmant Karen (internal); Klein, Larry; Price, Gail (internal); Scharft Gregory (internal); Schmidt Greg; Shepherd, Nancy (internal); Yeht Yiaway; City Mgr Pilot Professorville Parking Permit Scan_Doc0134.pdf Jaime-I am in support of the pilot program, however I fear that the problem being experienced by the pilot blocks will . be transferred to the adjacent residential blocks not being included in the pilot test. I would like to better understand the thinking regarding ~he area to be included should the pilot ~e successful and a long term implementation plan be considered by the City. Rob Robert T. Steinberg, FAIA President Steinberg 98 Battery Street, Suite 300 San Francisco, CA 94111 415.683.2633 I Mobile 415.987.0699 *Please note my new mobile phone number* This message is intended only for the recipient(s) identified above MId may contain confidential information. If you arc not an intended recipient, do not read, use, or this material. This 5112111 not be construed as an official project instruction or direction of Steinberg in the project contract If you have received this transmission in error, please notify us immediately ,·tVO"C::1:;;.:J"t'1· • .), return this transmission, and delete or destroy any copies (digital or paper). 1 Betten. Zariah From: Sent: To: Cc: Subject: Dear Jaime, Takeshi "TK" Mori <tkmori@zenshincapital.com> Saturday, June 30, 2012 9:00 PM Rodriguez, Jaime Takeshi Mori Residential parking permit in professorville My name is TK l\(Iori. I live at 1116 Bryant Street. The parking situation is really bad on Bryant (my section is between Lincoln and Kingsley), and is getting worse recently. Most of the weekday daytime, we cannot find a single spot on Bryant. I recently heard that you are going to try a pilot RPP program, and my block is to adjacent to the trial area. I really think RPP is a good idea, and thank you for considering it. I hope you will implement RPP as soon as possible and it covers much wider area. I am' concerned that since your trial program is only covering a small area, the cars parked there would be pushed out to my block. I would appreciate your close attention to the matter. TK Mori tkmori@gmail.com 1 Betten, Zariah From: Rodriguez, Jaime Sent: To: SundaYI June 17, 2012 10:26 PM Michael Vinson Subject: RE: Pilot Professorville Residential Permit Parking Hello Mr. Vinson, Thank you for your email. The pilot Professorville RPP project is currently in the stage where we are querying residents within the proposed area for their interest in implementing the trial. The results of the survey will be presented at the city council meeting of July 16th. Residents living adjacent to the proposed pilot area will be notified by postal mail of the council meeting at the end of June. We will definetely take in your written email now and not any concerns received before the meeting, during the meeting. If you have any questions, please feel free to contact me at (650) 329-2136. Jaime Rodriguez From: Michael Vinson [vinsonl022@gmail.com] Sent: Sunday, June 17, 2012 3:01 PM To: Rodriguez, Jaime' Subject: Re: Pilot Professorville Residential Permit Parking On Jun 17, 2012, at 2:55 PM, Michael Vinson wrote: >1 have recently become aware of this pilot program. I am writing to register my objections. > > I live at 1022 Waverley Street, Palo Alto, between Lincoln and Addison, just outside the proposed zone. It is already impossible to find parking in front of my house during the week. I have even gone out to find cars blocking my driveway. I am often forced to park more than a block away. > > If you implement the proposed plan, it will just result in more people trying to park in front of my house since it will be first block outside the zone. It will likely mean I will have to look 2 or more blocks from home to find street parking. > > I think residential parking is a good idea. But, your zone is too small and does not consider the impact of a small zone on the surrounding neighbors. You are doubling the problem and moving it a few blocks, and while that may help the people in the zone, it hurts those outside the zone. > > The only thing that makes sense is a zone which include the entire area south to Embarcadero and probably east to Webster. > > Michael Vinson , 1 Betten, Zariah Subject: FW: Pilot Residential Permit Parking Program From: Matt Mealiffe [mailto:matt@mealiffe.org] Sent: Monday, June 25, 2012 3:36 PM To: Transportation Subject: Pilot Residential Permit Parking Program Dear Transportation Division City Staff, I am writing after a friend in our neighborhood handed me a copy of your June 12, 2012 letter announcing the pilot Residential Permit Parking program (RPP) in the vicinity of the Professorville area. We live at 203 Addison (between Ramona and Emerson) on a block that -when boundaries of residential areas and streets with businesses are considered -seems remarkably and strangely absent from the proposed RPP boundary. We did not receive the pilot RPP letter, presumably because it was only sent to houses within the proposed pilot RPP boundary. My fiancee and I were and are both very strong supporters 'of a residential parking permit program on our street. The parking crush from living in a neighborhood adjacent to downtown Palo Alto is - without question -the most negative , factor of our daily existence in Palo Alto. It is also -admittedly -the only thing that drives us to anything resembling local political activism. Some time ago, at the invitation of neighbors, we got involved in the process with our politically active neighbors - attending a neighborhood meeting organizing advocacy and attending a city council meeting to show our support for the RPP. Strangely, our neighbors, after aggressively encouraging us to show support with a sign and attend various meetings (which one or both of us often did), suddenly stopped inviting us to participate. Since we are both busy professionals, we did not investigate as thoroughly as we should have why we were hearing nothing but crickets in the neighborhood. Looking through the "retrospectoscope", I regret not sensing that something was up now that I've been handed a copy of the pilot RPP announcement that strangely does not include our block. I'm on a mission to reconstruct what happened and learn more about how the RPP map came to look like a gerrymandered Texas congressional district. I'd appreciate an opportunity to meet with you -perhaps early next week - so that you help me learn about the logic behind the pilot RPP boundaries. Thank you very much. Sincerely, Matt Mealiffe 1 City of Palo Alto (ID # 2937) City Council Staff Report Report Type: Action ItemsMeeting Date: 7/16/2012 July 16, 2012 Page 1 of 9 (ID # 2937) Council Priority: Environmental Sustainability Summary Title: Carbon Neutral Electric Portfolio Definition Title: Utilities Advisory Commission Recommendation that Council Approve a Definition of Carbon Neutrality in Anticipation of Achieving a Carbon Neutral Electric Supply Portfolio by 2015 From: City Manager Lead Department: Utilities Request Staff recommends that the City Council approve the following definition as the basis for the City’s pursuit of a carbon neutral electric supply portfolio: Carbon Neutrality: A carbon neutral electric supply portfolio will demonstrate annual net zero greenhouse gas (GHG) emissions, measured at the Citygate1, in accordance with The Climate Registry’s Electric Power Sector protocol for GHG emissions measurement and reporting. This item will be presented to the Utilities Advisory Commission (UAC) on Wednesday evening July 11, 2012, after the time the Council packet goes out. Staff will update Council on the UAC action and recommendation on this item in advance of the Council meeting Monday July 16, 2012. Executive Summary In May, Council directed staff to develop a plan to achieve carbon neutrality for the City’s electric supply portfolio. Fundamental to the development of the plan 1 Citygate is the location of the City’s main meter where the City interconnects to the Pacific Gas and Electric transmission system. July 16, 2012 Page 2 of 9 (ID # 2937) is a clear definition of what carbon neutrality means for the City’s electric supply portfolio. This report recommends a definition of carbon neutrality that is achievable, credible, transparent and measurable as well as consistent with current industry standards for GHG accounting and reporting protocols. The proposed definition is also simple to explain and cost effective to implement. Adopting a definition of carbon neutrality based on sound and reputable standards will show leadership in sustainability and creates a model which can easily be followed by other publicly- owned and investor-owned utilities. Once Council establishes a definition of carbon neutrality for the City’s electric supply portfolio, staff will develop a plan to achieve a carbon neutral electric supply portfolio by January 1, 2015. Background Council approved the City’s Climate Protection Plan (CPP) in December 2007 (CMR 435:07). The CPP set a goal to reduce the City and community GHG emissions2 by 15% from 2005 levels by the year 2020. In April 2012, the City’s Sustainability Manager reported to Council that the 15% reduction goal is likely to be achieved by the end of 2012, and that the primary drivers behind the GHG emission reductions included obtaining a higher percentage of renewable electricity supplies, greater participation in the PaloAltoGreen program, and energy efficiency savings in electricity and natural gas usage by the City of Palo Alto Utilities (CPAU) customers. Figure 1 illustrates this reduction by different sectors. 2 The six greenhouse gases are carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydro-fluorocarbons (HFCs), perfluorocarbons (PFCs), and sulfur hexafluoride (SF6). Given different physical characteristics, these gasses are commonly converted to their equivalent emissions of CO2 (expressed as CO2e). The term “net zero” includes the use of environmental products such as RECs and offsets, detailed later in this document. July 16, 2012 Page 3 of 9 (ID # 2937) Figure 1: Communitywide GHG Reductions Since 2005 (Electric supply portfolio emissions shown separately) Community GHG Emissions: 2005 vs. 2012 (est.) (Total: 760,000 to 650,000 MT, reduction of 14%) 160,057 187,744 413,061 94,718 183,338 370,581 0 100,000 200,000 300,000 400,000 500,000 Direct Emissions (natural gas and landfill) Emissions from Electricity Generation Emissions from Transportation and Solid Waste GH G E m i s s i o n s ( M T / y e a r ) 2005 2012 estimated In May 2010 Council approved an updated ten-year Electric Energy Efficiency (EE) plan which set a goal to save 7.2% of the City’s electric usage needs by 2020 (CMR: 218:10). In April 2012 Council approved the Long-term Electric Acquisition Plan (LEAP) (Staff Report 2710), which includes: (1) a least cost resource acquisition objective and general direction for efforts to reduce the electric portfolio’s carbon intensity to achieve certain GHG reduction goals under Strategy #5, Climate Protection, consistent with the City’s CPP and requirements under California’s Global Warming Solutions Act of 2006 (AB32); and (2) a Renewable Portfolio Standard (RPS) to attain at least 33% of sales from renewable resources by 2015 within a rate impact limit of 0.5 cents per kilowatt-hour (¢/kWh). In July 2011 Council approved the Utilities Strategic Plan (Staff Report 1880), including a performance measure to reduce the carbon intensity of the electric portfolio. On May 21, 2012, Council directed staff to develop a plan by December 2012 to achieve carbon neutrality for the City’s electric supply portfolio (Staff Report July 16, 2012 Page 4 of 9 (ID # 2937) 2525). Council directed staff to include in the plan a recommendation for how to achieve carbon neutrality by January 1, 2015. By 2015 the City expects to have achieved a 4% reduction in load through energy efficiency, along with an RPS level of at least 33%.3 Large hydroelectric resources, which are carbon-free, are expected to provide another 49% of the City’s electricity needs and therefore at least 81% of the City’s electricity will be supplied by low carbon4 and carbon-free resources. The remaining 19% would normally be purchased from the wholesale “brown” market. Figure 2 shows the City’s expected electric supply mix in 2015, which includes renewable resources currently under contract and new renewable resources to meet the 33% RPS goal. Figure 2: Expected Electric Supply Portfolio by Resource in 2015 Large Hydro 47%Future RPS 5% Geothermal 3% Landfill Gas 12% Net Market Purchases 21% Wind 11%Small Hydro 1% 3 Consistent with state law SB X1-2 , RPS level is expressed as a percentage of the City’s total retail sales volume. Thus, 33% of sales is equivalent to about 31.8% of the City’s total electric supply. 4 There are small GHG emissions associated with geothermal and landfill-gas-to-energy resources. July 16, 2012 Page 5 of 9 (ID # 2937) Discussion Defining carbon neutrality for the electric supply portfolio is an important step in developing the carbon neutral plan. In its efforts to develop a definition of carbon neutrality for CPAU, staff enlisted Navigant Consulting, Inc. (Navigant) to assess: 1) other municipal electric utilities’ carbon neutrality or “clean electricity” goals in order to provide reference points in developing the City’s goals; and 2) parameters around defining carbon neutrality. The first study (Attachment B) showed that a common motivator behind many other utilities’ efforts to reduce GHG emissions is to be regarded as a leader in the area of sustainability. However, the manner in which each utility goes about achieving its goals varies significantly and is often driven by regulatory requirements and community support. Most utilities with GHG emission reduction programs pursue opportunities through a hierarchical approach, first by reducing consumption of energy, then procuring low or zero GHG emission resources, and finally by balancing any remaining GHG emissions with an equivalent amount of carbon offsets and/or renewable energy certificates (RECs). The second study (Attachment C) assisted staff in developing its recommended definition of carbon neutrality by focusing on key policy elements. To help ensure transparency and credibility of the City’s efforts towards achieving carbon neutrality for the electric supply portfolio, staff recommends that The Climate Registry (TCR) Electric Power Sector (EPS) protocol be adopted as the standard for accounting, reporting, and verification. A summary of the EPS protocol is provided as Attachment A. Staff proposes that the City use TCR’s established protocol, which includes identification of the proposed GHG emissions to be covered in the City’s inventory and emission factor by resource type to be used to determine the carbon intensity of the City’s electric supply portfolio. Essentially, this means that to achieve carbon neutrality, the GHG emissions from the City’s owned and purchased electric supply resources must be net zero on an annual basis. This can be done by purchasing carbon-free resources and balancing GHG emissions from July 16, 2012 Page 6 of 9 (ID # 2937) other resources with purchases of carbon offsets and/or renewable energy certificates (RECs). Next Steps Following Council’s approval of a definition of carbon neutrality, staff will propose a plan to achieve the carbon neutrality target by January 1, 2015. The plan will include specific portfolio recommendations, cost, identification of risks, legal considerations and the expected rate impacts. The plan is expected to be reviewed by the UAC in October followed by Council consideration in December 2012. Staff has begun the process of seeking community input to assess its support and willingness to pay for carbon neutrality and the impacts of a carbon neutral portfolio in achieving energy efficiency goals. Staff is also in the process of updating the City’s ten-year Electric EE goals; and continues its efforts to acquire renewable resources, both locally and remotely, to meet the City’s RPS. The findings and/or results of these efforts will be included as part of the report to the UAC and Council with the recommended plan to achieve carbon neutrality. The timeline below illustrates the remaining key steps and elements involved in the development of the plan. Staff anticipates refinements to the timeline as part of the process of developing the plan for carbon neutrality. July 16, 2012 Page 7 of 9 (ID # 2937) Table 5: Tentative 2012 Timeline UAC – July Council – July Staff presents analysis and recommendation for:  Definition of carbon neutrality  The set of carbon neutral portfolio options to evaluate in further detail May – August Staff consults with community stakeholders and seeks community input through surveys and other tools to determine:  Willingness to pay for carbon neutrality  Reaction to the carbon neutral portfolio options June – September Staff refines analysis of carbon neutral portfolio options, including:  Update assessment of EE potential for the 2013 10-year Electric EE Plan and goals  Update renewable energy portfolio with new contracts, if any  Revise estimate of participants for local renewable distributed generation, including the City’s Clean Local Energy Accessible Now Program (CLEAN)  Evaluate cost and rate impacts under various scenarios (market prices, projected cost of carbon allowances, hydroelectric generation, etc.)  Evaluate options for redesigning the PaloAltoGreen Program  Evaluate risks, including regulatory risk UAC – October Council – December Staff presents analysis and recommended Carbon Neutral Plan July 16, 2012 Page 8 of 9 (ID # 2937) Resource Impact There is no direct resource impact as a result of staff’s proposed definition of carbon neutrality for the City. Staff has enlisted outside expertise to assist in the assessment of GHG accounting protocols and to study other electric utilities’ efforts towards carbon reduction. The FY 2012 and proposed FY 2013 budgets include funding for Navigant. The plan to achieve carbon neutrality will address the cost, potential rate increase and other resource impacts. Policy Implications The proposed recommendation meets the Council-approved LEAP Objectives, Strategies and Implementation Plan; supports the Council-approved 2011 Utilities Strategic Plan’s environmental sustainability objective; is consistent with the City’s Climate Protection Plan; and supports environmental sustainability, one of the City Council’s top five priorities. Environmental Review Support of the recommendation to develop a plan to achieve a carbon neutral electric portfolio does not constitute a project for the purposes of the California Environmental Quality Act. Commission Review and Recommendation On July 11, 2012, the UAC reviewed staff’s proposed definition of carbon neutrality for the electric supply portfolio. The excerpted draft minutes of the UAC’s July 11, 2012 meeting will be provided “at-places” for the Council’s information. Attachments:  Attachment A: Summary of Implementation of The Climate Registry's Electric Power Sector Protocol in Pursuit of Carbon Neutrality for the City of Palo Alto's ElectricAtta Portfolio (PDF)  Attachment B: Navigant's Study of Utility Profiles (PDF)  Attachment C: Navigant's Study on Carbon Neutrality Definitional Issues (PDF) Prepared By: Monica Padilla, Sr. Resource Planner Department Head: Valerie Fong, Director City Manager Approval: ____________________________________ July 16, 2012 Page 9 of 9 (ID # 2937) James Keene, City Manager Page 1 of 10 ATTACHMENT A Summary of Implementation of The Climate Registry’s Electric Power Sector Protocol in Pursuit of Carbon Neutrality for the City of Palo Alto’s Electric Portfolio The key policy elements discussed in the TCR EPS protocol include: 1. Measurement, Accounting, Reporting and Verification Protocol 2. Inventory Scope of GHG Emissions Covered by Definition 3. GHG Emission Factor by Resource 4. Balancing Periods and Banking 5. Role of PaloAltoGreen Program 6. Portfolio Alternatives to Achieve Carbon Neutrality 1. Measurement, Accounting, Reporting and Verification Protocol There are several GHG accounting standards in the industry, although all are based on the accounting architecture developed by The World Resources Institute (WRI). WRI is regarded as a global leader on the topic of GHG measurement and accounting standards through its development of accounting tools for governments and businesses that enable them to understand, quantify, and manage GHG emissions. WRI’s methodology divides GHG emissions into three types: Scope 1, Scope 2, and Scope 3. For a GHG reporting entity such as the City, Scope 1 includes the direct emissions the entity has control over, such as factory emissions, building emissions, emissions from utility owned generation and emissions from vehicles it owns or controls. Scope 2 includes primarily emissions associated with electricity the reporting entity consumes for its own operations but did not produce. Scope 3 emissions are all other emissions over which the reporting entity does not have control. Scope 3 emissions include sources such as electricity purchased by electric utilities for the use of its customers, commutes by employees and emissions associated with concrete purchased for construction. The WRI protocol is the accounting foundation for The Climate Registry (TCR) GHG reporting protocol. TCR is a U.S. Environmental Protection Agency (US EPA) recognized national GHG reporting public platform, and the City has been reporting to this agency (and its predecessor agency, the California Climate Action Registry) since 2005. Figure 1 is an illustration of the various emissions types and how they are accounted for under WRI’s Scope 1, Scope 2, and Scope 3 definitions. Page 2 of 10 Figure 1: Overview of Scope 1, 2, and 3 GHG Emissions Source: World Resources Institute TCR protocol directs an electric utility to report its own Scope 1 and Scope 2 emissions under the General Reporting Protocol (GRP), and allows for the utility to compute the emissions (in metric tons of CO2e) using standardized emission factors (in pounds of CO2e per unit of electricity delivered to different customers) under the Electric Power Sector (EPS) protocol1. The portfolio or program level emission factors generated by electricity providers, calculated using the EPS protocol, may then be used by end-use customers to report the Scope 2 emissions associated with their own electricity usage. To help ensure transparency and credibility of the City’s efforts towards carbon neutrality, staff recommends that TCR’s EPS protocol be adopted as the standard for accounting, reporting, and verification. 2. Inventory Scope of GHG Emissions Covered by Definition Electric Supply Staff recommends limiting the scope of the emissions to be counted to those associated with the electric supply portfolio as measured at the City’s main meter (Citygate) plus output from City-owned generation facilities (the city-owned back-up generator, or COBUG) within City boundaries. The electric supply portfolio consists of all resources purchased and/or owned, including deliveries from its two hydroelectric resources, Western and Calaveras, all renewable resources acquired under power purchase agreements, and net market purchases (total 1 www.theclimateregistry.org/resources/protocols/electric-power-sector-protocol Page 3 of 10 purchases minus total sales in the wholesale markets) made to meet load requirements on an annual, calendar year basis. Electric Grid Reliability & Transmission Losses Given the highly variable nature of the City’s long-term electric supply resources—on a minute- to-minute, month-to-month and year-to-year level—it is inevitable that the City will rely to some extent on generation reserves connected to the California Independent System Operator (CAISO) grid. Specifically, some generation capacity is always reserved to follow loads in the event that actual load and generation resources deviate widely from forecasted levels. Consistent with the EPS protocol, the emissions associated with these load-following resources are reported by the generation owners as Scope 1 emissions. To the extent that CPAU requires these resources to meet unplanned electric load, this energy will be delivered to Citygate and thus the emissions associated with the energy will be counted as Scope 2 or 3 emissions on the City’s emissions inventory, just like all of its purchased power. In 2008 the City effected a 15-year assignment of its share in the California-Oregon Transmission Project (COTP). Since the City currently does not own or operate transmission, according to the TCR EPS protocol it does not need to include transmission line losses in its emissions calculation. Emissions associated with transmission losses may need to be considered in future inventories depending on TCR protocols, or if the City reacquires transmission ownership rights. Distribution System In addition to the GHG emissions associated with electric supply, electric distribution operations also generate GHG emissions. The City reports to TCR on electric utility operational activities producing GHG emissions2 including fuel consumption by the CPAU vehicle fleet (Scope 1), potential SF6 emissions from substation breakers (Scope 1), and electricity used in CPAU buildings (Scope 2). However, since carbon neutrality is being defined as emissions related to electricity supply only, emissions associated with operations will not be included in the emission inventory. Electricity losses in distribution system wires, which are estimated at five percent of electric purchases, will be accounted for since the electric supply is measured at Citygate and not at customer meters. Table 1 below is a summary of the emissions to be included in the City’s electric supply portfolio inventory. 2 GHG emissions from electric operations represent less than 0.5 percent of all emissions produced by the electric utility. Page 4 of 10 Table 1: Electric Portfolio Carbon Neutral Emission Inventory Scope Categories Description 1 Stationary combustion Emissions from owned/controlled facilities. For CPAU this includes COBUG 2 Distribution system losses CPAU owned distribution line losses only Purchased power for own consumption Electricity used by all City facilities is included in the measure at the City’s meter (Citygate) 3 Purchased power for customers Electricity purchased for resale to the City’s customers measured at Citygate 3. GHG Emission Factor by Resource TCR protocols allow for project-specific emissions factors, in pounds of CO2e per megawatt- hour (MWh), to be used as the basis for calculating portfolio emissions. These emissions would be based on actual metered fossil fuel consumption or measurement of GHG releases. If project-specific emissions factors are not known, TCR allows the use of generic technology- based emission factors based on US EPA numbers as shown in Table 2. Table 2: Default Emissions Factors for Power Purchases from Specific Resources Resource Emissions Factor (pounds CO2/MWh) CPAU Resources Natural Gas Combined Cycle – Two Turbines 909 N/A Combined Cycle – Single Shaft 860 N/A Combustion Turbine 1,329 N/A Steam Turbine 1,532 N/A Internal Combustion 1,226 COBUG Biogenic Fuels Anthropogenic Biogenic Landfill Gas3 38 2,677 6 Ameresco PPAs Municipal Solid Waste 1,353 2,513 N/A Geothermal (Non-binary) 200 lbs CO2/MWh 1.66 lbs CH4/MWh n/a Western GeoPower PPA Source: The Climate Registry Electric Power Sector Protocol for Voluntary Reporting Program (Annex 1 to the General Protocol) v1.0, June 2009. California Non-specific Emissions Factor The wholesale brown market power purchases that the City executes to balance its resource supply with its load are not from a specific generator, and are called “unspecified” resources. TCR protocols dictate that the emissions associated with power purchases from unspecified 3 Bio-gas and anaerobic digester plants are assumed to have roughly the same amount of anthropogenic emissions as landfill gas generation. Page 5 of 10 resources be calculated by applying a default emissions factor based on the geographic region from which the power likely originated. These geography-based non-specific emissions factors are found in the US EPA’s Emissions & Generation Resource Integrated Database (eGRID). It is assumed that all of the City’s wholesale market power purchases originate in the “WECC California” eGRID subregion, for which the current emissions factor is 661.2 pounds of CO2e per MWh. Biogenic and Anthropogenic Emissions TCR protocols require that both biogenic and anthropogenic emissions be counted – and reported separately – in an entity’s emissions inventory. Biogenic emissions of GHGs are those that would occur naturally from living organisms’ respiration and digestion. Anthropogenic GHG emissions are due to human activity, mostly from burning of fossil fuels. In the electric generation sector, examples of biogenic emissions include CO2 emissions resulting from the combustion of plant biomass, sludge digester gas or landfill gas. Since biogenic emissions are not a GHG consequence of City projects and activities, the emissions will not be included in the calculation of emissions for the city’s electric supply portfolio. Anthropogenic emissions factors are shown in Table 2 for various types of generation resources that will be counted in the City’s emission inventory along with the eGRID listed emission factors for unspecified resources. For illustrative purposes, Table 3 shows the expected 2015 GHG emissions intensity of the City’s electric supply portfolio assuming a 4.2% reduction in usage from energy efficiency; a 33% RPS; average hydroelectric conditions; and the remaining load met through unspecified market purchases. Table 3: GHG Emissions Associated with the City’s 2015 Electric Supply Resources Resource Type Generation (GWh) Emissions Coefficient (lb CO2e/MWh) Total Emissions (Metric Tons CO2e) Hydro 514 0 0 Wind 120 0 0 Landfill Gas 126 38 2,171 Geothermal 33 235 3,523 Other Renewables (for a total RPS 33% of sales) 53 0 0 COBUG 0.5 1,226 278 Market Purchases 229 661 68,567 Total 1,075 74,539 4. Balancing Periods and Banking The City’s electric load requirements and supply resources vary significantly on an hourly, daily, monthly and annual basis. Under the current plan in 2015, the City’s electric portfolio is expected to require market purchases of about 19% of the annual load; however, even in an average hydroelectric year the portfolio’s electric resources will exceed loads in months when Page 6 of 10 hydroelectric generation and wind output are highest. Figure 2 is an illustration of monthly variability in load and supply resources in 2015. The City’s hydroelectric resources cause large variations in supply resources on an annual basis. Hydroelectric supplies provide from 30% to 80% of the City’s annual electric needs depending on hydrologic conditions. Currently, under wet hydrologic conditions the City may have resources surplus to load by as much as 55% during the spring months. Adding additional carbon neutral resources to the portfolio would extend these surpluses even further, particularly if the new resources had an annual load shape like hydroelectric, California wind or solar resources. Figure 2: Expected Monthly Load and Resource Balance in 2015 0 20 40 60 80 100 120 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Mo n t h l y L o a d a n d R e s o u r c e S u p p l y ( G W h ) LOAD Geothermal Hydro Generation Wind Generation Landfill Generation Future Renewables to Achieve 33% RPS Operationally the City’s electric load must be balanced with a supply resource every 10 minutes. As the City’s scheduling coordinator, the Northern California Power Agency (NCPA) actively buys and sells electricity through the CAISO on a daily, hourly, and real-time basis. The level of granularity the City seeks to pursue through its carbon neutral effort will influence the cost of achieving carbon neutrality and, to some extent, will dictate the types of resources available. Ensuring that the City’s portfolio is carbon neutral on a monthly (or even daily) basis may prove to be costly insofar as it leads to more transaction costs incurred. For example, in the spring and some summer months, the City’s availability of carbon-free resources from wind and hydroelectric resources is highest. Since it is not possible to schedule resources in excess of Page 7 of 10 load, NCPA sells excess supply as a “system sale” (i.e., non-resource specific) and the renewable attributes associated with the resource are retained by the City. Conversely, in months where the City is deficient, NCPA makes system purchases to meet load. Assuring carbon neutrality in time increments less than on an annual basis would require that the City sell excess renewable resources in surplus months and purchase additional renewable resources in deficit months. The TCR EPS reporting protocol requires an annual report showing net emissions for the calendar year, thus allowing for the carryover of surplus renewable attributes (i.e., RECs) from some months to be used to cover deficits in other months. Further, the protocol allows for the carryover of surplus renewable attributes beyond the calendar year in which they were produced. This practice is referred to as “banking” and is commonly used to minimize transaction costs. TCR protocols allow for banking only for new renewable resources (less than 15 years old), with restrictions on how long the RECs can be banked. As such, because the City’s two hydroelectric resources are older than 15 years, RECs from these two resources may only be counted towards offsetting emissions in the calendar year in which they are produced. Figure 3 shows the City’s electric supply portfolio emissions following the recommended reporting protocol given 33% RPS and unspecified market purchases. These emissions would need to be “zeroed out” through the purchase of RECs and/or offsets to achieve carbon neutrality for the electric supply portfolio. The wide annual variation in emissions for the period from 2005 through 2011 is primarily due to variations in generation from hydro resources. The declining amount of emissions projected after 2012 is due to additional renewable resources expected to become available. Page 8 of 10 Figure 3: Actual/Projected GHG Emissions for the City’s Electric Supply Portfolio 0 20,000 40,000 60,000 80,000 100,000 120,000 140,000 160,000 180,000 200,000 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Calendar Year To t a l E l e c t r i c i t y S u p p l y E m i s s i o n s ( T o n n e s C O 2 e ) CPAU Total Emissions (Actual / Projected) CPAU Total Emissions (Average Hydro) Actual Projected 5. Role of PaloAltoGreen Program PaloAltoGreen, which started in 2003, is a voluntary program where customers elect to pay a premium in order to ensure that their supply is comprised of 100% renewable resources.4 With roughly 25% of the City’s customers (8% of retail load) on PaloAltoGreen, the City’s program is recognized as the top-ranked voluntary renewable program in the country by participation rate. In 2011, PaloAltoGreen accounted for approximately 28,000 metric tons of CO2e of GHG reductions for the community. At the time the PaloAltoGreen program started, the City did not have a renewable resource portfolio standard and participants received 100% renewable resources for their needs. However, as the City approaches its RPS goal, PaloAltoGreen participants may have less incentive to remain part of the program and pay extra for renewable resources. In the event that the City continues to offer PaloAltoGreen as an alternative to the City’s regular supply portfolio, the TCR EPS protocol allows for the reporting of multiple electric 4 In 2011 PaloAltoGreen was sourced through RECs purchased from wind projects in Washington and Wyoming (97.5% of supply) and solar projects in California (2.5% of supply). Page 9 of 10 supply emission tables to be used by customers in their voluntary reporting of their own Scope 2 emissions. However, the TCR EPS protocol does not allow emission reductions from PaloAltoGreen to be counted towards carbon neutrality efforts of the non-voluntary portfolio. A task to redesign the PaloAltoGreen program is part of the LEAP Implementation Plan. That redesign will be done in the context of the pursuit of carbon neutrality for the electric supply portfolio. As PaloAltoGreen has tapped into an important community resource involving a willingness to support environmental stewardship, PaloAltoGreen redesign efforts will explore alternatives for continuing to provide GHG emission reduction efforts throughout the community. 6. Product Alternatives to Achieve Carbon Neutrality There are several types of resources and/or environmental products that the City could use under TCR protocols to achieve carbon neutrality for the electric portfolio. A general description of these products is provided below. The plan to achieve carbon neutrality will provide further detail regarding costs and availability of each resource along with a recommendation of whether or not to use them as part of the City’s carbon neutral efforts. RPS Eligible Resources: RPS eligible resources are those certified by the California Energy Commission (CEC) and are included in the CEC’s RPS Eligibility Guidebook. The City’s RPS requires that resources meet the CEC RPS eligibility requirements as well. The list of renewable resource technologies that meet the CEC’s RPS eligibility standards includes energy from landfill gas-to-energy, solar photovoltaic, solar thermal electric, wind, small hydroelectric, and geothermal projects. Under California’s RPS law (SB X1-2), unbundled RECs (i.e., RECs without any physical energy associated with them or Bucket 3) and renewable resources that are located out-of-state (i.e., Bucket 2) can be used for RPS compliance, with some restrictions on the degree to which these resources can be relied upon to meet the state RPS requirement. For the purpose of reporting emissions, the TCR protocol does not distinguish between RPS eligible resources and non-RPS eligible resources. REC-Only Products TCR protocols allow entities that procure unbundled RECs to adjust their emissions inventories to account for these products. Even though the physical energy is not delivered to the entity, TCR allows the use of unbundled RECs—whether RPS eligible or not—to displace an equivalent amount of power from the actual power mix. This adjustment is allowed because the RECs include all renewable and environmental attributes associated with the production of electricity from the renewable energy resource. Carbon-free, Non-RPS Eligible Renewable Resources Non-RPS eligible resources that can be reported as being carbon-free under the TCR protocols include large hydroelectric (such as from Western and Calaveras resources), nuclear and out-of- state renewable resources built before 2005. Page 10 of 10 Environmental Offsets GHG offsets5 are tradable credits issued for emissions reductions resulting from qualifying GHG mitigation projects. They can be purchased on the voluntary market (for example to achieve carbon neutral objectives) or in the compliance markets (for example to meet cap-and-trade requirements). Qualified offsets for California’s cap-and-trade system are certified and issued by the Climate Action Reserve and are typically transacted on a bilateral basis. The California Air Resources Board (CARB) currently recognizes offsets issued by the Climate Action Reserve for several types of GHG mitigation projects—including forestry, urban forestry, livestock methane, and ozone depleting substances—for use in meeting AB32 GHG reduction goals for 2020. There are other international offset markets, such as the Clean Development Mechanism which facilitates offsets from developing countries to be sold into the European Union’s Emission Trading Scheme. With the uncertainty associated with the use and eligibility of various types of offset products coupled with the lack of compliance-driven buyers, the market for offsets is currently very illiquid and there is a great deal of uncertainty around the long-term market price of these products. Table 4 is a summary of the various products including RPS specifications and how they are currently reported under California’s Power Content Label requirements. Table 4: Summary of Various Renewable Energy and Environmental Products RPS Eligible Energy RPS Eligible RECs Non-RPS RECs Non-RPS Carbon- free Energy Environmental Offsets Description Bucket 1: In- state projects, and Bucket 2: firmed and shaped products from out-of- state resources Bucket 3: REC- Only deals or other transactions, subject to compliance limits Unbundled RECs from projects not RPS certified by the CEC These could include large hydro, nuclear, or older out-of-state renewable energy projects Emissions reduction credits from qualifying GHG mitigation projects RPS Eligible? Yes Yes No No No Power Content Label Eligible Renewable Eligible Renewable Eligible Renewable Specific Resource Unspecified Market The Climate Registry Emissions reported * Emissions reported * Emissions reported * Zero emissions Emission reductions counted * Anthropogenic emissions, if applicable, reported. 5 WRI defines a carbon offset as “a unit of carbon dioxide-equivalent (CO2e) that is reduced, avoided, or sequestered to compensate for emissions occurring elsewhere.” ©2012 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. ENERGY DISPUTES & INVESTIGATIONS • ECONOMICS • FINANCIAL ADVISORY • MANAGEMENT CONSULTING June 4, 2012 City of Palo Alto Utility Carbon Neutrality Assessment – Utility Profiles 1 ©2012 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. ENERGY Content of Report This presentation was prepared by Navigant Consulting, Inc. exclusively for the benefit and internal use of the City of Palo Alto and/or its affiliates or subsidiaries. No part of it may be circulated, quoted, or reproduced for distribution outside these organization(s) without prior written approval from Navigant Consulting, Inc. The work presented herein represents our best efforts and judgments based on the information available at the time this presentation was prepared. Navigant Consulting, Inc. is not responsible for the reader’s use of, or reliance upon, the presentation, nor any decisions based on the presentation. NAVIGANT CONSULTING, INC. MAKES NO REPRESENTATIONS OR WARRANTIES, EXPRESSED OR IMPLIED. Readers of the presentation are advised that they assume all liabilities incurred by them, or third parties, as a result of their reliance on the report, or the data, information, findings and opinions contained in the report. June 4, 2012 ©2012 Navigant Consulting, Inc. All rights reserved. Navigant Consulting is not a certified public accounting firm and does not provide audit, attest, or public accounting services. See www.navigantconsulting.com/licensing for a complete listing of private investigator licenses. Investment banking, private placement, merger, acquisition and divestiture services offered through Navigant Capital Advisors, LLC., Member FINRA/SIPC. 2 ©2012 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. ENERGY Austin Energy – Austin Climate Protection Plan Austin Energy does not buy unbundled RECs and has a limited amount of offsets in its portfolio. Austin Energy Stated Goal •City of Austin successfully reached its target of powering 100% of city facilities with renewable energy by 2012. The next goal for Austin is to have carbon-neutral city facilities and transportation by 2020. •Austin Energy has a goal of 35% renewable energy in their portfolio by 2020. •The broader Austin community has a goal of 20% GHG reduction (from 2005 levels) by 2020 and an Austin Climate Protection Plan through its Office of Sustainability. Motivation •City of Austin wants to be a national leader in climate protection. •Austin Energy views its program as influencing “the way electricity is made.” Implementation •Austin Energy uses The Climate Registry accounting protocols. •Austin Energy is not required by law to participate in the RPS, but their voluntary GreenChoice program follows Texas RPS rules as closely as possible. •Austin Energy does not buy unbundled RECs and does not rely heavily on offsets, although considers offset projects if they make sense. •No stated preference for local offsets, but they has a locally produced offset program. •Does not trade locally produced offsets in the open market. Communication •Recommends using a checklist approach to report progress to the public - “Reduce, Renew, Offset.” •Clearly delineates between utility goals, city goals, and community goals. Challenges / Lessons Learned •Thinking many years ahead of stated target deadlines can help mitigate unforeseen complications that arise. •The broader community needs to be committed to climate change action in order for these programs to work. •The problem with being a leading city is that there aren’t many others to share best practices with. •Third party validation is important, and “small things are worth doing.” Sources: Phone interview with Austin Energy http://www.austinenergy.com/about%20us/Environmental%20Initiatives/ http://www.austinenergy.com/Energy%20Efficiency/Programs/Green%20Choice/programdetails.pdf 3 ©2012 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. ENERGY Seattle City Light – Resolution 31312 (Carbon Neutrality) Seattle City Light met their goal of carbon neutrality in 2005 initially using owned generation, power purchases, and offsets. Seattle City Light Stated Goal •Seattle City Light’s (City Light) goal is carbon neutrality for electricity that “serves retail load”. The utility met this goal in 2005. As far as they know, Seattle City Light was the first utility in the U.S. to reach carbon neutrality. •Stems from broader community GHG reduction goals of: 30% GHG reduction by 2020, 58% GHG reduction by 2030, and carbon neutrality by 2050. Motivation •City Light goal was set by City Council in 2000 (used term “carbon neutral”); city goals were established in 2010. •Seattle has been active with environmental issues since 1977 and there are a number of activist groups in the Seattle area, such as the Seattle Green Ribbon Commission. Implementation •City Light measures carbon neutrality against its own emissions inventory protocols developed in 2003-2004. •SF6 and line losses from the T&D system are included in the scope of carbon neutrality calculation •Seattle City Light does not use RECs in their carbon neutrality program as they consider them to be controversial and want to avoid double counting. •90% of portfolio is hydropower; LFG in their portfolio is considered carbon free. •Maintains a hierarchical approach to reaching target: 1) energy efficiency, 2) renewables and 3) offsets. •Local and affordable offset projects are preferred, but these can be difficult to find; preference for CCAR and VCS approved offsets. •Seattle City Light has an offset project with cruise ships that come into port and plug into the electric system instead of burning fuel and is looking into partnering with the Seattle composting center. •Fossil based purchases are zeroed out on a monthly bases to reach carbon neutrality, preferable due to use of wholesale market trading. Communication •City Light wants to be “a catalyst for others” pursuing GHG reduction efforts. •Encountered some concerns over offsets as taking the place of reductions on their part, emphasized energy conservation efforts and renewables in their communications with offsets as a “last resort.” Challenges / Lessons Learned •Washington state laws made it difficult for the utility to justify their ratepayer expenditures for GHG program, offsets program required passage of special legislation. •Credibility is extremely important need to “do what they said they would do”. Sources: Phone interview with Seattle City Light http://www.seattle.gov/council/issues/carbon_neutrality.htm http://www.seattle.gov/news/detail.asp?id=5656&dept=40 4 ©2012 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. ENERGY Marin Energy Authority – Marin Energy Authority Marin Energy Authority 100% renewables goal includes all CEC- qualifying resources including biomass and biogas. Marin Energy Authority Stated Goal •Marin Energy Authority (MEA) procures renewable sources of electricity, and partners with PG&E to deliver electricity. •MEA’s goal is 100% renewables although currently have two products “Light Green” which is 50% renewables and “Deep Green” which is 100% renewable. Motivation •Marin County identified reductions in electricity associated emission in its county-level Climate Action Plan and created MEA to implement this, launching customer service in 2010. Implementation •MEA uses a mix of California RPS qualifying resources, Green-e certified RECs and WREGIS registered RECs from Washington and Oregon. •MEA hopes to incrementally increase bundled contracts over time while keeping their prices competitive. •MEA currently has biogas in their portfolio. MEA has received inquires related to emitting renewable resources and referred to a position paper published by the Sierra Club (2010) that some customers have referenced. •MEA currently serves 14,000 customers with full rollout in July 2012 to total of 95,000 customers. Communication •MEA’s programs are very customer-driven with regular public board meetings. •Local marketing on buses, in newspapers and at farmer’s markets used to communicate program benefits. •MEA indicated that communicating the value of RECs to customers can prove challenging. •Environmental issues with wind turbines have raised concerns - MEA has referenced the Audubon Society statements related to GHG emissions being worse for birds than wind turbines. Challenges / Lessons Learned •Value and benefits of RECs can be difficult to communicate to customers. •Location of the purchased power or technology can be an issue. Some customers have complained about solar panels built in Asia or the parent company of the REC developer being a multinational. Sources: Phone interview with Marin Energy Authority https://marincleanenergy.info/about-us 5 ©2012 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. ENERGY Aspen Municipal Utility – Carbon Neutrality Goal Aspen Municipal Utility will not be using RECs or offsets to meet their 100% renewables goal. Aspen Municipal Utility Stated Goal •Aspen Municipal Utility (Aspen) is pursuing carbon neutrality for its electric generation profile only. It is on track to be carbon neutral by 2015, obtaining its power from 100% renewable sources. Currently, the utility produces about 75% of its energy from wind and hydroelectric sources. •Goal for the greater Aspen community is to reduce GHG emissions by 80%, based off 2004 baseline. •Climate Action Plan also includes reducing the city’s GHG emissions internally, strict energy codes for buildings, water conservation, park and open space maintenance, recycling, and cleaner transportation. Motivation •Aspen's carbon neutrality goal came from a collaboration with the City of Aspen’s Canary Initiative and Aspen Global Warming Alliance. •Aspen takes pride in its green reputation. Recently the Aspen Ski Chamber pulled out of the Chamber of Commerce because of its views on climate change. •Aspen views carbon neutrality as doing something for local economic benefits (i.e. ski industry). Implementation •Aspen’s original emissions inventory (2004) did not follow a standard, although now they have hired a consultant to compile an inventory using the Climate Registry protocol. •It is unclear how this “baseline adjustment “ will impact carbon neutrality efforts, although it is not likely to be an issue given the heavy reliance on hydropower. •Their current portfolio consists of purchased and owned generation. Renewables (wind and hydropower) make up 75%. The remaining 25% is mostly coal and some nuclear. •Aspen stated that it does not use RECs or offsets, as decided by the City Council, they do not believe this is in the spirit of what they are trying to do. •Currently, Aspen is in the FERC permitting process for a new hydropower plant which has experienced local environmental opposition. Communication •Aspen primarily communicates with its customers through bill inserts. Challenges / Lessons Learned •Diverting money into renewable and energy efficiency funds ahead of time was critical to funding and implementing current programs. Sources: Phone Interview with Aspen Municipal Utility http://www.aspenpitkin.com/Living-in-the-Valley/Green-Initiatives/The-Greening-of-Aspen/ Key C O N T A C T S ©2011 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. Key C O N T A C T S ©2011 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. Key C O N T A C T S ©2011 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. Key C O N T A C T S ©2012 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. 6 ENERGY Adam Borison Director San Francisco (415) 356-7144 adam.borison@navigant.com Fred Wellington Associate Director San Francisco, CA (415) 356-7132 fred.wellington@navigant.com Lauren Altschuh Senior Consultant Rancho Cordova, CA (916) 631-3222 lauren.altschuh@navigant.com ©2012 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. ENERGY DISPUTES & INVESTIGATIONS • ECONOMICS • FINANCIAL ADVISORY • MANAGEMENT CONSULTING June 4, 2012 City of Palo Alto Utility Carbon Neutrality Assessment – Definitional Issues 1 ©2012 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. ENERGY Content of Report This presentation was prepared by Navigant Consulting, Inc. exclusively for the benefit and internal use of the City of Palo Alto and/or its affiliates or subsidiaries. No part of it may be circulated, quoted, or reproduced for distribution outside these organization(s) without prior written approval from Navigant Consulting, Inc. The work presented herein represents our best efforts and judgments based on the information available at the time this presentation was prepared. Navigant Consulting, Inc. is not responsible for the reader’s use of, or reliance upon, the presentation, nor any decisions based on the presentation. NAVIGANT CONSULTING, INC. MAKES NO REPRESENTATIONS OR WARRANTIES, EXPRESSED OR IMPLIED. Readers of the presentation are advised that they assume all liabilities incurred by them, or third parties, as a result of their reliance on the report, or the data, information, findings and opinions contained in the report. June 4, 2012 ©2012 Navigant Consulting, Inc. All rights reserved. Navigant Consulting is not a certified public accounting firm and does not provide audit, attest, or public accounting services. See www.navigantconsulting.com/licensing for a complete listing of private investigator licenses. Investment banking, private placement, merger, acquisition and divestiture services offered through Navigant Capital Advisors, LLC., Member FINRA/SIPC. 2 ©2012 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. ENERGY GHG Accounting > Accounting and Carbon Neutrality GHG accounting impacts all aspects of approaches to carbon neutrality, from baseline issues, to implementation and communication. GHG Accounting Framework •In order to define what carbon neutrality means for CPAU, it is necessary to develop a GHG inventory that will ultimately be used to underpin that definition. •“What in and What’s Out”. Implementation Options Accounting for Emission Reductions Communication •The options available to CPAU to “zero out” GHG emissions are dependent on the structure of the underlying inventory. •How CPAU accounts for emissions can influence what options are available. •CPAU should understand how its definition of carbon neutrality relates to GHG accounting principals in order to avoid misunderstanding amongst its stakeholders •Need to strike a balance between simplicity with meaningful reductions. GHG reduction options, implementation and communication are a function of the underlying accounting which in turn influences how to define carbon neutrality. •GHG accounting protocols oftentimes have prescriptive methods to account for activities that lower GHG emissions. •Some measures that ostensibly reduce emissions may in fact not “count” towards a carbon neutrality target, depending on how it is defined. 3 ©2012 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. ENERGY Overview of GHG Accounting Protocols GHG Accounting > GHG Accounting Protocols While there are many GHG accounting protocols, almost all are based on WRI’s GHG Protocol, including The Climate Registry. •Navigant focused our assessment on The Climate Registry (TCR) protocols. TCR and many other accounting protocols are consistent with the WRI/WBCSD GHG Protocol. •Specifically, Navigant focused on the Electric Power Sector Protocol (Annex 1 to the General Protocol). •It should be noted that a draft revision of TCR’s General Protocol was released for comment on January 2012. •Because CPAU is only concerned with carbon neutrality in its electric portfolio, Navigant limited its assessment to issues pertaining to this aspect of GHG accounting. •Navigant has not focused on issues that would impact CPAU’s utility- wide portfolio (e.g. operations, natural gas, etc.). Source: World Resources Institute EPA Climate Leaders Guidance CCAR Reporting Protocol WBCSD/WRI GHG Protocol The Climate Registry Protocol Public Sector Protocol ISO 14064 Standards 4 ©2012 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. ENERGY Overview of Scope 1, 2 and 3 GHG Emissions GHG Accounting > GHG Accounting Architecture Carbon neutrality requires consideration of how the architecture of GHG accounting relates to GHG mitigation efforts. Graphic? •Given the complexities associated with GHG accounting, namely the classification of emissions scopes, CPAU should consider how its definition of carbon neutrality relates to generally accepted accounting protocols (i.e. TCR) as well as its own broader GHG inventory. •Since the carbon neutrality calculation only affects emission from electricity generation, it will be important to identify – and eventually communicate to stakeholders – how this relates to CPAU overall GHG Inventory. Source: World Resources Institute 5 ©2012 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. ENERGY GHG Accounting > Description of Emissions Sources Pertinent to Carbon Neutrality How carbon neutrality is defined can impact the “type” of emissions that need to be “zeroed out”. Categories Description CPAU’s Inventory? Carbon Neutral Calculation? Comment Sc o p e 1 Stationary Combustion Emissions from owned/controlled facilities Yes Yes CPAU-owned emitting facilities, i.e. local gas units, need to be included. Fugitive Emissions Emissions of SF6 from high voltage equipment used in transmission and distribution systems, HFCs from power generation air intake chillers and CH4 emissions from coal piles Yes (only SF6) Maybe Inclusion of fugitive emissions in carbon neutrality depends on the boundary of the calculation., only for CPAU-owned T&D facilities. Process Emissions Emissions from acid gas/SO2 scrubbers, geothermal facilities, and other sources No No Process emissions from geothermal purchases should be included in Scope 2. Sc o p e 2 T&D System Losses Emissions associated with the portion of purchased electricity that is consumed (i.e. lost) in the T&D system. Yes Maybe Inclusion depends on whether the T&D system is included in the carbon neutral calculation, and only for CPAU owned facilities.** Purchased Power for Own Consumption Emissions associated with purchased electricity/steam/heating/cooling consumed in owned equipment & facilities Yes Yes CPAU might consider differentiating between electricity that it purchases for its own organizational consumption versus that which is sold to customers. Sc o p e 3 Purchased Power for End Users Emissions associated with purchased power delivered to end users No Yes Delineation between owned/end use purchased power consumption is specific to retail electricity providers. ** T&D losses for facilities not owned by CPAU , but used for delivery of CPAU purchased power, are Scope 2 for entity which owns facility. 6 ©2012 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. ENERGY GHG Accounting > Carbon Neutrality Calculation Boundary CPAU will need to describe how the boundaries of the carbon neutral calculation relate to broader organizational and community emissions. Emissions from CPAU’s Organizational Activities Emissions from Electricity Generation and Delivery to Customers Emissions from Electricity Generation •CPAU will need to determine the boundary of emissions for their calculation. •This is important because emissions that will be zeroed- out will be a subset of CPAU’s overall GHG inventory reported to TCR. •It will be important to identify – and eventually communicate to stakeholders – how the carbon neutrality effort relates to CPAU’s overall GHG inventory, as well as the broader community inventory. •Importantly, CPAU will need to determine if emissions associated with electricity delivery are within the boundaries of the carbon neutrality calculation. Palo Alto Community Emissions 7 ©2012 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. ENERGY GHG Accounting > Key GHG Accounting Issues Relative for Carbon Neutrality There are three primary GHG accounting issues that need to be considered in the definition of carbon neutrality. Main Accounting Issues Affecting CPAU’s Carbon Neutrality Definition T&D System Emissions REC Purchases Emitting Renewable Energy Resources 1 3 2 Decreasing order of importance 8 ©2012 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. ENERGY GHG Accounting > Renewable Resources Relevant technology-specific emissions factors for emitting resources. Default CO2 Emission Factors For Power Purchases From Specific Resources Technology / Fuel Source Emission Factor (pounds CO2 / MWh) Natural Gas Combined Cycle – Dual Turbine 909 Combined Cycle – Single Turbine 860 Combustion Turbine 1,329 Steam Turbine 1,532 Internal Combustion 1,226 Biogenic Fuels Anthropogenic Biogenic Wood Derived Solids 44 2,492 Black Liquor 136 1,670 Landfill Gas 38 2,677 Municipal Solid Waste 1,353 2,513 Geothermal (non-binary) 200 lbs CO2 / MWh 1.66 lbs CH4 / MWh n/a Source: Electric Power Sector Protocol for the Voluntary Reporting Program (Annex 1 to the General Protocol). V1.0. June 2009. The Climate Registry. Table 14.3 9 ©2012 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. ENERGY Implementation > Carbon Neutrality Definitional Options CPAU should consider many options in defining carbon neutrality. Options Pros Cons Bo u n d a r i e s All generation at point of consumption •More inclusive of actual emissions associated with the portfolio. •Includes T&D losses which increases quantity (and associated cost) of mitigation required. •May ‘trigger’ inclusion of fugitive SF6 emissions . All generation at point of generation •Excludes T&D system emissions (both line losses and SF6) which lowers quantity (and associated cost) of mitigation required. •Likely communication issues and differences from CPAU’s overall inventory and in Scope 2 and 3 emissions. Non-renewable generation only •Excludes emitting renewables and avoids associated communication issues. •Avoids SF6 emissions. •Includes T&D losses which increases quantity (and associated cost) of mitigation required. Carbon neutral for all Scopes 1, 2 and/or 3 •Consistent with TCR accounting and CPAU inventory. •Difficult to implement for Scope 3 (i.e. would this capture other Scope 3 emission sources including T&D and operations) Ti m i n g Average across years •Enables “banking” of zero-carbon hydro in wet years. •Difficult to communicate value of approach to stakeholders. Target by certain year •Greater visibility and allows CPAU to plan. •Could be expensive if target year is low hydro year. Staggered approach •Enables CPAU to achieve “easier” definition first and then incrementally improve (e.g. start by excluding T&D system and then offset those emissions at later date). •Could prove difficult to communicate to stakeholders. Mi t i g a t i o n Only direct power purchases •Enables purchasing power to influence market. •Difficult to implement given reliance of hydro (i.e. variability leads to reliance on spot purchases). Only offsets •Less expensive than direct power purchases •Simple from accounting standpoint. •Difficult to communicate value of approach to stakeholders. Only RECs •Less expensive than direct power purchases. •Difficult to communicate value of approach to stakeholders. •Issues with GHG accounting. “Loading order” •“Reduce, renew, offset”. •Could allow CPAU to prioritize and limit potential criticism around RECs and offsets. •Requires integration of energy efficiency and renewable energy measures. 10 ©2012 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. ENERGY Implementation > Carbon Neutrality Definitional Options Because there are no standard definitions for low-carbon energy goals, CPAU should clearly articulate its definitions and terminology. Term Possible Definition Comments Carbon Neutral Zeroing out all carbon emissions associated with generation and delivery of electricity to customers. •While this term is in widespread use, there is no standard industry definition. 100% Carbon Free Zeroing out all carbon emissions associated with electricity generation only. •This term is not commonly used in the industry and therefore there is no standard definition. 100% Renewables Procuring generation that is either renewable or “greened” with RECs. •This term (or some derivation in terms of percentage) is commonly used in the industry and is easily understood. 100% Clean Energy Procuring “low carbon” generation including natural gas, clean coal and nuclear. •This term is not commonly used in the industry and would require a definition of “clean”, which may or may not include other emissions such as criteria pollutants or waste disposal. Key C O N T A C T S ©2011 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. Key C O N T A C T S ©2011 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. Key C O N T A C T S ©2011 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. Key C O N T A C T S ©2012 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. 11 ENERGY Adam Borison Director San Francisco (415) 356-7144 adam.borison@navigant.com Fred Wellington Associate Director San Francisco, CA (415) 356-7132 fred.wellington@navigant.com Lauren Altschuh Senior Consultant Rancho Cordova, CA (916) 631-3222 lauren.altschuh@navigant.com