Loading...
The URL can be used to link to this page
Your browser does not support the video tag.
Home
My WebLink
About
2012-11-05 City Council Agenda Packet
CITY OF PALO ALTO CITY COUNCIL Special Meeting Council Conference Room November 5, 2012 6:00 PM Agenda posted according to PAMC Section 2.04.070. Supporting materials are available in the Council Chambers on the Thursday preceding the meeting. 1 November 5, 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 Study Session 1. Study Session with the Public Art Commission City Manager Comments 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. Minutes Approval September 24, 2012 October 1, 2012 Consent Calendar Items will be voted on in one motion unless removed from the calendar by two Council Members. 2. Adoption of Form 806, as Required by the California Fair Political Practices Commission, to Provide for Reporting of Election of City Council Members to Stipended Positions, such as Mayor and Vice- Mayor 3. Appointments of Jennifer Hetterly and Ed Lauing to the Parks and Recreation Commission for Two Full Terms Ending on December 31, 2015 4. Approval of Amendment No. 2 to the Amended and Restated Stewardship Agreement Between The City of Palo Alto and Acterra in the Amount of $10,000 for the Initial year of Services for the Enid W. Pearson Arastradero Preserve 2 November 5, 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. 5. Finance Committee Recommendation to Adopt a Resolution Approving a Power Purchase Agreement with Brannon Solar LLC for the Purchase of Electricity over 25 Years at a Cost not to Exceed $91 Million 6. Utilities Advisory Commission and Finance Committee Recommendation that the City Council Approve the Proposed Definition of Carbon Neutrality to Use in the Development of a Plan to Achieve a Carbon Neutral Electric Supply Portfolio by 2015 7. Second Reading: Ordinance to Amend the Contract Between the Board of Administration of the California Public Employees’ Retirement System (CalPERS) and the City of Palo Alto to Implement California Government Code Section 20475: Different level of benefits provided for new employees, Section 21363.1: 3.0% @ 55 Full Formula, and Section 20037: Three Year Final Compensation for Safety Police Employees (1st Reading- October 15, 2012 7-0 Burt, Schmid absent) 8. Approval of a Record of Land Use Action for a Conditional Use Permit Amendment Allowing the Operation of a New Pre-Kindergarten Program Within an Expanded Building and an After-School Day Care Program Associated with an Existing Private School (K-8 Program) at 1095 Channing Avenue. 9. Adoption of a Budget Amendment Ordinance in the Amount of $549,000 to Capital Improvement Program Project PE-86070 and Approval of Contract with JJR Construction, Inc. in the Amount Not to Exceed $785,716 for the 2012 Surface Transportation Program (STP) Resurfacing Project: Lytton Avenue / Channing Avenue 10. Award of Contract to Ideal Computer Services, Inc. for Hardware Support 11. Appeal of Director’s Architectural Review Approval of the Collocation by AT&T Mobility LLC of Wireless Communications Equipment on 15 Pole-Mounted Wireless Communication Antennas and Associated Equipment Boxes on Existing Utility Poles Within City Rights-of-Ways Near the Following Locations: 528 Homer; 896 Melville; 1491 Greenwood; 1061 Fife; 1496 Dana; 697 Wildwood; 973 Embarcadero Rd; 671 Seale; 731 Lincoln; 1594 Walnut/Embarcadero side; 1280 Newell; 643 Coleridge; 401 Marlowe; 1196 Hamilton; 933 N. California. 3 November 5, 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. 12. Approval of Agreement Between the City of Palo Alto on Behalf of the Cable Joint Powers Agency and the Midpeninsula Community Media Center, Inc. for Cablecasting Equipment Funding Support 13. Final Annual Public Review of Stanford University's Compliance with Development Agreement for the Sand Hill Road Corridor projects 14. Approval of Contract Amendment No. Six with Group 4 Architecture, Inc., for Additional Design Services for the Mitchell Park Library and Community Center Project, to Add $692,810 for a Total Amount Not to Exceed $8,595,231, which includes funding for all three Libraries Utilizing Bond Funds 15. Approval of Contract Amendment No. 4 for Additional Construction Management Services with Turner Construction, Inc., to add $2,052,016 for a Total Amount Not to Exceed $5,835,761 for all three Libraries Utilizing Bond Funds 16. Adoption of Resolution of Intent to Fix the Employer's Contribution Under the Public Employee's Medical and Hospital Care Act with Respect to Members of the Palo Alto Fire Chiefs' Association and Rescinding Resolution No. 8666. 17. Approval of Agreement Between the City of Palo Alto on Behalf of the Cable Joint Powers Agency and Comcast Corporation of California IX, Inc. For The Use of Fiber; Approval of Agreement Between the City of Palo Alto on Behalf of the Joint Powers and the Cities of Palo Alto, East Palo Alto and Menlo Park, and the Town of Atherton for Storage and Operation of I-Net Equipment; and Approval of Agreement Between the City of Palo Alto on Behalf of the Joint Powers and the Palo Alto Unified School District, the Ravenswood City School District, the Menlo Park City School District, the Las Lomitas Elementary School District, and the Sequoia Union High School District Covering Shared I-Net Responsibilities; and Approval of Agreement Between the City of Palo Alto on Behalf of the Joint Powers and Internet Systems Consortium, Inc. Covering the Provision of Internet Services to I-Net Connected Institutions 4 November 5, 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. 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. Action Items Include: Reports of Committees/Commissions, Ordinances and Resolutions, Public Hearings, Reports of Officials, Unfinished Business and Council Matters. 18. Colleagues Memo from Vice Mayor Scharff and Council Members Holman and Schmid Regarding Re-evaluation of Ground Floor Retail Protections in the Downtown Commercial District 19. Adoption of Budget Amendment Ordinance and Approval of a Loan Request from Palo Alto Housing Corporation in the Amount of $5,820,220 for the Acquisition of 567-595 Maybell Avenue 20. Adoption of Budget Amendment Ordinance to Provide Appropriation of $1 Million for a Loan Commitment for the Rehabilitation of Stevenson House 21. Update of Parking Program and Review and Direction on Parking Policy Strategies 22. Status Report on Current High Speed Rail and Caltrain Electrification Issues Submitted for Council Review and Comment Council Member Questions, Comments and Announcements Members of the public may not speak to the item(s) Adjournment AMERICANS WITH DISABILITY ACT (ADA) Persons with disabilities who require auxiliary aids or services in using City facilities, services or programs or who would like information on the City’s compliance with the Americans with Disabilities Act (ADA) of 1990, may contact (650) 329-2550 (Voice) 24 hours in advance. 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. 5 November 5, 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 Standing Committee Meetings Finance Committee Cancellation City Council Rail Committee Cancellation Regional Housing Mandate Committee Schedule of Meetings Schedule of Meetings Tentative Agenda Tentative Agenda Action Minutes October 15, 2012 October 22, 2012 Informational Report City Roster Notice of City Manager's Public Hearing Certificate of Public Convenience and Necessity City Council Seeking Public Input For the 2013 City Council Priorities Public Letters to Council Set 1 Set 2 City of Palo Alto (ID # 3272) City Council Staff Report Report Type: Study SessionMeeting Date: 11/5/2012 City of Palo Alto Page 1 Summary Title: Study Session Meeting Date 11/5/2012 Title: Study Session with the Public Art Commission From: City Manager Lead Department: Community Services Potential List of Topics for Joint Meeting with the City Council. Below are the potential topics of discussion for the joint meeting with the Public Art Commission. I. Highlights of the Past Year II. Current Projects III. Future Projects IV. Council Questions Attachments: : November 5, 2012 Joint Meeting Powerpoint slides (PDF) : Attachment B verlander mural (PDF) : Attachment C for Joint meeting 2012(PDF) : Attachment D for joint meeting 2012(PDF) 10/30/2012 1 1 Palo Alto Public Art Commission Joint Meeting with City Council November 5, 2012 2 “The Object of Art is to Give Life Shape” ‐William Shakespeare 10/30/2012 2 3 The Collection 37 Permanently Sited Sculptures 34 Murals 15 Portable Sculptures 304 paintings, textiles, photographs and works on paper Valued at over $1.3 M as of 2008 4 The Past Year 10/30/2012 3 5 Maintenance $50k FY 2012, $30K FY 3013 Repainted Midtown Poetry Wall and 5 other outdoor sculptures Recast and Replaced, Rrrun, by Marta Thoma Restored and replaced footings for Mitchell Johnson’s After the Fire Cleaned and Coated 4 outdoor sculptures Framed 13 artworks and more 6 Gale Wagner, Albuquerque 10/30/2012 4 7 Mitchell Johnson, After the Fire 8 Marta Thoma, Rrrun 10/30/2012 5 9 21 New Portable Works in FY2012 10 Temporary Public Art Partnerships 10/30/2012 6 11 Oliver Ranch Tour 12 Youth Art 10/30/2012 7 13 Current Projects 14 Mitchell Park Artworks Bruce Beasley, Arpeggio V Brad Oldham, Wise and Whimsy Roger Stoller, Cloud Forest Mark Verlander, Follow Your Heart 10/30/2012 8 15 Other Current Projects Main Library/Art Center art by Creative Machines Hoover Park Art Byxbee Park Artwork Juana Briones Restroom Michael Szabo Fountain Water Quality Treatment Plant, El Camino Park, Newell Street Bridge 16 Main Library and Art Center 10/30/2012 9 17 Upcoming Temporary Artwork 18 Looking Forward Artists Reaching Communities Program Tunnels and Transportation Hubs Downtown Mural Program Expanded Percent for Art Arts Districts 10/30/2012 10 19 Artists Reaching Communities Program 20 Transportation Hubs and Tunnels 10/30/2012 11 21 Downtown Mural Program 22 Expanded Public Art Program 10/30/2012 12 23 Soil Kitchen,Futurefarmers, Philadelphia, PA 24 Rain Oculus, Ned Kahn, Singapore 10/30/2012 13 25 Curbside Haiku, John Morse, New York 26 Playing Apart,Jon Rubin & Lee Walton, Denver, CO 10/30/2012 14 27 Leap, Lawrence Argent, Sacramento, CA CITY OF PALO ALTO OFFICE OF THE CITY ATTORNEY November 5, 2012 The Honorable City Council Palo Alto, California Adoption of Form 806, as Required by the California Fair Political Practices Commission, to Provide for Reporting of Election of City Council Members to Stipended Positions, such as Mayor and Vice- Mayor Recommendation Adopt Form 806, as required by the Fair Political Practices Commission (FPPC), for the purpose of reporting appointments of Council Members to stipended positions such as Mayor and Vice- Mayor and direct the City Clerk to post the form on the City’s website. The form will be blank at this time, as there are no City Council Members currently appointed to positions that receive a stipend. After adopting and posting the form, all Council Members will be able to participate in the election of Mayor and Vice-Mayor in January 2013. As part of electing new officers in January, Council should direct the Clerk to amend the posted Form 806 to indicate the Council Members elected as Mayor and Vice-Mayor. Background The Palo Alto Charter requires the City Council, at its first meeting in January, to elect one of its members to serve as Mayor and one as Vice-Mayor, for one-year terms. Charter, Sec. 8. Council policy provides that the Mayor receive a stipend of $150 per month and the Vice-Mayor receive $100 per month to defray the additional expenses of these offices. See Compensation Plan for Management and Professional Personnel and Council Appointees, Sec. P; City Council and Boards and Commissions Policy for Travel and Miscellaneous Expense Reimbursement, p. 5. The California Political Reform Act, Govt. Code §§ 81000 et seq. (the Act), prohibits governmental conflicts of interest. The Fair Political Practice Commission (FPPC) is charged with interpreting and administering the Act. The FFPC adopts regulations to fill in gaps in the statutory scheme. 2 Cal. Code Regs. §§ 18110 et seq. When requested by local officials, the FFPC issues informal assistance letters that provide guidance regarding the FPPC’s interpretation of the Act. FPPC advice letters are public documents, but are not widely publicized. Section 87100 of the Act prohibits public officials from making, participating in making, or using an official position to influence a governmental decision in which the official has a financial interest. Income is one type of financial interest that is subject to the Act. The Act excludes Updated: 10/31/2012 11:14 AM by Sharon Hanks A Page 2 governmental salary and reimbursement from the types of income that create a conflict of interest: “’Income’ does not include: Salary and reimbursements for expenses or per diem . . . received from a state, local, or federal government agency.” § 82030(b)(2). The FPPC regulations confirm a broad definition of government salary: “’Salary’ from a state, local or federal government agency means any and all payments made by a government agency to a public official, or accrued to the benefit of a public official, as consideration for the public official’s services to the government agency.” Reg. 18232. In addition to income, however, the Act also states that a financial interest sufficient to trigger a conflict of interest can be formed by “an economic interest in [the official’s] personal finances.” § 87103. This rule is commonly referred to as the “personal financial effects” rule. The FPPC set a materiality threshold for this type of financial interest of at least $250 in any 12-month period. Reg. 18705.5(a). Discussion For many years, most city attorneys and city officials believed that the appointment of City Council Members to special positions with stipends (such as mayor and vice-mayor, as well as delegates to other regional planning and regulatory bodies) did not create a prohibited conflict of interest because the Act excludes government salary and reimbursement from income that creates a conflict of interest. As a result, it was common for all members of a body to participate in the selection of members to stipended positions, including those interested in and nominated to the positions. In January of 2012, it came to the attention of Bay Area city attorneys that the FPPC had issued a series of advice letters, including one in October 2011, advising that a City Council Member could not make or participate in making a decision to appoint him or herself to a position that provided a stipend of more than $250 annually. The FPPC based its interpretation on the personal financial effects rule, rather than on the rule exempting governmental salary from income that creates a conflict of interest. As a result of the FPPC’s interpretation, Palo Alto’s 2012 Mayor and Vice-Mayor waived in writing the stipend provided by local rule for Mayor and Vice-Mayor. Immediately following the widespread appreciation of the FPPC’s interpretation, city attorneys throughout the state encouraged the FPPC to revise its regulations to exclude stipended government positions from the conflict of interest rules. The city attorneys argued that the FPPC interpretation created an unworkable and potentially anti-democratic rule, and was unnecessary to prevent financial self-dealing in these circumstances. In March 2012, the FPPC responded by amending Regulation 18705.5 to provide that it is not a conflict of interest for an elected official to participate in a decision to appoint him or herself to a stipended government position, such as mayor or vice-mayor, provided that the appointment is one that the body is required to make by state law, local law or a joint powers agreement, Updated: 10/31/2012 11:14 AM by Sharon Hanks A Page 3 and provided that the body posts on its website certain information about the appointment on a form provided by the Commission. Several months later, the FPPC issued Form 806 to implement this regulation. The FPPC requires local bodies to adopt and post Form 806 in advance of making any appointment to a stipended position. Upon appointment of any individual to a stipended position, the local agency amends the form with the names and specific appointment information. We recommend that the Council adopt FPPC Form 806 for the purpose of reporting appointments of Council Members to stipended positions such as Mayor and Vice-Mayor, and direct the City Clerk to post the Form on the City’s website. Resource Impact There are no resource impacts related to this recommendation. Environmental Review Adoption of Form 806 is not a project subject to environmental review under the California Environmental Quality Act (CEQA). ATTACHMENTS: Attachment A: FPPC Form 806 (PDF) Attachment B: 2 Cal. Code Regs. § 18705.5 “Materiality Standard: Economic Interest in Personal Finances” (PDF) Department Head: Molly Stump, City Attorney Updated: 10/31/2012 11:14 AM by Sharon Hanks A Page 4 Agency Report of: Public Official Appointments A Public Document California 806 Form 1. Agency Name Division, Department, or Region (If Applicable) For Official Use Only Designated Agency ontact (Name, Title) Date Posted: Area Code/Phone Number E-mail Page __ of __ (Month, Day, Year) 2. Appointments Agency Boards and Name of Appointed Person Appt Date and Per Meeting/Annual Salary/Stipend Commlulons Length of Term ~ Per Meeting: $ ~Name ~ _1 __ 1- (Last, First) Appt Date ~ Estimated Annual: Alternate, if any ~ 0$0-$1,000 0$2,001-$3,000 (Last First) Length of Term 0$1,001-$2,000 0 Other ~ Per Meeting: $ ~Name ~ __ 1 __ 1_- (Last, First) Appf Date ~ Estimated Annual: Alternate, if any ~ 0$0-$1,000 0$2,001-$3,000 (Last, First) Length of Term 0$1,001-$2,000 0 Other ~Name ~ _1 __ 1_-~ Per Meeting: $ (Last, First) Appf Date ~ Estimated Annual: Altemate, if any ~ 0$0-$1,000 0$2,001-$3,000 (Last, Firsf) Length of Term 0$1,001-$2,000 0 Other ~ Per Meeting: $ ~Name ~ _1_1- (Last, First) ApptDate ~ Estimated Annual: Alternate, if any ~ 0$0-$1,000 0$2,001-$3,000 (Last, First) Length of Term 0$1,001-$2,000 0 Other 3. Verification I have read and understand FPPC Regulation 18706.6. I have verified that the appointment and information identified above is true to the best of my information and belief. Signature of Agency Head or Designee Print Name Title (Month, Day, Year) Comment ______________________________________ _ FPPC Form 806 (5/12) FPPC Toll-Free Helpline: 866/ASK-FPPC (866/275-3772) Agency Report of: Public Official Appointments Background This form is used to report additional compensation that officials receive when appointing themselves to positions on committees, boards or commissions of a public agency, special district, and joint powers agency or authority. For example, a city councilmember may be appointed to serve as the city's representative on a joint powers insurance authority or a metropolitan planning organization or mayor. (Regulation 18705.5, amended 03.2012) Each agency must post on its website a single Form 806 which lists all the paid appointed positions. When there is a change in compensation or a new appointment, the Form 806 is updated to reflect the change. The form must be updated promptly as changes occur. Initial Agency Posting As soon as possible, each agency should prepare a Form 806 identifying all of the current paid appointments to other governmental agencies. Thereafter, the form may be amended to include the future appointments. Instructions This form must be posted prior to a vote (or consent item) to appoint a governing board member to a paid position on another agency. Part 1. Agency Identification Identify the agency name and information on who should be contacted for information. Part 2. Appointments Identify the name of the other agency, board or commission. List the name of the official, and an alternate, if any. List the appointment date and the length of term the agency official will serve. Disclose the stipend provided per meeting and the estimated annual payment. The annual salary is an estimate as it will likely vary depending on the number of meetings. It is not necessary to revise the estimate at the end of the calendar year. Part 3. Verification The agency head or his/her designee must sign the verification. Frequently Asked Questions (FAQs) 1. When does an agency need to complete the Form 806? A Form 806 is required when an agency's board members vote on an appointment for a board member to serve on another governmental agency and pay is provided. 2. The city council votes to serve as the city's housing authority, a separate entity. Will the Form 806 be required? If the council members receive an additional compensation for serving on the housing authority, the Form 806 is required. If there is no payment, the Form 806 is not required. California 806 Form A Public Document 3. Are appointments made by a governing board to aPPOint one of its members to serve as an officer of that board for additional pay (e.g. mayor) required to be disclosed on Form 806? Yes. Regulation 18705.5 permits voting on your own appointment to position of mayor as well as other boards and commissions so long as proper disclosure on the Form 806 is made. This exception and disclosure apply to agencies with governing boards that are elected or appointed. 4. In determining the salary, must the agency include mileage reimbursements, travel payments, health benefits, and other compensation? No. The FPPC regulation only requires the reporting of the stipend or salary. 5. Which agency must post the Form 806? The agency that is voting to appoint a public official must post the Form 806 on its website. The agency that the official will serve as a member is not required to post the Form 806. The form is not sent to the FPPC. 6. When must the Form 806 be amended? The Form 806 should be amended promptly upon any of the following circumstances: (1) the number of scheduled meetings is changed, (2) there is a change in the compensation paid to the members, or (3) there is a change in membership on the board or commission. 7. When a body meets irregularly, how should the annual compensation be estimated? The agency should estimate compensation using the highest number of meetings. 8. In 2013 our agency will have a new appOintment to a new agency. How is the Form 806 updated? Before the agency votes on the appointment, the agency should update the Form 806 and identify the other governmental entity's name. If known, also include other information such as the number of meetings and stipend. As long as that information is posted prior to a vote of the governing board on an appointment, the agency is in compliance with Regulation 18705.5. Following the vote, the agency must update the form to identify the individual that will serve. Privacy Information Notice Information requested by the FPPC is used to administer and enforce the Political Reform Act. Failure to provide information may be a violation subject to penalties. All reports are public records available for inspection and reproduction. Direct questions to FPPC's General Counsel. Fair Political Practices Commission, 428 J Street, Ste. 620, Sacramento, CA 95814. FPPC Form 806 (5/12) FPPC TolI·Free Helpline: 866/ASK·FPPC (866/275·3772) (Regulations of the Fair Political Practices Commission, Title 2, Division 6, California Code of Regulations) § 18705.5. Materiality Standard: Economic Interest in Personal Finances. (a) A reasonably foreseeable financial effect on a public official's or his or her immediate family's personal finances is material ifit is at least $250 in any 12-month period. When determining whether a governmental decision has a material financial effect on a public official's economic interest in his or her personal finances, neither a financial effect on the value of real property owned directly or indirectly by the official, nor a financial effect on the gross revenues, expenses, or value of assets and liabilities of a business entity in which the official has a direct or indirect investment interest shall be considered. (b) The financial effects of a decision which affects only the salary, per diem, or reimbursement for expenses the public official or a member of his or her immediate family receives from a federal, state, or local government agency shall not be deemed material, unless the decision is to appoint, hire, fire, promote, demote, suspend without payor otherwise take disciplinary action with financial sanction against the official or a member of his or her immediate family, or to set a salary for the official or a member of his or her immediate family which is different from salaries paid to other employees of the government agency in the same job classification or position, or when the member of the public official's immediate family is the only person in the job classification or position. (c) Notwithstanding subsection (b), pursuant to Section 82030(b)(2) and Regulation 18232, a public official may make, participate in making, or use his or her official position to influence or attempt to influence, a government decision where all of the following conditions are satisfied: (1) The decision is on his or her appointment as an officer of the body of which he or she is a member (e.g., mayor or deputy mayor), or to a committee, board, or commission of a public agency, a special district, a joint powers agency or authority, a joint powers insurance agency or authority, or a metropolitan planning organization. (2) The appointment is one required to be made by the body of which the official is a member pursuant to either state law, local law, or a joint powers agreement. (3) The body making the appointment referred to in paragraph (1) adopts and posts on its website, on a form provided by the Commission, a list that sets forth each appointed position for which compensation is paid, the salary or stipend for each appointed position, the name of the public official who has been appointed to the position and the name of the public official, if any, who has been appointed as an alternate, and the term of the position. COMMENT: Cross-references: For the definition of "immediate family," see Government Code section 82029. Note: Authority cited: Section 83112, Government Code. Reference: Sections 87100, 87102.5, 87102.6,87102.8 and 87103, Government Code. HISTORY 1. New section filed 11-23-98; operative 11-23-98 pursuant to the 1974 version of Government Code section 11380.2 and title 2, California Code of Regulations, section 18312( d) and (e) (Register 98, No. 48). 2. Change without regulatory effect amending section heading filed 3-26-99 pursuant to section 100, title 1, California Code of Regulations (Register 99, No. 13). 3. Editorial correction of History 1 (Register 2000, No. 25). 4. Amendment of section heading and section filed 1-17-2001; operative 2-1-2001. Submitted to OAL for filing pursuant to Fair Political Practices Commission v. Office of Administrative Law, 3 Civil C010924, California Court of Appeal, Third Appellate District, nonpublished decision, April 27, 1992 (FPPC regulations only subject to 1974 Administrative Procedure Act rulemaking requirements) (Register 2001, No.3). 5. Amendment of subsection (a) filed 1-16-2002; operative 2-15-2002 (Register 2002, No.3). 6. Amendment of subsection (b) filed 6-21-2005; operative 7-21-2005 (Register 2005, No. 25). 7. Amendment of subsection (a) filed 12-18-2006; operative 1-17-2007. Submitted to OAL for filing pursuant to Fair Political Practices Commission v. Office of Administrative Law, 3 Civil C010924, California Court of Appeal, Third Appellate District, nonpublished decision, April 27, 1992 (FPPC regulations only subject to 1974 Administrative Procedure Act rulemaking requirements) (Register 2006, No. 51). 8. New subsections (c)-(c)(3) filed 4-23-2012; operative 5-23-2012. Submitted to OAL for filing pursuant to Fair Political Practices Commission v. Office of Administrative Law, 3 Civil C010924, California Court of Appeal, Third Appellate District, nonpublished decision, April 27, 1992 (FPPC regulations only subject to 1974 Administrative Procedure Act rulemaking requirements and not subject to procedural or substantive review by OAL) (Register 2012, No. 17). CITY OF PALO ALTO OFFICE OF THE CITY CLERK November 5, 2012 The Honorable City Council Palo Alto, California Appointments of Jennifer Hetterly and Ed Lauing to the Parks and Recreation Commission for Two Full Terms Ending on December 31, 2015 At the City Council Meeting on October 22, 2012 Staff presented Council with four applications for the four terms the Parks and Recreation Commission set to expire in December. Two applicants were incumbents and two were new applicants. Council directed this to come back on Consent on November 5, 2012 for the appointment of the incumbents. Council should appoint the two incumbents, Jennifer Hetterly and Ed Lauing, to two terms on the Parks and Recreation Commission ending December 31, 2015. Department Head: Donna Grider, City Clerk Page 2 City of Palo Alto (ID # 3166) City Council Staff Report Report Type: Consent Calendar Meeting Date: 11/5/2012 City of Palo Alto Page 1 Summary Title: Acterra Stewardship Agreement Amendment Title: Approval of Amendment No. 2 to the Amended and Restated Stewardship Agreement Between The City of Palo Alto and Acterra in the Amount of $10,000 for the Initial year of Services for the Enid W. Pearson Arastradero Preserve From: City Manager Lead Department: Community Services Recommendation Staff recommends that the Council approve the Amendment No. 2 to Amended and Restated Stewardship Agreement between the City of Palo Alto and Acterra to increase the contract compensation in the amount of $10,000, for a total compensation of $66,150 for the Initial year of Services for the Enid W. Pearson Arastradero Preserve (Attachment A). Discussion On October 26, 2009, the Council adopted a Mitigated Negative Declaration and the Foothills Fire Management Plan (CMR: 326:09). This plan is an update to the 1982 and 1997 Foothill Fire Management Plans. The revised plans include fuel treatment strategies for specifically identified sensitive areas within Foothills Park, Pearson Arastradero Preserve and segments of Skyline Boulevard, Page Mill, Arastradero and Los Trancos Road. On April 16, 2012, the Council approved Amendment No. 1 to the Amended and Restated Stewardship Agreement in the amount of $56,150 for the Initial year of Services for the Enid W. Pearson Arastradero Preserve (ID # 2688). City of Palo Alto Page 2 Implementation of the Fire Management Plan and Mitigated Negative Declaration protocols are in progress. The Mitigated Negative Declaration requires that the City follow protocols for environmental resource protection. These best management practices include biological review of treatment areas, prescription sheets detailing specifications for each treatment area and both pre and post- treatment surveys. As an amendment to the Stewardship Agreement between the City of Palo Alto and Acterra, Acterra has been asked to add the biological review and treatment surveys into their annual work plans. On August 8, 2012, a fire, likely arson, burned approximate 4 acres in the Pearson- Arastradero Preserve. As a result, the City has asked Acterra to create research plots to observe the effects of late season fires on the preserve ecosystem and to test various restoration techniques of burned areas as part of the Fire Management Plans Adaptive Management practices and to better inform our post-fire land management. The Biological Review of treatment areas, pre and post-treatment surveys, burn area research and fire restoration projects area added duties to Acterra work plan at an added cost of $10,000 per year. Resource Impact Funds for this contract amendment ($10,000) are available in the Fiscal Year 2013 Adopted Operating Budget, Open Space Contract Services. Policy Implications The proposal to amend the existing Stewardship Agreement to have Acterra assist the City in the accomplishment of the goals of the Foothills Fire Management Plan is consistent with the public/private partnership policy. Environmental Review City of Palo Alto Page 3 Amendment No. 2 to the Amended and Restated Stewardship Agreement adds biological review duties, but represents a continuation of the same use of existing facilities, a Class I facility exempt under Section 15301 of CEQA, so no further environmental review is required. Attachments: : Attachment A - Acterra Contract Amendment (PDF) AMENDMENT NO. 2 TO AMENDED AND RESTATED STEWARDSHIP AGREEMENT BETWEEN THE CITY OF PALO ALTO AND ACTERRA This Amendment No. 2 to Amended and Restated Stewardship Agreement (the “Agreement”) is entered into September , 2012 by and between the CITY OF PALO ALTO, a California chartered municipal corporation (the “CITY”), and ACTERRA, a California public benefit corporation organized under the California Nonprofit Public Benefit Corporation Law, located at 3921 East Bayshore Road, Palo Alto, California 94303‐4303, Telephone: (650) 962‐ 9876 (the “STEWARD”) (individually, a “Party” and, collectively the “Parties”). R E C I T A L S: 1. The Agreement was entered into between the parties for the provision of educational and research programs and the performance of a variety of maintenance and habitat activities at the Preserve. 2. The Parties wish to amend the Agreement to increase compensation. NOW, THEREFORE, in consideration of the covenants, terms, conditions, and provisions of this Amendment, the Parties agree: SECTION 1. Section 2 SCOPE OF SERVICES, subsection 2.4 is hereby amended to read, as follows: “2.4 As compensation for the services fully and faithfully provided during the Term specified in Section 3.1 by the STEWARD hereunder, the CITY will pay the STEWARD at the beginning of each calendar quarter, commencing July 1, 2012, upon receipt of the STEWARD's quarterly invoice the amount of sixteen thousand five hundred and thirty seven dollars and fifty cents ($16,537.50), for a total annual compensation of sixty‐six thousand one hundred fifty dollars ($66,150.00) per year.” SECTION 2. Except as herein modified, all other provisions of the Contract, including any exhibits and subsequent amendments thereto, shall remain in full force and effect. 120821 dm 00710072 120821 dm 00710072 IN WITNESS WHEREOF, the Parties have by their duly authorized representatives executed this Amendment on the date first above written. CITY OF PALO ALTO ____________________________ City Manager APPROVED AS TO FORM: _____________________________ Senior Asst. City Attorney Date: ACTERRA By:___________________________ Name:_________________________ Title:________________________ City of Palo Alto (ID # 3223) City Council Staff Report Report Type: Consent Calendar Meeting Date: 11/5/2012 City of Palo Alto Page 1 Summary Title: Brannon Solar Renewable Energy Contract Title: Finance Committee Recommendation to Adopt a Resolution Approving a Power Purchase Agreement with Brannon Solar LLC for the Purchase of Electricity over 25 Years at a Cost not to Exceed $91 Milli on From: City Manager Lead Department: Utilities Recommendation Staff, the Utilities Advisory Commission, and the Finance Committee recommend that the City Council: 1. Adopt a resolution approving a Power Purchase Agreement (PPA) with Brannon Solar LLC, a Delaware limited liability company, for the acquisition of up to 52,000 megawatt- hours (MWh) per year of solar energy over twenty-five years at a cost not to exceed $91 million; and 2. Waive the application of the investment-grade credit rating requirement of Section 2.30.340(d) of the Palo Alto Municipal Code, which applies to energy companies that do business with the City. Executive Summary As part of ongoing efforts to procure renewable resources to meet the City’s Renewable Portfolio Standard of at least 33% of sales from renewable resources by 2015, staff issued a request for proposals in the fall of 2011 and evaluated the proposals based on price, value, viability and compatibility with the City’s needs. The Brannon Solar proposal achieved the best score as well as offered the lowest price. The Brannon Solar project would provide about five percent of the City’s annual energy needs. The Brannon Solar project is proposed by Brannon Solar LLC, a Delaware limited liability City of Palo Alto Page 2 company, formed by the San Jose based development office of Trina Solar Limited, a vertically integrated Chinese solar panel manufacturer. The price for the Brannon Solar project over the 25-year term of the agreement is $77.00/MWh, a rate that is less than the prices of the last four renewable energy contracts that were approved by the Council. Both the Utilities Advisory Commission (UAC) and the Finance Committee unanimously recommended Council approve the proposed contract with Brannon Solar. Committee Review and Recommendation On June 6, 2012, the UAC unanimously recommended that Council approve a PPA with Brannon Solar LLC with a price of $72 per megawatt-hour (MWh). However, after the UAC’s meeting, Brannon Solar advised the City that the impacts of the U.S. Department of Commerce’s decision to impose import tariffs on Chinese solar cells would make the project financially untenable without a price increase. Further negotiations resulted in a final price of $77/MWh for the PPA. The notes from the UAC’s June 6, 2012, meeting are provided as Attachment D. On September 5, 2012, the UAC reviewed the re-priced PPA with Brannon Solar with the $77/MWh price. Although it was displeased with the renegotiated higher price, the UAC unanimously recommended that Council approve the Brannon Solar PPA. The notes from the UAC’s September 5, 2012, meeting are provided as Attachment E. At its October 2, 2012 meeting, the Finance Committee discussed the Brannon Solar project. The Finance Committee staff report, which contains a detailed evaluation of the PPA, is provided as Attachment C. Staff explained the sequence of events that led to a negotiated price of $77/MWh after the U.S. tariff indirectly impacted the project. Staff explained the project has low financial risks as the City will only pay for energy after it is delivered. However, the project carries two opposing risks. One risk is that a PPA does not assure the project will be built, and the other risk is that we cannot be sure that future resource opportunities will not be even more attractive than this one. In answers to questions from Finance Committee members, staff indicated that the 20 MW project size is in the “sweet spot” of PG&E interconnection sizing for relatively rapid approval. In addition, the solar project provides diversity to the wind, geothermal and landfill gas projects already under contract. Mr. Milo Terzich, land development manager for Brannon Solar’s parent company, Trina Solar, attended the meeting and was available for questions from the Committee. When asked if Brannon Solar had any prior experience with building solar projects in California, Mr. Terzich said that Trina is building two other projects in Fresno County and two projects in Sacramento County. Mr. Terzich also explained the land is dry-farmed land and is not subject to agricultural conservation easements. City of Palo Alto Page 3 After discussion, the Finance Committee voted unanimously to recommend that the Council adopt the resolution approving the PPA with Brannon Solar LLC and to waive the application of the investment-grade credit rating requirement. The Finance Committee minutes are provided as Attachment F. Resource Impact The cost of renewable energy supplies from the Brannon Solar PPA is expected to be up to $91.0 million over the 25-year term of the agreement. The annual expected cost is up to $3.91 million, which includes a green premium over the cost of brown power of about $0.96 million per year. In the contract, the City has an option for a 5-year extension, at the same price, to be exercised by Council by the end of the 24th year of the contract. Approval of the Brannon Solar PPA would result in a retail rate impact from all contracted renewable resources of 0.38 ¢/kWh, which is within the 0.5 ¢/kWh rate impact limit. Policy Implications Approval of the Brannon Solar PPA is in conformance with the City’s Long-term Energy Acquisition Plan (LEAP), specifically the City’s Renewable Portfolio Standard to meet at least 33% of the electric sales from renewable energy by 2015. Environmental Review Execution of this PPA does not meet the definition of a project, pursuant to section 21065 of the California Environmental Quality Act (CEQA). However, the City intends to receive output from projects that will constitute a project for the purposes of CEQA. Project developers will be responsible for acquiring the necessary environmental reviews and permits on projects to be developed. Attachments: Attachment A: Resolution (PDF) Attachment B: Power Purchase Agreement with Brannon Solar LLC (PDF) Attachment C: Finance Committee Staff Report 2887 Renewable Energy Contract (without attachments) (PDF) Attachment D: Excerpted Final Minutes of the June 6, 2012 UAC Meeting (PDF) Attachment E: Excerpted Final Minutes of the September 5, 2012 UAC Meeting (PDF) Attachment F Finance Committee meeting notes from October 2, 2012 (PDF) Not Yet Approved 120919 dm 00710092 1 Resolution _________ Resolution of the Council of the City of Palo Alto Approving the Long Term Power Purchase Agreement (Solar Power) with Brannon Solar LLC for the Purchase of Electricity Generated by Solar Electric Generating Facilities A. On April 16, 2012, the City approved electric portfolio planning and management guidelines to guide the development and management of the City’s long- term electricity acquisition plan; one of the guidelines is to reduce the carbon intensity of the electric portfolio by pursuing a minimum level of renewable purchases of at least 33% of retail sales by 2015. B. The City is interested in purchasing power generated by renewable resources for the benefit of its electric customers. C. By purchasing renewable energy resources, the City will help reduce the production of greenhouse gases and assist in reducing volatile organic compound emissions. D. Brannon Solar LLC (“Brannon”) though its parent company, Trina Solar LLC, has proposed its project in response to the City’s Request for Proposals 143383 (“RFP”) in November 2011; its proposal is competitive with other RFP respondent proposals. E. The execution of a power purchase agreement (“PPA”) with Brannon is anticipated to enable the City to meet a five-percent portion of its goal of sourcing 33% of its energy needs from renewable electric energy. F. The City is allocated a 100 percent share of the power from the solar project located in Fresno County, California, which yields approximately 20 megawatts of plant net output. G. The PPA will allow the City to extend the agreement at the City’s sole option for an additional five-year term after the initial twenty-five-year term. H. The County of Fresno will be the lead agency for the purposes of compliance with the requirements of the California Environmental Quality Act. The Council of the City of Palo Alto does resolve as follows: SECTION 1. The Council approves the power purchase agreement between Brannon Solar LLC, as seller, and the City of Palo Alto, as buyer. The delivery term of the agreement is twenty five (25) years, commencing upon the commercial operation date of the planned electric generation facility. The City will receive a 100 percent share Not Yet Approved 120919 dm 00710092 2 of the facility’s net output. Spending authority under the agreement shall not to exceed ninety one million dollars ($91,000,000). The Council delegates to the City Manager the authority to sign on behalf of the City the agreement with Brannon Solar LLC, and any confirmations executed in connection with the agreement. SECTION 2. With respect to the Council’s award of the power purchase agreement referred to in Section 1 above, the Council waives the creditworthiness requirements of Palo Alto Municipal Code section 2.30.340(c), as that requirement may apply to Brannon Solar LLC. SECTION 3. The Council finds that the adoption of this resolution does not constitute a project under the California Environmental Quality Act and no environmental assessment is required. INTRODUCED AND PASSED: AYES: NOES: ABSENTIONS: ABSENT: ATTEST: APPROVED: _____________________________ _____________________________ City Clerk Mayor APPROVED AS TO FORM: _____________________________ City Manager _____________________________ Senior Asst. City Attorney _____________________________ Director of Utilities _____________________________ Director of Administrative Services Execution Version 1 POWER PURCHASE AGREEMENT This Power Purchase Agreement (the “Agreement”), dated as of ________________, 2012 (the “Effective Date”), is entered into by and between the City of Palo Alto, a California chartered municipal corporation (“Buyer”), and Brannon Solar, LLC, a Delaware limited liability company (“Seller”) (individually, a “Party” and, collectively, the “Parties”). RECITALS: 1. Seller intends to develop, finance, build, own and operate a solar photovoltaic electric generating facility (the “Plant”), to be located at the Site. 2. Buyer is engaged in the procurement and supply of electricity to residential and commercial customers in Palo Alto, California. 3. Buyer wishes to purchase the Output of the Plant and intends to resell related Energy to its residential and commercial customers. 4. Buyer is willing to purchase, and Seller is willing to sell, the Output of the Plant, on the terms and conditions and at the prices set forth in this Agreement. 5. Buyer is purchasing this Output to meet Buyer’s needs at a known price and timing. NOW THEREFORE, in consideration of the recitals above and the following covenants, terms and conditions, the Parties agree: AGREEMENT: ARTICLE I - DEFINITIONS The following initially capitalized terms, whenever used in this Agreement, have the meanings set forth below, unless the context of their use otherwise indicates. The terms “includes” and “including” mean to include and including, “without limitation.” AC: Alternating current Agreement: This Power Purchase Agreement, including all exhibits, as may be amended from time to time. Buyer: The City of Palo Alto and any successor or permitted assignee. 2 CAISO: The California Independent System Operator Corporation, or its functional successor. Calculation Period: The twenty-four (24) month period immediately preceding each anniversary of the Commercial Operation Date, commencing at the second anniversary of the Commercial Operation Date. Change in Law: The enactment or issuance of any new law or regulation, the amendment, alteration, modification or repeal of any existing law or regulation or any authoritative interpretation of any existing law or regulation issued by a competent court, tribunal or Governmental Authority contrary to the existing official interpretation thereof, in each case coming into effect after the date of this Agreement and which must be complied with in order for the Plant to be constructed and operated lawfully. Commercial Operation: The condition of the Plant, whereupon it (a) is certified by Seller to be complete in accordance with manufacturers’ recommendations except for punch list items and (b) has passed the performance test set forth in Exhibit E, while it is synchronized with the LDC System or CAISO transmission grid. Commercial Operation Date: The date upon which Commercial Operation first occurs. Seller shall notify Purchaser, in writing, within ten (10) days of the Commercial Operation Date. Contractual Obligations: As to Seller, any material agreement, instrument or undertaking to which Seller is a party or by which it or any of its property is bound. Development Assurance: The amount of not less than four hundred thousand dollars ($400,000) to be posted or deposited by Seller in accordance with Article IX of this Agreement. EA Agency: Any local, state or federal entity, or any other Person, that has responsibility for or jurisdiction over a program involving transferability of Environmental Attributes, including, without limitation, the Clean Air Markets Division of the United States Environmental Protection Agency (the “EPA”), the California Energy Resources Conservation and Development Commission (the “CEC”), the California Public Utilities Commission (the “CPUC”), and any successor agency thereto. Emergency: Any condition or situation which (i) endangers life or property or (ii) affects Buyer's physical ability to maintain safe, adequate, and continuous electric power and energy to Buyer's customers. Energy: The electricity generated by the Plant and delivered to Buyer by the Seller, pursuant to this Agreement, at the Point of Interconnection, as expressed in units of kilowatt-hours (kWh) or megawatt-hours (MWh), including Test Energy. 3 Environmental Attributes: Any and all credits, benefits, emissions reductions, offsets, and allowances, howsoever entitled, attributable to the generation from the Plant or Expansion Plant(s), as the case may be, and its displacement of conventional energy generation. Environmental Attributes include, without limitation: (1) any avoided emissions of pollutants to the air, soil or water such as sulfur oxides (SOx), nitrogen oxides (NOx), carbon monoxide (CO) and other pollutants; (2) any avoided emissions of carbon dioxide (CO2), methane (CH4) and other greenhouse gases (GHGs) that have been determined by the United Nations Intergovernmental Panel on Climate Change to contribute to the actual or potential threat of altering the Earth’s climate by trapping heat in the atmosphere; and (3) the reporting rights to these avoided emissions such as Green Tag Reporting Rights. “Green Tag Reporting Rights” are the right of a “Green Tag” purchaser to report the ownership of accumulated Green Tags in compliance with federal or state law, if applicable, and to a federal or state agency or any other party at the Green Tag purchaser’s discretion, and include without limitation those Green Tag Reporting Rights accruing under Section 1605(b) of the Energy Policy Act of 1992 and any present or future federal, state, or local law, regulation or bill, and international or foreign emissions trading program. Green Tags are accumulated on kWh basis and one Green Tag represents the Environmental Attributes associated with one (1) MWh of energy. Environmental Attributes do not include (i) any energy, capacity, reliability or other power attributes from the Plant or Expansion Plant(s) or (ii) tax credits associated with the construction or operation of the Plant, Expansion Plant(s), or any other associated contract or right, and other financial incentives in the form of credits, rebates, reductions, or allowances associated with the Plant, Expansion Plant(s), or any other associated contract or right, that are applicable to a state or federal income taxation obligation. Environmental Attributes Reporting Rights: All rights to report ownership of the Environmental Attributes to any person or entity, under Section 1605(b) of the Energy Policy Act of 1992 or otherwise. Environmental Laws: Any and all federal, state and local laws, including statutes, regulations, rulings, orders, administrative interpretations and other governmental restrictions and requirements relating to the discharge of air pollutants, water pollutants or process waste water or otherwise relating to the environment or hazardous substances, as amended from time to time. Expansion Plant: Any expansion of the Plant from its Initial Capacity, or any other electricity generating facility owned or controlled by Seller or its affiliate(s), located at the Site. Each such expansion of the Plant or additional facility shall be deemed to be an “Expansion Plant.” Expansion Plant Output: All capacity, energy, associated Environmental Attributes, ancillary services, contributions towards resource adequacy or reserve requirements (if any) and any other reliability or power attributes produced by Seller at any Expansion Plant. 4 Expected Annual Net Energy Production: For each twelve-month period, commencing one day after the Commercial Operation Date, it is the value of the expected annual net energy production in AC Megawatthours, including the effects of first year 2.5% panel performance degradation and subsequent 0.7% panel annual performance degradation as represented in Exhibit H. FERC: The Federal Energy Regulatory Commission and its successor organization, if any. Force Majeure Event: Any act or event that delays or prevents a Party from timely performing obligations under this Agreement or from complying with conditions required under this Agreement to the extent that such act or event is reasonably unforeseeable and beyond the reasonable control of and without the fault or negligence of the Party relying thereon as justification for such delay, nonperformance, or noncompliance. Force Majeure Events typically include: (i) acts of God or the elements, extreme or severe weather conditions, explosion, fire, epidemic, landslide, mudslide, sabotage, lightning, earthquake, flood or similar cataclysmic event, acts of public enemy, war, blockade, civil insurrection, riot, civil disturbance or strike or other labor difficulty caused or suffered by a Party; (ii) any restraint or restriction imposed by law or by rule, regulation or other acts or omissions of governmental authorities, whether federal, state or local which by exercise of due diligence and in compliance with applicable law a Party could not reasonably have been expected to avoid and to the extent which, by exercise of due diligence and in compliance with applicable law, has been unable to overcome (so long as the affected Party has not applied for or assisted such act by a governmental authority); and (iii) electric transmission interruptions or curtailments (not including any such event that results from discretionary non-emergency curtailment of Buyer or a failure by Buyer to obtain firm transmission or similar rights or otherwise to make congestion-related payments) provided that the term “Force Majeure Event” does not include (a) economic conditions that render a Party’s performance of this Agreement at the Price unprofitable or otherwise uneconomic (including Buyer’s ability to buy Energy or Environmental Attributes at a lower price, or Seller’s ability to sell Energy or Environmental Attributes at a higher price, than the Price), (b) a governmental act by Buyer that delays or prevents Buyer from timely performing its obligations under this Agreement, (c) a Plant Outage, except, in any case, if caused by an event or circumstance that meets the requirements set forth in this ”Force Majeure” definition (other than as described in (iii) above), (d) failure or delay in grant of Permits, except, in any case, if caused by an event or circumstance that meets the requirements set forth in this ”Force Majeure” definition or (e) failures or delays by the LDC or the CAISO in entering into all agreements with Seller contemplated by this Agreement. Full Capacity Deliverability Status: The CAISO term (inclusive of any successor designation) for interconnection arrangements made to provide regional improvements to the grid allowing other projects to deliver energy and capacity so that the capacity from the applicable site can be deemed fully deliverable and can count toward system and local capacity requirements, if any, of the Buyer. 5 GAAP: Generally Accepted Accounting Principles. Governmental Authority: Any federal or state government, or political subdivision thereof, including, without limitation, any municipality, township or county, or any entity or authority exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, including, without limitation, any corporation or other entity owned or controlled by any of the foregoing. Initial Capacity: The installed capacity of the Plant, determined as of the Commercial Operation Date, which shall not to be less than 19 MW AC or more than 21 MW AC (net at the Point of Interconnection). Incentives: Any and all tax credits, deductions, allowances, depreciation and exemptions applicable to federal, state and local taxes and any other payment, credit, deduction, benefit, grant or monetary incentive provided by any federal, state or local governmental authority or any Person, whether now in effect or arising in the future, in each case arising from the activities contemplated by this Agreement, including any “Renewable Energy Production Incentive Payments” from the U.S. Department of Energy and any “Energy Investment Tax Credit” described in Section 48 of the Internal Revenue Code of 1986, as it may be amended or supplemented from time to time. Notwithstanding the foregoing, Incentives shall not include anything that qualifies as Output as defined herein (including any Environmental Attributes). Interconnection: Construction, installation, operation and maintenance of all Interconnection Facilities. Interconnection Agreement: The agreement between Seller, the LDC and CAISO, dated April 12, 2012, pursuant to which Seller, the LDC and CAISO set forth the terms and conditions for Interconnection of the Plant to the LDC System, as amended from time to time. Interconnection Facilities: All of the facilities installed for the purpose of interconnecting the Plant to the LDC System, including, without limitation, transformers and associated equipment, relay and switching equipment and safety equipment. LD Amount: The Monthly LD Amount multiplied by 12 (twelve). LDC: Pacific Gas and Electric Company, a California corporation. LDC System: The electric power generation, transmission, substation and distribution facilities owned, operated and/or maintained by the LDC, which shall include, without limitation, after construction and installation, the circuit reinforcements, extensions, and associated terminal facility reinforcements or additions required to interconnect the LDC’s facilities with the Plant. 6 Lender(s): Any Person(s) providing money or extending credit (including any capital lease) to Seller for (i) the construction of the Plant, (ii) the term or permanent financing of the Plant, or (iii) working capital or other ordinary business requirements for the Plant. “Lender(s)” shall not include any trade creditor(s) of Seller. Monthly LD Amount: The product of $1,667.00 per MW AC and the Initial Capacity specified under Section 4.2(h) (net at the Point of Interconnection). MW: Megawatt. MWh: Megawatt-hour. NCPA: The Northern California Power Agency, a California joint powers agency. Outage: A physical state in which all or a portion of the Plant is unavailable to provide Energy to the Point of Interconnection, or in which any portion of the LDC System is unavailable to receive Energy, to the extent that the unavailability affects the LDC System’s ability to accept delivery of Energy at the Point of Interconnection, whether planned or unplanned. Output: All actual capacity of the Initial Capacity and associated Energy, as well as the following, as associated with the Initial Capacity and/or associated Energy: Environmental Attributes; ancillary services; and contributions towards resource adequacy or reserve requirements (if any) and any other reliability or power attributes. Parties: Buyer and Seller, and their respective successors and permitted assignees. Participating TO or Participating Transmission Owner: Pacific Gas and Electric Company, a California corporation, or any successor thereto acting as transmission provider from the Site to the CAISO grid. Party: Buyer or Seller, and each such Party’s respective successors and permitted assignees. Performance Assurance: The amount of four hundred thousand dollars ($400,000), which shall be posted or deposited in accordance with Article IX of this Agreement. Permits: All material federal, state or local authorizations, certificates, permits, licenses and approvals required by any Governmental Authority for the construction, ownership, operation and maintenance of the Plant. Person: An individual, partnership, corporation (including a business trust), limited liability company, joint stock company, trust, unincorporated association, joint venture, Governmental Authority or other entity. 7 Plant: The power generation facilities described in the Recitals to be constructed and owned by Seller and located on the Site for the generation and delivery of electricity, including the step-up transformer, revenue quality meter and all other facilities up to the Point of Interconnection, but not including any Expansion Plant. Point of Interconnection: The point on the electrical system where the Plant is physically interconnected with the LDC System, which is anticipated to be at the high side of Seller’s step-up transformers at the Plant. Prudent Utility Practice: Those practices, methods and equipment, as changed from time to time, that: (i) when engaged in are commonly used in the United States of America in prudent electrical engineering and operations to operate solar photovoltaic plant generation electric equipment and related electrical equipment lawfully and with safety, reliability, efficiency and expedition; or (ii) in the exercise of reasonable judgment considering the facts known, when engaged in could have been expected to achieve the desired result consistent with applicable law, safety, reliability, efficiency and expedition. Prudent Utility Practices are not limited to an optimum practice, method, selection of equipment or act, but rather are a range of acceptable practices, methods, selections of equipment or acts. REC: A renewable energy credit for compliance with California’s Renewables Portfolio Standard (“RPS”) is a certificate of proof, issued through WREGIS, that one megawatt- hour of electricity was generated by an RPS-eligible renewable energy resource and delivered for consumption by California end-use retail customers. A REC includes all renewable and environmental attributes associated with the production of electricity from the eligible renewable energy resource, including any avoided emission of pollutants to the air, soil or water; any avoided emissions of carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons, sulfur hexafluoride, or any other greenhouse gases that have been determined by the United Nations Intergovernmental Panel on Climate Change, or otherwise by law, to contribute to the actual or potential threat of global climate change; and the reporting rights to these avoided emissions, such as Green Tag reporting rights. A REC does not include any energy, capacity, reliability or other power attributes of the generation; any tax credits or other financial incentives in the form of credits, reductions, or allowances associated with the generation that are applicable to a state or federal income taxation obligation. 8 The electricity underlying a REC must be delivered for consumption by California end- use retail customers, in accordance with the definition of delivery implemented by the CEC. No REC may be created based on any electricity generated pursuant to any contract with a California retail seller or a local publicly owned electric utility executed before January 1, 2005, unless the contract contains explicit terms and conditions specifying the ownership or disposition of the RECs. A REC may not be created based on any electricity generated pursuant to a contract with a qualifying facility pursuant to the Public Utility Regulatory Policies Act of 1978 that was executed after January 1, 2005. A REC cannot be created with respect to electricity generated by an eligible renewable energy resource attributable to the use of nonrenewable fuels, beyond a de minimus quantity as determined by the CEC. Requirements of Laws: Collectively, any federal or state law, treaty, franchise, rule, regulation, order, writ, judgment, injunction, decree, award or determination of any arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon Seller or Buyer or any of its property or to which Seller or Buyer or any of its respective properties are subject. Scheduling Coordinator: NCPA or any agent or successor thereof, or such other scheduling coordinator as may be designated in accordance with this Agreement. Section 45 Credits: Those tax credits available under Section 45 of Subtitle A, Chap. 1A, Part IV of the Internal Revenue Code of 1986, as amended, or any other similar state, federal or local tax credits, deductions, payments or benefits arising from the generation and sale of electricity using qualifying renewable resources, not including any Environmental Attributes. Section 48 Credits: Those tax credits available under Section 48(a)(3)(A)(i) and 48(a)(5) of the Internal Revenue Code of 1986, as amended, or any other similar state, federal or local tax credits, deductions, payments or benefits arising from the investment in qualifying energy properties, not including any Environmental Attributes. Seller: Brannon Solar, LLC, a Delaware limited liability company, and any successor or permitted assignee. Site: The real property on which the Plant is to be built and located at the intersection of Davidson Avenue and W. Ballard Avenue, Firebaugh, Fresno County, California as more particularly described in Exhibit A, or such other real property selected by Seller to which Buyer consents in writing which consent shall not be unreasonably withheld Site Control: The point at which Seller satisfies one or more of the following conditions: (1) Seller is (a) the lessee under a lease, or (b) the grantee under an exclusive easement, with the owner (or its subsidiary) of the Site that allows Seller to 9 construct and operate the Plant at the Site during the Term in accordance with this Agreement; (2) Seller has a fee ownership of the Site; or (3) any other form of site control acceptable to Buyer, acting in the reasonable exercise of its discretion. Station Service Power: The energy used by Seller to operate the Plant. Test Energy: Energy and Output to the extent available generated by the Plant and delivered to the Point of Interconnection prior to the Commercial Operation Date. Two Year Minimum Production Threshold: The minimum volume of Output that Seller must provide to Buyer during each two year rolling period calculated each anniversary of the Commercial Operation Date starting with the second anniversary thereof. The Two Year Minimum Production Threshold volume in MWh is shown in Exhibit H in the applicable column for each prospective racking configuration for each two year period of the Term. WREGIS: The Western Renewable Energy Generation Information System, an independent, renewable energy tracking system for the region, administered by the Western Electricity Coordinating Council (“WECC”). WREGIS tracks renewable energy generation from units that register in the system using verifiable data and creates RECs for this generation. WREGIS was developed through a collaborative process between the Western Governors’ Association, the Western Regional Air Partnership, and the CEC. ARTICLE II TERM, PURCHASE AND SALE 2.1 Term This Agreement shall be effective upon its execution by authorized representatives of the Parties and, unless earlier terminated pursuant to an express provision of this Agreement, shall continue until the 25th anniversary of the Commercial Operation Date (“Initial Term”). Buyer shall have the option to extend the term of this Agreement for up to five years from the 25th anniversary of the Commercial Operation Date (“Extension Term”). Buyer shall exercise the option to extend the Term by a written notice delivered to Seller by not later than three hundred sixty-five (365) days prior to the end of the Initial Term. The Initial Term, together with any Extension Term, is referred to herein as the “Term.” 2.2 Purchase and Sale of the Output (a) Commencing on the Commercial Operation Date and continuing during the Term, Seller shall sell and deliver at the Point of Interconnection, and Buyer shall purchase, accept from Seller at the Point of Interconnection and pay for, the 10 Output produced during the Term pursuant to the terms of this Agreement. Prior to the Commercial Operation Date, Buyer shall purchase and accept from Seller at the Point of Interconnection and pay for, the Output relating to any Test Energy pursuant to the terms of this Agreement; provided that the decision to produce and deliver Test Energy hereunder shall be at the sole discretion of the Seller. All Test Energy shall be scheduled in accordance with the procedures set forth in Exhibit D. Seller shall not sell to any other party, and Buyer may claim credit for, the Output, as may be available to Buyer from time to time. (b) During the Term, Seller shall sell and transfer to Buyer, and Buyer shall purchase and receive from Seller, all right, title and interest in and to the Environmental Attributes associated with the Output, if any, whether now existing or subsequently generated or acquired (other than by direct purchase from a third party) by Seller, or that hereafter come into existence, during the Term, as a component of the Output purchased by Buyer from Seller hereunder. Seller agrees to transfer and make such Environmental Attributes available to Buyer immediately to the fullest extent allowed by applicable law upon Seller’s production or acquisition of the Environmental Attributes. Seller shall not assign, transfer, convey, encumber, sell or otherwise dispose of all or any portion of the Environmental Attributes to any Person other than Buyer. Seller makes no written or oral representation or warranty, either express or implied, regarding the current or future existence of any Environmental Attributes. (c) During the Term, Seller shall not report to any person or entity that the Environmental Attributes granted hereunder to Buyer belong to anyone other than Buyer, and Buyer may report under any program that such Environmental Attributes purchased hereunder belong to it. (d) Seller will document the production of Environmental Attributes under this Agreement by delivering with each invoice to Buyer an attestation for Environmental Attributes produced by the Plant and purchased by Buyer in the preceding calendar month. The form of attestation is set forth as Exhibit B. Exhibit B shall be updated or changed by the Parties, as necessary, to ensure that Buyer receives full and complete title to, and the ability to record with any EA Agency as its own, all of the Environmental Attributes purchased hereunder. At Buyer’s request, the Parties, each at their own expense, shall execute all such documents and instruments in order to transfer the Environmental Attributes, specified in this Agreement, to Buyer or its designees, as Buyer may reasonably request. In the event of the promulgation of a scheme involving Environmental Attributes administered by an EA Agency, upon notification by an EA Agency that any transfers contemplated by this Agreement will not be recorded, the Parties shall promptly cooperate in taking all reasonable actions necessary so that such transfer can be recorded. Each Party shall promptly give the other Party copies of all documents it submits to the EA Agency to effectuate any transfers. 11 2.3 Price Subject to any performance related adjustments under the provisions of Article IX, during the Initial Term, Buyer shall pay Seller $0.077 per kWh of Energy (“Price”) delivered or tendered to Buyer at the Point of Interconnection. The Price shall be the total compensation owed by Buyer for the Output delivered or tendered to Buyer during the Initial Term. During the Extension Term, Buyer shall pay Seller the Price in effect during the 25th anniversary year. 2.4 Tax Credits and Incentives Buyer agrees and acknowledges that all Incentives shall be owned by Seller. Buyer shall not claim Incentives. Buyer agrees to cooperate with Seller, as may be necessary to allow maximization of the value of, and realization of, and all Incentives; provided that Buyer shall not be required to incur additional costs or accept any diminution in value of its rights under this Agreement or of the Output purchased hereunder. In addition, Buyer shall not take any action (except as otherwise permitted under this Agreement), that would in any way reduce or eliminate the availability to Seller of any Incentives, including the Section 48 Credits, and Buyer shall forego any credits or benefits available to it (other than Environmental Attributes), including rights to purchase of Test Energy, to the extent necessary to allow Seller to obtain the full benefit of the Incentives, but in no event shall Buyer be required to forego receipt of Output after the Commercial Operation Date. 2.5 Right of First Refusal for Expansion Plant and Expansion Plant Output (a) During the Term, Seller may, in exercising its sole discretion, determine, from time to time, to develop, finance, construct and/or operate an Expansion Plant. Each time such a determination is made, Seller shall notify Buyer of such determination and shall offer, in writing, to sell to Buyer the Expansion Plant Output to Buyer. The offer shall include the price to be paid by Buyer for the Expansion Plant Output, the term of the proposed power purchase agreement, and the other principal terms and conditions of the proposed sale. If Buyer wishes to accept such offer to purchase all (but not less than all) of the Expansion Plant Output, Buyer shall so notify Seller within sixty (60) days of its receipt of such offer. Buyer and Seller shall promptly thereafter enter into good faith negotiation of a definitive power purchase agreement, incorporating the terms of such offer. Until a power purchase agreement for an Expansion Plant is executed, Seller’s proposal, accepted by Buyer (including any modifications agreed upon in writing by both parties), shall control all dealings between the Parties relating to the Expansion Plant. Should any issue arise that is not covered by such documentation, the terms of this Agreement shall apply. (b) If Buyer does not accept Seller’s offer to purchase the Expansion Plant Output within sixty (60) days of receipt of Seller’s offer, Seller shall be deemed 12 authorized to offer to sell that portion of the Expansion Plant Output to one or more third parties at a price and on other terms and conditions which, taken as a whole, are at least as favorable to Seller as the price and other terms and conditions set forth in Seller’s offer to Buyer. If Seller offers to disaggregate the Expansion Plant Output for the purpose of selling the same to multiple independent buyers, Seller shall notify Buyer, in writing, of the terms and conditions of such offers, and Buyer shall again have the right of first refusal consistent with the terms set forth above for each of the lesser amounts being offered to the third parties. If Buyer does not purchase the Expansion Plant Output and Seller sells such Expansion Plant Output to a third party, Seller shall promptly certify, in writing, to Buyer that the terms and conditions of sale of such Expansion Plant Output to such third party, taken as a whole, are at least as favorable to Seller as the price and other terms and conditions set forth in Seller’s offer to Buyer, and Seller shall provide the relevant final contract and any other supporting documentation for such certification. Upon the sale of such Expansion Plant Output in compliance with this Agreement, Buyer shall have no further rights to be offered or to purchase such Expansion Plant Output. Buyer’s refusal, in writing, of the Expansion Plant Output from one Expansion Plant shall not affect Buyer’s right to purchase the Expansion Plant Output from a subsequently developed Expansion Plant under the terms of this Agreement. Seller shall not sell or provide the Expansion Plant Output to any third party, unless Seller can do so without compromising in any material way its ability to provide the Output to Buyer hereunder. The materiality of any such impact shall be determined by Buyer, acting in its reasonable discretion. 2.6 Refurbishment of Plant up to Initial Capacity During the Term, Seller may propose to refurbish the Plant, alter components of the Plant, replace components of the Plant, add additional solar modules, or replace solar modules with more powerful modules in order to increase the Plant estimated peak AC capability up to the lesser of the Initial Capacity or to the amount allowed by the Interconnection Agreement. If such refurbishment is proposed to increase capacity no higher than the expected production volume level per applicable year of Exhibit H, then upon consent of Buyer, not to be unreasonably withheld, Seller may make such refurbishment. Buyer has the right, in its sole discretion, to accept or decline to permit any such refurbishment that may increase estimated Output above the expected production volume levels shown for the applicable years in Exhibit H. 13 ARTICLE III METERING AND BILLING 3.1 Metering Requirements The transfer of Energy from Seller to Buyer shall be measured by revenue quality metering equipment at the Point of Interconnection. Such metering equipment, including any equipment required for communicating meter data (e.g., a dedicated data line) to Buyer or the CAISO, shall be selected, provided, installed, owned, maintained and operated, at Seller’s sole cost and expense, by Seller or its designee in accordance with applicable CAISO rules. Seller shall exercise reasonable care in the maintenance and operation of any such metering equipment, and shall test and verify the accuracy of each meter at least annually. Seller shall inform Buyer in advance of the time and date of these tests, and shall permit Buyer to be present at such tests and to receive the results of such tests. Subject to Buyer paying the cost of any update or upgrade to such metering equipment pursuant to a new requirement of the CAISO, the LDC or any other Governmental Authority, adopted after the Commercial Operation Date, each of Seller’s meters shall be accurate to the metering specifications then in effect for CAISO meter accuracy. Seller shall further install and maintain all equipment and data circuits necessary to transmit all monitored real time supervisory control and data acquisition (“SCADA”) system data and real time data from the CAISO meter to the CAISO and NCPA, while adhering to both CAISO and NCPAs’ communications protocols. Seller shall provide Buyer with a copy of each certificate of compliance issued by CAISO, if any. Buyer and NCPA shall be provided access to all monitored SCADA points to be used at their discretion in real time monitoring. Buyer, at its sole cost and expense, may install and maintain check meters and all associated measuring equipment necessary to permit an accurate determination of the quantities of Energy delivered under this Agreement, provided the referenced equipment does not interfere with Seller’s metering equipment. Seller shall permit Buyer or NCPA or its agent access to Seller’s Plant for the purpose of installing and maintaining such check meters. Seller shall submit to the CAISO, or allow the CAISO to retrieve, any meter data required by the CAISO related to the Plant output in accordance with the CAISO’s settlement and billing protocol and meter data tariffs. Buyer shall have reasonable access to relevant meters and associated facilities, as well as real time access to all meter data, as is necessary for Buyer or NCPA or its agent to perform its duties as scheduling coordinator and comply with the requirements of the CAISO Tariff. 3.2 Billing Seller shall read the meter at the end of each calendar month of the Term, and provide to Buyer on or before the tenth (10th) day of the following month an 14 invoice based upon the meter data for Energy delivered in such calendar month and the corresponding attestation pursuant to Section 2.2(d). Such invoice may be transmitted by e-mail to settlements@ncpa.com, or to any other e-mail address designated, in writing, by Buyer, with a copy to be delivered in the mail of the United States Postal Service or other entity to the notice address designated below. Should either Seller or Buyer determine at a later date, but in no event later than two (2) years after the original invoice date, that the invoice amount was incorrect, that Party shall promptly notify, in writing, the other Party of the error. If the amount invoiced was lower than the amount that should have been invoiced, then Buyer shall, upon receiving verification of the error and supporting documentation from Seller, pay any undisputed portion of the difference within thirty (30) days of receipt of verification. If the amount invoiced was higher than the amount that should have been invoiced, then Seller shall, upon receiving verification of the error and supporting documentation from Buyer, pay any undisputed portion of the difference within thirty (30) days of receipt of verification. Any such adjusted amount owing by Seller or Buyer shall be subject to the interest rate as designated in Section 3.3, running from the original due date of payment. 3.3 Payment For Energy delivered to Buyer pursuant this Agreement, Buyer or its agent shall pay Seller by electronic transfer of funds by the later of the 20th day of the month or the 10th business day after the invoice is received in accordance with Section 3.2. If such due date falls on a weekend or legal holiday, such due date shall be the next day which does not fall on a weekend or legal holiday. Payments made after the due date shall be considered late and shall bear interest on the unpaid balance at an annual rate equal to two percent (2%) plus the average daily prime rate as determined from the "Money Rates" section of The Wall Street Journal for the days of the late payment period multiplied by the number of days elapsed from and including the day after the due date, to and including the payment date. Interest shall be computed on the basis of a 365-day year. In the event this index is discontinued or its basis is substantially modified, the Parties shall agree on a substitute equivalent index. Should Buyer in good faith dispute the amount of an invoice, Buyer or its agent may withhold such disputed amounts until the dispute is resolved by mediation, arbitration or other permissible method. Such disputed amounts shall bear interest at the interest rate described above. Failure of Buyer or its agent to withhold any amount shall not constitute a waiver of Buyer’s right to challenge such amount. Both Parties shall maintain all records relating to the other Party or this Agreement for a minimum of two (2) years after the expiration or earlier termination of the Term, and shall permit the other Party, upon reasonable notice, to inspect and audit such records as the requesting Party deems reasonably necessary to protect its rights. 15 ARTICLE IV SELLER'S OBLIGATIONS During the Term, Seller agrees to perform the following affirmative obligations: 4.1 Development, Finance, Construction and Operation of the Plant During the Term, Seller shall: (a) Develop, finance and construct the Plant. (b) Provide Buyer with access to a “real time” Plant monitoring system (which, at a minimum, shall provide “real time” information regarding the net output of the Plant) that is anticipated to be internet protocol-based and include alarms. (c) Seek, obtain, maintain, comply with and, as necessary, renew and modify from time to time, all Permits, certificates or other authorizations, which are required by any Requirements of Law or Governmental Authority as prerequisites to engaging in the activities required of Seller by the Agreement and to meeting Seller's obligation to operate the Plant consistently with the terms of the Agreement. (d) Operate, maintain, and repair the Plant in accordance with this Agreement, all Requirements of Law applicable to Seller or the Plant, Contractual Obligations, Permits and in accordance with Prudent Utility Practice, including with respect to efforts to maintain availability of the Initial Capacity subject to normal system wear-and-tear and panel degradation factor. (e) Obtain and maintain the policies of insurance in amounts and with coverages as set forth in Exhibit C. (f) Operate and maintain in a manner consistent with Prudent Utility Practice the facilities it will own and otherwise cooperate with the LDC in the physical interconnection of the Plant to the LDC System in accordance with the Interconnection Agreement. (g) By October 1st of each year of the Term, provide each of Buyer and NCPA with an annual projection of scheduled Outages for the following calendar year. Should Seller make any changes to such projection, it will notify Buyer and NCPA of such changes at least fourteen (14) days in advance of any newly scheduled or rescheduled Outage. If Buyer requests a change to the scheduled date of any Outage (including to a date set forth in a change notice from Seller), Seller shall consider such request in good faith and notify Buyer of its decision within seven (7) days of receipt of Buyer’s request. In no instance other than Saturdays, Sundays and federal holidays during the period of reliability 16 accounting (initially the period between June 1st and September 30th but subject to changes selected at Buyer’s discretion for conforming to CAISO availability assessment) will Seller schedule Outages of more than twenty-four (24) hours during the Term. In connection with any Outage, whether a scheduled or unscheduled Outage, Seller shall notify Buyer and NCPA, as soon as practicable, of the percentage of Plant (based on percentage of Energy loss) expected to be out of service and how long the Outage is expected to last. If the Outage is total and is due to failure of the Plant rather than the transmission and distribution system beyond the Point of Interconnection, Seller shall give Buyer and NCPA at least four (4) hours’ prior notice before re-energizing the Plant. In addition, Seller will comply with NCPA’s scheduling protocols, as may be changed from time to time. A copy of the current version of NCPA’s scheduling protocols, which the Parties agree are reasonable, is attached as Exhibit D; provided, during the Term, Buyer shall provide Seller with any revised scheduling protocols to the extent NCPA provides the same to Buyer. (h) Negotiate and enter into an Interconnection Agreement with the LDC to enable Buyer to transmit Energy received at the Point of Interconnection through the CAISO-controlled grid. Seller shall be responsible for and pay all initial non- recurring costs and charges arising under the Interconnection Agreement (even if not actually incurred) prior to the Commercial Operation Date in compliance with the Interconnection Agreement and associated rules and requirements in place as of the Commercial Operation Date. (1) All other out-of-pocket costs and charges related to interconnection, other than these initial non-recurring costs and charges, will be reimbursed by Buyer. During the Term and prior to any Expansion Plant becoming available for commercial service, Buyer will reimburse Seller for any out-of-pocket costs and charges under the Interconnection Agreement paid or required to be paid by Seller to the LDC or its successor; provided, however, Buyer shall be responsible for such out-of-pocket costs and charges under the Interconnection Agreement only to the extent Buyer has approved, in writing, in its sole discretion, the Interconnection Agreement, including any amendments to the Interconnection Agreement (which shall not include changes in relevant tariffs) from time to time. Seller shall cooperate with Buyer to minimize any such costs as are to be reimbursed by Buyer. (2) If Buyer chooses in its sole discretion to pursue Full Capacity Deliverability Status for the Plant and its associated Output during the Term, Seller shall provide Buyer with reasonable assistance in obtaining such upgrades if requested by Buyer; provided that the costs associated with any optional upgrades (including reasonable expenses of Seller) to enable Full Capacity Deliverability Status for the Plant shall be the responsibility of Buyer. 17 (i) Negotiate and enter into a Participating Generator Agreement and a Meter Service Agreement for CAISO Metered Entities with the CAISO, the load control area operator for the LDC System, to which the Plant is interconnected. Buyer shall pay for or reimburse Seller for any such costs or charges associated with these agreements, except to the extent such cost or charge is required to be paid by Seller under this Agreement in Sections 3.1 and 4.1(h). Seller shall cooperate with Buyer to minimize any such costs as are to be reimbursed by Buyer. (j) Coordinate all Plant start-ups and shut-downs, in whole or in part, with Buyer in accordance with CAISO scheduling protocols and the reasonable protocols established by Buyer that are not inconsistent with the CAISO Tariff and CAISO procedures. (k) Fund and maintain the Development Assurance to assure Seller’s timely development of the Plant, including the performance of all construction tasks, and fund and maintain the Performance Assurance to assure Seller’s delivery of the Output to Buyer in accordance with Article IX. 4.2 General Obligations (a) Seller shall obtain in its own name and at its own expense any and all pollution or environmental credits or offsets necessary to operate the Plant in compliance with the Environmental Laws. (b) Seller shall keep complete and accurate operating and other records and all other data for the purposes of proper administration of the Agreement, including such records as may be required by any Governmental Authority or Prudent Utility Practice. (c) Seller shall continue to (i) preserve, renew and keep in full force and effect its organizational existence and good standing, and take all reasonable action to maintain all applicable Permits, rights, privileges, licenses and franchises necessary or desirable in the ordinary course of its business; and (ii) comply with all Contractual Obligations and Requirements of Law applicable to Seller or the Plant. (e) Seller shall provide to Buyer such other information regarding the permitting, engineering, construction or operations of the Plant as Buyer may from time to time reasonably request, subject to licensing or other restrictions of Seller or a third party with respect to confidentiality, disclosure or use; provided, nothing herein will limit Buyer’s right to agree to confidentiality or sign a confidentiality agreement in connection therewith before acquiring knowledge of such information. 18 (f) Seller shall enter into any agreements with the CAISO required by the CAISO for generators delivering power into the CAISO-controlled grid. Except for such costs and charges as are expressly identified in this Agreement as Seller’s costs, Buyer shall reimburse Seller for all costs and charges under such agreements. Seller shall cooperate with Buyer to minimize any such costs as are to be reimbursed by Buyer. (g) Seller shall provide to Buyer a copy of Seller’s ultimate corporate parent’s most current annual audited financial statements, prepared in accordance with GAAP, by no later than four (4) months after the end of such accounting year of such entity. Seller shall also provide, on a quarterly basis, an unaudited financial statement in the form of Exhibit F, prepared in accordance with GAAP consistently applied for Seller and for Seller’s ultimate corporate parent. Such financial statements shall be certified by an officer of Seller as fairly presenting the financial condition of Seller subject only to what would typically be included in year-end audit adjustments and footnotes. If, from time to time, an audited year- end financial statement is prepared for Seller, Seller shall provide it to Buyer no later than four (4) months after the end of Seller’s accounting year. (h) Within fifteen (15) days of the later of (i) obtaining the authority to construct for the Plant from the applicable Governmental Authority or (ii) Seller’s receipt of the system impact and facility cost studies from the LDC, but in no event later than the date set forth in Section 4.3(b)(ii), Seller shall specify the Initial Capacity of the Plant (which shall be subject to the limits contained in the definition of Initial Capacity). At that time, Seller shall provide to Buyer a letter stating the Initial Capacity of the Plant in MW AC and the panel racking design chosen to be either a fixed tilt system or a single axis tracking system. 4.3 Construction Milestones (a) The Parties agree that time is of the essence in the performance of Seller’s obligations under this Agreement and certain milestones (“Milestones”) for the development, financing and construction of the Plant must be achieved in a timely fashion or Buyer shall suffer damages which are difficult to estimate with reasonable certainty. Seller shall provide Buyer with documentation satisfactory to Buyer, acting in the reasonable exercise of its discretion, to support the achievement of Milestones by the dates set forth below. (b) The following events are all of the Milestones: (i) By the date ninety (90) days following the Effective Date, Seller shall obtain Site Control. (ii) By the date twenty (20) months following the Effective Date, Seller shall (a) obtain all Permits necessary, in final form, to commence construction of the Plant, and (b) enter into an Interconnection Agreement. (iii) By the date two (2) months (or such longer period pursuant to Section 7.6(b)) following the later of (a) the finalization of all necessary 19 Permits, described in Section 4.3(b)(ii) and (b) entering into an Interconnection Agreement, Seller shall arrange for the financing of the construction of the Plant or otherwise make funds available to commence and complete construction. (iv) By the date twelve (12) months following the later of (a) the finalization of all necessary Permits, described in Section 4.3(b)(ii) and (b) entering into an Interconnection Agreement, Seller shall have commenced construction of the Plant. (v) By the earlier of August 1, 2014 or the date eighteen (18) months following the arrangement of financing or availability of funds for construction, Seller shall achieve Commercial Operation. (c) Starting on the Effective Date, Seller shall provide to Buyer monthly progress reports concerning the progress towards completion of the Milestones. In addition, within five (5) business days of the completion of each Milestone, Seller shall provide a certification to Buyer (along with any supporting documentation), demonstrating Seller’s achievement or satisfaction of the Milestone. Seller shall provide to Buyer additional information concerning Seller’s progress towards, or confirmation of, achievement of the Milestones, as Buyer may reasonably request from time to time. (d) Upon becoming aware that it will, or is reasonably likely to, fail to achieve a Milestone by the required date, for any reason including Force Majeure Event, Seller shall so notify Buyer, in writing, as soon as is reasonably practical. Such notice shall provide information regarding the cause of the delay, provide a revised date for achievement of the Milestone(s), and otherwise describe Seller’s plan for meeting the Milestone(s). Seller’s notice will also explain any impact such delay may or will have on any other Milestone, and measures to be taken to mitigate such impact. (e) In the event that (1) a Force Majeure Event causes any delay to the achievement of the Milestones set forth in Sections 4.3(b) (ii), (iii), (iv), or (v), or (2) a failure to achieve all necessary Permits or complete interconnection (through no fault of Seller) causes delay to achievement of the Milestones set forth in Sections 4.3(b)(ii), (iii), (iv), or (v), any such Milestone’s deadline may be extended, together with any Force Majeure Event extensions for other Milestones, for a period not to exceed six (6) months. The extension of the deadline for any Milestone shall extend the deadline for all subsequent Milestones, provided that in no event shall the combined extensions for Force Majeure Events or for a failure to achieve all necessary Permits or complete interconnection (through no fault of Seller) for any or all of the Milestones exceed six (6) months. (f) In the event that Seller fails to meet the Milestone set forth in Section 4.3(b)(i) for any reason, Buyer may terminate this Agreement, without liability of either Party to the other, by giving notice to Seller, in writing, of such termination 20 at any time prior to Seller curing its failure. Such option to terminate shall be Buyer’s sole remedy for any failure to meet the Milestone set forth in Section 4.3(b)(i). (g) In the event that Seller fails to meet the Milestone set forth in Section 4.3(b)(ii) (as may be extended per Section 4.3(e)) for any reason, Buyer may terminate this Agreement, without liability of either Party to the other, within ten (10) business days after the Milestone date by giving notice of termination, in writing, to Seller. If Seller meets the Milestone set forth in Section 4.3(b)(ii) prior to Buyer giving written notice of termination, this Agreement shall remain in full force and effect. If Buyer does not terminate this Agreement within ten (10) business days after the Milestone date, Seller shall continue to pursue satisfaction of the relevant Milestone and Buyer must give Seller sixty (60) days’ prior written notice of termination of this Agreement, during which period, if Seller cures such defect and achieves the relevant Milestone, the notice of termination shall be deemed void, and this Agreement shall remain in full force and effect. The option to terminate shall be Buyer’s sole remedy for any failure by Seller to meet the Milestone set forth in Section 4.3(b)(ii). (h) Should Seller fail to satisfy the Milestone set forth in Section 4.3(b)(iv) for more than twelve (12) months, Buyer may terminate this Agreement upon written notice to Seller of such termination. (i) Seller covenants that it will diligently pursue to completion all Milestones as set forth Section 4.3(b). (j) In the event that any of the approvals described in Section 4.3(b)(ii) are not obtained by the date specified in Section 4.3(b)(ii) for satisfaction of the relevant Milestone or are obtained on a basis not reasonably satisfactory to Seller, Seller may terminate this Agreement without liability of either Party to the other by giving notice to Buyer, in writing, of such termination; provided that such notice must be given not later than fourteen (14) days following the earlier of (a) the date on which a given approval, in writing, not satisfactory to Seller is received, or (b) the date specified in Section 4.3(b)(ii) for satisfaction of the relevant Milestone as may be extended per Section 4.3(e); further provided, that such notice and such termination shall not be effective if Buyer, by written notice to Seller within ninety (90) days following such notice from Seller, agrees (i) to pay Seller with the first invoice following the Commercial Operation Date the reasonable all-inclusive costs (including reasonable broker fees, if any) to purchase all such offsets sufficient to operate the Plant at Expected Annual Net Energy Production for the Term, and (ii) to adjust equitably the price payable under Section 2.3 of this Agreement and within ninety (90) days thereafter agrees with Seller, in writing, (each in their sole discretion) to an amendment of this Agreement revising such price. Failure to provide notice of termination by the date specified above shall constitute a waiver of the right to terminate this Agreement as provided in this Section 4.3(j). In the event that Seller exercises 21 such termination right, Buyer shall have a right of first refusal to purchase the Output of any electricity generating facility owned or controlled by Seller or its affiliate(s) located at the Site. Such right of first refusal shall conform to the provisions of Section 2.5. The provisions of this Section 4.3(j) shall survive termination of this Agreement under this Section 4.3(j) for a period of five (5) years from such termination. (k) Seller may terminate this Agreement without liability of either Party to the other by giving notice of termination to Buyer, in writing, in the event that any of the commitments and contractual rights to receive all equity, debt, tax equity and other financing described in Section 4.3(b)(iii) are not obtained by the date specified in Section 4.3(b)(iii) for satisfaction of the relevant Milestone or cannot be obtained in such form and from such parties as is satisfactory to Seller and as Seller determines necessary to develop, construct, operate and maintain the Plant over its useful life, or the conditions precedent to the effectiveness of any and all such financings have not been satisfied or waived. In the event that Seller exercises such termination right, and Seller or its affiliate(s) subsequently enters into or seeks to enter into any other agreement to sell energy from a generating facility at the Site, then Buyer shall have a right of first refusal to purchase the Output of any electricity generating facility owned or controlled by Seller or its affiliate(s) located at the Site. Such right of first refusal shall conform to the provisions of Section 2.5. The provisions of this Section 4.3(j) shall survive termination of this Agreement under this Section 4.3(j) for a period of five (5) years from such termination. 4.4 Obligation to Schedule and Deliver (a) Scheduling. During the Term, Buyer shall provide (or cause to be provided), at its own expense, Scheduling Coordinator services for the Plant. Seller shall sign and deliver documentation, if any, that are required to: (i) designate and otherwise verify that Buyer or its designee is Scheduling Coordinator for the Plant; and (ii) allow Buyer to perform its various Scheduling Coordinator duties, including, but not limited to, scheduling Plant output in accordance with CAISO’s Participating Intermittent Resource Program (“PIRP”) or successor programs. Buyer reserves the right to substitute NCPA or any other entity as Scheduling Coordinator for the Plant upon reasonable advance notice to Seller. (b) Participating Intermittent Resource Program (i) The Parties acknowledge and agree that, following the execution and delivery of all applicable CAISO documents referred to in 22 Section 4.4(a) and this Section 4.4(b), and following the certification by CAISO (if necessary), the Plant will participate in CAISO’s PIRP, or its successor program. Seller shall sign and deliver any documentation necessary to allow the Plant to participate in the PIRP or successor program during the Term. (ii) If the PIRP is modified or altered in a manner that would result in the imposition of materially different costs or obligations on Seller or Buyer, compared to costs or obligations imposed as of the Effective Date, the Parties shall meet and negotiate in good faith equitable changes to the Agreement. In the event the Parties are unable to mutually agree upon a mutually acceptable solution, either Party may, upon written notice to the other, request that the matter be referred to senior executive management with express authority to resolve the issue. Such representatives shall meet at least once to negotiate in good faith a mutual resolution within ten (10) business days of the delivery of such written notice. If such representatives cannot reach a mutual resolution, then the issue shall be submitted to non-binding mediation within thirty (30) days of a written request of a Party served on the other Party. The Parties acknowledge that the implementation of the CAISO’s current draft PIRP proposals, as of the Effective Date, for a successor program to the PIRP shall not constitute a modification or alteration to the PIRP that imposes materially different costs or obligations on Seller or Buyer for the purposes of this Section. (c) Buyer Curtailment Requirements. (i) General. Seller shall reduce delivery amounts as directed by the CAISO, Buyer, LDC, or any successor thereof as the Participating TO during any Dispatch Down Period (as defined in the CAISO Tariff). (ii) Order and Limit. Buyer may require Seller to curtail deliveries of Energy from the Plant to the Delivery Point by delivering a Dispatch Notice to Seller, provided that (A) such curtailments shall be limited to a quantity of not more than 2,600 MWh cumulatively in each calendar year; and (B) the Dispatch Notice shall be consistent with the operational characteristics set forth in Exhibit D (“Economic Dispatch Down”). Buyer shall pay Seller, on the date payment would otherwise be due in respect of the month in which any such Economic Dispatch Down occurred, an amount equal to the product of (1) the amount of Energy that Seller could reasonably have delivered to Buyer but for such Economic Dispatch Down and (2) the Price. Seller shall reduce the Project’s Delivered Energy by the amount and for the period set forth in the Dispatch Notice. 23 (iii) Failure to Comply. If Seller fails to comply with a Dispatch Notice that meets the requirements of Economic Dispatch Down, then, for the amount of Output that the Plant delivered in contradiction to the Dispatch Notice, Seller shall pay Buyer the greater of: (A) 200% of the Price for such hours plus any penalties or other charges actually incurred resulting from Seller’s failure to comply with the Dispatch Notice; and (B) the absolute value of the CAISO’s Real- Time Market (as defined in the CAISO Tariff) price for the applicable PNode for such hours plus any penalties or other charges actually incurred resulting from Seller’s failure to comply with the Dispatch Notice. (d) Forecast Fee. The Parties acknowledge that PIRP or its successor program, by means of a contract with a forecasting service (the “Forecasting Service”) develops high quality forecasts for Day-Ahead and/or Hour Ahead scheduling for CAISO operations. Buyer, or Scheduling Coordinator, shall bear forecast fees imposed by CAISO for use of the Forecasting Service, up to $0.10/MWh. If fees exceed this amount, the Parties will negotiate in good faith using the process in Section 4.4(b)(ii). With respect to the Energy to be sold under this Agreement: (i) If requested, Seller agrees to provide the Forecasting Service with sufficient data to support a reasonably accurate and unbiased forecast; and (ii) Buyer, as part of its Scheduling Coordinator services, will use the forecasts developed by the Forecasting Service, which are most applicable to the Facility as the Facility’s “Energy Schedule” for the CAISO Day-Ahead and/or Hour-Ahead markets. ARTICLE V BUYER’S OBLIGATIONS 5.1 Delivery and Transmission Except for Seller’s obligations pursuant to Sections 3.1 and 4.1(h), Buyer shall be solely responsible for paying costs and charges associated with the receipt of Energy, under this Agreement, at the Point of Interconnection and for the transmission and delivery of Energy from the Point of Interconnection to any other point downstream of the Point of Interconnection (including, without limitation, transmission costs and charges, competition transition charges, applicable control area service charges, transmission congestion charges, inadvertent energy flows, any other CAISO charges related to the transmission of 24 such Energy by the CAISO and any charge assessed or collected in the future pursuant to any utility tariff or rate schedule, however defined, for transmission or transmission-related service rendered by or for any transmission-owning or operating entity). Buyer shall be responsible for the scheduling coordinator function. The NCPA, acting on behalf of Buyer, shall be scheduling coordinator for the transmission of Energy from the Plant in accordance with applicable CAISO rules. Buyer’s duties as scheduling coordinator shall be limited to those duties as are specifically required of scheduling coordinators in the CAISO Tariff and the CAISO protocols. Commercial arrangements for such transmission and delivery services will be coordinated and settled by the Scheduling Coordinator directly with the CAISO or other third parties. At the option of Buyer, the Plant may be included within NCPA’s metered sub-system in connection with the scheduling of power over the CAISO grid and related functions; provided that such inclusion shall have no adverse effect on the Plant’s operations or Seller (or any such effect shall be fully mitigated by Buyer). Seller will do all things reasonably needed to allow Buyer to comply with any obligations, and minimize any potential liability, under the CAISO Tariff; provided, that if such actions require any actions beyond the giving of notice provided by Buyer, then Buyer shall reimburse Seller for all reasonably incurred out-of-pocket costs and charges of such actions. If and to the extent that Seller fails to comply with the notice provision in Section 4.1(g) concerning Outages or with its obligations as outlined in the previous sentence, Seller shall be wholly responsible for all imbalances, deviations, or any other CAISO charges or penalties associated with such Outage or CAISO Tariff obligation. Buyer may replace NCPA as Scheduling Coordinator for the Plant. If NCPA ceases to be Scheduling Coordinator for the Plant and Buyer is unable, upon receipt of fourteen (14) days’ notice from Seller, to appoint jointly a replacement Scheduling Coordinator, Seller shall have the right to appoint a replacement Scheduling Coordinator on Buyer’s behalf, and Buyer shall enter into all reasonable and appropriate agreements with such replacement Scheduling Coordinator at its own cost. 5.2 Taxes Buyer shall pay and be fully responsible for any sales, use, gross receipts, utility or other taxes, assessments or fees, if any, incurred or imposed on the sale or transfer of Output from Seller to Buyer under this Agreement. Buyer shall not be responsible for any taxes measured on the net income of Seller or ad valorem taxes paid by Seller that are associated with Seller’s rights and privileges relating to the Site. 5.3 Notification of Transmission Outages Buyer will exercise reasonable efforts to provide Seller with as much advance notice as practicable of any Outage on the LDC System or other transmission or delivery facilities which may adversely affect the delivery of Energy to Buyer. 25 ARTICLE VI FORCE MAJEURE 6.1 Force Majeure Events It is understood that at times unavoidable delays or interruptions in construction, delivery or performance may result from Force Majeure Events. The performance of each Party under this Agreement may be subject to interruptions or reductions due to a Force Majeure Event. Both Parties shall in good faith use such effort as is reasonable under all the circumstances known to that Party affected by the Force Majeure Event at the time to remove or remedy the cause(s) and mitigate the inability to perform. However, the obligation to use such reasonable efforts shall not be interpreted to require resolution of labor disputes by acceding to demands of the opposition when such course is inadvisable in the discretion of the Party having such difficulty. 6.2 Remedial Action Subject to the limitation on extensions of Milestones set forth in Section 4.3(e), a Party shall not be liable to the other Party if the Party is prevented from performing its obligations hereunder due to a Force Majeure Event. The Party rendered unable to fulfill an obligation by reason of a Force Majeure Event shall take all action necessary to remove such inability with all due speed and diligence. The non-performing Party shall be prompt and diligent in attempting to remove the cause of its failure to perform, and nothing herein shall be construed as permitting that Party to continue to fail to perform after said cause has been removed. Notwithstanding the foregoing, the existence of a Force Majeure Event shall not excuse any Party from its obligations to make payment of amounts due hereunder. 6.3 Notice In the event of any delay or nonperformance resulting from a Force Majeure Event, the Party suffering the Force Majeure Event shall, as soon as practicable under the circumstances, notify the other Party, in writing, of the nature, cause, date of commencement thereof and the anticipated extent of any delay or interruption in performance. 26 6.4 Termination Due To Force Majeure Event Subject to Section 4.3(e), if a Party is prevented from performing its material obligations under this Agreement due to a Force Majeure Event for a period of twelve (12) consecutive months or longer, the unaffected Party may terminate this Agreement, without liability of either Party to the other, upon thirty (30) days’ prior written notice at any time during the Force Majeure Event. ARTICLE VII DEFAULT/REMEDIES/TERMINATION 7.1 Events of Default by Buyer (1) The following shall each constitute an “Event of Default” by Buyer, if Buyer fails to cure within the period of time set forth in clause (2) below: (a) Buyer breaches any material obligation (other than one covered by Section 7.1(b) or (c) of this Agreement) and fails to cure such breach within thirty (30) days after written notification of breach by Seller or if the breach cannot be cured within thirty (30) days such longer period as may be necessary to cure such breach as long as Buyer is exercising diligent efforts to cure such default. (b) Buyer fails to make any payment due under this Agreement within thirty (30) days after written notice that such payment is due. (c) The initiation of an involuntary proceeding against Buyer under the bankruptcy or insolvency laws, which involuntary proceeding remains unresolved for sixty (60) consecutive days, or in the event of the initiation by Buyer of a voluntary proceeding under the bankruptcy or insolvency laws. (2) Time for Cure. Nothing described in Section 7.1(1)(a) above shall constitute an Event of Default if Buyer cures the event, failure or circumstance within (30) days after written notification by Seller or if the breach cannot be cured within thirty (30) days, such longer period as may be necessary to cure as long as Buyer is exercising diligent efforts to cure. 7.2 Events of Default by Seller (1) The following shall each constitute an “Event of Default” by the Seller if Seller does not cure within the time set forth in clause (2), below: (a) Seller breaches any material obligation (other than ones covered by Sections 7.2(b), (c), (d), (e) or (f) of this Agreement or for which a remedy is 27 specified) and fails to cure such breach within thirty (30) days after written notification of breach by Buyer or if the breach cannot be cured with thirty (30) days such longer period as may be necessary to cure such breach as long as Seller is exercising diligent efforts to cure such default. (b) Seller fails to make any payment due under this Agreement within thirty (30) days after written notice that such payment is due. (c) The initiation of an involuntary proceeding against Seller under the bankruptcy or insolvency laws, which involuntary proceeding remains unresolved for sixty (60) consecutive days, or in the event of the initiation by Seller of a voluntary proceeding under the bankruptcy or insolvency laws. (d) Seller sells or transfers the Output (or any individual component thereof) or Expansion Plant Output (or any individual component thereof) or the right to the Output (or any individual component thereof) or Expansion Plant Output (or any individual component thereof), to the extent that such Expansion Plant Output is purchased by Buyer, to any Person other than Buyer. (e) Seller fails to comply with the terms of Buyer’s right of first refusal as described in Sections 2.5 and 4.3 of this Agreement. (f) Subject to Section 7.4(c), Seller fails, for any reason other than an unauthorized act or omission by Buyer, to achieve the Commercial Operation Date by the applicable Milestone deadline as set forth in Section 4.3(b)(v), as such deadline may be extended in accordance with Section 4.3(e). (2) Time for Cure. Nothing described in Section 7.2(1)(a) above shall constitute an Event of Default if Seller cures the event, failure or circumstance within (30) days after written notification by Buyer or if the breach cannot be cured within thirty (30) days such longer period as may be necessary to cure as long as Seller is exercising diligent efforts to cure. 7.3 Termination for Default (a) In the event the defaulting Party fails to cure the Event of Default within the period for curative action under Sections 7.1 or 7.2, as applicable, the non- defaulting Party may terminate the Agreement by notifying the defaulting Party in writing of (i) the decision to terminate and (ii) the effective date of the termination. (b) Upon termination of the Agreement by Buyer pursuant to Section 7.3(a) due to an Event of Default by Seller, (i) Buyer shall have no future or further obligation to purchase the Output of the Plant or to make any payment whatsoever under this Agreement, except for payments for obligations arising or accruing prior to the effective date of termination, and (ii) Seller shall, if Buyer has paid for interconnection capital costs arising under the Interconnection 28 Agreement pursuant to Section 4.1(h), either (A) reimburse Buyer pro rata for any such costs paid for by Buyer (assuming twenty-five (25) years of Plant operations) or (B) transfer to Buyer title to any such interconnection assets paid for by Buyer. To the extent Buyer has paid CAISO or PG&E for Full Capacity Deliverability Status-related interconnection costs and those costs are reimbursable by CAISO or PG&E, the reimbursements from CAISO or PG&E must be forwarded to Buyer. Upon termination of the Agreement by Seller pursuant to Section 7.3(a) due to an Event of Default by Buyer, Seller shall not have any additional obligation to deliver the Output of the Plant to Buyer or to satisfy any other obligation of this Agreement, except for payments or other obligations arising or accruing prior to the effective date of termination. After the effective date of termination, the Agreement shall not be construed to provide any residual value to either Party or any successor or any other Person, for rights to, use of or benefits from the Plant to any Person; provided, however, Buyer shall have a right of first refusal to purchase the Output of any electricity generating facility owned or controlled by Seller or its affiliate(s) located at the Site. Such right of first refusal shall conform to the provisions of Section 2.5. The provisions of Section 7.3 shall survive termination of this Agreement under Section 7.3 for a period of five (5) years from such termination. 7.4 Damages (a) For all claims, causes of action and damages the Parties shall be entitled to the recovery of actual damages allowed by law unless otherwise limited by the Agreement. Neither the enumeration of Events of Default in Sections 7.1 and 7.2, nor the termination of this Agreement by a non-defaulting Party pursuant to Section 7.3(a), shall limit the right of a non-defaulting Party to rights and remedies available at law, including, without limitation, claims for breach of contract or failure to perform by the other Party and for direct damages incurred by the non-defaulting Party as a result of the termination of this Agreement. (b) Except as otherwise specifically and expressly provided in the Agreement, neither Party shall be liable to the other Party under this Agreement for any indirect, special or consequential damages, including, without limitation, loss of use, loss of revenues, loss of profit, interest charges, cost of capital or claims of its customers or members to which service is made. Except as set forth in Article IX and except to the extent Seller violates its undertaking not to provide or sell rights to part or all of the Output to a party other than Buyer, Seller shall not be liable to Buyer for failure to provide any specific amount of Output hereunder. (c) In the event that Seller fails to meet the Commercial Operation Date by the applicable Milestone deadline, Seller shall pay Buyer liquidated damages as set forth in Article IX. (d) The Parties agree that the liquidated damages set forth in Sections Article IX are reasonable and represent a fair and genuine estimate of the 29 damages that Buyer will suffer upon the failure of Seller to achieve Commercial Operation by the agreed upon date(s). The Parties acknowledge that it would be impracticable or extremely difficult to fix Buyer’s actual damages, and therefore they have deemed the liquidated damages set forth above to be the amount of damage sustained by Buyer upon the occurrence of such a failure. The Parties further agree that payment of such amount shall be as and for liquidated damages and not as a penalty, and is therefore not subject to avoidance under California Civil Code section 1671. 7.5 Indemnification Each Party agrees to defend, indemnify, and hold the other Party, and its respective elected and appointed officials, officers, directors, employees and agents, harmless from and against all claims, demands, losses, liabilities, and expenses (including reasonable attorneys' fees) (collectively, "Damages") for personal injury or death to persons and damage to each other's physical property or facilities or the property of any other Person to the extent arising out of, resulting from, or caused by the negligent or intentional and wrongful acts, errors, or omissions of the indemnifying Party. This indemnification obligation shall apply notwithstanding any negligent or intentional acts, errors or omissions of the indemnified Party, but the indemnifying Party's liability to pay Damages to the indemnified Party shall be reduced in proportion to the percentage by which the indemnified Party’s negligent or intentional acts, errors or omissions caused the Damages. Neither Party shall be indemnified for its Damages resulting from its sole negligence or willful misconduct. This indemnification obligation shall be subject to the limitation on damages set forth in Section 7.4(b) hereof. These indemnity provisions shall not be construed to relieve any insurer of its obligation to pay claims consistent with the provisions of a valid insurance policy. 7.6 Buyer’s Right to Operate (a) If Seller (i) fails to maintain Seller’s Two Year Minimum Production Threshold or (ii) fails to generate Energy for sixty (60) consecutive days, then Buyer or its designee may, but shall not be obligated to, assume operational control of the Plant from Seller; provided that Buyer shall not be permitted to take control so long as Seller or any of Seller’s Lenders are using commercially reasonable efforts to remedy the failures described in (i) or (ii) above. Buyer, its officers, employees, agents, contractors and designees shall have the unrestricted right to enter the Plant to the extent necessary to operate the Plant. Upon the exercise of this right, Buyer or its designee shall at all times operate the Plant, using Prudent Utility Practice, and shall comply, to the extent commercially practicable, with the terms of this Agreement. Notwithstanding the foregoing, Seller shall not be excused from any obligation or remedy available to Buyer as a result of Buyer’s operation of, or election not to operate, the Plant. Buyer shall pay Seller the applicable rate for Output provided hereunder, less any costs incurred by Buyer to operate the Plant. 30 Buyer shall indemnify and hold Seller harmless from any liability to third parties arising out of Buyer’s failure to operate the Plant using Prudent Utility Practice. Upon Buyer’s satisfaction that Seller has the ability to operate the Plant in accordance with this Agreement, Seller shall resume operational control. (b) Should Seller’s Lender(s) refuse to finance the Plant, or materially condition such financing, solely as a result of this Section 7.6, and Seller gives Buyer reasonable prior written notice of such refusal to finance, Buyer shall have the following options: (1) renegotiate this Section 7.6 with Seller and Lender(s) in a manner mutually acceptable; (2) arrange for financing for the Plant under materially equivalent terms and conditions as the Lender(s) were prepared to provide but for this Section 7.6; (3) delete this Section 7.6 in its entirety (which deletion will not require Seller’s additional consent); or (4) terminate this Agreement without liability of one Party to the other. If Buyer fails to elect and complete one of these options within sixty (60) days of written notice from Seller, Seller shall have the right to terminate this Agreement without liability of one party to the other. To the extent that Seller fails to accomplish financing pursuant to the Milestone set forth at Section 4.3(b)(iii), and such delays are attributable to the discussion and negotiation with Lender(s) of this Section 7.6, then Seller shall be entitled to such reasonable time to arrange for the financing of the Plant upon final resolution of matters related to this Section 7.6. ARTICLE VIII REPRESENTATIONS AND WARRANTIES 8.1 Seller’s Representations and Warranties Seller represents and warrants to Buyer that as of the Effective Date: (i) Seller is duly organized and validly existing as a limited liability company under the laws of Delaware, and has the lawful power to engage in the business it presently conducts and contemplates conducting in this Agreement, and Seller is duly qualified in California and each jurisdiction wherein the nature of the business transacted by it makes such qualification necessary; (ii) Seller has the legal power and authority to make and carry out this Agreement and to perform its obligations hereunder; all such actions have been duly authorized by all necessary proceedings on its part. As of the Effective Date, (a) the Plant shall on the Commercial Operation Date be a "qualifying small power production facility" as that term is defined in 31 Section 3(17)(C) of the Federal Power Act, and will possess all of the exemptions from regulation provided in 18 CFR Sections 292.601(c) and 292.602; and (b) no approval (except with respect to "qualifying small power production facility" status) with respect to this Agreement is required from FERC. In the event that the Plant is not a "qualifying small power production facility" on the Commercial Operation Date or any date thereafter, Seller shall make appropriate filings under the Federal Power Act within sixty (60) days so as to comply with applicable law, subject at all times to the provisions of Section 10.15 of this Agreement; (iii) The execution, delivery and performance of this Agreement by Seller will not conflict with its governing documents, any applicable laws, or any covenant, agreement, understanding, decree or order to which Seller is a party or by which it is bound or affected; (iv) This Agreement has been duly and validly executed and delivered by Seller and, as of the Effective Date, constitutes a legal, valid and binding obligation of Seller, enforceable in accordance with its terms against Seller, except to the extent that its enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the rights of creditors generally or by general principles of equity; and (v) Except as identified herein, there are no actions, suits, proceedings or investigations pending or, to the knowledge of Seller, threatened, in writing, against Seller, at law or in equity, before any Governmental Authority, which individually or in the aggregate are reasonably likely to have a materially adverse effect on the business, properties or assets or the condition, financial or otherwise, of Seller, or to result in any impairment of Seller’s ability to perform its obligations under this Agreement. Seller is an indirect subsidiary of Changzhou Trina Solar Energy Co., Ltd., a China-based manufacturer of solar panels and member of the ‘Trina Solar’ family of companies. The operations of the ‘Trina Solar’ family of companies have been and will continue to be impacted by the antidumping duty case (ITA case number A-570-979 & ITC case number 731-TA-1190) and countervailing duty case (ITA case number C-570-979 & ITC case number 701-TA-481) filed at the International Trade Commission and Department of Commerce alleging unfair trade practices with regards to Chinese origin solar cells and solar modules, including any other regulatory action that imposes import duty, taxes or fees in addition to the current levels for the importation of Chinese origin solar cells or solar modules as defined by the International Trade Administration or U.S. Customs and Border Protection. On October 11, 2012, Solyndra LLC filed a Complaint in the Northern District of California (Case No. C-12-5272) asserting antitrust and unfair practices claims against Trina Solar Limited, Trina Solar (U.S.), Inc. and other defendants. 32 8.2 Buyer Representations and Warranties Buyer represents and warrants to Seller that as of the Effective Date: (i) Buyer is a municipal corporation, duly organized and validly existing, and has the lawful power to engage in the business it presently conducts and contemplates conducting in this Agreement; (ii) Buyer has the legal power and authority to make and carry out this Agreement and to perform its obligations hereunder and all such actions have been duly authorized by all necessary proceedings on its part; (iii) The execution, delivery and performance of this Agreement by Buyer will not conflict with its governing documents, any applicable laws or any covenant, agreement, understanding, decree or order to which Buyer is a party or by which it is bound or affected; (iv) This Agreement has been duly and validly executed and delivered by Buyer and, as of the Effective Date, constitutes a legal, valid and binding obligation of Buyer, enforceable in accordance with its terms against Buyer, except to the extent that its enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the rights of creditors generally or by general principles of equity; and (v) There are no actions, suits, proceedings or investigations pending or, to the knowledge of Buyer, threatened, in writing, against Buyer, at law or in equity, before any Governmental Authority, which individually or in the aggregate are reasonably likely to have a materially adverse effect on the business, properties or assets or the condition, financial or otherwise, of Buyer, or to result in any impairment of Buyer’s ability to perform its obligations under this Agreement. ARTICLE IX DEVELOPMENT AND PERFORMANCE ASSURANCE 9.1 Forms of Assurance Seller shall maintain the Development Assurance and the Performance Assurance as follows: (a) The Development Assurance shall be deposited by electronic transfer to Buyer’s designated account with Wells Fargo Bank, N.A. or posted in the form of a letter of credit or escrow account (in substantially the form of agreements set forth on Exhibit G-1 and G-2 hereto) with Wells 33 Fargo Bank, N.A. or such other banking institution reasonably acceptable to Buyer, as security for the timely development of the Plant. The transfer or posting shall occur within thirty (30) days after the Effective Date, and the Development Assurance will be maintained to and including the Commercial Operation Date. (b) The Performance Assurance shall be deposited by electronic transfer to Buyer’s designated account with Wells Fargo Bank, N.A. or otherwise posted in the form of a letter of credit or escrow account (in substantially the form of agreements set forth on Exhibit G-1 and G-2 hereto) with Wells Fargo Bank, N.A. or other banking institution reasonably acceptable to Buyer, as security for the performance of the Seller to meet its obligations during the period commencing one day after the Commercial Operation Date and ending at the expiration of the Term. The Performance Assurance shall be deposited or posted within thirty (30) days of the Commercial Operation Date and shall be maintained until the end of the Term. 9.2 Managing Assurances Within ten (10) days of the occurrence of the Commercial Operation Date Buyer shall notify Seller’s banking institution that the Development Assurance (which shall be the full amount of the Development Assurance, plus interest under the applicable account, less any liquidated damages incurred under this Agreement) shall be returned to Seller. Buyer may either make, or request Seller’s banking institution to make, withdrawals from the Development Assurance and Performance Assurances in accordance with this Agreement and, if applicable, the terms of the letter of credit or escrow agreement. Seller shall provide additional funds (or availability thereof) in order to maintain such account at $400,000.00 at all times during the existence of the Development Assurance and Performance Assurance, as applicable. Such additional deposits or availability shall occur within fifteen (15) days of any withdrawals from such accounts causing the account balance to fall below $400,000.00. Within thirty (30) days after the expiration or earlier termination of this Agreement, Buyer will return to Seller any undisputed amount of the Performance Assurance. 9.3 Development Liquidated Damages. In the event that Seller fails to meet the Commercial Operation Date by the applicable Milestone deadline, as set forth in Section 4.3(b)(v), as such deadline may be extended in accordance with Section 4.3(e), Seller shall be liable for liquidated damages in the amount, per month, equal to the Monthly LD Amount for each full month (with parts of a month pro rated) that Seller is late in satisfying the Milestone. So long as Seller is paying such liquidated damages on a monthly basis after failing to meet the relevant Milestone deadline (as such Milestone may have been extended per Section 4.3(e)), Buyer shall not be permitted to 34 terminate this Agreement for up to twelve (12) months. If after twelve (12) months following the relevant Milestone deadline (as such Milestone may have been extended per Section 4.3(e)) Seller has failed to achieve Commercial Operation, or if for any reason Seller fails to pay, or discontinues paying, the monthly liquidated damages provided for above, Buyer may terminate this Agreement by written notice to Seller. This twelve (12) month period shall not be further extended as a result of a Force Majeure Event. Within thirty (30) days of the receipt of the termination notice, Seller shall pay Buyer a lump sum equal to the LD Amount minus any Monthly LD Amounts, if any, previously paid to Buyer. No other damages or remedy shall be available to Buyer on the basis of such failure to meet the Milestone set forth in Section 4.3(b)(v) or termination of this Agreement based on Seller’s failure to achieve Commercial Operation within twelve (12) months of that Milestone deadline. 9.4 Performance Liquidated Damages Seller shall pay or credit Buyer for any shortfalls of Output volume below the Two Year Minimum Production Threshold in accordance with this Section 9.4. If Seller fails to provide Output volume equal to or exceeding the Two Year Minimum Production Threshold, then Seller may cure its failure to meet its Two Year Minimum Production Threshold during any Calculation Period by paying or crediting Buyer an amount equal to (i) the product of the shortfall amount of Output below the Two Year Minimum Production Threshold per Exhibit H in Megawatt-hours and (ii) the Price in this Agreement multiplied by a factor of 1.2. Except as otherwise expressly stated in Sections 6.4 and 7.6, the foregoing shall be Buyer’s sole remedy for any shortfall of or failure to produce the Output or failure to maintain any specified Two Year Minimum Production Threshold.] ARTICLE X MISCELLANEOUS 10.1 Assignment The rights and obligations of this Agreement may not be assigned by either Party without the prior written consent of the other Party, which consent shall not be unreasonably withheld or delayed. Notwithstanding the foregoing, Seller may use subcontractors without Buyer’s consent to comply with the terms of this Agreement, provided that notwithstanding the use of those subcontractors, Seller shall remain responsible for all of its obligations under this Agreement. Buyer may furthermore use any agent it so designates for scheduling and billing purposes, so long as Buyer remains responsible for all of its obligations under this Agreement. Any purported assignment of this Agreement in the absence of the required consent, except as provided in 10.2, shall be void. 35 10.2 Financing Notwithstanding Section 10.1, Seller may, without the consent of Buyer, collaterally assign its rights under this Agreement to Lender(s) as collateral security in connection with any financing of the purchase or operation of the Plant, provided that such Lender(s) or its designee agree(s), in writing, that upon assuming any of Seller’s prospective rights under this Agreement, such Lender(s) also shall be bound by all of Seller’s prospective obligations under this Agreement. Notwithstanding any such assignment, Seller’s obligations under this Agreement shall continue in their entirety in full force and effect and Seller shall remain fully liable for all of its obligations under or relating to this Agreement. Each such collateral assignment and any purchaser or transferee shall be subject to Buyer’s rights and defenses hereunder and under applicable law. Seller shall provide prior written notice to Buyer at least ten (10) business days prior to any such collateral assignment. In order to facilitate the obtaining of financing of the Plant, Buyer shall execute, upon request, a commercially reasonable consent to assignment, with respect to a collateral assignment hereof to Lenders in connection with the documentation of the financing or refinancing for the Plant. Any assignment in violation of this Agreement shall be void, ab initio. Buyer shall consider in good faith any amendments to this Agreement proposed by Seller which relate to financing of the Plant or other amendments requested by Seller in order to receive or maintain financing from Lenders. 10.3 Notices Any notice, demand, request, or communication required or authorized by this Agreement shall be delivered either by hand, facsimile, overnight courier or mailed by certified mail, return receipt requested with postage prepaid, to: City of Palo Alto 250 Hamilton Avenue, 8th Floor Palo Alto, CA 94301 Attention: Senior Assistant City Attorney / Utilities Telecopier: (650) 329-2646 on behalf of Buyer; with a copy to: City of Palo Alto 250 Hamilton Avenue, 3rd Floor Palo Alto, CA 94301 Attention: Director of Utilities 36 Telecopier: (650) 329-2946 and to: Northern California Power Agency 651 Commerce Drive Roseville, CA 95678-6411 Attention: Power Contracts Administrator Telecopier: (916) 783-7693 and to: Brannon Solar, LLC 100 Century Center Court, Suite 340 San Jose, CA 95112 Attention: Randy Wu, Director of Project Development Email: randy.wu@trinasolar.com Telephone: (408) 459-6699 with a copy to: Brannon Solar, LLC 100 Century Center Court, Suite 340 San Jose, CA 95112 Attention: Victor Contract, US Legal Director Email: victor.contract@trinasolar.com Telephone: (408) 459-6703 on behalf of Seller. The designation and titles of the person to be notified or the address of such person may be changed at any time by written notice delivered in the manner set forth in this Section 10.3. Any such notice, demand, request, or communication shall be deemed received (i) if delivered by hand by a Party or sent by facsimile or email or (ii) upon receipt by the receiving Party if sent by courier or U.S. mail. 10.4 Captions All titles, subject headings, section titles and similar items are provided for the purpose of reference and convenience and are not intended to be inclusive, definitive or to affect the meaning of the contents or scope of the Agreement. 37 10.5 No Third Party Beneficiary No provision of the Agreement is intended to, nor shall it in any way, inure to the benefit of any customer, property owner or any other third party, so as to constitute any such Person a third party beneficiary under the Agreement, or of any one or more of the terms hereof, or otherwise give rise to any cause of action in any Person not a Party hereto. 10.6 No Dedication No undertaking by one Party to the other under any provision of the Agreement shall constitute the dedication of that Party's system or any portion thereof to the other Party or to the public or affect Seller as an independent entity and not a public utility. 10.7 Entire Agreement; Integration This Agreement, together with all exhibits and Appendices attached hereto, constitutes the entire agreement between the Parties and supersedes any and all prior oral or written understandings. No amendment, addition to or modification of any provision hereof shall be binding upon the Parties, and neither Party shall be deemed to have waived any provision or any remedy available to it, unless such amendment, addition, modification or waiver is made, in writing, and signed by a duly authorized officer or representative of the Parties. 10.8 Applicable Law The Agreement is made in the State of California and shall be interpreted and governed by the laws of the State of California and/or the laws of the United States, as applicable. 10.9 Venue The Parties hereby submit to the exclusive jurisdiction of the federal courts for the Northern District of the State of California; provided, however, that if such federal courts sitting in the Northern District of the State of California refuse jurisdiction, the Parties agree to the exclusive jurisdiction of the state courts sitting in the County of Santa Clara, State of California. 10.10 Nature of Relationship The duties, obligations and liabilities of the Parties are intended to be several and not joint or collective. The Agreement shall not be interpreted or construed to create an association, joint venture, fiduciary relationship or partnership between Seller and Buyer or to impose any partnership obligation or liability or any trust or 38 agency obligation or relationship upon either Party. Seller and Buyer shall not have any right, power or authority to enter into any agreement or undertaking for, or act on behalf of, or act as or be an agent or representative of or otherwise bind the other Party. 10.11 Good Faith and Fair Dealing; Reasonableness The Parties agree to act reasonably and in accordance with the principles of good faith and fair dealing in the performance of this Agreement. Unless expressly provided otherwise in this Agreement, (i) wherever the Agreement requires the consent, approval or similar action by a Party, such consent, approval or similar action shall not be unreasonably withheld or delayed, and (ii) wherever the Agreement gives a Party a right to determine, require, specify or take similar action with respect to matters, such determination, requirement, specification or similar action shall be reasonable. 10.12 Severability Should any provision of the Agreement be or become void, illegal or unenforceable, the validity or enforceability of the other provisions of the Agreement shall not be affected and shall continue in full force and effect. The Parties will, however, use their best endeavors to agree on the replacement of the void, illegal, or unenforceable provision(s) with legally acceptable clauses which correspond as closely as possible to the sense and purpose of the affected provision. 10.13 Confidentiality All information disclosed by Seller, including, without limitation, all engineering documents, designs, specifications and financial information, shall be kept confidential to the extent consistent with applicable laws, and shall not be disclosed to any third party except as provided in this Section 10.13 or as permitted or authorized by applicable laws. Buyer acknowledges Seller’s request to hold all information regarding this Agreement confidential. Buyer shall disclose such information to third parties only to the extent required by California law (including, without limitation, the California Constitution, the California Public Records Act and the Brown Act). Notwithstanding the foregoing, either Party may disclose this Agreement to Pacific Valley, LLC or its representatives, Trina Solar US Development LLC or its representatives (or any wholly-owned affiliate thereof under the common control of Trina Solar Limited), the Northern California Power Agency or its representatives, or to any Lender(s) or potential Lender(s) or their representatives; provided that prior to such disclosure, the recipient shall agree, in writing, to keep the material confidential under terms no less stringent than as set forth in this Section 10.13. Buyer also shall be permitted to disclose this Agreement and related information to the City Council of Palo Alto for the express purpose of obtaining approval to execute this Agreement; provided that 39 in connection with such disclosure Buyer shall only disclose such information to the extent required by California law (including, without limitation, the California Constitution, the California Public Records Act and the Brown Act). Each Party shall be bound by its obligations of confidentiality hereunder for a period of two (2) years from the expiration or earlier termination of this Agreement. Notwithstanding anything to the contrary in this Section 10.13, nothing shall restrict any Party from using or disclosing confidential information in any manner it chooses which (i) is or becomes generally available to the public other than as a result of a disclosure directly or indirectly by the disclosing Party or its representative; (ii) was within the using or disclosing Party’s possession prior to it being furnished hereunder, provided that such information is not subject to another confidentiality agreement with, or other contractual, legal or fiduciary obligation of confidentiality to, any other party with respect to such information; (iii) is rightfully obtained by a Party from third parties authorized to make such disclosure without restriction; or (iv) is legally required to be disclosed by judicial or other governmental action as determined by such Party’s attorney acting in good faith (including, but not limited to, the California Constitution, the California Public Records Act and the Brown Act), provided that prompt notice of the judicial or other governmental action shall have been given to the non-disclosing Party and that the non-disclosing Party shall, at its sole cost and expense, be afforded the opportunity (consistent with the legal obligations of the disclosing Party) to exhaust all reasonable legal remedies to maintain the confidential information in confidence. 10.14 Cooperation The Parties agree to reasonably cooperate with each other in the implementation and performance of the Agreement. Such duty to cooperate shall not require either Party to act in a manner inconsistent with its rights under the Agreement. 10.15 Mobile Sierra Doctrine The Parties intend that the standard of review for changes to any rate, charge, classification, term or condition of this Agreement at FERC shall be the most stringent standard permissible under applicable law. As to the Parties, it is understood that the standard is the “Mobile-Sierra public interest” standard of review, as stated by the United States Supreme Court in Morgan Stanley Capital Group Inc. v. Public Utility District No. 1 of Snohomish County, 554 U.S. 1164 (2008). As to all other persons it is intended that the same standard, as may be made applicable to other than the Parties, apply, as stated by FERC in Modesto Irrigation District, Docket No. EL03-159-004, 125 FERC ¶ 61,174, para. 15 (Order Denying Rehearing, November 14, 2008). 40 10.16 Counterparts This Agreement may be executed in two or more counterparts and by different Parties on separate counterparts, all of which shall be considered one and the same agreement and each of, which shall be deemed an original. [signature page follows] 41 IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed as of the day and year first above written. SELLER BRANNON SOLAR, LLC By: Name: Randolph Wu Title: General Manager Date: By: Name: Victor Contract Title: US Legal Director Date: BUYER CITY OF PALO ALTO APPROVAL AS TO FORM: By: Name: Grant Kolling Title: Senior Assistant City Attorney Date: CITY OF PALO ALTO APPROVAL BY ADMINISTRATIVE SERVICES DIRECTOR By: Name: Lalo Perez Title: Administrative Services Director Date: CITY OF PALO ALTO APPROVAL BY UTILITIES DIRECTOR By: Name: Valerie Fong Title: Utilities Director Date: CITY OF PALO ALTO APPROVAL BY CITY MANAGER By: Name: James Keene Title: City Manager Date: CITY OF PALO ALTO APPROVAL BY MAYOR: By: Name: Title: Mayor Date: 42 EXHIBIT A-1 PLANT SITE DESCRIPTION The 156.3 acre site is located in Fresno County, Firebaugh, CA 93622. The site is bounded by private land with Davidson Avenue along the eastern boundary and West Bullard Avenue along the northern boundary. [SITE MAP AND LEGAL DESCRIPTION ATTACHED] Exhibit A-1 (cont’d) LEGAL DESCRIPTION Real property in the unincorporated area of the County of Fresno, State of California, described as follows: THE NORTHWEST QUARTER OF SECTION 8, TOWNSHIP 13 SOUTH, RANGE 13 EAST, MOUNT DIABLO BASE AND MERIDIAN, ACCORDING TO THE OFFICIAL PLAT THEREOF; EXCEPTING THEREFROM THE SOUTHERLY 50 FEET OF THE WESTERLY 55 FEET THEREOF. ALSO EXCEPTING THEREFROM ALL MINERALS, OIL, GAS AND OTHER HYDROCARBON SUBSTANCES LYING BELOW A DEPTH OF 500 FEET FROM THE SURFACE OF THE LAND WITHOUT RIGHT OF SURFACE ENTRY TO THE LAND AS RESERVED BY WESTLANDS WATER DISTRICT, A CALIFORNIA WATER DISTRICT IN THE GRANT DEED RECORDED (TO BE DETERMINED) OF OFFICIAL RECORDS. APN: 011-050-09ST 43 EXHIBIT A-2 SITE DRAWINGS Seller shall provide to Buyer final Site Drawings prior to the Commercial Operation Date. 44 EXHIBIT B Environmental Attribute Transfer from Seller to Buyer Participation in the Western Renewable Energy Generation Information System Western Renewable Energy Generation Information System. Seller shall, at its sole expense take all actions and execute all documents or instruments necessary to ensure that all WREGIS Certificates associated with all Renewable Energy Credits corresponding to all Delivered Energy are issued and tracked for purposes of satisfying the requirements of the California Renewables Portfolio Standard and transferred in a timely manner to Buyer for Buyer’s sole benefit. Seller shall comply with all Laws, including, without limitation, the WREGIS Operating Rules, regarding the certification and transfer of such WREGIS Certificates to Buyer and Buyer shall be given sole title to all such WREGIS Certificates. Seller shall be deemed to have satisfied the warranty in EXHIBIT B (viii); provided that Seller fulfills its obligations under EXHIBIT B (i) through (vii) below. In addition: (i) Prior to the Initial Energy Delivery Date, Seller shall register the Project with WREGIS and establish an account with WREGIS (“Seller’s WREGIS Account”), which Seller shall maintain until the end of the Delivery Term. Seller shall transfer the WREGIS Certificates using “Forward Certificate Transfers” (as described in the WREGIS Operating Rules) from Seller’s WREGIS Account to the WREGIS account(s) of Buyer or the account(s) of a designee that Buyer identifies by Notice to Seller (“Buyer’s WREGIS Account”). Seller shall be responsible for all expenses associated with registering the Project with WREGIS, establishing and maintaining Seller’s WREGIS Account, paying WREGIS Certificate issuance and transfer fees, and transferring WREGIS Certificates from Seller’s WREGIS Account to Buyer’s WREGIS Account. (ii) Seller shall cause Forward Certificate Transfers to occur on a monthly basis in accordance with the certification procedure established by the WREGIS Operating Rules. Since WREGIS Certificates will only be created for whole MWh amounts of Energy generated, any fractional MWh amounts (i.e., kWh) will be carried forward until sufficient generation is accumulated for the creation of a WREGIS Certificate. (iii) Seller shall, at its sole expense, ensure that the WREGIS Certificates for a given calendar month correspond with the Delivered Energy for such calendar month as evidenced by the Project’s metered data. (iv) Due to the ninety (90) day delay in the creation of WREGIS Certificates relative to the timing of invoice payment under Article 3, Buyer shall make an invoice payment for a given month in accordance Article 3 before the WREGIS Certificates for such month are formally transferred to Buyer in accordance with the WREGIS Operating Rules and this EXHIBIT B. Notwithstanding this delay, Buyer shall have all right and title to all such WREGIS Certificates upon payment to Seller in accordance with Article 3. 45 (v) A “WREGIS Certificate Deficit” means any deficit or shortfall in WREGIS Certificates delivered to Buyer for a calendar month as compared to the Delivered Energy for the same calendar month (“Deficient Month”). If any WREGIS Certificate Deficit is caused, or the result of any action or inaction, by Seller, then the amount of Delivered Energy in the Deficient Month shall be reduced by the amount of the WREGIS Certificate Deficit for the purposes of calculating Buyer’s payment(s) to Seller under Article 3 and the Guaranteed Energy Production for the applicable Performance Measurement Period. Any amount owed by Seller to Buyer because of a WREGIS Certificate Deficit shall be made as an adjustment to Seller’s next monthly invoice to Buyer in accordance with Article 3, and Buyer shall net such amount against Buyer’s subsequent payment(s) to Seller pursuant to Article 3. (vi) Without limiting Seller’s obligations under this EXHIBIT B, if a WREGIS Certificate Deficit is caused solely by an error or omission of WREGIS, the Parties shall cooperate in good faith to cause WREGIS to correct its error or omission. (vii) If WREGIS changes the WREGIS Operating Rules after the Execution Date or applies the WREGIS Operating Rules in a manner inconsistent with this EXHIBIT B after the Execution Date, the Parties promptly shall modify this EXHIBIT B as reasonably required to cause and enable Seller to transfer to Buyer’s WREGIS Account a quantity of WREGIS Certificates for each given calendar month that corresponds to the Delivered Energy in the same calendar month. (viii) Seller warrants that all necessary steps to allow the renewable energy credits transferred to Buyer to be tracked in the Western Renewable Energy Generation Information System will be taken prior to the first delivery under the contract. 46 EXHIBIT C INSURANCE COVERAGES At its own expense, Seller shall secure and maintain during the Term the following insurance with the coverage amounts indicated for occurrences during and arising out of Seller’s performance of this Agreement. Such insurance shall be placed with responsible and reputable insurance companies in compliance with Requirements of Law applicable to Seller. 1. Workers’ Compensation/Employer’s Liability. Seller shall maintain Workers’ Compensation Insurance and Employer’s Liability Insurance which comply with Requirements of Law applicable to Seller. 2. Automobile Liability. Seller shall maintain Automobile Liability Insurance in compliance with Requirements of Law applicable to Seller, including coverage for owned, non-owned and hired automobiles for both bodily injury (including death) and property damage, including automobile liability contractual endorsement and uninsured/underinsured motorist protection endorsements. 3. Third Party Liability. Seller shall maintain third party liability insurance in compliance with Requirements of Law applicable to Seller on a project-specific basis covering against legal responsibility to others as a result of bodily injury, property damage and personal injury arising from the operation and maintenance of the Plant. Such policy shall be written with a limit of liability not less than $10,000,000 and a deductible not to exceed $10,000. Such liability may be in any combination of primary and excess/umbrella. Coverage shall include, but not be limited to, premises/operations, explosion, collapse, underground hazards, broad form property damage and personal injury liability. Such coverage shall not contain exclusions for punitive or exemplary damages. 4. Property Insurance. Seller shall maintain third party property insurance on a project-specific basis covering cost of repairing Plant and or Interconnection equipment to operational condition. Such policy shall be written with coverage sufficient to replace and rebuild the Plant. Coverage shall include, but not be limited to, fire, storm damage, equipment failure, damage to equipment precluding operation under prudent utility practice, premises/operations, explosion, collapse, underground hazards, broad form property damage. (you need to run this by Sandra Blanch) 47 EXHIBIT D SCHEDULING PROTOCOLS [Attached] 48 EXHIBIT E PERFORMANCE TEST The Seller shall coordinate and schedule with Buyer a Performance Test after completion of all equipment startup and commissioning activities. This performance test may be performed before completing punch list items. Buyer shall be permitted to witness the Performance Test, including access to and copies of control room logs, control system display screens, and instrumentation data for a reasonable period of time before, during and after the Performance Test, and may also concurrently conduct a site inspection of the Plant and associated facilities, systems and equipment. Seller shall supply a written copy of the Performance Test results to Buyer within five (5) business days following the conclusion of the test. The Performance Test shall continue for one hundred twenty (120) consecutive hours (the “Test Period”) to demonstrate the following: 1) Net Plant Output: The power output for each inverter shall be recorded for the Test Period to verify the net initial capacities. This Performance Test shall be performed for all units simultaneously and will be considered successful if the average net output for the Test Period is equal to at least eighty percent (80%) of the estimated production volume designated in Exhibit H of this Agreement, provided that such production volume shall be annualized and adjusted upwards or downwards for time of year factor as agreed upon by the parties prior to such Test Period. All power measurements shall be based on a power factor of 0.90. 2) Compliance: The Performance Test shall also demonstrate the ability of the Plant to comply with all material safety, system reliability, environmental, and other requirements of its permits, this Agreement, and any interconnection agreements. 49 EXHIBIT F SELLER’S SAMPLE QUARTERLY FINANCIAL STATEMENT Balance Sheets December 31, _____ ASSETS Current assets: Cash and cash equivalents Restricted cash Accounts receivable Prepaid and other current assets Total current assets Other assets: Project assets, net Due from member Debit issuance costs, net Total other assets LIABILITY AND MEMBER’S EQUITY Current liabilities: Current portion of long-term debt Accounts payable Accrued expenses Total current liabilities Long-term liabilities: Long-term debt, less current portion Deferred tax liabilities Total long-term liabilities Member’s equity 50 Statements of Operations Years Ended December 31, _____ Revenues: Electricity Sales Costs of revenue: Operation and maintenance Depreciation of project assets Gross profit (loss) Operating expenses: Selling, general and administrative Operating income (loss) Interest and other financing costs Income (loss) before tax benefit (provision) Income tax benefit (provision) Net income (loss) 51 Statements of Cash Flows Years Ended December 31, ______ Cash flows from operating activities: Net income (loss) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization Amortization of deferred issuance costs Deferred taxes Change in assets and liabilities: (Increase) decrease in: Accounts receivable Prepaid expenses Accounts payable Due to (from) member Net cash provided by operating activities Cash flows from investing activities: Accounts payable relating to construction activity Accrued expenses relating to construction activity Purchase of project assets Net cash used in investing activities Cash flows from financing activities: Increase in restricted cash Capital contributions Distributions to member Proceeds from debt issuance Debt issuance costs Net cash provided by financing activities Net increase in cash and cash equivalents Cash and cash equivalents, beginning of year Cash and cash equivalents, end of year Supplemental disclosure of cash flow information: Cash paid during the year for: Interest Income taxes Supplemental disclosure of non-cash transactions: Accrued purchases of project assets 52 Exhibit G-1 Form of Letter of Credit ProFormaProForma Each page of this document is an integral part of this Irrevocable Standby Letter of Credit Number IS0014972U Page 1 of 5 This sample wording is presented without any responsibility on our part. This draft is provided to you as a suggestion only at your request. Please note that the draft remains unissued and is not an enforceable instrument. Wording Reviewed and Approved: By:Applicant Signature This form is an integral part of the application and agreement for the issuance of your Standby Letter of Credit. The Letter of Credit cannot be issued until this draft is returned to us with the Applicant's Signature above. Irrevocable Standby Letter Of Credit Number :IS0014972U Issue Date :October 19, 2012 BENEFICIARY CITY OF PALO ALTO ATTN: SR. ASSISTANT CITY ATTONEY/UTILITIES 250 HAMILTON AVENUE PALO ALTO, CALIFORNIA 94301 APPLICANT BRANNON SOLAR, LLC ATTN: TREASURER 100 CENTURY CENTER, SUITE 340 SAN JOSE, CALIFORNIA 95112 1.0 LETTER OF CREDIT ISSUE AMOUNT EXPIRY DATEUSD 400,000.00 OCTOBER 19, 2013 LADIES AND GENTLEMEN: WELLS FARGO BANK, N.A. (THE "BANK") HEREBY ESTABLISHES THIS IRREVOCABLE NONTRANSFERABLE STANDBY LETTER OF CREDIT ("LETTER OF CREDIT") IN FAVOR OF CITY OF PALO ALTO (THE "BENEFICIARY"), AT THE REQUEST OF BRANNON SOLAR LLC, (THE "APPLICANT"), FOR THE AMOUNT OF FOUR HUNDRED THOUSAND AND 00/100 DOLLARS ($400,000.00) (THE "AVAILABLE AMOUNT"), EFFECTIVE IMMEDIATELY AND EXPIRING AT 5:00 P.M., SAN FRANCISCO, ON OCTOBER XX, 2013 (THE "EXPIRATION DATE") OR ANY AUTOMATIC EXTENSION THEREOF. THIS LETTER OF CREDIT SHALL BE OF NO FURTHER FORCE OR EFFECT UPON THE CLOSE OF BUSINESS ON THE EXPIRATION DAY OR, IF SUCH DAY IS NOT A BUSINESS DAY (AS HEREINAFTER DEFINED), ON THE NEXT BUSINESS DAY. FOR THE PURPOSES HEREOF, "BUSINESS DAY" SHALL MEAN ANY DAY ON WHICH COMMERCIAL BANKS ARE NOT AUTHORIZED OR REQUIRED TO CLOSE IN SAN FRANCISCO, CALIFORNIA. ProFormaProForma Each page of this multipage document is an integral part of this Irrevocable Standby Letter of Credit Number IS0014972U Page 2 of 5 SUBJECT TO THE TERMS AND CONDITIONS HEREIN, FUNDS UNDER THIS LETTER OF CREDIT ARE AVAILABLE TO BENEFICIARY BY PRESENTATION IN COMPLIANCE ON OR BEFORE 5:00 P.M. SAN FRANCISCO, CALIFORNIA TIME AND ON OR BEFORE THE EXPIRATION DATE OF THE FOLLOWING: 1. THE ORIGINAL OF THIS LETTER OF CREDIT AND ALL AMENDMENTS (OR PHOTOCOPY OF THE ORIGINAL FOR PARTIAL DRAWINGS); AND 2. THE DRAWING CERTIFICATE ISSUED IN THE FORM OF ATTACHMENT A ATTACHED HERETO AND WHICH FORMS AN INTEGRAL PART HEREOF, DULY COMPLETED AND PURPORTEDLY BEARING THE SIGNATURE OF AN AUTHORIZED REPRESENTATIVE OF THE BENEFICIARY; AND 3. A DRAFT DRAWN ON US AT SIGHT MARKED "DRAWN UNDER WELLS FARGO BANK, N.A. STANDBY LETTER OF CREDIT NO. IS0014972U." IT IS A CONDITION OF THIS LETTER OF CREDIT THAT IT SHALL BE AUTOMATICALLY EXTENDED, WITHOUT AMENDMENT, FOR ADDITIONAL PERIOD(S) OF ONE YEAR FROM THE EXPIRY DATE HEREOF, OR ANY FUTURE EXPIRATION DATE UPTO, BUT NOT BEYOND OCTOBER XX, 2039, UNLESS AT LEAST 30 (THIRTY) DAYS PRIOR TO ANY EXPIRATION DATE WE NOTIFY YOU BY CERTIFIED MAIL (RETURN RECEIPT REQUESTED) OR EXPRESS COURIER THAT WE ELECT NOT TO CONSIDER EXPIRY DATE OF THIS LETTER OF CREDIT RENEWED FOR ANY SUCH ADDITIONAL PERIOD. PARTIAL DRAWING OF FUNDS SHALL BE PERMITTED UNDER THIS LETTER OF CREDIT, AND THIS LETTER OF CREDIT SHALL REMAIN IN FULL FORCE AND EFFECT WITH RESPECT TO ANY CONTINUING BALANCE; PROVIDED, THE AVAILABLE AMOUNT SHALL BE REDUCED BY THE AMOUNT OF EACH SUCH PAYMENT MADE UNDER THIS LETTER OF CREDIT. NOTWITHSTANDING THE FOREGOING, ANY DRAWING HEREUNDER MAY BE REQUESTED BY TRANSMITTING THE REQUISITE DOCUMENTS AS DESCRIBED ABOVE TO THE BANK BY FACSIMILE AT 704-715-0205 OR SUCH OTHER NUMBER AS SPECIFIED FROM TIME-TO-TIME BY THE BANK. THE FACSIMILE TRANSMITTAL SHALL BE DEEMED DELIVERED WHEN RECEIVED. DRAWINGS MADE BY FACSIMILE TRANSMITTAL ARE DEEMED TO BE THE OPERATIVE INSTRUMENT WITHOUT THE NEED OF ORIGINALLY SIGNED DOCUMENTS, HOWEVER, PROVIDED THAT A FAX DRAWING WILL NOT BE EFFECTIVE PRESENTED UNTIL YOU CONFIRMED BY TELEPHONE OUR RECEIPT OF SUCH FAX DRAWING BY CALLING US AT TELEPHONE NUMBER 1-800-798-2815. TO THE EXTENT OF OUR AGREEMENT HEREIN TO DO SO, IN THE EVENT OF A DRAWING UNDER THIS LETTER OF CREDIT, WE AGREE THAT THE AMOUNT AVAILABLE TO BE DRAWN UNDER THIS LETTER OF CREDIT MAY BE INCREASED BY MEANS OF OUR AMENDMENT TO THIS LETTER OF CREDIT, BUT ONLY UPON OUR RECEIPT OF A WRITTEN APPLICATION AND REQUEST TO INCREASE THE AMOUNT AVAILABLE UNDER THIS LETTER OF CREDIT FROM THE APPLICANT IN FORM AND SUBSTANCE ACCEPTABLE TO OURSELVES, SPECIFICALLY MENTIONING THE AMOUNT BY WHICH THE LETTER OF CREDIT IS TO BE INCREASED AND WITH THE REQUEST FOR INCREASE PROPERLY APPROVED BY WELLS FARGO BANK, N.A. GLOBAL CLEANTECH GROUP, PALO ALTO, CALIFORNIA. NOTWITHSTANDING THE PREVIOUS SENTENCE, WE WILL ONLY BE OBLIGATED TO INCREASE THE LETTER OF CREDIT BY MEANS OF AN AMENDMENT TO THIS LETTER OF CREDIT BY THE AMOUNT REQUESTED BY THE APPLICANT IN ITS WRITTEN APPLICATION AND REQUEST TO INCREASE THE AMOUNT AVAILABLE UNDER THIS LETTER OF CREDIT IN FORM AND SUBSTANCE ACCEPTABLE TO OURSELVES AND ONLY IF PROPER APPROVAL IS GIVEN TO US BY WELLS FARGO BANK, N.A. GLOBAL CLEANTECH GROUP, PALO ALTO, CALIFORNIA. OTHERWISE, WE ARE UNDER NO OBLIGATION TO INCREASE THE AMOUNT OF THIS LETTER OF CREDIT. THIS LETTER OF CREDIT IS NOT TRANSFERABLE. ANY PURPORTED TRANSFER SHALL BE VOID AND OF NO ProFormaProForma Each page of this multipage document is an integral part of this Irrevocable Standby Letter of Credit Number IS0014972U Page 3 of 5 FORCE OR EFFECT. BANKING CHARGES SHALL BE THE SOLE RESPONSIBILITY OF THE APPLICANT. THIS LETTER OF CREDIT SETS FORTH IN FULL OUR OBLIGATIONS AND SUCH OBLIGATIONS SHALL NOT IN ANY WAY BE MODIFIED, AMENDED, AMPLIFIED OR LIMITED BY REFERENCE TO ANY DOCUMENTS, INSTRUMENTS OR AGREEMENTS REFERRED TO HEREIN, EXCEPT ONLY THE ATTACHMENT REFERRED TO HEREIN; AND ANY SUCH REFERENCE SHALL NOT BE DEEMED TO INCORPORATE BY REFERENCE ANY DOCUMENT, INSTRUMENT OR AGREEMENT EXCEPT FOR SUCH ATTACHMENT. THE BANK ENGAGES WITH THE BENEFICIARY THAT BENEFICIARY’S DRAFTS DRAWN UNDER AND IN COMPLIANCE WITH THE TERMS OF THIS LETTER OF CREDIT WILL BE DULY HONORED IF PRESENTED TO THE BANK ON OR BEFORE THE EXPIRATION DATE. EXCEPT SO FAR AS OTHERWISE STATED, THIS LETTER OF CREDIT IS SUBJECT TO THE INTERNATIONAL STANDBY PRACTICES ISP98 (ALSO KNOWN AS ICC PUBLICATION NO. 590) (THE "ISP"). AS TO MATTERS NOT COVERED BY THE ISP, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS THEREUNDER, SHALL GOVERN ALL MATTERS WITH RESPECT TO THIS LETTER OF CREDIT. Authorized Signature By: Very Truly Yours, WELLS FARGO BANK, N.A. The original of the Letter of Credit contains an embossed seal over the Authorized Signature. Please direct any written correspondence or inquiries regarding this Letter of Credit, always quoting our reference number, to Wells Fargo Bank, National Association, Attn: U.S. Standby Trade Services One Front Street MAC A0195-212, San Francisco, CA 94111 401 Linden Street MAC D4004-017, Winston-Salem, NC 27101 or at either Phone inquiries regarding this credit should be directed to our Standby Customer Connection Professionals 1-800-776-3862 Option 2 (Hours of Operation: 8:00 a.m. EST to 5:30 p.m. EST) 1-800-798-2815 Option 1 (Hours of Operation: 8:00 a.m. PT to 5:00 p.m. PT) ProFormaProForma Each page of this multipage document is an integral part of this Irrevocable Standby Letter of Credit Number IS0014972U Page 4 of 5 ATTACHMENT A DRAWING CERTIFICATE TO [ISSUING BANK NAME] IRREVOCABLE NON-TRANSFERABLE STANDBY LETTER OF CREDIT NO. IS0014972U DRAWING CERTIFICATE BANK BANK ADDRESS SUBJECT:IRREVOCABLE NON-TRANSFERABLE STANDBY LETTER OF CREDIT REFERENCE NUMBER: IS0014972U THE UNDERSIGNED , AN AUTHORIZED REPRESENTATIVE OF [______________] (THE "BENEFICIARY"), HEREBY CERTIFIES TO WELLS FARGO BANK, N.A. (THE "BANK"), AND TRINA SOLAR US DEVELOPMENT LLC (THE "APPLICANT"), WITH REFERENCE TO IRREVOCABLE NONTRANSFERABLE STANDBY LETTER OF CREDIT NO. IS0014972U, DATED OCTOBER XX, 2012, (THE "LETTER OF CREDIT"), ISSUED BY THE BANK IN FAVOR OF THE BENEFICIARY, AS FOLLOWS AS OF THE DATE HEREOF: 1.THE BENEFICIARY IS ENTITLED TO DRAW UNDER THE LETTER OF CREDIT AN AMOUNT EQUAL TO U.S $ , FOR THE FOLLOWING REASON(S) [CHECK APPLICABLE PROVISION]: [ ]A.AN EVENT OF DEFAULT (AS DEFINED IN THE AGREEMENT) UNDER SECTION 7.2(F) OF THE POWER PURCHASE AGREEMENT BETWEEN _________ AND _________, DATED AS OF[DATE OF EXECUTION] (THE "AGREEMENT"), WITH RESPECT TO THE APPLICANT HAS OCCURRED AND IS CONTINUING FOR WHICH THERE EXIST ANY UNSATISFIED PAYMENT OBLIGATIONS. [ ]B.THE COMMERCIAL OPERATION DATE HAS NOT OCCURRED BY THE APPLICABLE MILESTONE DEADLINE IN ACCORDANCE WITH SECTION 9.3 OF THE AGREEMENT AND THERE EXIST ANY UNSATISFIED PAYMENT OBLIGATIONS WITH RESPECT TO MONTHLY LD AMOUNTS OR LD AMOUNT PURSUANT TO THE AGREEMENT. [ ]C.THE BENEFICIARY IS ENTITLED TO RETAIN A PORTION OF THE PERFORMANCE ASSURANCE EQUAL TO THE PRODUCT OF $92.4 PER KW/HR TIMES THE SHORTFALL IN OUTPUT (MEASURED IN KW/HR) AS A RESULT OF APPLICANT FAILING TO MEET ITS PERFORMANCE OBLIGATIONS IN ACCORDANCE WITH SECTION 9.4 OF THE AGREEMENT. [ ]D.THE LETTER OF CREDIT WILL EXPIRE IN FEWER THAN TWENTY (20) BUSINESS DAYS FROM THE DATE HEREOF, AND APPLICANT HAS NOT PROVIDED BENEFICIARY ALTERNATIVE DEVELOPMENT ASSURANCE OR PERFORMANCE ASSURANCE (AS DEFINED IN THE AGREEMENT) ACCEPTABLE TO BENEFICIARY. [ ]E.THE BANK HAS HERETOFORE PROVIDED WRITTEN NOTICE TO THE BENEFICIARY OF THE BANK’S INTENT NOT TO RENEW EXPIRY DATE OF THE LETTER OF CREDIT FOLLOWING THE PRESENT EXPIRATION DATE THEREOF, AND APPLICANT HAS FAILED TO PROVIDE THE BENEFICIARY WITH A REPLACEMENT LETTER OF CREDIT SATISFACTORY TO BENEFICIARY IN ITS SOLE DISCRETION WITHIN THIRTY (30) DAYS FOLLOWING THE DATE OF THE NOTICE OF NON-RENEWAL. 2.BASED UPON THE FOREGOING, THE BENEFICIARY HEREBY MAKES DEMAND UNDER THE LETTER OF CREDIT FOR PAYMENT OF U.S. DOLLARS AND ____/100THS (U.S.$________), WHICH AMOUNT DOES NOT EXCEED (I) THE AMOUNT SET FORTH IN PARAGRAPH 1 ABOVE, AND (II) THE AVAILABLE AMOUNT UNDER THE LETTER OF CREDIT AS OF THE DATE HEREOF. 3.FUNDS PAID PURSUANT TO THE PROVISIONS OF THE LETTER OF CREDIT SHALL BE WIRE TRANSFERRED TO ProFormaProForma Each page of this multipage document is an integral part of this Irrevocable Standby Letter of Credit Number IS0014972U Page 5 of 5 THE BENEFICIARY IN ACCORDANCE WITH THE FOLLOWING INSTRUCTIONS: (INSERT WIRE INSTRUCTIONS) UNLESS OTHERWISE PROVIDED HEREIN, CAPITALIZED TERMS WHICH ARE USED AND NOT DEFINED HEREIN SHALL HAVE THE MEANING GIVEN EACH SUCH TERM IN THE LETTER OF CREDIT. IN WITNESS WHEREOF, THIS CERTIFICATE HAS BEEN DULY EXECUTED AND DELIVERED ON BEHALF OF THE BENEFICIARY BY ITS AUTHORIZED REPRESENTATIVE AS OF THIS ____ DAY OF , _____. BENEFICIARY:[______________________________] BY:__________________________________ NAME: TITLE: 53 Exhibit G-2 Form of Escrow Agreement Exhibit G-2 1 THIS ESCROW AGREEMENT WAS NEGOTIATED AS AN ESCROW AGREEMENT TEMPLATE AS OF October 8, 2012 FOR USE AT SUCH FUTURE TIME AS THE PARTIES REQUIRE AN ESCROW ACCOUNT. THE PARTIES ACKNOWLEDGE THAT THIS ESCROW AGREEMENT TEMPLATE AND THE ATTACHED FEE SCHEDULE AS EXHIBIT C TO THE TEMPLATE ARE SUBJECT TO RENEGOTIATION AT SUCH FUTURE TIME THAT THE PARTIES EXECUTE AN ESCROW AGREEMENT ESCROW AGREEMENT This Escrow Agreement dated this ___ day of _________________, ______ (the “Escrow Agreement”), is entered into by and among Brannon Solar, LLC, a Delaware limited liability company (“Brannon Solar”), the City of Palo Alto, a California chartered municipal corporation (“Palo Alto” and together with Brannon Solar, the “Parties,” and individually, a “Party”), and Wells Fargo Bank, National Association, as escrow agent (“Escrow Agent”). RECITALS A. The Parties have entered into a Power Purchase Agreement, dated _______________, 2012, (as amended, the “PPA”) which provides for performance assurance in the amount of $400,000.00 to be posted by Brannon Solar for the benefit of Palo Alto. B. Brannon Solar agrees to place in escrow certain funds and the Escrow Agent agrees to hold and distribute such funds in accordance with the terms of this Escrow Agreement. In consideration of the promises and agreements of the Parties and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties and the Escrow Agent agree as follows: ARTICLE 1 ESCROW DEPOSIT Section 1.1. Receipt of Escrow Property. Upon execution hereof, Brannon Solar shall deliver to the Escrow Agent the amount of $400,000.00 (the “Escrow Property”) in immediately available funds. Section 1.2. Investments. (a) The Escrow Agent is authorized and directed to deposit, transfer, hold and invest the Escrow Property and any investment income thereon as set forth in Exhibit A hereto, or as set forth in any subsequent written instruction signed by _____________. Any investment earnings and income on the Escrow Property [shall become part of the Escrow Property, and shall be disbursed in accordance with Section 1.3 or Section 1.5 of this Escrow Agreement] [or] [shall not become Exhibit G-2 2 part of the Escrow Property and shall be disbursed to __________________, as directed in writing by _________________]. (b) The Escrow Agent is hereby authorized and directed to sell or redeem any such investments as it deems necessary to make any payments or distributions required under this Escrow Agreement. The Escrow Agent shall have no responsibility or liability for any loss which may result from any investment or sale of investment made pursuant to this Escrow Agreement. The Escrow Agent is hereby authorized, in making or disposing of any investment permitted by this Escrow Agreement, to deal with itself (in its individual capacity) or with any one or more of its affiliates, whether it or any such affiliate is acting as agent of the Escrow Agent or for any third person or dealing as principal for its own account. The Parties acknowledge that the Escrow Agent is not providing investment supervision, recommendations, or advice. Section 1.3. Disbursements. The Escrow Agent shall disburse the Escrow Property (A) in accordance with the written instructions of an authorized representative of Palo Alto, with a copy to Brannon Solar, identifying the PPA section under which such disbursement is authorized and (B) upon the conclusion of the Term pursuant to Section 1.5 below, in accordance with the joint written instructions of the Parties. Section 1.4. Income Tax Allocation and Reporting. (a) The Parties agree that, for tax reporting purposes, all interest and other income from investment of the Escrow Property shall, as of the end of each calendar year and to the extent required by the Internal Revenue Service, be reported as having been earned by Brannon Solar (or an affiliate thereof designated by Brannon Solar), whether or not such income was disbursed during such calendar year. (b) Prior to closing, the Parties shall provide the Escrow Agent with certified tax identification numbers by furnishing appropriate forms W-9 or W-8 and such other forms and documents that the Escrow Agent may request. The Parties understand that if such tax reporting documentation is not provided and certified to the Escrow Agent, the Escrow Agent may be required by the Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder, to withhold a portion of any interest or other income earned on the investment of the Escrow Property. (c) To the extent that the Escrow Agent becomes liable for the payment of any taxes in respect of income derived from the investment of the Escrow Property, the Escrow Agent shall satisfy such liability to the extent possible from the Escrow Property. The Parties, jointly and severally, shall indemnify, defend and hold the Escrow Agent harmless from and against any tax, late payment, interest, penalty or other cost or expense that may be assessed against the Escrow Agent on or with respect to the Escrow Property and the investment thereof unless such tax, late payment, interest, penalty or other expense was directly caused by the gross negligence or willful misconduct of the Escrow Agent. The indemnification provided Exhibit G-2 3 by this Section 1.4(c) is in addition to the indemnification provided in Section 3.1 and shall survive the resignation or removal of the Escrow Agent and the termination of this Escrow Agreement. Section 1.5. Termination. This Escrow Agreement shall terminate on [___________], or such earlier times as the Parties agree to in writing, at which time the Escrow Agent is authorized and directed to disburse the Escrow Property in accordance with Section 1.3 and this Escrow Agreement shall be of no further force and effect except that the provisions of Sections 1.4(c), 3.1 and 3.2 hereof shall survive termination. Section 1.6. Security Procedure For Funds Transfers. The Escrow Agent shall confirm each funds transfer instruction received in the name of a Party by means of the security procedure selected by such Party and communicated to the Escrow Agent through a signed certificate in the form of Exhibit B-1 or Exhibit B-2 attached hereto, which upon receipt by the Escrow agent shall become a part of this Escrow Agreement. Once delivered to the Escrow Agent, Exhibit B-1 or Exhibit B-2 may be revised or rescinded only by a writing signed by an authorized representative of the Party. Such revisions or rescissions shall be effective only after actual receipt and following such period of time as may be necessary to afford the Escrow Agent a reasonable opportunity to act on it. If a revised Exhibit B-1 or B-2 or a rescission of an existing Exhibit B-1 or B-2 is delivered to the Escrow Agent by an entity that is a successor-in-interest to such Party, such document shall be accompanied by additional documentation satisfactory to the Escrow Agent showing that such entity has succeeded to the rights and responsibilities of the Party under this Escrow Agreement. The Parties understand that the Escrow Agent’s inability to receive or confirm funds transfer instructions pursuant to the security procedure selected by such Party may result in a delay in accomplishing such funds transfer, and agree that the Escrow Agent shall not be liable for any loss caused by any such delay. ARTICLE 2 DUTIES OF THE ESCROW AGENT Section 2.1. Scope of Responsibility. Notwithstanding any provision to the contrary, the Escrow Agent is obligated only to perform the duties specifically set forth in this Escrow Agreement, which shall be deemed purely ministerial in nature. Under no circumstances will the Escrow Agent be deemed to be a fiduciary to any Party or any other person under this Escrow Agreement. The Escrow Agent will not be responsible or liable for the failure of any Party to perform in accordance with this Escrow Agreement. The Escrow Agent shall neither be responsible for, nor chargeable with, knowledge of the terms and conditions of any other agreement, instrument, or document other than this Escrow Agreement, whether or not an original or a copy of such agreement has been provided to the Escrow Agent; and the Escrow Agent shall have no duty to know or inquire as to the performance or nonperformance of any provision of any such agreement, instrument, or document. References in this Escrow Agreement to any other agreement, instrument, or Exhibit G-2 4 document are for the convenience of the Parties, and the Escrow Agent has no duties or obligations with respect thereto. This Escrow Agreement sets forth all matters pertinent to the escrow contemplated hereunder, and no additional obligations of the Escrow Agent shall be inferred or implied from the terms of this Escrow Agreement or any other agreement. Section 2.2. Attorneys and Agents. The Escrow Agent shall be entitled to rely on and shall not be liable for any action taken or omitted to be taken by the Escrow Agent in accordance with the advice of counsel or other professionals retained or consulted by the Escrow Agent. The Escrow Agent shall be reimbursed as set forth in Section 3.1 for any and all compensation (fees, expenses and other costs) paid and/or reimbursed to such counsel and/or professionals. The Escrow Agent may perform any and all of its duties through its agents, representatives, attorneys, custodians, and/or nominees. Section 2.3. Reliance. The Escrow Agent shall not be liable for any action taken or not taken by it in accordance with the direction or consent of the Parties or their respective agents, representatives, successors, or assigns. The Escrow Agent shall not be liable for acting or refraining from acting upon any notice, request, consent, direction, requisition, certificate, order, affidavit, letter, or other paper or document believed by it to be genuine and correct and to have been signed or sent by the proper person or persons, without further inquiry into the person’s or persons’ authority. Concurrent with the execution of this Escrow Agreement, the Parties shall deliver to the Escrow Agent authorized signers’ forms in the form of Exhibit B- 1 and Exhibit B-2 to this Escrow Agreement. Section 2.4. Right Not Duty Undertaken. The permissive rights of the Escrow Agent to do things enumerated in this Escrow Agreement shall not be construed as duties. Section 2.5. No Financial Obligation. No provision of this Escrow Agreement shall require the Escrow Agent to risk or advance its own funds or otherwise incur any financial liability or potential financial liability in the performance of its duties or the exercise of its rights under this Escrow Agreement. ARTICLE 3 PROVISIONS CONCERNING THE ESCROW AGENT Section 3.1. Indemnification. The Parties, jointly and severally, shall indemnify, defend and hold harmless the Escrow Agent from and against any and all loss, liability, cost, damage and expense, including, without limitation, attorneys’ fees and expenses or other professional fees and expenses which the Escrow Agent may suffer or incur by reason of any action, claim or proceeding brought against the Escrow Agent, arising out of or relating in any way to this Escrow Agreement or any transaction to which this Escrow Agreement relates, unless such loss, liability, cost, damage or expense shall have been finally adjudicated to have been directly caused by the willful misconduct or gross negligence of the Escrow Agent. The provisions of this Section 3.1 shall survive the resignation or removal of the Escrow Agent and the termination of this Escrow Agreement. Exhibit G-2 5 Section 3.2. Limitation of Liability. THE ESCROW AGENT SHALL NOT BE LIABLE, DIRECTLY OR INDIRECTLY, FOR ANY (I) DAMAGES, LOSSES OR EXPENSES ARISING OUT OF THE SERVICES PROVIDED HEREUNDER, OTHER THAN DAMAGES, LOSSES OR EXPENSES WHICH HAVE BEEN FINALLY ADJUDICATED TO HAVE DIRECTLY RESULTED FROM THE ESCROW AGENT’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT, OR (II) SPECIAL, INDIRECT OR CONSEQUENTIAL DAMAGES OR LOSSES OF ANY KIND WHATSOEVER (INCLUDING WITHOUT LIMITATION LOST PROFITS), EVEN IF THE ESCROW AGENT HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH LOSSES OR DAMAGES AND REGARDLESS OF THE FORM OF ACTION. Section 3.3. Resignation or Removal. The Escrow Agent may resign by furnishing written notice of its resignation to the Parties, and the Parties may remove the Escrow Agent by furnishing to the Escrow Agent a joint written notice of its removal along with payment of all fees and expenses to which it is entitled through the date of termination. Such resignation or removal, as the case may be, shall be effective thirty (30) days after the delivery of such notice or upon the earlier appointment of a successor, and the Escrow Agent’s sole responsibility thereafter shall be to safely keep the Escrow Property and to deliver the same to a successor escrow agent as shall be appointed by the Parties, as evidenced by a joint written notice filed with the Escrow Agent or in accordance with a court order. If the Parties have failed to appoint a successor escrow agent prior to the expiration of thirty (30) days following the delivery of such notice of resignation or removal, the Escrow Agent may petition any court of competent jurisdiction for the appointment of a successor escrow agent or for other appropriate relief, and any such resulting appointment shall be binding upon the Parties. Section 3.4. Compensation. The Escrow Agent shall be entitled to compensation for its services as stated in the fee schedule attached hereto as Exhibit C, which compensation shall be paid by Brannon Solar. The fee agreed upon for the services rendered hereunder is intended as full compensation for the Escrow Agent's services as contemplated by this Escrow Agreement; provided, however, that in the event that the conditions for the disbursement of funds under this Escrow Agreement are not fulfilled, or the Escrow Agent renders any service not contemplated in this Escrow Agreement, or there is any assignment of interest in the subject matter of this Escrow Agreement, or any material modification hereof, or if any material controversy arises hereunder, or the Escrow Agent is made a party to any litigation pertaining to this Escrow Agreement or the subject matter hereof, then the Escrow Agent shall be compensated for such extraordinary services and reimbursed for all costs and expenses, including reasonable attorneys’ fees and expenses, occasioned by any such delay, controversy, litigation or event. If any amount due to the Escrow Agent hereunder is not paid within thirty (30) days of the date due, the Escrow Agent in its sole discretion may charge interest on such amount up to the highest rate permitted by applicable law. The Escrow Agent shall have, and is hereby granted, a prior lien upon the Escrow Property with respect to its unpaid fees, non-reimbursed expenses and unsatisfied indemnification rights, superior to the interests of any other persons or entities and is hereby granted the Exhibit G-2 6 right to set off and deduct any unpaid fees, non-reimbursed expenses and unsatisfied indemnification rights from the Escrow Property. Section 3.5. Disagreements. If any conflict, disagreement or dispute arises between, among, or involving any of the parties hereto concerning the meaning or validity of any provision hereunder or concerning any other matter relating to this Escrow Agreement, or the Escrow Agent is in doubt as to the action to be taken hereunder, the Escrow Agent may, at its option, retain the Escrow Property until the Escrow Agent (i) receives a final non-appealable order of a court of competent jurisdiction or a final non-appealable arbitration decision directing delivery of the Escrow Property, (ii) receives a written agreement executed by each of the parties involved in such disagreement or dispute directing delivery of the Escrow Property, in which event the Escrow Agent shall be authorized to disburse the Escrow Property in accordance with such final court order, arbitration decision, or agreement, or (iii) files an interpleader action in any court of competent jurisdiction, and upon the filing thereof, the Escrow Agent shall be relieved of all liability as to the Escrow Property and shall be entitled to recover attorneys’ fees, expenses and other costs incurred in commencing and maintaining any such interpleader action. The Escrow Agent shall be entitled to act on any such agreement, court order, or arbitration decision without further question, inquiry, or consent. Section 3.6. Merger or Consolidation. Any corporation or association into which the Escrow Agent may be converted or merged, or with which it may be consolidated, or to which it may sell or transfer all or substantially all of its corporate trust business and assets as a whole or substantially as a whole, or any corporation or association resulting from any such conversion, sale, merger, consolidation or transfer to which the Escrow Agent is a party, shall be and become the successor escrow agent under this Escrow Agreement and shall have and succeed to the rights, powers, duties, immunities and privileges as its predecessor, without the execution or filing of any instrument or paper or the performance of any further act. Section 3.7. Attachment of Escrow Property; Compliance with Legal Orders. In the event that any Escrow Property shall be attached, garnished or levied upon by any court order, or the delivery thereof shall be stayed or enjoined by an order of a court, or any order, judgment or decree shall be made or entered by any court order affecting the Escrow Property, the Escrow Agent is hereby expressly authorized, in its sole discretion, to respond as it deems appropriate or to comply with all writs, orders or decrees so entered or issued, or which it is advised by legal counsel of its own choosing is binding upon it, whether with or without jurisdiction. In the event that the Escrow Agent obeys or complies with any such writ, order or decree it shall not be liable to any of the Parties or to any other person, firm or corporation, should, by reason of such compliance notwithstanding, such writ, order or decree be subsequently reversed, modified, annulled, set aside or vacated. Section 3.8 Force Majeure. The Escrow Agent shall not be responsible or liable for any failure or delay in the performance of its obligation under this Escrow Agreement arising out of or caused, directly or indirectly, by circumstances beyond Exhibit G-2 7 its reasonable control, including, without limitation, acts of God; earthquakes; fire; flood; wars; acts of terrorism; civil or military disturbances; sabotage; epidemic; riots; interruptions, loss or malfunctions of utilities, computer (hardware or software) or communications services; accidents; labor disputes; acts of civil or military authority or governmental action; it being understood that the Escrow Agent shall use commercially reasonable efforts which are consistent with accepted practices in the banking industry to resume performance as soon as reasonably practicable under the circumstances. ARTICLE 4 MISCELLANEOUS Section 4.1. Successors and Assigns. This Escrow Agreement shall be binding on and inure to the benefit of the Parties and the Escrow Agent and their respective successors and permitted assigns. No other persons shall have any rights under this Escrow Agreement. No assignment of the interest of any of the Parties shall be binding unless and until written notice of such assignment shall be delivered to the other Party and the Escrow Agent and shall require the prior written consent of the other Party and the Escrow Agent (such consent not to be unreasonably withheld). Section 4.2. Escheat. The Parties are aware that under applicable state law, property which is presumed abandoned may under certain circumstances escheat to the applicable state. The Escrow Agent shall have no liability to the Parties, their respective heirs, legal representatives, successors and assigns, or any other party, should any or all of the Escrow Property escheat by operation of law. Section 4.3. Notices. All notices, requests, demands, and other communications required under this Escrow Agreement shall be in writing, in English, and shall be deemed to have been duly given if delivered (i) personally, (ii) by facsimile transmission with written confirmation of receipt, (iii) by overnight delivery with a reputable national overnight delivery service, or (iv) by mail or by certified mail, return receipt requested, and postage prepaid. If any notice is mailed, it shall be deemed given five business days after the date such notice is deposited in the United States mail. If notice is given to a party, it shall be given at the address for such party set forth below. It shall be the responsibility of the Parties to notify the Escrow Agent and the other Party in writing of any name or address changes. In the case of communications delivered to the Escrow Agent, such communications shall be deemed to have been given on the date received by the Escrow Agent. If to Brannon Solar: ___________________________________ ___________________________________ Attention: Telephone: Facsimile: If to Palo Alto: ___________________________________ Exhibit G-2 8 ___________________________________ Attention: Telephone: Facsimile: If to the Escrow Agent: Wells Fargo Bank, National Association 707 Wilshire Blvd., 17th Floor MAC #E2818-176 Los Angeles, CA 90017 Attn: Kyle Lim, Corporate, Municipal and Escrow Solutions Facsimile: (213) 614-3306 Telephone: (213) 614-3493 E-mail: kyle.lim@wellsfargo.com Section 4.4. Governing Law. This Escrow Agreement shall be governed by and construed in accordance with the laws of the State of California. Section 4.5. Entire Agreement. This Escrow Agreement sets forth the entire agreement and understanding of the parties related to the Escrow Property. Section 4.6. Amendment. This Escrow Agreement may be amended, modified, superseded, rescinded, or canceled only by a written instrument executed by the Parties and the Escrow Agent. Section 4.7. Waivers. The failure of any party to this Escrow Agreement at any time or times to require performance of any provision under this Escrow Agreement shall in no manner affect the right at a later time to enforce the same performance. A waiver by any party to this Escrow Agreement of any such condition or breach of any term, covenant, representation, or warranty contained in this Escrow Agreement, in any one or more instances, shall neither be construed as a further or continuing waiver of any such condition or breach nor a waiver of any other condition or breach of any other term, covenant, representation, or warranty contained in this Escrow Agreement. Section 4.8. Headings. Section headings of this Escrow Agreement have been inserted for convenience of reference only and shall in no way restrict or otherwise modify any of the terms or provisions of this Escrow Agreement. Section 4.9. Counterparts. This Escrow Agreement may be executed in one or more counterparts, each of which when executed shall be deemed to be an original, and such counterparts shall together constitute one and the same instrument. [The remainder of this page left intentionally blank.] Exhibit G-2 S-1 IN WITNESS WHEREOF, this Escrow Agreement has been duly executed as of the date first written above. BRANNON SOLAR, LLC By: _________________________ Name:_________________________ Title: _________________________ CITY OF PALO ALTO By: _________________________ Name:_________________________ Title: _________________________ WELLS FARGO BANK, NATIONAL ASSOCIATION, as Escrow Agent By: _________________________ Name:_________________________ Title: _________________________ Exhibit G-2 EXHIBIT A Agency and Custody Account Direction For Cash Balances Wells Fargo Money Market Deposit Accounts Direction to use the following Wells Fargo Money Market Deposit Accounts for Cash Balances for the escrow account or accounts (the “Account”) established under the Escrow Agreement to which this Exhibit A is attached. You are hereby directed to deposit, as indicated below, or as I shall direct further in writing from time to time, all cash in the Account in the following money market deposit account of Wells Fargo Bank, National Association: Wells Fargo Money Market Deposit Account (MMDA) I understand that amounts on deposit in the MMDA are insured, subject to the applicable rules and regulations of the Federal Deposit Insurance Corporation (FDIC), in the basic FDIC insurance amount of $250,000 per depositor, per insured bank. This includes principal and accrued interest up to a total of $250,000. I acknowledge that I have full power to direct investments of the Account. I understand that I may change this direction at any time and that it shall continue in effect until revoked or modified by me by written notice to you. [_________________________] Authorized Representative [Authorized Representative] [PARTY 1] [PARTY 2] [ ] Date [Date] Exhibit G-2 EXHIBIT B-1 [“___________”] certifies that the names, titles, telephone numbers, e-mail addresses and specimen signatures set forth in Parts I and II of this Exhibit B-1 identify the persons authorized to provide direction and initiate or confirm transactions, including funds transfer instructions, on behalf of [“___________”], and that the option checked in Part III of this Exhibit B-1 is the security procedure selected by [“___________”] for use in verifying that a funds transfer instruction received by the Escrow Agent is that of [“___________”]. [“___________”] has reviewed each of the security procedures and has determined that the option checked in Part III of this Exhibit B-1 best meets its requirements; given the size, type and frequency of the instructions it will issue to the Escrow Agent. By selecting the security procedure specified in Part III of this Exhibit B-1, [“___________”] acknowledges that it has elected to not use the other security procedures described and agrees to be bound by any funds transfer instruction, whether or not authorized, issued in its name and accepted by the Escrow Agent in compliance with the particular security procedure chosen by [“___________”]. NOTICE: The security procedure selected by [“___________”] will not be used to detect errors in the funds transfer instructions given by [“___________”]. If a funds transfer instruction describes the beneficiary of the payment inconsistently by name and account number, payment may be made on the basis of the account number even if it identifies a person different from the named beneficiary. If a funds transfer instruction describes a participating financial institution inconsistently by name and identification number, the identification number may be relied upon as the proper identification of the financial institution. Therefore, it is important that [“___________”] take such steps as it deems prudent to ensure that there are no such inconsistencies in the funds transfer instructions it sends to the Escrow Agent. Part I Name, Title, Telephone Number, Electronic Mail (“e-mail”) Address and Specimen Signature for person(s) designated to provide direction, including but not limited to funds transfer instructions, and to otherwise act on behalf of [“___________”] Name Title Telephone Number E-mail Address Specimen Signature _______________ __________ ________________ _____________ ______________________ _______________ __________ ________________ _____________ ______________________ _______________ __________ ________________ _____________ ______________________ Part II Name, Title, Telephone Number and E-mail Address for person(s) designated to confirm funds transfer instructions Name Title Telephone Number E-mail Address ___________________ ________________ ________________ _________________ ___________________ ________________ ________________ _________________ ___________________ ________________ ________________ _________________ Exhibit G-2 Part III Means for delivery of instructions and/or confirmations The security procedure to be used with respect to funds transfer instructions is checked below: Option 1. Confirmation by telephone cal Title: l-back. The Escrow Agent shall confirm funds transfer instructions by telephone call-back to a person at the telephone number designated on Part II above. The person confirming the funds transfer instruction shall be a person other than the person from whom the funds transfer instruction was received, unless only one person is designated in both Parts I and II of this Exhibit B-1. CHECK box, if applicable: If the Escrow Agent is unable to obtain confirmation by telephone call-back, the Escrow Agent may, at its discretion, confirm by e-mail, as described in Option 2. Option 2. Confirmation by e-mail. The Escrow Agent shall confirm funds transfer instructions by e-mail to a person at the e-mail address specified for such person in Part II of this Exhibit B-1. The person confirming the funds transfer instruction shall be a person other than the person from whom the funds transfer instruction was received, unless only one person is designated in both Parts I and II of this Exhibit B-1. [“________”] understands the risks associated with communicating sensitive matters, including time sensitive matters, by e-mail. [“________”] further acknowledges that instructions and data sent by e-mail may be less confidential or secure than instructions or data transmitted by other methods. The Escrow Agent shall not be liable for any loss of the confidentiality of instructions and data prior to receipt by the Escrow Agent. CHECK box, if applicable: If the Escrow Agent is unable to obtain confirmation by e-mail, the Escrow Agent may, at its discretion, confirm by telephone call-back, as described in Option 1. Option 3. Delivery of funds transfer instructions by password protected file transfer system only - no confirmation. The Escrow Agent offers the option to deliver funds transfer instructions through a password protected file transfer system. If [“________”] wishes to use the password protected file transfer system, further instructions will be provided by the Escrow Agent. If [“________”] chooses this Option 3, it agrees that no further confirmation of funds transfer instructions will be performed by the Escrow Agent. Option 4. Delivery of funds transfer instructions by password protected file transfer system with confirmation. Same as Option 3 above, but the Escrow Agent shall confirm funds transfer instructions by telephone call-back or e-mail (must check at least one, may check both) to a person at the telephone number or e-mail address designated on Part II above. By checking a box in the prior sentence, the party shall be deemed to have agreed to the terms of such confirmation option as more fully described in Option 1 and Option 2 above. Dated this ____ day of ___________, 20__. By ________________________________________ Name: Exhibit G-2 EXHIBIT B-2 [“___________”] certifies that the names, titles, telephone numbers, e-mail addresses and specimen signatures set forth in Parts I and II of this Exhibit B-2 identify the persons authorized to provide direction and initiate or confirm transactions, including funds transfer instructions, on behalf of [“___________”], and that the option checked in Part III of this Exhibit B-2 is the security procedure selected by [“___________”] for use in verifying that a funds transfer instruction received by the Escrow Agent is that of [“___________”]. [“___________”] has reviewed each of the security procedures and has determined that the option checked in Part III of this Exhibit B-2 best meets its requirements; given the size, type and frequency of the instructions it will issue to the Escrow Agent. By selecting the security procedure specified in Part III of this Exhibit B-2, [“___________”] acknowledges that it has elected to not use the other security procedures described and agrees to be bound by any funds transfer instruction, whether or not authorized, issued in its name and accepted by the Escrow Agent in compliance with the particular security procedure chosen by [“___________”]. NOTICE: The security procedure selected by [“___________”] will not be used to detect errors in the funds transfer instructions given by [“___________”]. If a funds transfer instruction describes the beneficiary of the payment inconsistently by name and account number, payment may be made on the basis of the account number even if it identifies a person different from the named beneficiary. If a funds transfer instruction describes a participating financial institution inconsistently by name and identification number, the identification number may be relied upon as the proper identification of the financial institution. Therefore, it is important that [“___________”] take such steps as it deems prudent to ensure that there are no such inconsistencies in the funds transfer instructions it sends to the Escrow Agent. Part I Name, Title, Telephone Number, Electronic Mail (“e-mail”) Address and Specimen Signature for person(s) designated to provide direction, including but not limited to funds transfer instructions, and to otherwise act on behalf of [“___________”] Name Title Telephone Number E-mail Address Specimen Signature _______________ __________ ________________ _____________ ______________________ _______________ __________ ________________ _____________ ______________________ _______________ __________ ________________ _____________ ______________________ Part II Name, Title, Telephone Number and E-mail Address for person(s) designated to confirm funds transfer instructions Name Title Telephone Number E-mail Address ___________________ ________________ ________________ _________________ ___________________ ________________ ________________ _________________ ___________________ ________________ ________________ _________________ Exhibit G-2 Part III Means for delivery of instructions and/or confirmations The security procedure to be used with respect to funds transfer instructions is checked below: Option 1. Confirmation by telephone call-back. The Escrow Agent shall confirm funds transfer instructions by telephone call-back to a person at the telephone number designated on Part II above. The person confirming the funds transfer instruction shall be a person other than the person from whom the funds transfer instruction was received, unless only one person is designated in both Parts I and II of this Exhibit B-2. CHECK box, if applicable: If the Escrow Agent is unable to obtain confirmation by telephone call-back, the Escrow Agent may, at its discretion, confirm by e-mail, as described in Option 2. Option 2. Confirmation by e-mail. The Escrow Agent shall confirm funds transfer instructions by e-mail to a person at the e-mail address specified for such person in Part II of this Exhibit B-2. The person confirming the funds transfer instruction shall be a person other than the person from whom the funds transfer instruction was received, unless only one person is designated in both Parts I and II of this Exhibit B-2. [“________”] understands the risks associated with communicating sensitive matters, including time sensitive matters, by e-mail. [“________”] further acknowledges that instructions and data sent by e-mail may be less confidential or secure than instructions or data transmitted by other methods. The Escrow Agent shall not be liable for any loss of the confidentiality of instructions and data prior to receipt by the Escrow Agent. CHECK box, if applicable: If the Escrow Agent is unable to obtain confirmation by e-mail, the Escrow Agent may, at its discretion, confirm by telephone call-back, as described in Option 1. Option 3. Delivery of funds transfer instructions by password protected file transfer system only - no confirmation. The Escrow Agent offers the option to deliver funds transfer instructions through a password protected file transfer system. If [“________”] wishes to use the password protected file transfer system, further instructions will be provided by the Escrow Agent. If [“________”] chooses this Option 3, it agrees that no further confirmation of funds transfer instructions will be performed by the Escrow Agent. Option 4. Delivery of funds transfer instructions by password protected file transfer system with confirmation. Same as Option 3 above, but the Escrow Agent shall confirm funds transfer instructions by telephone call-back or e-mail (must check at least one, may check both) to a person at the telephone number or e-mail address designated on Part II above. By checking a box in the prior sentence, the party shall be deemed to have agreed to the terms of such confirmation option as more fully described in Option 1 and Option 2 above. Dated this ____ day of ___________, 20__. By ________________________________________ Name: Title: EXHIBIT C Exhibit G-2 FEES OF ESCROW AGENT (see attached.) 54 EXHIBIT H ESTIMATED OUTPUT AND PERFORMANCE THRESHOLDS Brannon Solar Plant Estimated Output and Performance Thresholds Fixed Angle System Single Axis Tracking System Peak AC MW 20 20 Est. annual full production hours 2,109 2,537 First year expected degradation 2.5% 2.5% Remaining years expected degradation 0.7% 0.7% 70% 70% A B C D E F G H Year ending Contract flow year Estimated production factor Estimated peak AC Estimated production volume Two year minimum performance Threshold* Estimated production volume Two year minimum performance Threshold* MW MWh/year MWh / two years MWh/year MWh / two years 7/31/2015 1 1.000 20.0 42,188 50,737 7/31/2016 2 0.993 19.9 41,893 58,856 50,382 70,783 7/31/2017 3 0.986 19.7 41,599 58,444 50,029 70,288 7/31/2018 4 0.979 19.6 41,308 58,035 49,679 69,796 7/31/2019 5 0.972 19.4 41,019 57,629 49,331 69,307 7/31/2020 6 0.965 19.3 40,732 57,226 48,986 68,822 7/31/2021 7 0.959 19.2 40,447 56,825 48,643 68,340 7/31/2022 8 0.952 19.0 40,164 56,427 48,302 67,862 7/31/2023 9 0.945 18.9 39,883 56,032 47,964 67,387 7/31/2024 10 0.939 18.8 39,603 55,640 47,629 66,915 7/31/2025 11 0.932 18.6 39,326 55,251 47,295 66,447 7/31/2026 12 0.926 18.5 39,051 54,864 46,964 65,982 7/31/2027 13 0.919 18.4 38,778 54,480 46,635 65,520 7/31/2028 14 0.913 18.3 38,506 54,099 46,309 65,061 7/31/2029 15 0.906 18.1 38,237 53,720 45,985 64,606 7/31/2030 16 0.900 18.0 37,969 53,344 45,663 64,153 7/31/2031 17 0.894 17.9 37,703 52,970 45,343 63,704 7/31/2032 18 0.887 17.7 37,439 52,600 45,026 63,258 7/31/2033 19 0.881 17.6 37,177 52,231 44,711 62,816 7/31/2034 20 0.875 17.5 36,917 51,866 44,398 62,376 7/31/2035 21 0.869 17.4 36,658 51,503 44,087 61,939 7/31/2036 22 0.863 17.3 36,402 51,142 43,778 61,506 7/31/2037 23 0.857 17.1 36,147 50,784 43,472 61,075 7/31/2038 24 0.851 17.0 35,894 50,429 43,168 60,648 7/31/2039 25 0.845 16.9 35,643 50,076 42,865 60,223 * Equals Seller's Energy Delivery Obligation First year production is displayed after performance degradation of by 2.5%. Subsequent years have 0.7% performance degradation City of Palo Alto (ID # 2887) Finance Committee Staff Report Report Type: Action ItemsMeeting Date: 10/2/2012 Summary Title: Renewable Energy Contract for Solar Power Title: Utilities Advisory Commission Recommendation to Adopt a Resolution Approving a Power Purchase Agreement with Brannon Solar LLC for the Purchase of Electricity over 25 Years at a Cost Not to Exceed $91 Million From: City Manager Lead Department: Utilities Recommendation Staff and the Utilities Advisory Commission (UAC) recommend that the Finance Committee recommend that the City Council: 1. Adopt a resolution approving a Power Purchase Agreement with Brannon Solar LLC, a California limited liability company, for the acquisition of up to 52,000 megawatt-hours (MWh) per year of energy over twenty-five years at a cost not to exceed $91 million; and 2. Waive the application of the investment-grade credit rating requirement of Section 2.30.340(d) of the Palo Alto Municipal Code, which applies to energy companies that do business with the City. Executive Summary As part of ongoing efforts to procure renewable resources to meet the City’s Renewable Portfolio Standard (RPS) of at least 33% of sales from renewable resources by 2015, staff issued a request for proposals (RFP) in the fall of 2011 and evaluated the proposals based on price, value, viability and compatibility with the City’s needs. The Brannon Solar proposal had the best score as well as the lowest price. The Brannon Solar project would provide about five percent of the City’s annual energy needs. The Brannon Solar project is proposed by Brannon Solar LLC, a California limited liability company, formed by the San Jose based development office of Trina Solar Limited, a vertically integrated Chinese solar panel manufacturer. The price for the Brannon Solar project over the 25-year term of the agreement is $77.00/MWh, a rate that is less than the rates for the last four renewable energy contracts that were approved by the Council. Background Per the Council-approved Long-term Electric Acquisition Plan (LEAP) Objectives, Strategies and Implementation Plan, updated in April 2012 (Staff Report 2710), the City’s current RPS target is to procure at least 33% of its retail sales volume from qualifying renewable resources by 2015, and to continue procuring renewable resources as long as the cumulative rate impact of all of the City’s renewable resources is not more than 0.5 cents per kilowatt-hour (¢/kWh). Current Status of Renewable Resources in Electric Portfolio The City has executed five Power Purchase Agreements (PPAs) for energy generated from new renewable resources which are currently delivering energy to Palo Alto. An additional three PPAs and a Northern California Power Agency (NCPA) Third Phase Agreement have been executed for four projects that are under construction. Basic information for all nine committed RPS resources is shown in Table 1 below. Table 1 – Existing Renewable Energy Contracts Project Supplier Technology Date Contract Executed Actual or Estimated Online Date Annual Energy (GWh) High Winds Iberdrola Wind Nov. 2004 Dec. 2004 48.9 Shiloh Iberdrola Wind Oct. 2005 Jun. 2006 71.4 Santa Cruz Ameresco Landfill Gas Nov. 2004 Feb. 2006 11.2 Half Moon Bay Ameresco Landfill Gas Jan. 2005 Apr. 2009 40.7 Keller Canyon Ameresco Landfill Gas Aug. 2005 Aug. 2009 11.8 Subtotal – Operating 184.0 Johnson Canyon Ameresco Landfill Gas Aug. 2009 Nov. 2012 10.4 Crazy Horse Ameresco Landfill Gas May 2010 Sep. 2013 21.6 San Joaquin Ameresco Landfill Gas May 2010 Apr. 2013 30.3 Western Geo Ram Geothermal Apr. 2011 Jun. 2014 33.1 Subtotal – Under Construction 95.4 Total – All Executed Contracts 279.4 In addition, through its contract with the Western Area Power Administration, the City receives hydroelectric energy that includes a small amount of energy from “small” hydroelectric projects that qualify under the state’s standard for renewable energy. The City also receives a share of the New Spicer Meadow qualifying small hydroelectric output as part of the Calaveras Hydroelectric Project. These resources count towards meeting the City’s RPS and together account for about 1% of the City’s sales in normal water years. Lastly, Palo Alto Clean Local Energy Accessible Now (CLEAN), a local solar photovoltaic (PV) feed-in tariff program, was approved by Council on March 5, 2012 (Staff Report 2548), and was launched in April 2012. The Palo Alto CLEAN program may provide up to 1.9% of Palo Alto’s electric energy needs by 2015. Together, when all of the committed facilities reach commercial operating status, and assuming Palo Alto CLEAN provides 1.9% of the City’s total energy supply, the City’s RPS will be about 29.8% of Palo Alto’s total energy supply needs by 2015 as shown in Figure 1 below. Figure 1 – Palo Alto’s Renewable Resources 0 50 100 150 200 250 300 350 400 200 3 200 5 200 7 200 9 201 1 201 3 201 5 201 7 201 9 202 1 202 3 202 5 202 7 202 9 203 1 203 3 203 5 203 7 GW h p e r Y e a r Palo AltoCLEAN WesternGeoPower Crazy Horse San Joaquin JohnsonCanyon Short-term Renewables KellerCanyon Half Moon Bay Santa Cruz Shiloh Wind High Winds Small Hydro 33% RPS Minimum Target Actual Projected Figure 1 shows actual deliveries through 2011 and estimated deliveries after 2011. “Green Premium” Calculation To conform to the rate impact limitation of 0.5 ¢/kWh on average, staff compares the total cost of each renewable resource to the wholesale market price of non-renewable energy at the time that the contract for the resource is executed. The limit is converted into an annual premium “budget” for qualifying renewables. For example, for 2015, the annual premium is calculated by multiplying the annual energy sales (approximately 1,038,000 MWh per year) by the premium (0.5 ¢/kWh, or $5/MWh) to get a green premium budget of approximately $5.2 million/year. For each resource the levelized1 cost impact ($/year) is calculated based on the renewable energy cost plus transmission charges, minus any system or local capacity value provided, and 1 Levelizing is a process of taking nominal cash flows, discounting them to present value, summing the present values, and amortizing the present value into uniform annual payments like a mortgage. The discounting and the amortizing are both performed with the user’s discount rate or time value of money. minus the wholesale market price quote for non-renewable energy (or “brown power”) plus transmission charges [Green Premium = (PPA cost + transmission charges – local capacity value) – (brown power cost + transmission charges)]. Table 2 below shows the amount of the green premium budget that has been used up with the committed RPS resources. As shown, the contracts that were executed in 2004 and 2005 were priced very near the brown energy market price. Prices for the last four contracts were significantly higher than the brown energy market price. As shown in Table 2, for the nine existing renewable contracts, the total green premium that is expected to be paid annually once all projects are generating (expected in 2014) is $3.0 million, which corresponds to a rate impact of about 0.29 ¢/kWh. This means that there is still room (up to $2.19 million per year) to acquire additional renewable energy within the 0.5 ¢/kWh rate impact limit. Table 2 – Green Premium for Existing Renewable Energy Contracts Date Contract Executed Annual Energy (GWh) Levelized Project Cost ($/MWh) Adjusted * Brown Market Cost ($/MWh) Green Premium ($/MWh) Green Premium ($1000/yr) Small Hydro N/A 10.0 N/A N/A 0 0 High Winds Nov. 2004 48.9 57.6 55.0 2.6 125 Shiloh Wind Oct. 2005 71.4 63.0 69.5 (6.5) (464) Santa Cruz Nov. 2004 11.2 62.3 59.3 3.0 33 Ox Mountain Jan. 2005 40.7 59.0 67.5 (8.5) (348) Keller Canyon Aug. 2005 11.8 70.8 83.9 (13.0) (154) Johnson Canyon Aug. 2009 10.4 123.6 67.3 56.3 586 San Joaquin May 2010 30.3 118.1 75.6 42.4 1,286 Crazy Horse May 2010 21.6 107.6 69.3 38.3 826 Western Geo Apr. 2011 33.1 113.0 79.5 33.5 1,107 Total - All Committed Contracts 289.4 2,998 * Brown Market Costs are levelized across the project’s contract period, and adjusted for the comparison project’s monthly and daily delivery profile, local and system capacity value, transmission costs and losses. Discussion The Market for Renewable Resources in California With the arrival of RPS goals for investor owned utilities (IOUs) and publicly owned utilities (POUs) plus the potential for still higher RPS goals as suggested by the Governor, the developers of renewable power have been bullish on the pricing prospects for their products. However, low cost solar panels and low cost natural gas have disrupted some of that bullishness, at least temporarily. Proposals for even higher future RPS requirements, California in-state renewable energy quotas, elimination of out of state biogas counting for RPS, and carbon cap-and-trade mechanisms continue to drive the bullishness of renewable energy project developers in the longer term. In the meantime, the California Public Utilities Commission’s (CPUC) Market Price Referent (MPR) has lost some of its impact on renewable energy prices. The MPR is published by the CPUC periodically and establishes benchmark prices above which renewable projects proposed to IOUs would face additional CPUC scrutiny. For 25-year baseload energy contracts with delivery starting in 2014, the current levelized MPR is $100.81/MWh. Results of Palo Alto’s Renewable Resource Request for Proposals (Fall 2011 RFP) The City seeks new renewable energy supplies through several activities. The most successful method to date has been to issue RFPs for renewable power, the most recent of which was released last fall. The City issued an RFP for renewable energy resources in September 2011 and received 64 proposals representing a total capacity of 1,200 MW and 3,400 gigawatt-hours per year (GWh/year) of energy from a variety of technologies. The 64 projects proposed included 46 solar PV projects, 9 wind projects, 4 landfill-gas-to-energy projects, 3 biomass/biogas projects, one geothermal project and one small hydro project. The proposals were evaluated for responsiveness to the RFP, price and value, project/contract viability, and compatibility with Palo Alto’s electric portfolio. The Brannon Solar proposal scored the best at meeting the price value criteria and the overall criteria. In evaluating the price and value of different offers staff takes into account: The daily and seasonal shape of the energy output; The location of the output; The structure of the output in terms of meeting legislated criteria (i.e., satisfying limitations on the use of the three types, or “buckets,” of renewable resources defined by the state’s RPS law); The likely capacity value of the output; The likely interconnection cost to get the output onto the grid; The proposed start date; and The green premium, which is calculated for each proposal as the proposal cost minus the cost of buying the equivalent amount of non-renewable resource output. Further, the viability of each proposed project was evaluated in terms of accomplished and remaining development steps along with the financial standing and development experience of the project developer. Staff found that all projects on the short-list of most attractive projects were in the planning, permitting, and development process and still had significant milestones to accomplish before reaching commercial operation. Staff contracted with Navigant Consulting to perform an evaluation of the viability of the top scoring proposals and they found that the Brannon Solar proposal had reasonable viability. Navigant noted that Brannon Solar proposed to utilize panels from Trina Solar, which are considered to be among the highest quality panels in the solar industry. The Brannon Solar proposal had the lowest green premium ($18.97/MWh, based on brown market prices as of August 15, 2012) among the 64 proposals. Figure 2 is a scatter plot of green premiums vs. project start date for the proposals received from the RFP. The green-premium associated with the Council-approved Palo Alto CLEAN program is provided for illustrative purposes. Figure 2 – Green Premiums and Project Start Dates of RFP Proposals Comparison of Greenhouse Gas Emissions of Various Qualifying Renewables Navigant Consulting also evaluated the relative greenhouse gas emissions from various qualifying renewable energy sources including: wind, solar, landfill gas, and other bio-energy sources. Navigant found that, ignoring differences in the embodied energy required to manufacture and install the different energy conversion devices associated with the different sources, wind-powered and solar-powered sources produce approximately zero net greenhouse gas emissions. Palo Alto’s Renewable Resource Portfolio with the Brannon Solar Project The City has made commitments to renewable resources projected to provide 27.9% of its energy from qualified renewable resources by 2015 not including any output associated with the Palo Alto CLEAN program. If the Brannon Solar PPA is added, Palo Alto’s renewable resources would increase to about 32.7% of total sales in 2015, or about 0.3% short of the 33% minimum RPS target. If the City procures 4 MW of local solar installations per year for four years through the CLEAN program in addition to the Brannon Solar project, renewable resources would provide 34.6% of total sales in 2015 and 35.3% of total sales in 2016. Figure 3 illustrates the renewable resources already in the portfolio plus the Brannon Solar project and the anticipated CLEAN Program participation. Figure 3 also shows a reference line indicating the level of renewables that would produce a carbon neutral electric portfolio (after any emissions associated with the renewables were zeroed out2). This reference line indicates there is substantial space in the portfolio available to accommodate the output from additional renewable projects. Figure 3 – Palo Alto’s Renewable Resources with Brannon Solar 0 100 200 300 400 500 600 200 3 200 5 200 7 200 9 201 1 201 3 201 5 201 7 201 9 202 1 202 3 202 5 202 7 202 9 203 1 203 3 203 5 203 7 GW h p e r Y e a r Palo Alto CLEAN Brannon Solar WesternGeoPower Crazy Horse San Joaquin Johnson Canyon Short-term Renewables KellerCanyon Half Moon Bay Santa Cruz Shiloh Wind High Winds Small Hydro CarbonNeutral Portfolio 33% RPS Minimum Target Actual Projected 100% Carbon Neutral Portfolio through Renewables The Brannon Solar PV Project Proposal The price for the Brannon Solar project PPA is $77.00/MWh over the entire 25-year term of the contract. Table 3 shows a summary of renewable energy supplies available assuming all contracted projects are built and that 12 MW (3 times the first year limit) of Palo Alto CLEAN resources are built by 2015. As shown in the table, the annual green premium for 50.7 GWh/year of the Brannon Solar project is $962,000. If Council approves the Brannon Solar PPA, there would still be approximately $165,000 per year of remaining green premium even with the Palo Alto CLEAN subscribed at 12 MW (or $1.23 million per year remaining without any Palo 2 Anthropogenic, or man-made, greenhouse gas emissions are associated with geothermal projects and, therefore, would need to be zeroed out in a carbon neutral portfolio. Alto CLEAN installations). This indicates that more renewable resources (from Palo Alto CLEAN, external RFPs, NCPA, or other venues) can be pursued within the 0.5 ¢/kWh rate impact limit. Table 3 – Summary of Current Renewable Energy Supplies and Brannon Solar Delivery Begins Annual Generation (GWh) Levelized Price ($/MWh) Adjusted Brown Market Price ($/MWh) Green Premium ($/MWh) Total Annual Green Premium ($1000) Small Hydro Before 2000 10.0 N/A N/A 0 0 High Winds Dec. 2004 48.9 57.6 55.0 2.6 125 Shiloh Wind Jun. 2006 71.4 63.0 69.5 (6.5) (464) Santa Cruz Feb. 2006 11.2 62.3 59.3 3.0 33 Ox Mountain Apr. 2009 40.7 59.0 67.5 (8.5) (348) Keller Canyon Aug. 2009 11.8 70.8 83.9 (13.0) (154) Johnson Canyon Nov. 2012 10.4 123.6 67.3 56.3 586 San Joaquin Sep. 2013 30.3 118.1 75.6 42.4 1,286 Crazy Horse Apr. 2013 21.6 107.6 69.3 38.3 826 Western Geo Jun. 2014 33.1 113.0 79.5 33.5 1,107 Total Committed Projects 289 Total Committed Green Premium 2,998 Brannon Solar Aug. 2014 50.7 77.0 58.0 19.0 962 Total with Brannon 340 Total Green Premium with Brannon 3,960 PA CLEAN 2013-2015 20.0 140.0 86.7 53.3 1,065 Total with Brannon & CLEAN 360 Total Green Premium with Brannon & CLEAN 5,025* *Annual green premium associated with a rate impact of 0.5 ¢/kWh is equal to $5.2 million The Brannon Solar PV Contract Structure and Associated Risks Like all of Palo Alto’s other renewable PPAs, the Brannon Solar agreement is structured so that the City only pays for metered output from the project after the output has been delivered each month. This structure minimizes the City’s exposure to operational, maintenance and counterparty default risks in these contracts. If, however, the project output is reduced or stops and the City decides to procure replacement volumes, there is a risk that the market price for the replacement volumes is more expensive. The pricing is known and fixed for the 25-year term of the contract at $77.00/MWh. While the price is known, the value of each MWh of output fluctuates with market conditions. Thus the City has price risk in that the fixed price paid for the contract may, over the life of the contract, be more or less attractive compared to future alternatives that may become available from other providers for the remaining term of the contract. Since the City has experienced renewable project commitments that either do not materialize or are delayed, for the Brannon Solar PPA, the City negotiated the inclusion of development and performance assurance deposits in the PPA. A development deposit of $400,000 (in the form of a letter of credit or escrow account) would be available to the City, and withheld from the developer, if the project misses the commercial operation timing milestone. The development deposit provides an incentive to the developer to complete the project on time. It also provides compensation to the City should the project be late or not materialize. After the start of commercial operations, the developer would provide a $400,000 performance assurance deposit (in the form of a letter of credit or escrow account), which will be available to the City, and withheld from the operator, if certain performance measures are not met. The performance assurance deposit provides an added incentive for the operator to maintain the project output and provides compensation to the City should performance be less than expected. Creditworthiness Review The Brannon Solar agreement is with a small Limited Liability Company (LLC). Brannon Solar LLC is supported by its parent company, Trina Solar Limited (TSL), a New York Stock Exchange traded company. TSL has solar PV panel making operations around the globe and is venturing into the project development business. This type of vertically integrated operation appears to be bringing economies to the project development business. Due to the recent turmoil in the solar PV panel manufacturing industry, TSL bonds issued in China have been trading at high yields, indicating a credit rating of below investment grade. As a result, TSL has agreed to provide letters of credit or escrow accounts for $400,000 each to the City as development and performance assurance deposits. The Energy Risk Manager assessed the expected default frequency (EDF) of TSL using a Moody’s credit measure tool which extracts credit signals by combining information from the company’s financial statements, the equity markets, and the company’s debt profile from the bond market. This analysis yielded an EDF of 15 percent, meaning that there is an estimated one in six chance of default by TSL in the next year. This high EDF is mitigated by several factors, the most important of which is that the City will not pay for power until it is received. Moreover, energy deliveries will be provided by a specific generator and at a specific location so a physical asset is assuring delivery of a product in contrast to market energy contracts, whose deliveries are often backed by the financial strength of company. The chief risk to the City of entering into the proposed Brannon Solar PPA is that the supplier will default or not perform according to the terms of the contract. If this occurs, the City would be forced to buy renewable energy from another supplier, or on the short-term markets, if required to meet its RPS obligations under State law or to meet the City’s RPS goals. These risks are minimized by the following terms of the proposed PPA: The City is not at risk for paying for output that is not delivered. The City will make no payments under the PPA until and unless energy from the project is delivered to the City and the City will only pay for energy after it is delivered. The supplier’s $400,000 letter of credit or escrow account for a development deposit provides some degree of certainty that the project will actually be built. If it does not, then the City will access the $400,000 to cover the risk of buying replacement renewable energy supplies and to help offset the cost of negotiating the contract and issuing a new RFP for replacement supplies. Once the project becomes operational, the balance of the development deposit is returned to Brannon Solar. Also, at that time, a new performance assurance deposit of $400,000 development deposit will be made by Brannon Solar and can be used by the City to cover operational and performance risk. Staff believes this amount is sufficient to cover these risks as, after a solar project is constructed, its operating costs are much lower than its operating revenue so project owners tend to keep the project operating. Under the terms of the proposed PPA, if the project does not come to fruition in a timely manner, or if the supplier defaults at any time during the term of the agreement, the City can access the $400,000 letter of credit or escrow account. For these reasons, staff recommends that the Council waive the investment-grade credit requirement for public agency contracts required under Section 2.20.340 (d) of the Palo Alto Municipal Code. This conforms to Council action on prior renewable resource contracts with similar characteristics (CMR:461:04, CMR:100:05, CMR:350:05, CMR:343:09, and CMR:226:10). This waiver is intended to benefit only renewable energy companies providing energy, which is paid for by the City only after its delivery under power purchase agreements. Commission Review and Recommendation On June 6, 2012, staff presented a recommendation to the UAC to recommend Council approval of a PPA with Brannon Solar LLC with a price of $72/MWh. The UAC unanimously recommended that Council approve the Brannon Solar PPA. At that time, negotiations were still ongoing, but after the UAC’s meeting, Brannon Solar advised the City that the impacts of the U.S. Department of Commerce’s decision to impose import tariffs on Chinese solar cells would make the project untenable without a price increase. Further negotiations resulted in a final price of $77/MWh for the PPA. The notes from the UAC’s June 6, 2012, meeting are provided as Attachment C. Staff returned to the UAC on September 5, 2012, with the recommendation for the UAC to recommend Council approval of a PPA with Brannon Solar LLC with a price of $77/MWh. Although commissioners expressed disappointment that the price had increased, the UAC unanimously recommended that Council approve the Brannon Solar PPA. The draft notes from the UAC’s September 5, 2012, meeting are provided as Attachment D. Resource Impact The cost of renewable energy supplies from the Brannon Solar PPA is expected to be up to $91.0 million over the 25-year term of the agreement. The annual expected cost is up to $3.91 million, which includes a green premium over the cost of brown power of about $0.96 million per year. In the contract, the City has an option for a 5-year extension, at the same price, to be exercised by Council by the end of the 24th year of the contract. Approval of the Brannon Solar PPA would result in a retail rate impact from all contracted renewable resources of 0.38 ¢/kWh, which is within the 0.5 ¢/kWh rate impact limit. Policy Implications Approval of the Brannon Solar PPA is in conformance with the City’s Long-term Energy Acquisition Plan (LEAP), specifically the City’s Renewable Portfolio Standard to meet at least 33% of the electric sales from renewable energy by 2015. Environmental Review Execution of this agreement does not meet the definition of a project, pursuant to section 21065 of the California Environmental Quality Act (CEQA). However, the City intends to receive output from projects that will constitute a project for the purposes of CEQA. Project developers will be responsible for acquiring necessary environmental reviews and permits on projects to be developed. Attachments: Attachment A: 00710092A RESO Brannon Solar LLC PPA (PDF) Attachment B: Power Purchase Agreement with Brannon Solar LLC (PDF) Attachment C: Excerpted Final Minutes of the June 6, 2012 UAC Meeting (PDF) Attachment D: Excerpted Draft Minutes of the September 5, 2012 UAC Meeting (PDF) Prepared By: Tom Kabat, Manager Department Head: Valerie Fong, Director City Manager Approval: ____________________________________ James Keene, City Manager Excerpted Final Minutes of the June 6, 2012 UAC Meeting ITEM 3: ACTION: Power Purchase Agreement for Brannon Solar Project Output No presentation. Commissioner Keller – Noted the report was easy to read and understand and that Figure 2 showed multiple proposals. Commissioner Keller asked if we are considering any of the other proposals at this time. Senior Resource Originator Kabat responded that we are not considering other proposals at this time and very soon we plan to issue another RFP. Commissioner Hall mentioned that Figure 3 shows volumes of renewable contract deliveries falling over time and asked about the trend. Kabat replied that even though they are long term contracts lasting 20 years, they do end in the decades shown on the graph. Commissioner Melton asked if, in our prior experience, any contracts failed to result in operational projects. Kabat answered that the Butte County Landfill Gas Power contract was cancelled by the developer. Commissioner Eglash asked what the risks are, particularly completion risks related to the Brannon project. Commissioner Eglash mentioned it looks consistent with the PV market, where there is occasionally a much lower priced contract such as this one. He asked why this price is so low and whether the project is likely to be completed. He also asked, whether this low price means that there is a greater likelihood that the project will fail. Kabat replied that the market has changed rapidly. The last time we received proposals from an RFP, solar projects were the most expensive, but this time, they were the lowest price. PV panel prices have fallen precipitously. Another reason is bidders find Palo Alto, with our Triple A credit rating, to be an attractive counterparty and also find negotiations with us are more efficient than negotiating with an investor owned utility. Also vertically integrated companies may be offering a low price to get contract volume. The risk of project failure is that we would have to purchase replacement energy, and the market could be at a higher price than it is now. Commissioner Eglash noted that the best and cheapest solar panels come from China, and that the US has imposed tariffs. Commissioner Eglash asked how this impacts prices. Kabat replied that the Brannon LLC and Trina Solar have agreed to absorb the cost of any tariffs. Kabat noted that by the time we were in negotiations, Trina Solar and Brannon Solar were very aware of the likelihood of tariffs. Commissioner Eglash asked whether we could negotiate a clause in the PPA to get a price discount representing a share of reduced tariffs to the extent the Chinese government is appealing application of the tariffs. Kabat replied that he can try to negotiate it. Vice Chair Cook offered congratulations on getting such a good offer and asked how the option to extend the term for 5 extra years works. Kabat answered that the City can extend the term at its sole option and that the City should exercise it if it’s attractive in the 24th year. If it’s unattractive the City does not have to act and the contract ends after the 25th year. Vice Chair Cook asked if Trina Solar has built any other projects in California. Mr. Kabat answered that Trina is in the process, but has not yet completed a project in California. Vice Chair Cook asked if Trina Solar has built any projects of this size anywhere in the world. Kabat answered that he believes there are other projects elsewhere in the state, the country and the world that are ahead of this one and more in the pipeline behind it. Vice Chair Cook asked if there are development milestones that allow us to measure whether progress has been made. Kabat indicated that there are intermediate milestones such as execution of interconnection agreements, obtaining permits, etc. Commissioner Hall asked what happens if Brannon does not achieve its milestones. Kabat noted that missing a milestone creates a default and starts a cure period. The developer can cure the defaut within the cure period and not be in breech of contract. However if not cured in time, the contract can be terminated by the City. Commissioner Hall mentioned that the Brannon proposal looks like a good deal, and asked how we get the performance deposit money. Kabat answered that it will be in the form of a Letter of Credit or a deposit in an escrow account and that the form is still in negotiation. Commissioner Eglash remarked that the solar resource provides a welcomed diversity to a renewable portfolio dominated by wind. ACTION: Chair Foster made a motion that the UAC recommend that the City Council: 1) Approve a Power Purchase Agreement with Brannon Solar LLC, a California limited liability company, for the acquisition of up to 52,000 Megawatt-hours (MWh) per year of energy over twenty-five years with a price of $72 dollars per MWh at a cost not to exceed $94 million; and 2) Waive the application of the investment-grade credit rating requirement of Section 2.30.340(d) of the Palo Alto Municipal Code, which applies to energy companies that do business with the City. Commissioner Hall seconded the motion. The motion passed unanimously (6-0) with Commissioner Waldfogel absent. Excerpted Final Minutes of the September 5, 2012 UAC Meeting ITEM 4: ACTION: Recommendation on Approval of Re-priced Power Purchase Agreement with Brannon Solar, LLC for up to 52,000 Megawatt-hours per Year of Energy Over Twenty-five Years at a Cost Not to Exceed $91.0 Million Vice Chair Foster stated that the report provided a good summary, which is that the original price was increased due to the impact of import tariffs on solar panels. Commissioner Eglash stated that even the higher price is quite good. Vice Chair Foster agreed that the new price was still attractive. Commissioner Waldfogel added that he hopes that this re-price will be the last re-price for this contract. Senior Resource Originator Tom Kabat presented slides showing the charts and tables provided in the report. Commissioner Eglash stated that, while this price is still attractive, the re-pricing of the contract should not be taken lightly and is disappointing. We take the initial prices seriously and no bidder should think that renegotiation should be a normal business practice. Vice Chair Foster summarized the history of the project which started at $72/MWh with a public declaration that any impact of import tariffs would not change the price, but now the supplier is coming back with a higher price after blaming the impact of the tariffs. This calls into question the very process by which the City competitively solicits proposals and negotiates contracts. The City chose to negotiate with Trina Solar on the Brannon project and to not pursue other proposals based on the bid price and, now, the bid price is not being honored. Vice Chair Foster said it is not appropriate behavior for a company to adjust a quoted price and added that with that adjustment behind us we look forward to working with Trina Solar on this project. Milo Terzich, representing Trina Solar, replied that Trina Solar was surprised by cost developments related to the ripple effects of the tariffs and consequently needed to raise the price to make the project financeable. Commissioner Waldfogel asked if we need to move forward or if we have re-engaged with any other bidders. Kabat replied that since the Trina Solar Brannon price is still more attractive than the prices of other bidders staff has not re-engaged other bidders for price updates. Kabat added that all bidders have a chance to provide their bids in the fall 2012 RFP that is currently open. Commissioner Hall asked if Trina Solar or staff was aware of anything that could further increase the price. Trina Solar Development Manager Milo Terzich replied that he did not see anything that would require further price adjustments. Kabat replied that he saw nothing in the text of the agreement that contemplates price increases. ACTION: Commissioner Eglash moved staff recommendation. Commissioner Hall seconded the motion. The motion passed unanimously (4-0). FINANCE COMMITTEE EXCERPT Page 1 of 4 Special Meeting Tuesday, October 2, 2012 Utilities Advisory Commission Recommendation to Adopt a Resolution Approving a Power Purchase Agreement with Brannon Solar LLC for the Purchase of Electricity over 25 Years at a Cost Not to Exceed $91 Million. Tom Kabat, Senior Resource Planner discussed the Power Purchase Agreement (PPA) Request for Proposal (RFP) results and the selection of Brannon Solar. A year ago Staff put out a RFP and got a large response. Staff evaluated the responses for price and value factors. The value was determined by the daily and seasonal output, the location, the structure and the ability to meet the Renewable Portfolio Standard (RPS). The recent legislation created certain buckets. Bucket One was the most desirable but there was also a Bucket Two and Three; he compared the prices for all these. They also looked at the capacity and how well it met the City’s needs. They looked at the interconnection cost and the start date. After all this, they looked at the Green Premium: the smaller the Green Premium, the less they paid for the renewable attribute of the project. He talked about Renewable Resources and how much volume was needed to be 100 percent carbon neutral. He discussed resources and the Brannon Solar contract under consideration. He showed how much the annual Green Premium consumed and how Brannon Solar came in less than the previous four contracts. If they had projects that, together consumed less than $5.2 million per year, then they could meet Green Premium and not exceed the .5 cents per kilowatt hour (kWh). He then discussed the Brannon Solar Agreement, how long the term was, the cost, the longevity, the place of construction, the availability of the company to the City, their developer (Trina Solar), and the import tariff. The Risk mitigation aspect of this project was that they paid for the volume that was delivered within the nature of the PPA. This part of the plan had a lot of Risk Mitigation written into the contract, which was good for the City. The Limited Liability Company (LLC) covered development risks through construction, including potential delays in construction, and performance risks. He talked about the contract guidelines and how there was little or no financial risk in participating in the PPA. The only risks mentioned were the completion risk and the risk of a better contract presenting itself in the future. Staff presented this to Utilities Advisory Commission (UAC) who unanimously approved it. Staff and UAC EXCERPT Page 2 of 4 Finance Committee Special Meeting Excerpt 10-02-12 recommendation was that the Finance Committee adopted a resolution approving a PPA with Brannon Solar LLC and to waive the application of the investment-grade credit rating requirement. The next steps were for Council to review the Brannon Solar PPA on November 5, 2012, Staff would then evaluate proposals from the fall 2012 RFP and recommend additional contracts for Council decision in spring 2013. Garth Hall, Utilities Advisory Commission Member said the consensus of the UAC was that this was an excellent project. They were a little disappointed by the price change but said the risk management was good. Council Member Burt asked if the size of the project was being driven by their request. Mr. Kabat said it was the supplier’s decision. The RFP required that the project size be between the 5 and 80 gigawatt hours per year (GWh/yr). The suppliers found that at 20 megawatts (MW), they were able save on interconnection costs. Council Member Burt asked if the driving point was to stay below that threshold. Mr. Kabat said yes. Council Member Burt asked if four different power purchase agreements were supposed to come online in the next two years and if they were proceeding successfully. Mr. Kabat said the three landfills were coming online successfully; he was not sure whether Western Geo was though. Council Member Burt asked what would happen if they did not meet the deadline and if they took the deposit back because the City might be in a situation where they did not have a replacement agreement. He asked if there was a way to know if the companies were on track. Mr. Kabat said the companies had mile-stones to demonstrate whether they were on track or not. Council Member Burt asked if it was 24 months before they could exit the contract because if 18 months passed, was it not clear then that they were not going to make the agreement commitment schedule. Mr. Kabat answered yes, but the contract read differently. At 12 months of EXCERPT Page 3 of 4 Finance Committee Special Meeting Excerpt 10-02-12 missing payments, they might have begun to make liquidated damages payments. Then if they missed payments for another 12 months, they had the ability to terminate. Council Member Burt said that could cause problems if these companies did not come through. He said there was not a lot of solar in the portfolio but from a power balancing standpoint, the City was in good shape, in case they had short falls at different times of day. Mr. Kabat said whenever energy was generated they got credit for the hours of operation. They were not looking for an exact match but were looking at things from a seasonal aspect. It meant that more costs were incurred later and it helped the overall balance. Vice Mayor Scharff commented on the falling of price in the recent renewable purchases, the Green Premium fell in increments of one. The notion was that they expected prices to go up and he wanted to know why they did not see a difference. Mr. Kabat said the market was mysterious because there were more demand waves to consider. After the economic struggle of 2008 and 2009 there were a lot of opportunities for the market to fluctuate. Chair Shepherd asked if it was capital investment that was bringing things down. Valerie Fong, Director of Utilities said solar was extremely expensive in the past, but now is very competitive. Vice Mayor Scharff asked how much it cost to develop a plant like this. Milo Terzich, Trina Solar said project construction costs for a 20 megawatt plant ranged over $3.00 a watt. Vice Mayor Scharff asked if they had worked on other plants like this in the country. Mr. Terzich said they worked on some in Fresno and Sacramento counties. Trina was mainly a manufacturer of modules, panels, and cells. Trina had projects all over the world and the technology was established. MOTION: Vice Mayor Scharff moved, seconded by Council Member Burt to recommend the City Council: EXCERPT Page 4 of 4 Finance Committee Special Meeting Excerpt 10-02-12 1. Adopt a resolution approving a Power Purchase Agreement with Brannon Solar LLC, a California limited liability company, for the acquisition of up to 52,000 megawatt-hours (MWh) per year of energy over twenty-five years at a cost not to exceed $91 million; and 2. Waive the application of the investment-grade credit rating requirement of Section 2.30.340(d) of the Palo Alto Municipal Code, which applies to energy companies that do business with the City. Vice Mayor Scharff said it was good to see prices go down. Council Member Burt said this aligned with the prior agenda at a pretty low cost impact. He never thought they had received this much renewable energy for this low of a price. He thought there was a good contrast of significantly lower cost to rate payers, in comparison with the investor- owned utilities. Chair Shepherd asked why they were looking into farm lands. Mr. Terzich said the site selection was purely infrastructure driven. There were only a few places that had interconnection capability infrastructure for a project of this size. A second reason was they did not want a site with a Williamson Act contract on it or one that fit the restriction guidelines for a prime agricultural site. Chair Shepherd said she was concerned when agricultural land stopped producing. She was in favor of the Motion and was happy to see this was falling into non-agricultural land. MOTION PASSED: 3-0 Price Absent City of Palo Alto (ID # 3194) City Council Staff Report Report Type: Consent Calendar Meeting Date: 11/5/2012 City of Palo Alto Page 1 Council Priority: Environmental Sustainability Summary Title: Definition of Carbon Neutrality for Electric Portfolio Title: Utilities Advisory Commission and Finance Committee Recommendation that the City Council Approve the Proposed Definition of Carbon Neutrality to Use in the Development of a Plan to Achieve a Carbon Neutral Electric Supply Portfolio by 2015 From: City Manager Lead Department: Utilities Recommendation Staff, the Utilities Advisory Commission, and the Finance Committee recommend 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. 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 is a clear definition of what carbon neutrality means for the City’s electric supply portfolio. 1 Citygate is the location of the City’s main meter where the City interconnects to the Pacific Gas and Electric transmission system. City of Palo Alto Page 2 The recommended definition of carbon neutrality 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 by creating 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. Committee Review and Recommendation At its October 2, 2012 meeting, the Finance Committee discussed the proposed definition of carbon neutrality for the electric supply portfolio. The staff report that explains the proposed definition in detail is provided as Attachment A. Staff provided a brief presentation of the proposed definition including a summary of the key elements related to The Climate Registry’s Electric Power Sector protocol for GHG emissions measurement and reporting. Staff explained that approving the definition has some policy implications including that any GHG emissions related to renewable resources must be counted, which would increase costs somewhat compared to a definition that ignores those emissions. In addition, the definition requires an annual accounting of GHG emissions so that achieving carbon neutrality on an annual basis could cost more than achieving carbon neutrality over a multi-year period. It was also noted that many policy elements are not decided by the definition of carbon neutrality, but await decision in the Carbon Neutral Plan itself. Those policy elements include what resources to use to achieve carbon neutrality, acceptable cost and rate impact levels limits (if any), and what timeline to use to achieve carbon neutrality (including a trajectory from an interim to a long-term portfolio), carve-outs for certain resources (e.g. rooftop solar, anaerobic digester), and exclusions of any particular resources. Staff also informed the Finance Committee that consideration of the Carbon Neutral Plan by Council will need to be delayed from December 2012 to January or February 2013. After discussion, the Finance Committee voted unanimously to accept the UAC’s and staff’s recommendation for Council to approve the recommended definition of carbon neutrality. The minutes of the Finance Committee are provided as Attachment B. Next Steps Following Council’s approval of a definition of carbon neutrality, staff will propose a plan to achieve carbon neutrality by January 1, 2015. The plan will include specific portfolio recommendations, cost, identification of risks, legal considerations and the expected rate impacts. City of Palo Alto Page 3 Staff has begun the process of seeking community input on its support and willingness to pay for carbon neutrality and the impacts of a carbon neutral portfolio in achieving energy efficiency goals. The information obtained will be provided to Council for its deliberation on the plan. Staff is also in the process of updating the City’s ten-year Electric energy efficiency (EE) goals; and continues its efforts to acquire renewable resources, both locally and remotely, to meet the City’s Renewable Portfolio Standard. 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. The Carbon Neutral Plan is scheduled to be reviewed by the UAC in December 2012 and the Finance Committee in early 2013 followed by Council consideration. Tentative Timeline October – November Staff refines analysis of carbon neutral portfolio options and develops the Carbon Neutral Plan, including: The set of carbon neutral portfolio options to evaluate in further detail 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 a base case and under various alternate scenarios (market prices, projected value of carbon allowances, hydroelectric generation, etc.) Evaluate options for redesigning the PaloAltoGreen Program Evaluate risks, including regulatory risk UAC – Dec. 2012 Fin. Comm. – Jan/Feb 2013 Council – Feb/March 2013 Staff presents analysis and the recommended Carbon Neutral Plan 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 City of Palo Alto Page 4 protocols; to study other electric utilities’ efforts towards carbon reduction; and to assist in the analysis of attributes, cost and risks of alternative strategies. The FY 2013 budget includes funding for the City’s consultant, 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 Long-term Electric Acquisition Plan (LEAP) Objectives, Strategies and Implementation Plan; supports the 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. Attachments: Attachment A: October 2, 2012 Finance Committee Staff Report ID 3079 (PDF) Attachment B: Draft Excerpted Finance Committee Minutes of 10-2-12 (PDF) City of Palo Alto (ID # 3079) Finance Committee Staff Report Report Type: Action ItemsMeeting Date: 10/2/2012 Council Priority: Environmental Sustainability Summary Title: Definition of Carbon Neutrality for Electric Portfolio Title: Utilities Advisory Commission Recommendation that the City Council Approve the Proposed Definition of Carbon Neutrality to Use in the Development of a Plan to Achieve a Carbon Neutral Electric Supply Portfolio by 2015 From: City Manager Lead Department: Utilities Recommendation Staff and the Utilities Advisory Commission (UAC) request that the Finance Committee recommend 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. 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 is a clear definition of what carbon neutrality means for the City’s electric supply portfolio. 1 Citygate is the location of the City’s main meter where the City interconnects to the Pacific Gas and Electric transmission system. The recommended definition of carbon neutrality 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 by creating 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 these GHG emissions reductions 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 gases are commonly converted to their equivalent emissions of CO2 (expressed as CO2e). 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 July 2011 Council approved the Utilities Strategic Plan (Staff Report 1880), including a performance measure to reduce the carbon intensity of the electric portfolio. 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). When the Finance Committee discussed these proposed changes to LEAP in March 20, 2012, it also voted to recommend that Council move forward with a “100% clean electricity” portfolio policy. This recommendation was transmitted to the Council when the Council took its action on the changes to LEAP in April 2012 (Staff Report 2710). 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 2525). Council directed staff to include in the plan a recommendation for how to achieve carbon neutrality by January 1, 2015. As the next step in the process of developing a plan for carbon neutrality, staff developed a definition of carbon neutrality so that it could develop a plan in accordance with that definition. The UAC reviewed the proposed definition at its July 11, 2012, meeting and voted unanimously to recommend Council approve the proposed definition (excerpted minutes provided as Attachment E). Staff presented this recommendation to the Council at its July 16, 2012 meeting (Staff Report 2937) and the Council directed staff to discuss the proposed definition with the Finance Committee before full City Council consideration. By 2015 the City is expected 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 80% of the City’s electricity will be supplied by low carbon4 and carbon-free resources. The remaining 20% 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. 3 Consistent with State law SB X1-2, the RPS level is expressed as a percentage of the City’s total retail sales volume. Thus, 33% of sales are equivalent to about 31.8% of the City’s net electric supply purchases. 4 There are small anthropogenic (man-made) GHG emissions associated with geothermal and landfill-gas-to- energy resources. Figure 2: Expected Electric Supply Portfolio by Resource in 2015 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 C) 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 D) 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 identifies the GHG emissions to be included in the City’s inventory and defines emissions factors by resource type for determination of 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 other resources with purchases of carbon offsets and/or renewable energy certificates (RECs). Approval of the proposed definition of carbon neutrality does not dictate a strategy for achieving carbon neutrality nor does it preclude the City Council from establishing parameters around the use of certain products and/or resources (e.g., RECs and offsets) to use in a carbon neutral plan. Alternatives Instead of adopting the TCR EPS as the standard for defining, measuring and reporting carbon neutrality for the electric supply portfolio, the City may develop its own definition of carbon neutrality with its own measurement and reporting protocols. This may include defining carbon neutrality as having the portfolio be sourced with 100% “clean electricity.” However, the definition of the term “clean” is not entirely clear and it has been used to describe resources considered to be lower carbon than conventional resources including “clean” coal, natural gas, and nuclear power. The City may choose to restrict the definition to exclude certain resources. In addition, the City can adopt a definition which allows for achieving carbon neutrality over a longer period of time, such as three years, instead of one year as in the proposed definition, to allow for annual variations in resources and/or load. Attachment B provides a summary of alternatives to the recommended definition of carbon neutrality along with possible implications. 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. Staff anticipates the plan to be reviewed by the UAC in December 2012 and the Finance Committee in January 2013 followed by Council consideration in January or February 2013. Staff has begun the process of seeking community input on its support and willingness to pay for carbon neutrality and the impacts of a carbon neutral portfolio in achieving energy efficiency goals. The information obtained will be provided to Council for its deliberation on the plan. 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. As a result of the one-month hiatus in Council meetings, staff expects at least a one-month delay—to January or February 2013—in its submission of the carbon neutral plan to Council. Tentative Timeline Council – November Staff presents analysis and recommendation for: Definition of carbon neutrality May – September 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 August – November Staff refines analysis of carbon neutral portfolio options, including: The set of carbon neutral portfolio options to evaluate in further detail 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 – Dec. Fin. Comm. – Jan Council – Feb 2013 Staff presents analysis and recommended Carbon Neutral Plan Commission Review and Recommendation On July 11, 2012, the UAC reviewed staff’s proposed definition of carbon neutrality for the electric portfolio. The UAC asked if the proposed definition was the industry standard, which staff confirmed. The UAC offered advice that the proposed carbon neutral plan maximize energy efficiency and outline the costs and risks of the alternative implementation strategies. The UAC voted unanimously (by a vote of 6 to 0) to recommend that the City Council approve the proposed definition of carbon neutrality as the basis for the City’s pursuit of a carbon neutral electric supply portfolio. The excerpted draft minutes are provided in Attachment E. 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 the City’s consultant, 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. Attachments: Attachment A: Summary of TCR EPS protocol (PDF) Attachment B: Alternative Carbon Neutral Definitions (PDF) Attachment C: Profiles of Other Utilities (PDF) Attachment D: Definitional Issues for Carbon Neutrality (PDF) Attachment E: Excerpted Draft Minutes from July 11 2012 UAC meeting (PDF) Prepared By: Monica Padilla, Sr. Resource Planner Department Head: Valerie Fong, Director City Manager Approval: ____________________________________ 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.” Term Possible Definition Implications Wind Solar Biogas Landfill Geo Hydro Natural Gas Coal Nuclear RECs Offset TCR EPS Protocol Zeroing out all carbon emissions associated with generation and delivery of electricity to customers Limits the reduction of emissions to a manageable inventory as measured at Citygate, which is more inclusive of actual emissions associated with the electric portfolio. May include T&D losses and fugitive SF6 emissions, if applicable. Allows for the use of RECs and offsets to zero out all emissions including anthropogenic emissions associated with certain renewable resources. yes yes yes yes yes yes no no ?yes yes (A)Zeroing out all carbon emissions associated with electricity generation only. Emissions neutralized at the source of generation – not Citygate, which narrows the scope of emissions. yes yes yes yes yes yes no no ?yes yes (B)Procuring generation deemed to be carbon-free, such as hydroelectricity, wind and solar. May limits the use of renewables with anthropogenic emissions, such as landfill gas, biogas and geothermal. yes yes no no no yes no no ?yes no (C)Zeroing out all carbon emissions from cradle to grave Most inclusive of all emissions. Unclear how emissions associated with the manufacturing, installation and operations or electricity plus all up-stream and down-stream emission are to be calculated.yes yes yes yes yes yes no no ?yes yes (A) Only RPS Eligible Resources Procuring generation that meets California’s RPS eligibility requirements which includes “greening” resources with RECs. Commonly used in the industry and is easily understood. Not clear how to deal with anthropogenic emissions associated with certain renewables and distribution losses. Consistent with Power Content Label. Does not include emissions associated with transmission and distribution. yes yes yes yes yes only small no no no with limits no (B) Any Renewable Resources Procuring RPS eligible and other renewable resources such as hydroelectricity and older renewable resources. Commonly used in the industry and is easily understood. Not clear how to deal with anthropogenic emissions associated with certain renewables and distribution losses. Consistent with Power Content Label. Does not include emissions associated with transmission and distribution. Some of the resources may be stranded, if California moves to a higher RPS. yes yes yes yes yes yes no no no yes no (A) Obama Administration Procuring “low carbon” generation including renewables, natural gas, clean coal and nuclear. Use of natural gas, clean coal and nuclear is not consistent with local and state policies towards renewables and resource planning. yes yes yes yes yes yes yes yes yes ?? (B)Clean includes RPS eligible resources and hydro Use of this term may be confusing outside of Palo Alto. yes yes yes yes yes yes no no no ?no 100% Renewables: Renewable energy is defined as any naturally occurring, theoretically unexhaustible source of energy, however the term renewable energy is also used to describe eligible resources to meet individual state’s renewable portfolio standard (RPS). 100% Clean Energy: Multiple organizations use this term to describe different types of electric portfolios and/or policies. Most notably the Obama Administration definition includes non- renewable energy sources. Applicable Resources and Products 100% Carbon Free: This term is not commonly used in the industry and therefore there is no standard definition. Carbon Neutral: While this term is in widespread use, there is no standard industry definition. ©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 Excerpted Draft Minutes of the July 11, 2012 UAC Meeting ITEM 4: ACTION: UAC Recommendation that Council Approve a Definition of Carbon Neutrality in Anticipation of Achieving a Carbon Neutral Electric Supply Portfolio by 2015 Senior Resource Planner Monica Padilla provided a presentation summarizing the written report, which recommended consideration of a definition of carbon neutrality for the electric supply portfolio. She described the recommendation to use an industry standard protocol and explained the major aspects of the proposed protocol, including what is included, how emissions are counted, what emission factors to use for resource types, banking of renewable energy credits (RECs), treatment of the PaloAltoGreen program, and resources available to achieve carbon neutrality. Padilla requested feedback from the UAC to help in the development of the carbon neutral plan, which will be presented to the UAC in October to meet the deadline for Council consideration of the plan by December 2012. Commissioner Melton commented that the plan to get to carbon neutrality will be essentially the same as PaloAltoGreen, but for the entire portfolio thus eliminating the need for PaloAltoGreen in its current form. Staff agreed with Commissioner Melton’s observation and reminded the UAC, that as directed by Council, staff is in the process of looking at modifications to the PaloAltoGreen program. Public Comment: Bruce Hodge urged the UAC to support staff's recommendation and stated that he was happy to see that the emissions of the internal generation (City-owned back-up generator, or COBUG, unit) is included in the carbon footprint and that staff is proposing to neutralize carbon emissions on an annual basis as opposed to an average over three-years or some other period. Commissioner Hall asked if the definition proposed is as simple as stating that the carbon emissions associated with all generation and delivery to customers will be neutralized, which staff confirmed. Commissioner Chang recommended that the City’s counting and reporting of greenhouse gas emissions be consistent with what the California Air Resources Board (CARB) uses for accounting for emissions reductions in accordance with AB32 goals. She added that staff consider energy efficiency and reductions in load as resources to achieve reductions in greenhouse gas emissions. Assistant Director Jane Ratchye replied that staff is updating the ten-year energy efficiency goals earlier than required so that the updated goals can be incorporated into the carbon neutral plan. She stated that the updated goals are scheduled to be reviewed by the UAC in September and that a report describing the framework for evaluating the potential for energy efficiency was provided to the UAC for its June 2012 meeting. Commissioner Waldfogel asked if there was a different definition that could be used and what the consequences might be for different potential definitions. He asked if the proposed protocol accounts for all emissions associated with landfill-gas-to-energy generation. Staff explained that the definition follows a national standard and the protocol accounts for the emissions associated with burning the landfill gas in the generator and that such emissions will be counted. Commissioner Eglash said that while this discussion is on the definition of carbon neutrality for the electric portfolio, there are other issues that will be discussed later. One of those is the cost of achieving carbon neutrality and that it is important to understand that carbon neutrality should not be pursued at any cost. He also noted that the City needs to consider the cost impacts on non-residential customers. ACTION: Commissioner Hall moved that the Utilities Advisory Commission (UAC) recommend that the City Council approve the following definition of carbon neutrality 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 Citygate, in accordance with The Climate Registry’s Electric Power Sector protocol for GHG emissions measurement and reporting. Commissioner Eglash seconded the motion. The motion carried unanimously (6-0). FINANCE COMMITTEE EXCERPT Draft Page 1 of 7 Special Meeting Tuesday, October 2, 2012 Utilities Advisory Commission Recommendation that the City Council Approve the Proposed Definition of Carbon Neutrality to Use in the Development of a Plan to Achieve a Carbon Neutral Electric Supply Portfolio by 2015. Monica Padilla, Senior Resource Planner said Staff requested support for a Carbon Neutral Definition in Palo Alto’s Electric Supply Portfolio. The overall objective was for Staff to receive feedback on how to achieve Carbon Neutrality. She discussed the background of carbon neutrality, what the costs were, what risks were, and what the definition was. The first step was to define Carbon Neutrality. They came up with a definition, Staff recommended it to the Utilities Advisory Commission (UAC) and they supported it unanimously. They took it to Council and Council directed them back to the Finance Committee. The recommended definition to achieve an annual zero Greenhouse Gas (GHG) emission was measured at City Gate, they achieved this in accordance with Electric Power Sector Protocol for GHG measurement and reporting. She discussed how they counted emissions. Six major technical elements were used to achieve Carbon Neutrality: measurement, inventory scope, GHG Emission Resource, balancing period and banking electricity, the role of the Palo Alto Green Program, and portfolio alternatives. To verify the numbers to lay out World Resource Institute (WRI) emission inventory, they reported to The Climate Registry (TCR) and outside agencies for in-put; TCR defined the emission factors. She discussed other ways to achieve carbon neutrality and talked about surplus banking of energy and how that was done. TCR protocol defined alternative programs that achieved Carbon Neutrality. Their next step was refining their analysis and actively seeking community input. Walt Hays spoke about who was pushing carbon neutrality. He pointed out that the definition was a standard one. He hoped that Council had a plan by a projected date and that they would move along with this plan. Tim Gray hoped that they would get a cost per bill for the average family. He wanted to know how Palo Alto Green fit into this proposal and whether this meant that they were going greener. He wanted to know if this proposal made a significant difference and if it had exceeded its goal in Palo Alto. EXCERPT Page 2 of 7 Finance Committee Special Meeting Excerpt 10-02-12 Council Member Burt noticed in the Staff Report that this was achieved through energy efficiency. In 2015, the goal was set to reach a four percent reduction; he was referring to page 12 of the Staff Report. He wanted to know if they were in line with their goal. Ms. Padilla said when they wrote the report, that was correct but they are updating the energy efficiency. They were in the process of setting a new ten year energy efficiency goal. Council Member Burt said another aspect was that there was a Renewable Portfolio Standard (RPS), on top of the hydroelectric one, which averaged about 49 percent of the Portfolio. He recalled a goal of 33 percent renewables by 2015, to be achieved in the original budgeted amount. He said the report mentioned, unlike PG&E (Pacific Gas & Electric) and other utility companies, that they were achieving a higher rate of renewables at a significantly lower cost. Ms. Padilla answered yes. She expected to get to 40 percent at a half cent premium. Council Member Burt said there was a more aggressive program than what the State proposed on all utilities in the state; they were coming in under budget and way below their costs. He asked if other agency costs were expected to go up because their renewable buys were less cost effective in meeting the State Mandate. Valerie Fong, Director of Utilities said she heard that they anticipated pressure because of their renewables. Council Member Burt said that was in the media. He wanted to see what this was going to cost the rate payers. If they were to get 40 percent off the current program then they only had 11 percent to go. He then asked about the presentation regarding the Cap and Trade Revenue because the Northern California Power Authority representative told Palo Alto that they were likely to receive $40 million. He wanted to know if that was on track. Ms. Fong said yes, to the best of her knowledge. She explained the City received free allowances from the California Air Resources Board; it was anticipated that the City will receive $4-5 million annually. Council Member Burt asked Ms. Fong to explain why. Ms. Fong said the California Air Resources Board looked at their load and EXCERPT Page 3 of 7 Finance Committee Special Meeting Excerpt 10-02-12 determined appropriate allocation for compliance obligations. The City had a low GHG emitting portfolio and they did not have to use this money to offset the cost that the City had incurred for having a lower portfolio. Council Member Burt asked if this was because they were moving toward a 33 or 40 percent renewable because City was getting more money from the Cap and Trade than they received with a lower renewable. Ms. Fong said when the issue is looked at in those terms; it might be an economic “break-even.” Council Member Burt clarified that it was from the State. Ms. Fong said the funding was based on load. The City does not need to buy offsets in the marketplace and can use the monies for other purchases. Council Member Burt said they needed a clearer explanation. Ms. Fong said they were going to the UAC tomorrow with the policy for how to spend the monies. Council Member Burt asked if there were any reasons those dollars could not be used to fulfill this program. Ms. Fong said there was an opportunity to debate that question. Council Member Burt asked not whether they should but if there was any reason not to. Ms. Fong said Council determined this but there was no law against using the revenue to offset certain types of costs. Council Member Burt assumed that this was a normal source of funds to achieve this. He said the City gets a certain amount of revenue from the State for avoiding GHG and the revenue was used to further the GHG reductions. He asked if the City were to get to 100 percent carbon free, if the City’s revenue would change. Ms. Fong said it depended on the market price. Council Member Burt wanted to know if the City was getting more dollars for a higher percentage through their Portfolio being carbon free. Ms. Fong said no, the state has already determined the number of free allowances an organization is to receive. EXCERPT Page 4 of 7 Finance Committee Special Meeting Excerpt 10-02-12 Garth Hall, Utilities Advisory Commission Member discussed what the Carbon Neutral Portfolio meant as it unfolded. He said they wanted to wait because they wanted to make out the definition. They stayed with The Climate Registry option because it was conventional and simple amongst other industries, plus their objective of a Carbon Neutral Portfolio was well served by that. Vice Mayor Scharff wanted to understand how neutralized carbon worked. Ms. Padilla said it worked with Renewable Energy Certificates (REC’s). Vice Mayor Scharff understood how a REC worked but wanted to know how an Environmental Offset worked. Ms. Padilla said it was similar but they bought in terms of pounds of CO2 (Carbon Dioxide) reduced instead of per megawatt hour. They bought something that was certified to produce and offset the equivalent amount of Carbon. Vice Mayor Scharff asked how Palo Alto Green worked. Ms. Padilla said 97.5 percent of it was made up of REC’s to get to 100 percent renewable energy. Vice Mayor Scharff reiterated how Palo Alto Green used the same energy sources that everyone did, they did not segregate out the renewables. They took the non-renewable portion and bought a REC to offset it. Ms. Padilla said no, they bought for 100 percent of the load. Vice Mayor Scharff asked if they were double counting because of the renewable portion. He wanted to know if they bought a REC for 100 percent and if that was the difference. He asked if they instituted Palo Alto Green for the whole portfolio and were they considered carbon neutral. Ms. Padilla answered yes. Vice Mayor Scharff asked how much extra people paid for Palo Alto Green. Ms. Padilla replied 1.5 cents per kilowatt hour. Vice Mayor Scharff asked if it was possible to achieve carbon neutrality at 1.5 cents per kilowatt hour. EXCERPT Page 5 of 7 Finance Committee Special Meeting Excerpt 10-02-12 Ms. Fong said .2 cents. Vice Mayor Scharff confirmed this Committee was choosing a Policy Definition and an agreement of .2 cents today. Jane Ratchye, Assistant Director of Utilities said the .2 cents was a guess. One option was to only use REC’s; another option involved purchasing more renewables and more long term Power Purchase Agreements (PPA). Vice Mayor Scharff said they could go to .2 cents, or more expensive plans. He reiterated that the definition had not driven the cost. Ms. Ratchye said that was right and that was why the policy elements were yet to come. They wanted to establish the definition before developing the plans with costs and other details. Vice Mayor Scharff asked if they were looking for feedback on any other issues, or just the definition. Ms. Fong said they were looking for just the definition. Vice Mayor Scharff said it was a simple short discussion on whether or not to use REC’s. MOTION: Council Member Shepherd moved, seconded by Vice Mayor Scharff to recommend 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 City gate, in accordance with The Climate Registry’s Electric Power Sector protocol for GHG emissions measurement and reporting. Chair Shepherd requested the report to come back in more simple terms. Vice Mayor Scharff asked when they expected to bring this back to Finance. Ms. Fong said they wanted to take this definition to Council in November first, then they wanted to go back to UAC with the plan, then they were headed to Finance in December or January, and then they wanted to go to Council again. Ms. Padilla said there was a timeline in the Staff Report but it was dependent on Council’s schedule. EXCERPT Page 6 of 7 Finance Committee Special Meeting Excerpt 10-02-12 Chair Shepherd inquired about the back-up generators within the City gates. Ms. Padilla said they were within the City gates and they counted the emissions associated with them. Chair Shepherd wanted to confirm that they were within the City gates, not at the City gates. Ms. Fong said it was counted toward the total amount of carbon emissions. Council Member Burt asked under TCR Standard, if nuclear was counted as a carbon free resource. Ms. Padilla said nuclear was carbon free by definition. Council Member Burt wanted to narrow the options so they were not moving backwards; he did not want to include nuclear in the Carbon free plan. He wanted guidance now to avoid a wasted effort. Vice Mayor Scharff did not agree because they were not working to build nuclear plants. Chair Shepherd said this was not part of their decision tonight. Council Member Burt said it was a definition that could preclude certain topics. Ms. Fong said they did not have nuclear in the portfolio but it was possible to clarify that statement as part of the definition. Vice Mayor Scharff clarified that he did not agree. Council Member Burt referred to page 16 of the packet, the fifth bullet, and wanted to know what the potential costs were. Ms. Fong said there was a market price, but there were compliance obligations along with that. Council Member Burt asked if that was for the REC case. Ms. Padilla clarified that the appropriate term was “Value of Carbon Allowances”, whether they were buying or selling them. Council Member Burt asked, in general, whether all the ways discussed tonight were considered equal environmentally. EXCERPT Page 7 of 7 Finance Committee Special Meeting Excerpt 10-02-12 Ms. Padilla said based on the Navigant study, there was a science that indicated that REC’s were not as good as buying actual renewables. Some communities were fine using them but it was more a matter of a perception. Council Member Burt said it was not merely a matter of perception and asked whether there was a body of literature that was used; it was something that was inundated extensively, and much discussed. Ms. Padilla said she agreed. She was speaking toward the Navigant study. Ms. Fong agreed that they will continue the discussion when they bring the plan back. MOTION PASSED: 3-0 Price Absent City of Palo Alto (ID # 3182) City Council Staff Report Report Type: Consent Calendar Meeting Date: 11/5/2012 Summary Title: 1095 Channing CUP Approval Title: Approval of a Record of Land Use Action for a Conditional Use Permit Amendment Allowing the Operation of a New Pre-Kindergarten Program Within an Expanded Building and an After-School Day Care Program Associated with an Existing Private School (K-8 Program) at 1095 Channing Avenue. From: City Manager Lead Department: Planning and Community Environment Recommendation Staff recommends Council approve the attached Record of Land Use Action (RLUA, Attachment A) approving a Conditional Use Permit (CUP) 11PLN-00437, modifying the existing CUP for the St. Elizabeth Seton School to allow the establishment of a pre-school program in an existing K-8 private school, to be located within a previously approved building designed to house Kindergarten and Pre-K classroom and after school day-care program activities. Executive Summary The requested Conditional Use Permit (CUP) would amend the existing operations of a private Catholic school to add a new Pre-Kindergarten program. The Pre-Kindergarten program would have the same school hours as the existing school, which also features pre- and after-school day care for all school students. The school is located in a residential zone, primarily accessed from Channing Avenue and bordered by single-family homes. The school CUP has been in place for decades and amended over time, and the number of students enrolled in the school has varied over time because there was no stated limit to the number of students in previous CUPs for the site. The total number of students would be limited to 315 students per this CUP, as clearly stated in the CUP documents and during the staff presentation to the Planning and Transportation Commission on June 13, 2012. The pre-K and Kindergarten students would be housed in the same building. The building is 2,423 square feet (sf) larger than the modular building it will replace; the building was approved in July 2012 via the Architectural Review (AR) process and there was no appeal of the AR decision. The associated site improvements include restriping of an existing parking lot to provide 44 parking spaces, an increase of four spaces from what currently exists on the site. The existing circulation patterns of drop-offs before and after school would be unchanged but, because of the new pre-K and associated after school pre-K program, the number of vehicles circulating on the site would increase. The hours of the Pre-K program are consistent with the existing hours of the school, including the after-school hours. After two hearings, the Planning and Transportation Commission (PTC) voted 4-1-1-1 to recommended approval, subject to an additional requirement pertaining to the height, funding and location of a perimeter fence. A meeting was held with neighbors, staff and the applicant subsequent to the October 3, 2012 PTC meeting, resulting in individual fence solutions appropriately tailored to each property and ensuring preservation and enhancement of existing screen vegetation. The solutions are described further in the Discussion section. Neighbors’ concerns about pick-up pattern, associated noise pollution, and a cap on the student number were expressed to the PTC. On October 22, 2012, the hearing requester asked that Council pull the item off Consent to address her remaining issue. However, staff believes that this issue has since been resolved as reflected in this report, the RLUA and revised site/on-site circulation plan. Background The CUP application was tentatively approved in July 2012 by the Planning Director, in conjunction with the Architectural Review (AR) application for a new building and site improvements. A neighbor requested a hearing by the Planning and Transportation Commission on the CUP application. None of the neighbors requested a hearing on the AR application, so the AR approval has become effective. The Director’s approval conditions included a student enrollment cap, since previous CUPs did not cite a numerical limit. Student Enrollment The conditions of CUP approval imposed by the Planning Director included placement of a maximum cap on the total number of students enrolled. This was described during the staff presentation to the PTC at the June 13, 2012 public hearing. The neighbors have been seeking a lower cap, a total student enrollment of 300 students, as expressed to the PTC during the October 3, 2012 hearing. None of the CUPs previously issued for this site contained a cap to limit the total number of students attending the private school. There has been some confusion on this point given comments by staff to the PTC on October 3, 2012. The number of students enrolled in the school has varied over time. The prior student population on the campus may have dramatically exceeded 315 students decades earlier, though the enrollment numbers are lower today. The current enrollment is reportedly 265 students. The applicant has described why 315 students is the number needed to operate a Catholic school; statements are reflected in the June 13th and October 3rd PTC meeting minutes on this point. An enrollment of 315 students, including the preschool, would translate to 31.5 students per class. The students would be distributed among the pre-K through 8th grade classrooms. This maximum number of students per classroom would be less than or consistent with the current public school maximum: 32 students per classroom. The cap of 315 students stated in the Director’s tentative CUP approval has been carried forward in the Record of Land Use Action (RLUA) for Council approval. The RLUA Approval condition #4 requires an annual student enrollment report, and approval condition #3 states that the Planning Director can add conditions or terminate the CUP. PAMC Section 18.77.110 allows the Director to issue a notice of noncompliance for failure to comply with approval conditions, or when a use is conducted in a manner detrimental to public health, safety and welfare. Any CUP is technically subject to a noticed Directors Hearing, if the noncompliance is not corrected within a specified timeframe, with the opportunity for affected parties to attend an participate in the hearing. 2007 CUP The most recent CUP approved for the site was for an application submitted in 2007 [07-PLN- 00188]. The 2007 CUP application included a traffic report that cited an enrollment at that time of 270 students. The 2007 CUP allowed for the addition of a modular Kindergarten classroom. The traffic study reflected the existence of an after-school care program. The 2007 CUP included this condition: “All conditions of the previous use permits shall remain in full effect.” Another condition of the 2007 CUP noted the property owner’s responsibility to ensure intensity of use and parking demand does not exceed on-site parking supply. The 2012 CUP is based upon the provision of four additional parking spaces, designed to meet the additional demand anticipated from the new Pre-K program. There is no evidence that the school anticipated expanding the number of students beyond the 270 students enrolled at that time, but there was also no cap placed on the number of students with the 2007 CUP. 1999 CUP The previous CUP [99-UP-6], associated with Architectural Review approval 99-ARB-57 (Attachment I), modified a 1987 CUP. The 1999 ARB staff report (Attachment K) indicates the Use Permit had recently been approved. Attachment H is the 1999 Building Permit allowing the convent expansion for educational purposes. 1987 CUP The 1987 CUP [87-UP-40] (Attachment E), amended the 1959 and 1964 CUPs [59-UP-26 and 64- UP-7]. In total, the CUPs from 1959 through 1999 conditionally allowed for the location and operation of a church, rectory, convent and school and the use of a portion of the first floor of the existing convent and then expanded convent for a Kindergarten classroom and afterschool daycare. Hours of Operation and Circulation The hours of operation of the existing school, which include the pre- and after-school hours, are 7 am to 6 pm Monday through Friday. Currently, and pursuant to the 1987 CUP, circulation is operating via one-way entry from the easternmost driveway to a one-way exit from the westernmost driveway, shown on Plan Sheet A1.1, and the side parking lot is also used for Kindergarten drop-offs and pickups. The October 3, 2012 PTC report describes a split drop-off system that allows for continuation of the 1987 pattern of drop offs for 1st through 8th graders at the front of the building, and the use of a side parking lot for both pre-K and Kindergarten student drop-offs. The report highlighted what seemed to be a mutual agreement between the applicant and neighbors. The report described why transportation staff supported the proposal for drop-offs and pick- ups, and noted that the on-site circulation pattern allows for avoidance of an otherwise potentially detrimental impact - queuing of cars on Channing Avenue during the peak PM period – given the potential additional number of students above the current enrollment. Neighbors’ concerns about pick-up patterns (2:45- 6 pm) and associated noise pollution were expressed to the PTC. Following the PTC hearing, the hearing, requester spoke again with the applicant to try to resolve her concerns about pick-ups. Staff believes that the issue regarding pickups has been addressed since, as of October 24, 2012, the school principal has committed to the following solutions, as negotiated between the hearing requester and applicant: 1. Establishing extended daycare parking in front of the school from approximately 3:30 to 5:30 pm, for grades 5 - 8. 2. Opening the west gate for additional parking as needed. This will reduce vehicles going to the side parking lot and accommodate any additional vehicles generated from increasing enrollment to capacity. The applicant has prepared a plan reflecting this in the plan set provided to Council. Transportation and planning staff had previously identified an area on-site toward the front/west side of the property (on-site). Transportation is supportive of this change, as long as use of the side parking lot (east side) is still allowed if necessary to avoid queue spill-backs onto Channing Avenue. Condition of approval #9 reflects the wording that has been reviewed by the hearing requester, to ensure the revision to the circulation is fully acceptable. Continuity of Afterschool Program The before-school and after-school program for school students grades K-8 is a typical component of schools, even public schools. Staff research yielded that the hours often begin at 6:30 or 7 am and end at 6 pm. The Church has stated that in 1987, the school began the practice of providing after school care (though not mentioned in the 1987 CUP). The CUP process in 1987 and 1999 included noticed public hearings by the Zoning Administrator (Attachment J). Attachment I shows that afterschool care for school students was taking place in the convent building prior to 1999. The 2007 traffic study reflected the existing after-school care program for the school’s students. The after school care practice was not challenged through the CUP hearing process in 1999, nor in 2007 through the request-for-hearing process. PTC Review The PTC reviewed the current CUP application and heard from the public during two hearings, on June 13 and October 3, 2012. The original concerns of the hearing requester, and attempts by the applicant to address them, were described in the June 13, 2012 report, and the October 3, 2012 report (Attachments M and B). The October 3, 2012 PTC minutes (Attachment C) further illuminate the neighbors’ concerns and the PTC’s consideration thereof. The person requesting the hearing had originally expressed a number of concerns as described in the June 13, 2012 PTC report, and had requested clarification. These concerns included mislabeling of specific uses on the plans, the requirement for a landscaped strip around the parking lot areas adjacent to residential uses and amount of landscape screening in the perimeter area, the number and amount of parking spaces on the existing site as compared to what was proposed, and vehicular circulation plan for pick up and drop off of students on the site. The June 13, 2012 PTC meeting minutes are attached to this report (Attachment N). Between the hearings, the applicant met with neighbors to address concerns raised at the June 13, 2012 PTC hearing regarding traffic circulation related to the additional students anticipated, and trash and noise issues. The October 3, 2012 report (Attachment B) summarizes the applicant’s efforts with the neighbors on these issues, the timeline for the outreach process (between June 27 and September 26, 2012), the offer of concessions or agreements for modifications designed to resolve concerns, and the permit history and status of improvements to the school. The applicant provided information to the PTC at the hearing (Attachment L). The PTC meeting minutes of October 3, 2012 (Attachment C) reflect the vote (4-1-1-1) and the issues described by neighbors as discussed during the hearing and considered by the PTC. There were seven public speakers on June 13, 2012 and five public speakers on October 3, 2012. On October 3, 2012, neighbors focused on the perimeter fence and perimeter landscape buffer dimension, the pick-ups at the side entrance and total number of parking spaces for the uses on the site. The PTC resolved the fence concerns via imposition of an additional approval condition pertaining to a 250 foot (approximate) portion of the perimeter fence. The fence had been requested by neighbors to be eight feet tall, so the PTC motion was for a new fence that would be eight feet tall, placed adjacent to residential property at 1125, 1133, 1139 Channing Avenue and end midway at 41 Kent Place, serving to buffer noise from the side parking lot. The one “no” vote was due to the added condition, which requires the Church to pay the entire cost of the approximately 250 foot long fence, estimated at that time to cost $14,000. Staff noted during the hearing that a height Variance may be required by Council to implement the recommendation. This is discussed further in the Discussion section of this report. Architectural Review The Architectural Review (AR) approval on April 25, 2012, allowed replacement of the existing modular Kindergarten classroom with a one-story 3,383 s.f. building, representing a 2,423 s.f. net increase in floor area. The approval was handled at staff level, due to the minor amount of additional floor area. The existing modular building, permitted in 1999, is to be removed and replaced in roughly the same location adjacent to the existing K-8 school building. The approval became effective on May 10, 2012, since an ARB hearing was not requested nor was the decision appealed. Discussion Post PTC Solutions On October 22, 2012, the hearing requester asked that Council pull the item from consent calendar in November to discuss her concerns regarding circulation; however, staff believes that her concerns have since been resolved. The RLUA reflects the recent solutions reached between the applicant and hearing requester regarding the revised afternoon traffic flow pattern and pick up, as described in the background section of this report. Perimeter Fences and Vegetation On October 22, 2012, staff and the applicant met for nearly two hours with the hearing requester and the four owners of residential adjacent property benefitting from the PTC’s recommendation for a fully funded fence. The owners seemed satisfied by the individual fence and vegetation solutions discussed at that meeting, and a seven foot wood fence (solid wood to six feet above grade, with one foot of lattice on top) appeared to be the correct solution to mitigate visual concerns. Staff is still supportive of the PTC condition requiring the Church to fund perimeter fences for the four property owners, but at a seven foot overall height. A seven foot fence would not require a Variance, nor would a building permit be required. Based upon conditions observed during the on-site meeting held with the four property owners, the Church will be working with these owners to implement and fund individual, per- property fence solutions. That is, the wood fences would be tailored to the individual circumstances of each of the four properties. The additional fencing material would provide limited sound attenuation but would provide visual and privacy benefits. The applicant proposed a construction that would feature noise buffering material between two layers of wood, to help provide some noise attenuation. Chain link fencing would be modified as needed following removal of ivy and compromised vegetation, to ensure school security. Asphalt paving would be removed and wheel stops installed to protect the landscape area, which would be used to plant additional vegetation (Carolina Laurel was the species discussed in the meeting) in key locations for screening purposes. RLUA Condition of Approval #26 reflects the requirements for seven foot tall fences, preserved and new perimeter vegetation, ivy removal and shrub maintenance, as discussed at the October 22, 2012 on-site meeting. It does not require an eight foot tall fence as had earlier been requested by some of these neighbors, and recommended by the PTC, since the neighbors now appear satisfied with the seven foot overall height. Public Records Request The hearing requestor also submitted a records request, on October 10, 2012, and staff responded within several days, providing the specific planning entitlements cited by the requester, including some of the documents attached to this report. Additional research was undertaken by staff in response as well, and has been provided to the hearing requestor within the requested timeline. Policy Implications The proposed project is consistent with the Comprehensive Plan and staff believes there are no other substantive policy implications. Environmental Review This project is exempt from the provisions of the California Environmental Quality Act per Section 15301. Attachments: Attachment A: Record of Land Use Action (DOC) Attachment B: October 3, 2012 PTC Staff Report (DOC) Attachment C: October 3, 2012 DRAFT Excerpt of PTC Verbatim Minutes (DOC) Attachment D: Tentative AR and CUP Approval Letter (PDF) Attachment E: 1987 CUP Approval (PDF) Attachment F: April 30, 2012 Request for Hearing (PDF) Attachment G: September 26, 2012 Letter from Applicant (PDF) Attachment H: 1999 Building Permit for 1105 Channing (PDF) Attachment I: 1999 Planning Permit/AfterSchool Care Documentation (PDF) Attachment J: 99-UP-6 Notice of Public Hearing (PDF) Attachment K: 99 ARB Staff Report (PDF) Attachment L: Applicant Submittal 10.3.12 (PDF) Attachment M: June 13, 2012 1095 Channing Ave PTC report (DOC) Attachment N: PTC minutes of June 13, 2012 (DOC) Prepared By: Amy French, Chief Planning Official Department Head: Curtis Williams, Director City Manager Approval: ____________________________________ James Keene, City Manager 1 DRAFT ACTION NO. 2012-xx RECORD OF THE COUNCIL OF THE CITY OF PALO ALTO LAND USE ACTION FOR Conditional Use Permit Amendment 11PLN-00437 (John Miller, APPLICANT) On November 5, 2012, the Council approved the application for amendment to a Conditional Use Permit to allow operation of a Pre-Kindergarten, Kindergarten and after school day care program making the following findings, determination and declarations: SECTION 1. Background. The City Council of the City of Palo Alto (“City Council”) finds, determines, and declares as follows: A. On November 29, 2011, John Miller on behalf of Elizabeth Seton School and Roman Catholic Bishop of San Jose, submitted for a Conditional Use Permit amendment associated with the operation of a new Pre-Kindergarten program within an expanded Kindergarten building, and an after school day care program, associated with an existing private school (K-8 program) at 1095 Channing Avenue. (“The Project”). B. Following staff review, the Director of Planning and Community Environment (Director) approved the conditional use permit application on April 25, 2012 and on April 30, 2012, within the prescribed timeframe, a request for a public hearing was submitted; additional information is contained in CMR #XXXX. C. On June 13, 2012, the Planning and Transportation Commission reviewed the project and voted [4-0] to continue the project to a date uncertain to allow time for the applicant to work with the neighbors to have discussions regarding the proposed traffic pattern and the issues with trash and noise. D. On October 3, 2012, the Planning and Transportation Commission reviewed the project and voted [4-1-1-1] to recommend that Council approve the project, subject to an addition condition of approval (Condition #26). The Commission’s action is contained in the CMR #XXXX. SECTION 2. Environmental Review. This project is exempt from the provisions of the California Environmental Quality Act per Section 15301 of the CEQA Guidelines. SECTION 3. Conditional Use Permit Findings. (1) The proposed use, at the proposed location, as conditioned, will not be detrimental or injurious to property 2 or improvements in the vicinity, and will not be detrimental to the public health, safety, general welfare, or convenience. This finding can be made in the affirmative in that the proposed building is located on the eastern corner behind the existing church and convent, aligned with the main internal circulation, and will replace an existing undersized Kindergarten structure with newer and larger facility providing both Kindergarten and Pre-Kindergarten classrooms with extended daycare and shall be within the allowable square footage for the site. Additionally, the new structure will provide a prominent entrance at the existing parent drop off and parking area. The new classroom expansion proposes to meet the maximum student enrollment of 315 students allowed for the use and there shall be adequate parking spaces to accommodate this conditional use. The traffic pattern and vehicular circulation shall be conducted in an orderly way and shall not generate excessive trip demand. New trees and landscaping is proposed in the 5-foot setback between the building and adjacent residential property line to provide additional buffering and replace the trees that are proposed to be removed within the new building footprint. Conditions of approval have been imposed to ensure the project conforms to the submitted plans. (2) The proposed use will be located and conducted in a manner in accord with the Palo Alto Comprehensive Plan and the purposes of the zoning Ordinance. This finding can be made in the affirmative in that the proposed project is replacing an existing 1999 Kindergarten/restroom addition with a larger Kindergarten/restroom and Pre Kindergarten/restroom addition with after school daycare program that would be consistent with the Palo Alto Comprehensive Plan. The total proposed 3,383 square feet addition will include exterior changes and addition that will provide high quality design and site planning and shall be compatible to the existing structure in design and materials. The school shall be conducted in a manner that will support and promote the provision of comprehensive school and childcare services by public and private providers as a conditional use in R-1 zoning district and maintain Palo Alto’s varied neighborhoods while sustaining vitality of its public facilities. This finding can be made in the affirmative. SECTION 4. CUP Approval Granted. CUP approval is hereby granted for the Project by the City Council pursuant to Chapter 18.77 of the Palo Alto Municipal Code. 3 SECTION 5. Plan Approval. The plans submitted for Building Permit shall be in substantial conformance with those plans prepared by John Miller Architects and received September 26, 2012, except as modified to incorporate the conditions of approval in Section 6. A copy of these plans is on file in the Department of Planning and Community Development. SECTION 6. Conditions of Approval. Planning and Community Environment Department Planning and Transportation Division 1. The proposed project shall be constructed and shall operate in substantial conformance with the revised project description stamped received September 26, 2012, and plans stamped received September 26, 2012, on file with the City in planning application no. 11PLN-00437, except as modified to incorporate these conditions of approval. 2. A copy of this approval letter shall be printed on the first page of the plans submitted for building permit. The building permit shall not be approved without this letter printed on the plan set. 3. The Director of Planning and Community Environment shall have continuing jurisdiction over this Conditional Use Permit amendment and reserves the right to revoke or terminate this permit, reaffirm this permit or modify the conditions or impose new conditions with respect to this permit. 4. The total enrollment for Elizabeth Seton School shall be limited to 315 students which will include the enrollment for new Pre-Kindergarten program for up to 30 students and the following hours of operation: Monday through Friday from 7:00 a.m. to 6:00 p.m. Any increase in enrollment shall require a new conditional use permit amendment. The school shall also provide a mandatory annual student enrollment report to the city to document the cap of students that shall not exceed 315 (maximum allowed). 5. The applicable conditions of use permit 87-UP-40 (which amends use permits 59-UP-26 and 64-UP-7) shall apply. They are briefly itemized as below: a. Parking space to be provided at a ratio of 1 space per each 4 seats b. Each parking shall be maintained for lifetime. 4 c. No parking space shall be located within first 20 feet of the front property line. d. No parking permitted in the driveways. e. Driveways located between church and convent and between rectory and school shall have a minimum width of 14 feet. f. Exterior lighting shall be so arranged as to protect adjoining residential properties. To this end no light source, brilliant, reflection, or excessive, “spill light” shall be visible from adjacent residential properties. g. Location of three (3) foot wide privet to reach six feet in height at maturity to remain next to the existing chain link fence. h. Perimeter landscaping and the existing planting located between Kent Place and the existing cyclone fence shall be maintained and replaced to provide adequate screening. i. Any unauthorized lighting shall be removed or altered. j. There shall be no access or egress to or from Kent Place by vehicles or pedestrians. 6. The following City standard requirements (related to neighbors’ concerns) shall be followed: a. Trash and Recycling requirements shall be applied as per PAMC code section 18.23.020 (B)(iii) Trash disposal and recyclable areas shall be screened from public view and shall be enclosed and covered. Gates or other controlled access shall be provided as feasible. b. The school shall install covered trash and recycle containers at new location, as shown on site plan (Attachment C) with sufficient trash capacity to prevent overflow of trash. Additional garbage pick-up trucks will be scheduled after 8:00 am to avoid disturbance to neighbors in immediate vicinity. Warning Signs shall be posted throughout the site warning parents and visitors to turn down their cell phones and radios when entering and exiting the parking lot area. c. Lighting requirements shall be applied as per PAMC code section 18.23.030(B)(vii) Lighting of the building exterior, parking areas and pedestrian ways should be of the lowest intensity and energy use adequate for its purpose, and be designed to focus illumination downward to avoid excessive illumination above the light fixture, and (C) (ii) Timing device should be considered for exterior and interior lights in order to minimize light glare at night. d. Perimeter Landscaping shall be provided as per PAMC code section 18.54.040(a)Each unenclosed parking facility shall provide and maintain perimeter landscaped strip at least 5 five feet wide between and adjacent to a line defining the exterior boundary of the parking area and the nearest adjacent property line, not separated by a building, and Landscape screens shall form a dense visual buffer with a combination of trees and shrubs as per PAMC code section 18.54.040(f)(1) On sites abutting or opposite a residential site, a dense visual buffer shall be provided. In addition, trees shall be planted or shall exist at a ratio of not less than one tree per three hundred square feet of the landscaped screen or fraction thereof, and supplemented with shrubs and groundcover. The tree and landscape inventory shall be as per sheet A1.1 of revised plans dated September 26, 2012, and landscape inspection shall be as per condition of approval #25 below and new Redwood fences will be per condition #26. e. Noise shall be mitigated pursuant to PAMC code section 18.54.050 (g) Areas used for primary circulation, for frequent idling of vehicle engines, or for loading activities shall be designed and located to minimize impacts on adjoining properties, including provisions of screening or sound baffling. Warning signs will be posted throughout the site to alert parents and visitors to turn down their cell phones and radios when entering and exiting the parking lot area which shall be strictly followed and enforced by school staff. Other noise abating measurement proposed is the construction of a Redwood fence along the perimeter of the parking lot. Cost to be shared between the neighbors and the Church. Other noise abating measurement requested by neighbors’ is the construction of a Redwood fence along the perimeter of the parking lot. Neighbors are willing to share the cost with the Church. 7. With the exception of pastor office hours, no other routine church services or activities shall occur during the peak hours of operation of the Pre-Kindergarten, K-8 and after school extended day care program, especially during drop-off and pick-up times. All other activities shall be limited to assembly sizes such that the parking demand of these services plus the school classes is less than the 44 spaces for school and 26 spaces for church activities. 8. All drop-off and pick-up operations shall be contained within the project site and in the areas clearly designated as drop off/pick-up areas. The school shall have a split drop-off system. There will be a front drop-off for children from 1st to 8th grade and side or walk-in drop-off for Kindergarten and Pre-Kindergarten children. There shall be an additional drop off area, further down from the front, which will be used as necessary. Dedicated school staff 6 members shall be required to supervise and ensure that proper measures are in place. 9. School dismissal times shall continue to be between 3:00 PM to approximately 3:05. Students leaving immediately after dismissal shall be picked up at the side entrance (east side of school). Vehicles arrive starting at approximately 2:45 PM and queue in the side parking lot (east side of school/convent), which shall not backup on to Channing Ave. a. Students not picked up immediately after school stay for extended daycare in the classrooms or on the rear playground. Pick up is staggered from 3:30 PM until 5:30 PM and infrequently delayed pickups may stay to closing at 6:00 PM. b. Lower grades are signed out by the parents who park in the side parking lot and walk to the rear playground sign- out area c. Upper grades (5th - 8th) are signed out by parents who park in the front parking areas (between church and school building) and walk to the rear playground sign-out area. The west gate, by the science modular classroom, will be opened as needed to accommodate the vehicles. 10. Any changes proposed by the applicant to amend the striping on the side of the project site on the west side (where there is existing, legal noncomplying/inadequate back- up/aisle width) would require submittal of a revised striping plan to meet current Palo Alto Municipal Code requirements. The proposed parking layout showing 44 parking spaces for school, 26 parking spaces for church and 66 bike spaces is adequate for current scope of work. 11. The plans submitted for building permit shall include installation of bicycle parking with a capacity of 1 space for every 5 students or 63 bikes. The parking should be installed within 50 feet of the main entrance to the buildings or distributed around multiple buildings, with good visibility. The type of bike rack and location shall be approved by City Staff prior to installation (Inverted-U type are typical. ‘Wave’ or ‘school yard’ are not allowed). 12. Planning/Landscape Inspection: Prior to final sign off, contractor or owner shall contact the project planner (650- 329-2471) to inspect and verify special conditions relating to the conditions for structures, fixtures, colors as per material board stamped received September 26, 2012, and 7 shall contact the Public Works Arborist (650-496-5953) to inspect the site landscape plan. 13. The school grounds and area in the vicinity of the school shall be kept in a clean, litter free state. The school administration shall be responsible for control of litter of school students in the school vicinity. Public Works Department Public Works Engineering 14. SIDEWALK, CURB & GUTTER: As part of this project, the applicant must replace those portions of the existing sidewalks, curbs, gutters or driveway approaches in the public right-of-way along the frontage of the property that are broken, badly cracked, displaced, or non-standard, and must remove any unpermitted pavement in the planter strip. Contact the Public Works’ inspector at 650-496-6929 to arrange a site visit so the inspector can determine the extent of replacement work. The site plan submitted with the building permit plan set must show the extent of the replacement work or include a note that Public Works’ inspector has determined no work is required. The plan must note that any work in the right-of-way must be done per Public Works’ standards by a licensed contractor who must first obtain a Street Work Permit from Public Works at the Development Center. 15. FLOOD ZONE: The proposed improvements are located within a Special Flood Hazard Area. Accordingly, the proposed construction must meet all of the City’s and Federal Emergency Management Agency’s (FEMA) requirements for construction within a flood zone, such as: the finished bottom floor must be at or above the base flood elevation (BFE); the crawl space (if used) must have flood vents; and all construction materials and equipment below the BFE must be water-resistant. Garage/storage slabs can be below the BFE, but the garage/storage will then need flood vents. See Palo Alto Municipal Code Section 16.52, Flood Hazard Regulations, and our website for more information. The plans must show the BFE on all applicable elevations, sections and details; must include a calculation of the required amount of flood vents; must include the flood vents on the elevations and foundation plan; must note all materials below the BFE as water-resistant; and must include the Elevation Certification Submittal Requirements for Construction in the Special Flood Hazard Area form, which is available from Public Works at the Development Center or on our website. Please note that FEMA recently (May 2009) changed the vertical datum of the flood zones. You must use 8 the new vertical datum (NAVD88) on plans submitted for a building permit. NOTE: Please correctly show the flood zone designation as AH27.7 16. GRADING & DRAINAGE PLAN: The plan set must include a grading & drainage plan prepared by a licensed professional that includes existing and proposed spot elevations and drainage flow arrows to demonstrate proper drainage of the site. Adjacent grades must slope away from the house a minimum of 2%. Downspouts and splash blocks should be shown on this plan, as well as any site drainage features such as swales. Grading will not be allowed that increases drainage onto, or blocks existing drainage from, neighboring properties. Public Works generally does not allow rainwater to be collected and discharged into the street gutter, but encourages the developer to keep rainwater onsite as much as feasible by directing runoff to landscaped and other pervious areas of the site. See the Grading & Drainage Plan Guidelines on our website. 17. STORM WATER POLLUTION PREVENTION: The City's full-sized "Pollution Prevention - It's Part of the Plan" sheet must be included in the plan set. Copies are available from Public Works at the Development Center or on our website. 18. STREET TREES: Show all existing street trees in the public right-of-way. Any removal, relocation or planting of street trees; or excavation, trenching or pavement within 10 feet of street trees must be approved by Public Works' arborist (phone: 650-496-5953). This approval shall appear on the plans. Show construction protection of the trees per City requirements. 19. WORK IN THE RIGHT-OF-WAY: The plans must clearly indicate any work that is proposed in the public right-of-way, such as sidewalk replacement, driveway approach, or utility laterals. The plans must include notes that the work must be done per City standards and that the contractor performing this work must first obtain a Street Work Permit from Public Works at the Development Center. 20. IMPERVIOUS SURFACE AREA: The project will be creating or replacing 500 square feet or more of impervious surface. Accordingly, the applicant shall provide calculations of the existing and proposed impervious surface areas with the building permit application. The Impervious Area Worksheet for Land Developments form and instructions are available at the Development Center or on our website. 9 21. SIDEWALK ENCROACHMENT: Add a note to the building permit plan set that says, “The contractor using the city sidewalk to work on an adjacent private building must do so in a manner that is safe for pedestrians using the sidewalk. The work area must be coned or taped off while still leaving at least 4 feet of sidewalk for pedestrian use. If less than 4 feet of sidewalk is available for pedestrians, the contractor must obtain an encroachment permit from Public Works to close the sidewalk.” Public Works Arborist 22. The Tree Protection Report (TPR) prepared by Walter Fujii, Project Arborist, dated March 06, 2012, is approved and shall be incorporated into the building permit plan set as specified below. All tree protection measures specified in this report are incorporated herein as conditions of project approval, in addition to the other tree protection conditions outlined below. 23. The final plans submitted for building permit shall include the following information and notes on the relevant plan sheets: a) Sheet T-1_Tree Protection-it's Part of the Plan available on the City website at (http://www.cityofpaloalto.org/environment/urbancanopy.asp). Applicant shall complete and include the Tree Disclosure Statement and Inspections and monthly reporting by the project arborist are mandatory (All projects: check #1; with tree preservation report: check #2-6; with landscape plan: check #7). b) The Tree Preservation Report (TPR). All sheets of the TPR approved by the City shall be printed on Sheet T-2, (T-3, T- 4, etc) and added to the building permit sheet index. c) Protective Tree Fencing Type. Delineate on grading plans, irrigation plans, site plans and utility plans, Type II fencing around Street Trees and Type I fencing around Protected/Designated trees as a bold and dashed line enclosing the Tree Protection Zone (all permeable ground area surrounding the trunk) per instructions on Detail #605, Sheet T-1, and the City Tree Technical Manual, Section 6.35-Site Plans. d) Site Plan Notes. Include the following three notes in the following specified sheet(s) of the building permit plan set stating: i) Note #1 - On the Site Plan - "All tree protection and inspection schedule measures, design recommendations, watering and construction scheduling shall be implemented in full by owner and contractor, as stated in the Tree Protection Report on Sheet T-1 and the approved plans,” 10 ii) Note #2 - All civil plans, grading plans, irrigation plans, site plans, utility plans and relevant sheets shall include a note referring to the trees to be protected, including neighboring trees, stating: "Regulated Tree - before working in this area contact Walter Fujii, Project Site Arborist, at (415) 699-6269," and iii) Note #3 - All Utility plan sheets shall include the following note: “Utility trenching shall not occur within the TPZ of a protected tree. Contractor shall be responsible for ensuring that no trenching occurs within the TPZ of the protected tree by contractors, City crews or final landscape workers. See sheet T-1 and note on site plan for instructions.” 24. The plans submitted for building permit shall include a landscaping plan showing details of new landscaping and tree relocation. Alternate planting may be approved with review of City’s Public Works Arborist. 25. The final landscape inspection, prior to occupancy approval, shall require review of the planting of new trees and landscaping as noted on sheet A1.1 of revised plans, dated September 26, 2012 with approved plans dated received February 15, 2012, and marked as “Exhibit A.” These include (1) 15-gallon Coast Live Oak, (1) 24” box Persian Ironwood, (1) 24” box Elegant Tristania and T-25 shall be Acer “October Glory” as replacement trees to be located as per the direction of the City Arborist. Persian Ironwood (T-14) shall be used for screening trees as required for neighbors’ backyards along south-east property line. Evergreen hedge consisting of (1) 5-gallon New Zealand Flax and (1) 5- gallon Carolina Cherry shall be planted at 5’ O.C. along the north-east property line as landscape screening and buffer for abutting residential parcels, and (1) 5-gallon New Zealand Flax as landscape screening at the south-west (front) corner of the property. Two Monterey Pine trees and two Glossy Privets are permitted to be removed as per tree schedule information on sheet A1.1 of revised plans dated September 26, 2012. All Ivy along the perimeter of parking lot shall be removed. 26. The church shall build on church property and maintain a new (7) seven-foot tall redwood fence along the driveway adjacent to 1125 Channing. The fence shall be 6' solid plus 1' lattice high with redwood siding and cement board noise- attenuation features as submitted to City staff October 26th, 2012. Additionally, new 6' plus 1' lattice high fences with noise-attenuation, or modifications to existing fences as desired by mutual parties (residential property owner and Church), shall be built and paid for by the Church 11 outside the chain-link fence and tailored to each property owner at 1125, 1133, 1139 Channing Ave. and ending midway at 41 Kent Place. Fences shall be built during the first stage of construction. A 5’ landscape strip at the edge of the side parking lot shall be created along the common rear property line with 1125, 1133, 1139 Channing Avenue and ending midway along the side property line of 41 Kent Place. In the landscape strip, the Church shall keep the existing large trees and plant 4 (15 gallon) Prunus Caroliniana behind 1133 and 1139 Channing Avenue and 11 Prunus Caroliniana next to 1141 Kent Place side property line. The existing vegetation in the landscape strip behind 1125 Channing Ave shall be pruned with the assistance of the neighbor. All ivy shall be permanently removed in the landscape strip up to the common property line. Irrigation shall be added only as needed to establish the Prunus Caroliniana and discourage ivy re-establishment. The parking spaces along the property line with the rear of 1125, 1133, 1139 Channing Avenue shall be signed “staff” and have wheel stops. 27. A tree relocation plan shall be submitted to the City’s Public Works Arborist and approved prior to building permit issuance. 28. Automatic irrigation shall be provided to all trees and new landscaping. For trees, detail #513 shall be included on the irrigation plans showing two bubbler heads mounted on flexible tubing placed at the edge of the root ball. Bubblers shall not be mounted inside an aeration tube. The tree irrigation system shall be connected to a separate valve from other shrubbery and ground cover, pursuant to the City’s Landscape Water Efficiency Standards. 29. Landscape Plan shall ensure the backflow device is adequately obscured with the appropriate screening to minimize visibility (planted shrubbery is preferred, painted dark green, decorative boulder covering acceptable; wire cages are discouraged). 30. Landscape Planting notes shall include the following: “Prior to any planting, all plantable areas shall be tilled to 12” depth, and all construction rubble and stones over 1” or larger shall be removed from the site. A turf-free zone around trees 36” diameter (18” radius) shall be provided for best tree performance.” 31. TREE PROTECTION VERIFICATION. Prior to demolition, grading or building permit issuance, a written verification from the contractor of record shall be submitted to the Building 12 Inspections Division indicating that the required protective fencing is in place. The fencing shall contain required warning sign and remain in place until final inspection of the project. 32. GENERAL. The following general tree preservation measures apply to all trees to be retained: No storage of material, topsoil, vehicles or equipment shall be permitted within the tree enclosure area. The ground under and around the tree canopy area shall not be altered. Trees to be retained shall be irrigated, aerated and maintained as necessary to ensure survival. 33. EXCAVATION RESTRICTIONS APPLY (TTM, Sec.2.20 C&D). Any approved grading, digging or trenching beneath a tree canopy shall be performed using ‘air-spade’ method as a preference, with manual hand shovel as a backup. For utility trenching, including sewer line, roots exposed with diameter of 1.5 inches and greater shall remain intact and not be damaged. If directional boring method is used to tunnel beneath roots, then “Trenching and Tunneling Distance,” shall be printed on the final plans. 34. PLAN CHANGES. Revisions and/or changes to plans before or during construction shall be reviewed and responded to by Walter Fujii, Project site Arborist, at (415) 699-6269, with written letter of acceptance before submitting the revision to the City for review. 35. CONDITIONS. All Planning Department conditions of approval for the project shall be printed on the plans submitted for building permit. 36. TREE PROTECTION COMPLIANCE. The owner and contractor shall implement all Arborist Inspection Schedule measures; design recommendations and construction scheduling as stated in the TPR, which are subject to code compliance action pursuant to PAMC 8.10.080. The required protective fencing shall remain in place until final landscaping and inspection of the project. Project arborist approval must be obtained and documented in the monthly activity report sent to the City. A mandatory Tree Activity Report shall be sent monthly to the City Building Division beginning with the initial verification approval, using the template in the TTM, Addendum 11. 37. TREE DAMAGE. Tree Damage, Injury Mitigation and Inspections apply to Contractor. Reporting, injury mitigation measures and arborist inspection schedule (1-5) apply pursuant to TTM, Section 2.20-2.30. Contractor shall be responsible for the repair or replacement of any publicly owned or protected trees 13 that are damaged during the course of construction, pursuant to the Palo Alto Municipal Code, and City Tree Technical Manual, Section 2.25. 38. LANDSCAPE INSPECTION. Prior to final occupancy approval, the Planning Department (attn. project planner) and Public Works Arborist shall be in receipt of written verification from the project arborist that he/she has inspected all protected trees and irrigation, and that they are functioning as specified in the approved plans dated March 8, 2012 and as shown on Exhibit A. The inspections should include the following: i) Performance of Percolation & drainage checks is acceptable, ii) Inspection of Fine grading and all plantable areas for tilling depth, rubble removal, soil test amendments are mixed and irrigation trenching will not cut through any tree roots, and iii) Tree and Shrub Planting Specifications, including delivered stock, meets Standards in the CPA Tree Technical Manual, Section 3.30-3.50. 39. MAINTENANCE. After final occupancy approval all required landscape and screening trees indicated in condition of approval shall be maintained, watered, fertilized, and pruned according to Best Management Practices-Pruning (ANSI A300-2001 or current version). Any screening tree that dies shall be replaced (with approved tree species and box size as shown on Exhibit A) or failed automatic irrigation repaired by the current property owner within 30 days of discovery. 40. Private Easement verification and allocation shall be the responsibility of the property owner and shall not be part of this approval. Building and Fire Department 41. Due to the new addition and expansion in use, the existing building, including restrooms, shall comply with all requirements of the 2010 Building and Fire codes and local ordinances. 42. Monitored NFPA 13 fire sprinkler and NFPA 72 fire alarm system shall be installed. 43. The Fire Department access roadway shall be a min 20 ft wide all weather surfaces and be capable of supporting a 75,000 lbs fire apparatus. The roadway shall have a min 13 ft 6 in vertical clearance. 44. Fire Department access roadway to be posted as Fire Lane-No Stopping. Fire Access roadway to meet the standards of the Palo Alto FD. 14 45. Submit plans and specs to the Palo Alto Fire Department Hazardous Materials Division for review, approval and permit prior to installation. Utilities Department Utilities Water Gas Wastewater 46. An approved reduced pressure principle assembly (RPPA backflow preventer device) is required for all existing and new water connections from Palo Alto Utilities to comply with requirements of California administrative code, title 17, sections 7583 through 7605 inclusive. The RPPA shall be installed on the owner's property and directly behind the water meter within 5 feet of the property line. RPPA’s for domestic service shall be lead free. 47. An approved reduced pressure detector assembly is required for the existing or new water connection for the fire sprinkler system or onsite fire hydrants to comply with requirements of California administrative code, title 17, sections 7583 through 7605 inclusive (a double detector assembly may be allowed for existing fire sprinkler systems upon the CPAU’s approval). Reduced pressure detector assemblies shall be installed on the owner's property within 5 feet of the property line. 48. The applicant shall submit improvement plans for utility construction showing the location for the new backflow preventers. 49. All backflow preventer devices shall be approved by the WGW engineering division. Inspection by the utilities cross connection inspector is required for the supply pipe between the meter and the assembly. 50. All new backflow preventer devices shall be inspected by the utilities cross connection inspector and tested by a licensed tester prior to final sign off for the project. The applicant shall provide the City with the initial test certificates and name, address, and phone number of responsible party for subsequent annual testing for all backflows. 51. For existing backflow preventer devices, the applicant shall provide current annual test certificates and name, address, and phone number of responsible party for subsequent annual testing prior to final sign off for the project. 52. The applicant shall submit a completed water-gas-wastewater 15 service connection application - load sheet for City of Palo Alto Utilities. The applicant must provide all the existing and new load information requested for utility service demands specifically for the added gas load in b.t.u.p.h. The applicant shall provide the existing (prior) loads, the new loads, and the combined/total loads (the new loads plus any existing loads to remain). 53. Utility vaults, transformers, utility cabinets, concrete bases, or other structures can not be placed over existing water, gas or wastewater mains/services. Maintain 1’ horizontal clear separation from the vault/cabinet/concrete base to existing utilities as found in the field. If there is a conflict with existing utilities, Cabinets/vaults/bases shall be relocated from the plan location as needed to meet field conditions. Trees may not be planted within 10 feet of existing water, gas or wastewater mains/services or meters. New water, gas or wastewater services/meters may not be installed within 10’ or existing trees. Maintain 10’ between new trees and new water, gas and wastewater services/mains/meters. 54. The applicant must show on the site plan the existence of any auxiliary water supply, (i.e. water well, gray water, recycled water, rain catchment, water storage tank, etc). 55. The applicant shall be responsible for any upgrading the existing utility services as necessary to handle anticipated peak loads. This responsibility includes all costs associated with the design and construction for the installation/upgrade of the utility services. 56. Sewer drainage piping serving fixtures located less than one foot above the next upstream sewer main manhole cover shall be protected by an approved backwater valve per California Plumbing Code 710.0. The upstream sewer main manhole rim elevation shall be shown on the plans. 57. Flushing of the fire system to sanitary sewer shall not exceed 30 GPM. Higher flushing rates shall be diverted to a detention tank to achieve the 30 GPM flow to sewer. 58. Sewage ejector pumps shall meet the following conditions: 1) The pump(s) is limited to a total 100 GPM capacity or less. 2) The sewage line changes to a 4” gravity flow line at least 20’ from the City clean out. 3) The tank and float is set up such that the pump run time shall not exceed 20 seconds each cycle. 59. The applicant shall pay the capacity fees and connection 16 fees associated with any new utility service/s or added demand on existing services. The approved relocation of services, meters, hydrants, or other facilities will be performed at the cost of the person/entity requesting the relocation. 60. All utility installations shall be in accordance with the City of Palo Alto utility standards for water, gas & wastewater. Utilities Marketing 61. If this project includes over 1,500 square feet of landscape modifications, the landscape and irrigation plans shall be approved by Utility Marketing Services, a division of the Utilities Department. Prior to issuance of either a Building Permit or Grading Permit, the applicant will need to comply with the City’s Landscape Efficiency Standards, which includes installation of a dedicated irrigation meter and approved backflow prevention device. Please submit the following items when applying for your Building and/or Grading Permit: 1) Landscape Water Use Statement 2) Water Use Calculations 3) Irrigation Plan 4) Grading Plan 5) Planting Plan 62. All documents and information to comply with the Landscape Water Efficiency Standards can be found on the City of Palo Alto Utilities website at www.cityofpaloalto.org/utilities. If you have any further questions, please contact Amanda Cox with Utility Marketing Services at (650) 329-2417. END OF CONDITIONS SECTION 7. Indemnity. To the extent permitted by law, the Applicant shall indemnify and hold harmless the City, its City Council, its officers, employees and agents (the “indemnified parties”)from and against any claim, action, or proceeding brought by a third party against the indemnified parties and the applicant to attack, set aside or void, any permit or approval authorized hereby for the Project, including (without limitation) reimbursing the City its actual attorneys fees and costs incurred in defense of the litigation. The City may, in its sole discretion, elect to defend any such action with attorneys of its own choice. 17 SECTION 8. Term of Approval. The approval shall be valid for one year from the revised date of approval (November 5, 2012), pursuant to Palo Alto Municipal Code Section 18.77.090. PASSED: AYES: NOES: ABSENT: ABSTENTIONS: ATTEST: APPROVED: _________________________ ____________________________ City Clerk Director of Planning and Community Environment APPROVED AS TO FORM: ___________________________ Senior Asst. City Attorney PLANS AND DRAWINGS REFERENCED: City of Palo Alto Page 1 PLANNING &TRANSPORTATION DIVISION STAFF REPORT TO: PLANNING & TRANSPORTATION COMMISSION FROM: Rina Shah, Project Planner DEPARTMENT: Planning and Community Environment AGENDA DATE: October 3, 2012 SUBJECT: 1095 Channing Ave [11PLN-00437]: Request by John Miller, on behalf of Elizabeth Seton School and Roman Catholic Bishop of San Jose, for a Conditional Use Permit Amendment allowing the operation of a new Pre- Kindergarten program within an expanded building, and an after school day care program, associated with an existing private school (K-8 program) at 1095 Channing Avenue. Zone: R-1. Environmental Assessment: Exempt from CEQA per section 15301. RECOMMENDATION Staff recommends that the Planning and Transportation Commission recommend that the City Council approve the requested Conditional Use Permit amendment (CUP) 11PLN-00437, with revisions reflected in Attachment D as presented to address neighbor concerns, and based upon additional findings and conditions as set forth in the Record of Land Use Action (Attachment A). BACKGROUND On June 13, 2012, the Planning and Transportation Commission (P&TC) held a public hearing and continued the item to a date uncertain to allow time for the applicant to work with the neighbors regarding the proposed traffic pattern and trash and noise issues. The June 13th P&TC report is included as Attachment B, and the meeting minutes are included as Attachment C of this staff report. Conditional Use Permit Review Process The Palo Alto Municipal Code requires that property owners obtain a conditional use permit for certain uses within most zoning districts. Conditional use permit requests must be publicly noticed, reviewed by the Planning and Transportation Commission, and ultimately reviewed and approved by the City Council. The PT&C makes a recommendation to the Council, and the Council decision is final. These differ from permitted uses, which can be approved at a staff City of Palo Alto Page 2 level without public review. In this case, the Municipal Code requires that a conditional use permit request be approved prior to operation of a school in an R-1 zone and PAMC Section 18.76.010 (c) requires the following findings: (1) Not be detrimental or injurious to property or improvements in the vicinity, and will not be detrimental to the public health, safety, general welfare, or convenience; (2) Be located and conducted in a manner in accord with the Palo Alto Comprehensive Plan and the purposes of this title (Zoning). As noted below, an expansion of a previously approved conditional use also requires P&TC review, as well as City Council review and approval, which is the case for this application. The conditional use permit process allows the public to be fully informed and participate in the review process, while allowing the P&TC and Council to place conditions on projects in order to reduce or eliminate potential impacts to the surrounding neighborhood. Permit History There have been numerous planning entitlements issued to this site over the past five decades. Table 1 outlines the CUP history details. This CUP application will amend 87-UP-40 (Attachment E). All applicable conditions of approval associated with conditional use permits 59-UP-26 and 64-UP-26 are applied as condition of approval #5 in the RLUA (Attachment A). Since 1959, the existing school has offered 1st through 8th grade education. The Kindergarten program began operation in 1987. The school is now requesting to add a new Pre-Kindergarten program to their existing Kindergarten through 8th grade school. Table 1 CUP NUMBER YEAR REASON FOR CUP 59-UP-26 1959 Church, rectory, residence, school 64-UP-7 1964 Off-street parking facilities, amend 59-UP-26 for perimeter parking requirements 87-UP-40 1987 Kindergarten classroom in Convent 99-UP-6 1999 Kindergarten classroom in new modular building 7PLN-00188 2007 Modular Science Classroom Structure 11PLN-00437 2011-2012 Add Pre-Kindergarten classroom and after school daycare DISCUSSION On June 27, 2012, a neighborhood outreach meeting was held by the Church where both parties met and discussed the issues related to the site. On August 20, 2012, a neighbor representative provided the staff with a written list of concerns. These concerns went beyond those described to City of Palo Alto Page 3 the P&TC at the 6/13/2012 public hearing. On September 26, 2012, the applicant provided a written response to the neighbors’ issues and concerns (Attachment G) and a revised project description (Attachment H). The school is able to address most of the neighbors’ concerns as listed in Attachment F. Traffic Circulation Traffic flow and student drop-off were the two most significant concerns expressed by the neighbors at the June 13th PTC meeting. Both parties are mutually agreeable to a split drop-off system where: (1) All cars will have one-way entry and one-way exit from Channing Ave; (2) There will be a front drop-off for 1st through 8th grades; and (3) All parents of Kindergarten and Pre-Kindergarten children will park in the parking lot adjacent to the Kindergarten room and walk to the Kindergarten and Pre-Kindergarten classrooms as per the revised site plan (Attachment D). There will be an additional drop off area (shown on Attachment D) which will be used when necessary. The pick-up times will vary because most children attend the extended daycare program, which remains open until 6 pm. The city’s traffic engineer supports the current circulation pattern at pick-up times. The cars begin to queue around 2:45 pm, circulate around the parking lot, pick up children at the side entrance, then exit onto Channing Avenue. This pattern avoids traffic queuing on Channing Avenue; however, the neighbors are still concerned that this pattern of traffic at pick-up times will be detrimental due to noise concerns. Maximum Number of Students. The school will balance the classroom sizes in all of their ten classrooms so as not to exceed the existing CUP school student cap of 315 students. Additionally, any proposal for an increase in the number of students would require a new CUP amendment. Staff is still supportive of the total student number, which will not exceed 315. A mandatory annual report of student enrollment shall be submitted by the school to the city. This requirement is included as condition of approval #4 in RLUA (Attachment A). Trash and Noise The school will install covered trash and recycle containers at a new location, as shown on the site plan (Attachment D), and conditions of approval # 6 (a), (b) and (c), in the RLUA (Attachment A), with sufficient capacity to prevent overflow of trash. Additional garbage pick-up trucks will be scheduled after 8:00 am to avoid disturbance to neighbors in immediate vicinity. Warning signs will be posted throughout the site to alert parents and visitors to turn down their cell phones and radios when entering and exiting the parking lot area which shall be strictly followed and enforced by school staff. Other noise abating measurement requested by neighbors’ is the construction of a Redwood fence along the entire perimeter of the parking lot. Neighbors are willing to share the cost with the Church. Following is a brief summary of the applicant’s response to neighbors’ concerns as listed in Attachment F: a. The cap for maximum number of students will remain at 315; City of Palo Alto Page 4 b. Drop-offs and pick-ups before and after school will occur on site. Cars will enter from the most easterly driveway from Channing Ave and depart from westerly driveway on to Channing Ave; c. The morning drop-off will be at the front of the school for Grades 1-8; The Kindergarten and Pre-K parents will park in the lot adjacent to the Kindergarten and walk the children to the classrooms. The pick-ups for all children will be at the new side entrance; d. Noise will be contained on site with adequate signs and posting of rules to be strictly followed. e. New Redwood fence will be built along the shared property line at the entrance driveway. The Church and the neighbor will share the cost; f. Lighting will be non-glaring and directed downwards away from surrounding residential properties; g. Trash enclosures will remain covered and locked at all times, except at trash pick- up time. Additional garbage pick-up times may be scheduled after 8 am; h. A pest control program will be implemented; all ivy along the parking lot perimeter shall be removed and replaced with green ground cover; i. Additional perimeter landscaping and screening with trees and hedges will be provided as per city arborist recommendation. Update on School Construction, The school secured a separate building permit on May 23rd to commence the remodel /repair of the existing elementary school restrooms for ADA compliance. A Temporary Use Permit (TUP) was issued on August 15th to allow Elizabeth Seton Catholic School to operate a Kindergarten classroom in a new temporary modular structure during the CUP process finalization and construction of the new Kindergarten building which is the subject of this CUP application. The neighbors’ representative was notified of the TUP. Unrelated Construction Noise Issue On August 15, 2012, a neighbor complained about noise due to storm repair work being carried out by the City’s Public Works Department. The church allowed the use of their parking for a temporary staging area. Neither the city workers nor the church were aware that the parking lot would be needed by the school. The staging area was immediately vacated. This situation caused confusion and delay in resolution of the neighbors’ concerns. TIMELINE This project is tentatively scheduled for Council Consent Calendar on November 5th, 2012. A minimum of three votes is required for Council to remove the item from the consent calendar. ENVIRONMENTAL REVIEW This project is exempt from the provisions of the California Environmental Quality Act per Section 15301. City of Palo Alto Page 5 ATTACHMENTS A. Record of Land Use Action B. PTC Report June 13th w/attachments C. Minutes of June 13th PTC meeting D. Site Plan (Revised)* E. Use Permit 87-UP-40 F. Neighbors’ Concerns List* G. Response to Neighbors’ Concerns* H. Revised Project Description* I. Plans (Commission only)* * Prepared by Applicant; all other attachments prepared by Staff COURTESY COPIES: John Miller, 579 Clyde Ave, Suite 300, Mountain View, CA 94043, Applicant Chuck Tully, 3290 Middlefield Rd, Palo Alto, CA 94306, Property Manager Evelyn Rosa, 1095 Channing Avenue, Palo Alto, CA 94301, Principal Rita Vrhel, 1125 Channing Avenue, Palo Alto, CA 94301, Appellant Lee Caswell, 1139 Channing Avenue, Palo Alto, CA 94301, Neighbor PREPARED BY: Rina Shah, Project Planner REVIEWED BY: Amy French, Chief Planning Official DEPARTMENT/DIVISION HEAD APPROVAL: Aaron Aknin, Assistant Director 1 Planning and Transportation Commission 1 Draft Verbatim Minutes 2 October 3, 2012 3 4 EXCERPT 5 6 1095 Channing Avenue: (Continued from June 13th P&TC Meeting) 7 8 Acting Chair Michael: So we’ll proceed to the first matter on the agenda which is the application 9 for the Conditional Use Permit for 1095 Channing Avenue. This is a request by John Miller on 10 behalf of Elizabeth Seton School and the Roman Catholic Bishop of San Jose, for a Conditional 11 Use Permit Amendment allowing the operation of a new Pre-Kindergarten program within an 12 expanded building, and an after school day care program, associated with an existing private 13 school which is K-8 program at 1095 Channing Avenue. 14 15 The Vice-Chair will introduce the speakers. 16 17 Vice-Chair Tanaka: The first speaker is John Miller. We would like a Staff Report. 18 19 Ms. Amy French, Chief Planning Official: Amy French, Chief Planning Official. The project 20 before you is a continuation of the hearing that took place on this item on June 13th. It is an 21 amendment to an existing K-8 school site and church site to establish this Pre-K program and 22 extended Day Care program for these Pre-K children. The Planning Commission asked the staff 23 to continue the item so that the staff and the Applicant could receive some feedback from the 24 neighbors and try to resolve the issues that were brought up at the hearing. Some additional 25 issues were brought up during some of those discussions; the issues as noted in the staff report: 26 traffic, circulation, noise, landscape, and the cap to the number of the children at the school. 27 Some of those were reported out in the staff report for some resolution there. The Conditions of 28 Approval, Condition Number 4, talks about having to report to the City to verify that they’re not 29 exceeding the cap that was in place with the previous Condition. There are four Conditional Use 30 Permits on file with this property dating back to as far as 1959. The school began in 1959 at this 31 site and the kindergarten was brought about in 1987 and then in 1999 there were some additional 32 changes at this site. 33 34 Condition Number 5 in the Record of Land Use Action does make mention of those earlier Use 35 Permit Conditions that this project will relate to those applicable conditions, and itemizes them 36 in that Condition Number 5. The Extended Care Program is the same hours as has been 37 operating at the site since approximately 1998, 7 to 10 a.m., from 3 to 6 p.m., that’s been in 38 operation for the K – 8 school, and that will be the same hours for the Pre-K and extended care. 39 40 There are some items that include fencing; the church has agreed to pay 50 percent of the fencing 41 that commonly separating the properties, the residential properties, from the church on one side 42 from where the parking lot is on the driveway. The cap on the students is still 315 as in the 43 previous proposal for the property, and there are other things such as trash and vermin issues that 44 are going to be mitigated as described in the Conditions of Approval. 45 46 That pretty much concludes the staff report. The Applicant is here as is the staff who prepared 47 the report, Rina Shah. 48 49 2 Acting Chair Michael: So at this time are there any questions from Commissioners? Of the 1 staff? Commissioner Tuma. 2 3 Commissioner Tuma: We just received a stack of papers at places, one of which appears to be 4 something from one of the neighbors. And then there’s 1, 2, 3, 4, 5, 6, 7, 8 pages of documents 5 that I think are from the neighbors, I’m not sure. Or from a neighbor, so, my question is, have 6 you all had a chance to review these? Do you have any points of view in terms of the contents of 7 this and I’m asking this question in the context of really trying to understand what issues remain 8 open in staff’s pages as well, but trying not to rehash things we’ve talked about before but trying 9 to get a sense of the results of the meetings and the documents we have. 10 11 Ms. French: I can say that I have not just now seen this stack here so perhaps during the public 12 testimony on this project I will have a chance to read thoroughly through this. I did have a 13 conversation with one neighbor, Rita Vrhel, who initially requested the hearing, and I heard from 14 her three to four items that she is concerned about, then I spoke with the Applicant, John Miller, 15 who is also here and some of these seem to have been resolved since the survey was done by the 16 Applicant. The neighbor doesn’t have a copy of that survey but the church has obtained the 17 survey from what I understand. 18 19 So some of these, I understand, they are not resolved. From Rita, Ms. Vrhels’ standpoint, she 20 would like the church to pay 100% of the cost of the fence and the church policy is 50%, the 21 applicant can elaborate more on that. She would like an 8 foot tall fence where a 7 foot tall fence 22 is the maximum. There are no building permits required for a 7 foot tall fence along the property 23 line there, though a variance would be required for an 8 foot tall fence. 24 25 There is the other item that was on key her list, which was the cars going by her property. I 26 spoke with the Applicant about that, so I don’t know if there are other neighbors that have that 27 concern. Ms. Vrhel continues to have a concern about additional cars driving by her home for the 28 pickup portion of the day. So that’s my understanding but I will go through this stack here. 29 30 Acting Chair Michael: Commissioner Alcheck? 31 32 Commissioner Alcheck: Yes, can you clarify real quick; you said the 7 foot tall fence is the 33 maximum. What is the requirement between a residential property and this type of property? 34 35 Ms. French: So this type of property is zoned R1, it’s got a Conditional Use Permit for a church 36 and school; being it is still R1 zoning, then a 7 foot fence is the maximum height. 37 38 Commissioner Alcheck: There is no requirement there be a fence. 39 40 Ms. French: There is no requirement that there be a fence. If it is a commercial property, we do 41 get that solid fence that is 8 feet tall, and it will be reviewed by the Architectural Review Board, 42 etc. So in the case of this, because it is residentially zoned and it is backed up to residential, if 43 there is a fence placed on the common property line or maybe even portionally on the residential 44 home side there’s no requirement for review by the ARB and there’s no Variance either as long 45 as it’s 7 feet tall. 46 47 Commissioner Alcheck: As long as it’s not more than 7 feet tall. 48 49 3 Ms. French: Not more than 7 feet tall, right. It’s kind of an odd thing because it’s not a 1 commercial property. 2 3 Commissioner Alcheck: If it was a commercial property then it would be a minimum of 8 foot. 4 5 Ms. French: I believe that’s in the performance standards under Chapter 18.45… 6 7 Commissioner Alcheck: Solid redwood or something similar, something just solid. 8 9 Ms. French: Yes, solid redwood fence, I think Ms. Vrhel was considering a 6 feet fence with 2 10 feet lattice on top. 11 12 Acting Chair Michael: Are there other questions from Commissioners? One question I have 13 Amy is under the existing Conditional Use Permit, what is the enrollment cap on the school? 14 15 Ms. French: Its 315 students. The enrollment has not reached that high in actuality but the cap 16 cannot be 315 students. (This is actually inaccurate – the cap is proposed with this Use Permit). 17 18 Acting Chair Michael: And what we have before us there includes a request that there would be 19 some sort of annual report to the City about the actual enrollment. 20 21 Ms. French: Correct. And with all Conditional Use Permits there is capacity for a Directors 22 Hearing, should Conditions of a Use Permit not be fulfilled, or should problems arise that are not 23 nailed down to the Conditional Use Permit, so we do have that kind of outlet if there should 24 become an issue that we haven’t anticipated. 25 26 Acting Chair Michael: Ok so hearing no further questions from Commissioners about the Staff 27 Report, should we move to Public testimony? Presentation by the Applicant. I believe 15 28 minutes is appropriate. 29 30 Mr. John Miller: Thank you very much Commissioners. Thank you for hearing this tonight. 31 My client has worked very hard and has been very accommodating in listening and responding to 32 issues that had been brought up by the neighbors. I want to go through the process first. I also 33 want to thank Lee Caswell for his hours of effort that he’s put in working with us at the church 34 and school. 35 36 So how do I get rid of this? Ok so let me explain that before we put our application in last 37 November, we did some outreach. During the application time we also did some more outreach. 38 This is one of the cards that was sent out and as you can see there is three dates where there were 39 coffees. These coffees are held once a month by the school. This was not exclusively for just 40 talking about the project. It was the school is general so I think it might have been missed by 41 some of the neighbors. So at the second hearing when we became aware that there were issues 42 with other neighbors, we went through another round of outreach. We walked the site with the 43 neighbors, understood their issues. We communicated our needs in following through with the 44 mission of the school. 45 46 There were a number of things that were small items. The two big things is traffic and I call it 47 capacity, maximum enrollment. There are some things you’ve already taken care of. There is a 48 rodent issue. We got Vector Control to come out and review the site. We have changed out our 49 4 dumpsters to dumpsters with metal lids. They do exist. Green waste came out. They were great. 1 They are going to give the school training on recycling. They got these dumpsters with lids out 2 within a couple of days and we’re also going to have several more pickups. So the issue with 3 food or anything in the dumpsters, I think we’ve taken care of. The other thing is that there is 4 some trash around sometimes by the dumpsters. The multiple pickups will take care of that. 5 6 There were some things about light trespassing and we’ve committed to removing some of the 7 lights on existing buildings which are the interference now. The lights on the new building we 8 got a photometric and we have no direct lights spill over the property line. Another thing was 9 communications; we’ve identified two people, the business manager and the school principle 10 who can always be contacted if there is an issue. I believe in the past if the neighbors have had 11 an issue they’ve contacted the Business Manager, Chuck Tilley, and he’s responded. 12 13 So let me talk about traffic. The number of iterations, this is in your packet so this is the plan 14 that we developed and as you can see the right side where it says parking we call it the side 15 parking lot. You can see a series of arrows that go up, wind around parking and then come out 16 and they subsequently pass between the church which is the building at the bottom and school 17 which is a building at the top this way and then proceed out. Now what we are proposing and 18 what is already done is that in the morning the kids that can get dropped off are dropped off here. 19 I have pictures that show how smoothly that’s working. There are no kids on Channing Street. 20 It’s done very quickly. The kids before school stay in the gymnasium which is right here and 21 then when school starts they process to the school. 22 23 In the afternoon, because 80% of the kids stay in extended daycare, they’re picked up in a 24 staggered fashion throughout the day, throughout the afternoon. I have a chart here that shows 25 just that. We took 15 minute intervals and I brought extra copies and you can see where drop off 26 in the morning and pick up in the evening occur and then you can see to the right that there is 27 every 15 minutes there is about 1 car a minute that comes in and picks up their kids. The key 28 thing with extended daycare is that each child must be signed out. Their parent or guardian has 29 to come in. It’s not just jump in the car and go. That has become very important to us. It’s 30 essential. We can’t operate the other way. 31 32 The other thing is the kids in extended daycare, they will have a homework room and then they’ll 33 stay in their classrooms or play on the playground. That’s where they’ll stay. It’s at the back 34 half of the school and the playground which is at the top of the building. So with this 35 arrangement we’ve instituted, it’s working well. It’s written up in the school manual already and 36 it’s being communicated by the principal. We also have a monitor system out. There are 37 students, I have some pictures of that a ways down. They have really made this a tight, well-38 organized operation. 39 40 This summarizes in chart fashion not only the current car situation by 15 minute, half hour 41 intervals but also it projects out what parking would be at full capacity. For instance, between 7 42 and 7:30 a.m. it might go from 23 to 28. This is based on the fact that there are 2.6 children per 43 vehicle in the morning and 1.8 children per vehicle in the afternoon. For the morning you can 44 see there is already a lot of carpooling going on. The key thing is the side parking lot which is 45 this white side and if you notice that the 7:30 a.m. to 8:00 a.m. when school starts goes from 80 46 parking now, it will go down to about 35 or has gone down to 35 because of most of the kids 47 now going to the front drop off. 48 49 5 During the day, which is this band, there are very few cars, emergencies only. Then after school 1 which is 3:00 to 3:30, kids are again picked up, but in the side parking lot and we expect that in 2 that half hour to go from 55 cars to 65 cars and then from 3:30 to essentially 5:30, all kids are 3 gone at 5:30 except for the half hour it could stay open for emergencies, parents that are delayed 4 in traffic, stuff. We expect now we experience 104 cars, we expect at capacity to go up to 122 5 cars. That’s a delta of 18 cars over basically 2 hours. 6 7 The Principal will talk more about school capacity but in terms of school capacity, just some 8 history. The school was really built in 1950 and opened in 1951. Back in those days they 9 probably had 40 kids in 8 grades so there were probably 400 kids in the school. Some numbers 10 of 330 are floating around. So that there wouldn’t be any impact, additional impact we kept our 11 maximum at 315 and reduced the class size on the other classes so that the ten classes with Pre-K 12 would now be 31 and a half students per class. 13 14 In terms of other things, in terms of noise and ways that we can help be good neighbors, they’ve 15 agreed to remove ivy which is for rodent control and they’ve agreed to pay 50% of the fence and 16 put in landscaping per the City Arborists along the common property line. With those items I 17 think that we have really identified the issues and addressed them. I’d like to have the Principal 18 say a few words. 19 20 Ms. Evelyn Rosa: Good evening everyone. I just have a few comments I would like to make. 21 First I would also like to express my gratitude to Lee Caswell and John Miller for their joint 22 efforts to facilitate communication with the neighbors, the school and the city. We really have 23 listened to and noted other concerns and have worked to address all of the issues. 24 25 I have some concerns because it is my understanding that the enrollment of the school is in 26 question. The Catholic schools in both the Archdiocese of San Francisco and the Diocese of San 27 Jose regularly enroll about 35 students per class and in some cases more than that apart from 28 preschool. Our current enrollment is only 261 students. We are nowhere near 315, but we do 29 need to insure the financial viability of the school. Fortunately at this point we are sponsored by 30 the Daughters of Charity. Our tuition is only $3,300 a year and the cost per child is about 31 $10,000 because even the after school care is free to our school families. So an enrollment of 32 315 including preschool would translate as John said to 31.5 students per class and we do not 33 feel that this is excessive by any means. 34 35 I also have some concerns about the delays that we’ve experienced due to the length of this 36 process. Our donors and staunch supporters who are also Palo Alto residents are expressing their 37 concerns regarding the delays. They’ve invested $2 million for this project. This is not coming 38 out of school funds or parishioner funds even. This is coming directly from Palo Alto donors. 39 They’ve invested $2 million as well as their support for the mission of this school which is to 40 educate children of East Palo Alto and break the cycle of poverty. 41 42 We canceled summer school to allow for the beginning of the building project. Our new school 43 restrooms that were part of the project were not completed on time. The kindergarten portable 44 did not arrive on time. We were not able to get kindergarten started until late. It was our first 45 year having a full day kindergarten, the entire project was delayed. Understandably this caused 46 the teachers and the students’ great inconvenience and also the school incurred significant 47 expenses as a result of the delays so it’s important to note that. The project is currently way 48 6 behind schedule and we really need to get rolling if the building is to be ready in the fall. Thank 1 you for listening. 2 3 Acting Chair Michael: So are there any Planning Commission questions of the Applicant? So 4 hearing none, let’s move to Public Comment. We have about ten cards so we’ll observe the 5 limitation of 3 minutes per speaker. Mr. Tanaka. 6 7 Acting Vice-Chair Tanaka: So the first speaker is John Miller. 8 9 Acting Chair Michael: We’ve heard from him already. 10 11 Acting Vice-Chair Tanaka: The second speaker is Evelyn Rosa. The third speaker is Michael 12 Nash to be followed by Pauline Hayward. 13 14 Mr. Michael Nash: Thank you. So my name is Mike Nash. I live at 1102 Channing so directly 15 across from the church. I’ve been there for about 10 years. A couple of things, first of all I 16 wasn’t expecting to see data and I work at Data Analytics so it was good to see that but I wanted 17 to also put a dose of reality from my perspective. Again, I live directly across the street so I feel 18 the traffic that occurs every day. The traffic pattern that worked so well doesn’t always work so 19 well from my perspective. Students are dropped off on the street, so if there is a Business 20 Manager we can chat with about that it would probably be appropriate. 21 22 As the kids go on field trips which they deserve, the busses that park on Channing illegally at 23 7:30 in the morning to pick up the kids. That needs to be addressed. They can’t go into the 24 parking lot because there is no room. It’s the same thing with the weddings. So I just wanted to 25 share with you that from a resident that lives across the street and loves the church bells, we still 26 feel the pain. If you feel that traffic patterns and the parking is sufficient I disagree. 27 28 I realize this is taking longer than expected but I applaud the fact that we’re all sitting here being 29 civil and talking about it because it’s not a solved issue from my perspective. Thank you. 30 31 Acting Vice-Chair Tanaka: Pauline Hayward followed by Irene Kane. 32 33 Ms. Pauline Hayward: Ms. Pauline Hayward, I live at 1040 Channing which is straight across 34 the street. I’ve lived there for 45 years. When I moved in the gentleman on one side of me who 35 lived there, I can’t even remember now, he used to look from his porch, through the cornfields to 36 University Avenue. The other gentleman on the other side made me aware of when the church 37 was built and that the time the church was built he was informed they would never park on the 38 street when they attended church. The parking area would be in the back of the church and when 39 we moved in 45 years ago I thought well so much for that commitment because in front of my 40 house on Saturday evening and on Sunday there are church cars that are there. 41 42 I am aware of when school begins because that is when litter starts coming onto my property. I 43 don’t know where it is blown from. Also where on the exit side there is a house that has oranges 44 on the trees and the children and their parents, who allow them to do this, are picking oranges off 45 of that property. I’m sure the people do not care but to me it’s not a very good example that’s 46 set. 47 48 7 I’m aware of the number of cars mainly because now I back into my driveway because I find it’s 1 far safer to come onto Channing because of the cars that are coming out of the exit which is 100 2 feet of where my driveway is. Not only do I have to look out for Channing traffic, I now have to 3 look out for those people coming out of the exit. 4 5 The driveway, the congestion, the noise… Now I can be in my backyard and I cannot tell you 6 how many feet I am away from the play yard and I can hear them so I can imagine those that live 7 in the court nearby or in the back of the field, I can’t imagine what kind of noise they’re hearing. 8 I’ve got one thought. I’ve dealt with the city because of a person who is building a home next to 9 my property and I’m well aware that if you’ve got influence in the City you can have so many 10 exemptions that are given to a homeowner that it just appalls me so when they say they’re not 11 going to do so and so I do not believe it because I think the City will bend to anyone who really 12 puts up a fight because I’ve seen it happen to the home that was next to me. I can’t tell you how 13 many times the neighbors and I came down to the City and said you can’t allow this exemption. 14 They said yes we can and they did. I just hope that at this point you’re aware of the influence 15 this has on the community. That is it. 16 17 Vice-Chair Tanaka: Rita Vrhel followed by Irene Kane. 18 19 Ms. Rita Vrhel: I was hoping I was going to have a little more than 3 minutes to counter what 20 Mr. Miller and the school Principal said. 21 22 Acting Chair Michael: We can give you 5 minutes. 23 24 Ms. Vrhel: Great thank you. Can we have the slide back up of the school? I am the neighbor 25 right next to the school. I am right here. So in 1987 a Use Permit was put specific to the 26 expansion of the kindergarten into the convent. It mandated that the traffic flowed from this 27 angle over to here. There were no exceptions. It also mandated a staggered pickup program. 28 29 Since 2007, when a Traffic Study was apparently done, all the traffic has been going back here. 30 Irene is a neighbor and she indicated to me how noisy my house is now. I have double pane 31 windows, I sleep with a fan on, I have put trees around my house and I have a fence. I don’t 32 know what else I can do except put earplugs in my ears. 33 34 When this was presented, it was for a building and an after daycare program, which I thought 35 went with the kindergarten. Ms. French described it that way just now. Actually I do not believe 36 there is an existing permit for any after daycare or extended school program. I’ve worked with 37 Ms. Shah and Ms. French this last week to try to find those permits. They cannot find those 38 permits. I believe that this application is trying to grandfather in an existing after school or 39 extended care program which is attended free by 200 children. The parents come exactly or 40 before 5:30 when the program then becomes expensive. 41 42 So I would ask that the permit be bifurcated and that the daycare portion of this permit 1) be 43 clarified to whether it is for Pre-K only which is 30 students, I don’t have a problem with that, or 44 if the school is actually trying to grandfather in an extended daycare or aftercare program that 45 has never actually been permitted. I think it is owed to me and to the public to see the permits 46 which actually exist on the extended daycare program. The permits before the 59, the 64 and the 47 87 are very clear that school activity on the site will not be expanded and that there will be no 48 increase in noise, traffic, fumes, whatever to the neighbors. With the traffic being rerouted from 49 8 here to back here and around, I think you can see that those conditions of the 1987 Use Permit 1 are not being met and are being flagrantly violated. 2 3 I have paid attention to everything that the school has tried to do because I am right here. I 4 moved in in 1984 when we still had nuns. I have attended meetings. I try to keep up current on 5 things and I did not get any notice on any changes to the existing Use Permit to allow for an after 6 daycare program or extended daycare program and I would again ask that that be investigated. I 7 personally don’t have a problem with the extended daycare program. What I have a problem 8 with is the parking being shuttled past here and pretending that this is not an issue for the 9 neighbors. All the traffic went this way. I believe that the traffic can be moved across here. 10 11 The other thing is that when the neighbors talk about parking, in my packet that I gave you, you 12 will see some pictures and the pictures show the entire back portion of the school being fenced 13 off, permanently fenced off with chain link fence. There is a play yard, there is a volleyball 14 thing, there’s also a sandbox. So those are the parking spaces that the neighbors are complaining 15 about not being available. In my list to you I note how many parking spaces are actually 16 available. I think it’s something like 70 parking spaces, 178 parking spaces are mandated so I’m 17 not sure where they went. 18 19 Mr. Caswell has been our point person and part of my speech today has not been cleared with the 20 group but because I am the most affected by this revised traffic flow pattern I felt I had to speak 21 out otherwise this is my last chance. Mr. Caswell who has worked really hard with the group 22 and I appreciate Ms. Shah and Ms. French for talking with me, will present our bottom line 23 issues. In my packet to you I’ve listed all the applicable Use Permits that go with each of the 24 items that we are requesting. Somehow if you’re going to extend the school day by 45% which 25 the extended daycare program has done and if you’re going to increase the students from the 26 1987 level of 267 which would be an 18% increase to 315 then I do think that you need to 27 provide more than 50% of the fencing. I also think the school needs to provide the mandated 28 1964 landscaping. Thank you. 29 30 Acting Chair Michael: One question before you sit down about the adequacy of the fence height. 31 What is your position on the fence height? 32 33 Ms. Vrhel: My quiet yard which I love has turned into a noisy thoroughfare with all these cars 34 going by me twice and then twice. Somehow this is a business and to pretend that it’s not a 35 business is ludicrous so I think an 8 foot fence is not an unnecessary request. I also think the 36 landscaping needs to be there and the parking needs to be set back 7 feet as it was mandated in 37 the 1959 and 1964 permits. Thank you. 38 39 Vice-Chair Tanaka: The next speaker is Irene Kane followed by Lee Caswell. 40 41 Ms. Irene Kane: Hi folks, neighbors. I’m Irene Kane. I live directly across the street on the 42 corner across from the school on Channing and Harriett. I moved in 11 years ago in 2001, so 11 43 years ago. I don’t like the after school program because of the traffic. At that time of day, it’s 44 just busy because that’s commute time. After work it’s already busy along Channing and having 45 people come pick up their kids at that same time just adds all that much more traffic. It’s hard 46 for me many times to get onto Channing from Harriett which my garage is on the Harriett side so 47 I’m trying to get onto Channing from Harriett. Cars are parked on both sides up to the corner so 48 9 it’s hard to see what’s coming up and down Channing so I have to be pretty much out onto the 1 street before I see the cars coming in either direction so that’s dangerous. 2 3 Also, I have sat for Rita. I’ve been doing that for a few years now. The first time I stayed at her 4 house I was like, early in the morning, 7:30, I’d hear car doors slamming, kids you know, that 5 happens Monday through Friday and then again on Sunday. So you only get one day off which 6 is Saturday morning and those cars come, there is nothing between the fence and the parking lot. 7 The fence is on the asphalt. The cars come right up, right next to the fence so it’s right there. 8 The car doors slamming, the kids, the parents… So it’s six days a week that’s happening in the 9 morning. There’s no sleeping through that so that’s my objections. Thank you. 10 11 Vice-Chair Tanaka: The final speaker is Lee Caswell. 12 13 Mr. Lee Caswell: Thank you very much. I’d like to start off by thanking certainly the Planning 14 Staff and Rita, particularly, for helping us work through and understand what the issues were. 15 Also Evelyn from the school was helpful to bring us all together and have some meetings I think 16 that was the purpose and then lastly to John Miller for listening and helping me to understand 17 some of the context here. I think we’ve done a good job, many of our concerns were addressed 18 and brought into the revised Conditional Use Permit and we think you for that. 19 20 I’m going to address my time on three remaining issues that based on new things that we’ve 21 learned about a requirement for drop off parking, I’m sorry pick up parking. So we learned that 22 because roughly 80% of those students go to after daycare program that’s free, that they have to 23 park and sign out their kids. That was new information. When we talk about a split pickup we 24 have to abandon that and we haven’t come up with a better idea so far, in order to have all of the 25 traffic go through the back on the pick-up, which was different than what we expected. 26 27 As a result when we started looking through other things on prior permits we found there was a 7 28 foot setback from the property line to the beginning of the parking lot and that’s very important 29 because the parking lot abuts against residential bedrooms with kids in particular for Rita you 30 can see here. This parking lot is mandated by the existing permit which is in violation. It should 31 be 7 feet but is currently at 5 and the new Use Permit specifies 5. We should be carrying over 32 the existing 7 foot setback so we have an additional 2 feet of boundary or barrier between the 33 parking area and then by regulation there is also a 2 feet setback from there for concrete setbacks 34 for the wheels. So we’d have an additional buffer across the parking across the back. So that’s 35 number 1. 36 37 Number 2, is that on the enrollment itself, there are 267 students currently, we endorse 261 and 38 we endorsed an additional 30, got us to 291, we said a cap of 300 sounds reasonable. There are 39 10 classrooms; 10 times 30 would be a slight addition to what we have today. We can’t find any 40 justification for a number of 315. Given the neighborhood concerns for traffic it seems 41 unreasonable to accept a 315 student cap without any justification. We’d like to see the cap 42 brought down from 315 to 300. 43 44 Lastly, on the fence issue, as we looked at the requirement to have many people going through, 45 virtually all the cars go through the parking lot in the afternoon, and given the amount of 46 construction that’s going to be coming up with some big heavy equipment, we’d like to see an 8 47 foot redwood fence at the church’s expense across the back perimeter of the lines that would 48 extend effectively from about here which is already in, well this would be new, it would be 49 10 basically up to about this part here and that would provide both a visual barrier which would be 1 partly helpful I think and then also could help with some sound and certainly would help given 2 the amount of traffic going through there. Those are the issues that I have. Thank you. 3 4 Commissioner Tuma: When you’re talking about the fence, show me where you start and where 5 you end. 6 7 Mr. Caswell: Yes. Currently there is about a 4 foot fence I think that comes and so a new fence 8 has been installed behind 1125 and we’re proposing that that fence be continued across 1131 and 9 1139 and then back to right here which is…sorry, go ahead. 10 11 Commissioner Tuma: So that’s where you’re proposing the new fence end? I was over at the 12 site today and curious about why it would end there. As I recall, sort of from there on it is chain 13 link and it is 6 feet tall and there are other homes behind there. Just speaking on the 8 foot solid 14 fence ending there and then it going to chain link. 15 16 Mr. Caswell: Actually it may be kind of a provincial view because I was working with 17 neighbors along this line and we haven’t had a chance to ask the other neighbors whether they 18 would actually prefer that as well. I hazard to guess that if we ask other neighbors around that 19 they would prefer it as well. 20 21 Commissioner Tuma: As you get further towards the end of that line as it goes back you have a 22 two story house there that no matter what you do you’re not going to put out that noise down. In 23 between there is a partially vacant lot. I’m sure it belongs to other people but it’s unconstructed 24 and it seemed like there was, along there… I was just trying to get an understanding about why 25 you were stopping there. 26 27 Mr. Caswell: Probably lack of time just in terms of being able to poll everyone. 28 29 Commissioner Tuma: One other question, do you have any idea or the applicant can also answer 30 this question, as to how many linear feet we’re talking about from what you’ve asked for to… 31 32 Mr. Caswell: Good question. I have a guess. There’s roughly 50 feet across the back of your 33 lot. We have two additional lots of an additional 50 feet. That would be 100 feet and now its 0 34 feet. I’m guessing this is about 70 feet to here so my guess is about 170 feet. I think the cost is 35 about $2,200. There’s a fence here as well. The proposal currently is at 50%. That is included 36 in the current write-up. Across this boundary I think the general consideration from the 37 neighborhood as we talked through the issues is was we’re allowing additional students, we 38 haven’t said we want to block the program, we’re anxious for them to get started too, is that 39 given the externalities that were imposed on the neighbors by the construction and issues that if 40 we covered this portion, but I haven’t told the other neighbors so I can’t speak to them. 41 42 Acting Chair Michael: Any other questions? So with no other questions, closing comments 43 from the Applicant? Three minutes. 44 45 Mr. Miller: Thank you. First off, I want to say that these are not big things and if the school 46 could enact them they would. The reason we have what we have is because we’ve come up 47 against a hard spot and let me recount those a little bit. Going to 7 feet landscape would reduce 48 11 the size of the parking lot just enough so that the garbage trucks requiring turning radius couldn’t 1 make it so we’d do 7 feet no problem but we don’t have it. 2 3 In terms of a lot of the traffic, I drive down Channing to get here and I believe Channing is a 4 very busy street and the amount of traffic that comes from the school is a small increment of that. 5 The other thing that you should understand is that at one time the church had a full schedule of 6 masses, daily mass, every day at 8 or 7:30, and a full schedule of masses on Sunday. So they’ve 7 reduced to 2 masses a week so this site is much less intensively used than it ever was. As I said 8 before, at one time there were probably 400 students there. 9 10 The other things that we’ve talked about, we’ve come up with, is to put staff parking along here 11 only so that there would be cars coming in and out. The other thing, I think we’re also going to 12 put up a noise courtesy sign and I’m sure the Principal will take care of those people who are 13 dropping off in front. She has monitors. We can definitely put a monitor out front so that would 14 be taken care of. 15 16 In terms of the 8 foot versus 7 foot, let me explain what an 8 foot fence permit is. An 8 foot 17 fence is an engineered fence which means that to my disgruntle on many projects, the structural 18 engineer ends up drilling a 5 or 6 foot deep 12 inch diameter pier and then on top of that then 19 you rise 8 feet so that would mean that all along here would be drilled piers in the ground and 20 then we would have to access that. 21 22 The other thing is that, I have some pictures. This is what the drive through looks like. You see 23 the guards, the cones. If it’s needed to be done, the school is going to do it. This is the front, this 24 is Ms. Vrhel’s property here. This is her fence. Obviously the church is interested in having a 25 good looking fence so that’s not an issue. But their policy always has been 50%. 26 27 This is the extent of the traffic, the heaviest time in the afternoon. There’s never a queue. 28 There’s never people waiting and if they could be more courteous I’m sure they would be. I’m 29 sure they’re being instructed to if there’s a problem. 30 31 You’re looking towards Channing. This is the Caswell’s, I forget their name and this is Rita’s 32 right? You can see that there is already a good amount of landscaping there. Two feet is not 33 going to make an effective difference. So those are some of my points. There are others I can 34 make. I want to reiterate, I think that they’ve tried to be good neighbors. They provide a very 35 good, very needed service for the community. There is strong community backing from the 36 donors and so I think that you could say this program really needs to go forward and finish with 37 what we have that we think we can agree on and we think it’s reasonable. Thanks. 38 39 Acting Chair Michael: So with that we’ll close the Public Hearing and will have discussions of 40 Motions, Recommendations by the Commission. First the Commissioners will have 3 minutes 41 for questions of the staff. Ok, Commissioner Tanaka. 42 43 Acting Vice-chair Tanaka: Can staff address some of the questions or the issues Rita brought up 44 about the setback? Is that really true? And the other points she said about parking on the site 45 being available and a few of the other points she brought up? I’d really like to know what is 46 staff’s point of view. 47 48 12 Ms. French: Some items were stated in comments. Of course I was distracted reading this at the 1 same time, and perhaps they coincide with the same information. The first bit is the 7 foot 2 setback. In the submittal that Ms. Vhrel gave to us tonight, it comments on the older Use 3 Permits which do have a condition saying a 7 foot planting strip is required. I can go and look 4 because I have the paperwork about that concrete wheel stop. Often we had a situation where a 5 wheel stop is placed and a car will hang over into the planting area. In this case I’m guessing 6 that we can go back and look at that 7 foot distance and a wheel stop is at that 7 foot so the car 7 hangs over. She also references Chapter 18.54 that specifies at least a 5 foot setback; it doesn’t 8 say at least a 7 feet setback in the code - planting strip, sorry - 5 foot planting strip is required by 9 code; we often see at the ARB the 5 feet planting strip, cars hanging into that so sometimes 10 wheels hang into that 5 foot landscaping. So, in this case, 1964 Use Permit, it talks about a 7 11 foot planting strip…instead of having 7 feet of landscaping you have 5 feet of landscaping and 2 12 feet of asphalt. 13 14 Acting Vice-chair Tanaka: Just to make sure I’m clear, so are you saying that yes, the way it is 15 currently configured today is following the correct code? Yes or better. That parking lot does 16 not need to be reconfigured to code. What we heard earlier from Rita was not correct with that. 17 18 Ms. French: Her statement about the prior Use Permits having a specific statement about a 7 19 foot planting strip is correct. What’s out there is not a 7 foot planting strip; it’s a 5 foot planting 20 strip with additional 2 feet of asphalt, not planted. The theory is to keep the cars back away from 21 the fence 7 feet, and hanging over into the landscaping. 22 23 Acting Vice-chair Tanaka: So the way the parking lot is currently configured, it’s meeting with 24 the Grant Deed and meeting with the code requires? It is meeting all the requirements and it 25 doesn’t need to be changed or does it need to be changed? Is it correct or not correct, that’s what 26 I’m looking for. 27 28 Ms. French: If one wanted to go back in time and say make sure you provide 2 feet more 29 planting ground cover within the 2 feet of asphalt, I suppose we can impose upon them to do 30 that. I don’t know that it solves the problem that is being voiced about keeping the cars parked 31 back from the fence. It simply is a car hanging over into planted matter. 32 33 Acting Vice-chair Tanaka: I was trying to understand whether the cars needed to be moved back 34 2 feet extra or not. 35 36 Ms. Silver: If I could just clarify as I understand it, the Municipal Code requires 5 feet of 37 landscape. The Conditional Use Permit provision though requires something more restrictive, 7 38 feet of landscape and currently the project complies with the code but does not appear to comply 39 with the Conditional Use Permit. 40 41 Acting Vice-chair Tanaka: So what Rita said is correct. 42 43 Ms. French: It is correct in part; but it is not correct in the statement, the written statement that 44 says what this code section says. The code section says at least 5 feet. It does not say 7 feet, 45 that’s the difference, if that’s helpful. The second part of the question is related to parking spots. 46 47 Acting Chair Michael: I’m going to give you an additional 2 minutes so you have a total of 5. 48 49 13 Ms. French: Let me answer the other part of the question for the next Commissioner, because he 1 did ask about the number of parking spaces. 2 3 Acting Vice-chair Tanaka: It’s supposed to be 178 and there are only 70 parking spots right 4 now. 5 6 Ms. French: I’m going to let Rina answer that. 7 Rina Shah: I can explain it to you on the map. 8 9 Acting Vice-Chair Tanaka: Well, let me explain to you what I heard and then you can tell me if 10 it’s correct. I heard a claim that said there are only 70 parking spots right now and there are 11 supposed to be 178 parking spots, so there are 100 parking spots missing. That’s a pretty big 12 bold claim, is that correct? 13 14 Rina Shah: You look at it just for the school. You have to look at the breakdown, the church, 15 there’s a church; the users are different on the parcel. The parking is satisfying the school and the 16 morning church use and handicap and that total is 70 spaces. 17 18 Ms. French: If I might add to that we have some tallying from the 1999 Use Permit 19 documentation and it appears that it says 171 parking spaces. That’s based on a church seating 20 of 683 occupants divided by 4. There’s a seating capacity based on the occupancy of the church 21 and so that same 171 parking spaces is what was previously… 22 23 Acting Vice-chair Tanaka: So how much should the project really have? Should it be 171 or 24 should it be 70? 25 26 Rina Shah: I would think it’s satisfying the parking requirements of the school and the church 27 morning services. There are a few people who use, the pastor and also we have the study, we 28 have the information on the plans and there was a study which was done in 2007. 29 30 Acting Vice-chair Tanaka: So as a church then it’s supposed to be 171 and as a school it’s 70 31 and since it operates as a school and a church it only has to have 70? 32 33 Ms. French: There is a mix of uses here. The school is not operating at the same time as the 34 church, so the church parking suffices for the school when the church is not in session. It sounds 35 like they have two services not at the same time as the school. That’s what I heard them say. 36 37 Acting Chair Michael: Going to other members of the Commission, Commissioner Tuma? 38 39 Commissioner Tuma: What does the current Use Permit allow by way of after care? The 40 current Use Permit, not what they are applying for. 41 42 Ms. French: The last Use Permit, the effective Use Permit for this property is from 2008, and 43 not noted as a statement in the Use Permit Approval paperwork or conditions, it does not state 44 anything about after school care; however the traffic report prepared for that Use Permit talked 45 about the extended care program that existed and the applicant says it’s been existing since 1998. 46 It’s hard from the evidence, looking through all of our electronic data, it was hard to lay hands on 47 other than there was a hearing in 1999, its quite extensive but I’m not aware of anything further 48 other than there was a traffic study talking about the existence of extended care in 2007. 49 14 1 Commissioner Tuma: So is there anything in the existing Use Permit that defines the hours of 2 operation? 3 4 Ms. French: Yes. 5 6 Rina Shah: Yes, 7:00 – 8:00 in the morning, and 3:00 – 6:00 in the afternoon. 7 8 Commissioner Panelli: In the existing Use Permit. 9 10 Ms. French: The traffic report said it was… 11 12 Commissioner Tuma: But my question is very specific. The Use Permit, does it define the hours 13 of operation in the current existing Use Permit. 14 15 Ms. French: I believe it does. If you give me a moment I will go find that, unless Rina knows 16 more specifically. 17 18 Rina Shah: The current Use Permit dates back to the last Use Permit… 19 20 Commissioner Tuma: Not what’s being applied for but what is currently in effect. 21 22 Rina Shah: It’s 2007; it specified 7:00 to 8:00 in the morning and 3:00 to 6:00 after school. 23 24 Commissioner Tuma: For hours of operation of the school? 25 26 Rina Shah: The school is operating from 8:00 to 3:00. And the day care program is from 7:00 to 27 8:00 and 3:00 to 6:00. 28 29 Commissioner Tuma: So the current Use Permit says 7:00 to 8:00 and 3:00 to 6:00 for before 30 and after care. And does it limit in any way the number of kids that can be involved in either 31 pre- or after care, other than the overall limit of 315? 32 33 Rina Shah: No. 34 35 Commissioner Tuma: Question probably for Counsel. 8 foot fence would require a variance. Is 36 that right? It would require some other discretionary permit. 37 38 Ms. French: Because it is bundled with this Conditional Use Permit, typically variances are staff 39 level affair unless called out for hearing before the Planning and Transportation Commission. 40 41 Commissioner Tuma: So my question would be, in our recommendation could we recommend 42 the requirement of an 8 foot fence because obviously there is no DEE or variance been noticed 43 for tonight but could we make that recommendation or does this require a different process? 44 45 Ms. French: To me it would seem you could recommend that staff work with the Applicant to 46 put that into the notice, and there is a 21 day comment period about that and then a decision 47 could be made at staff level and called out for a hearing in front of the Planning and 48 15 Transportation Commission. Depending on straw votes or whatever a determination… It would 1 go to Council eventually. 2 3 Commissioner Tuma: When is this supposed to go to Council? 4 5 Ms. French: November 5th. 6 7 Commissioner Tuma: So we do have 21 days. 8 9 Ms. French: Or it can be a follow up for recommendation that Council would put in what they 10 do for process after the fact. 11 12 Commissioner Tuma: In terms of construction of the 8 foot fence, if you have a six foot fence 13 with a two foot lattice does it require the type of engineering that the Applicant was saying? 14 15 Ms. French: A lattice is open construction; I guess it may not need as much as a wind load 16 calculation. 17 18 Mr. Aknin: It comes down to a wind load issue so it varies from building to building, here it 19 seems like the status is don’t go above 7 feet, it doesn’t require a building permit, so I think it 20 also depends on how open that lattice actually is on top. Some building departments do some 21 50%, if it’s open by 50% wind capacity... (INAUDIBLE 1:15) 22 23 Commissioner Tuma: And one last question should be for the Applicant. Have you received 24 any sort of price quote for this fencing? 25 26 Mr. Miller: Based on some calculations it is 230 feet would be about $13,000 or $14,000 27 dollars. If it was engineered fencing it would be much more than double that. 28 29 Commissioner Tuma: Thank you. 30 31 Acting Chair Michael: Commissioner Panelli. 32 33 Commissioner Panelli: I have one simple question. Is there something in the code that talks 34 about what is acceptable time of operation for a school is? If a school use is permitted, is that 35 defined as 8:00 to 3:00? Or is it… 36 37 Ms. French: Not in the code. Generally what we’ve seen going beyond what your question is 38 maybe, I think trying to get to practices, good practices, common practices I would say typically 39 we would prefer to have some staggered throughout drop-off and pickup behavior, so we don’t 40 have everybody converging within the same 15 minutes upon the school of drop off and pick up. 41 So the practice of having extended pickups is generally a favorable practice so it doesn’t back up 42 onto the street. We’ve seen that at other places like Keyes school and we’ve worked with them 43 to spread that out so as not to impact traffic in the neighborhood. 44 45 Commissioner Panelli: My question is more broad than that though. I’m trying to understand. If 46 this were not subject to a Conditional Use Permit, this were a site that wasn’t already zoned 47 properly for a school, is there something that says school operates between x and y hours or? 48 49 16 Ms. French: Not private schools. This is a Catholic school, it’s considered a private school and 1 they have certain curriculum standards I imagine, but there is nothing in the code. 2 3 Commissioner Panelli: So there’s nothing in the code that says a “school use means”? That’s 4 what I was asking. 5 6 Acting Chair Michael: Commissioner Alcheck. 7 8 Commissioner Alcheck: This is not just questions, comments as well? I think based on what’s 9 being presented here, I don’t think starting weekdays at 7:30 is unreasonable, I think if you live 10 next to a church I think you can expect a weekend day to start earlier than normal. I think there 11 is a requirement in the State of California about properties that are noncommercial, so R1 zoned 12 properties and their fences, I think are split 50/50 and Council can comment on this. I don’t 13 think that a good neighbor fence on the fence line, a fence is on the neighbor line, on the 14 property line, I don’t think you can force them to pay for it all, which I think is important, 15 because there’s, I have some personal experience in this actually, but when you’re dealing with 16 250 feet of fence, let’s take the neighbor that lives’ right on the corner there, she has a fence that 17 faces the front of the street that I noticed, a white fence. If the school puts up a redwood fence it 18 won’t match the fence she has facing the front. Every neighbor has different tastes and 19 aesthetics, you might have Mediterranean homes, modern homes, and fencing is particularly 20 personal so there’s a part of me that believes that this is absolutely something that the neighbors 21 and church can get together on, work together on and sometimes the best way for us to work 22 together on something is to share the expense and I also think there may be some requirement 23 they share the expense under California law. 24 25 Ms. Silver: I’m not sure I have heard reference of the Good Neighbor 50/50 Policy in residential 26 neighborhoods. I’m not sure that is actually the case and how it would apply to a Conditional 27 Use Permit. Anyway I don’t think it applies here because it’s not a purely residential 28 neighborhood. 29 30 Commissioner Alcheck: Ok, I will keep going, I think that this kind of clarifies what 31 Commissioner Tanaka was asking, I sort of acknowledge that maybe there should be 7 feet of 32 landscaping. Whether we should deal with that is a good question, it sounds to me though like 33 there’s 5 feet of landscaping and 2 feet of asphalt in which case the additional 2 feet of required 34 landscaping if we were to enforce that condition won’t necessarily accomplish a goal that would 35 increase the distance so really I don’t know if that’s any relevance issue. I think that requiring an 36 8 foot engineered fence, I think that would be probably a mistake because there is a lot more 37 involved in that and I think that but again I’m also encouraging putting that through, I am also 38 encouraging us not to force the church to not take that expense on their own. So if the neighbors 39 and the church would like to spend money on an engineered fence, I think they should do that. 40 I’m not suggesting it’s required I don’t know if an additional 2 feet would impact noise at all. 41 42 My last comment is about the 315 number and I think that’s a big jump, 20%. 18 percent 43 roughly that’s a big jump, and the count of the students per car (two-something in the morning 44 actually is impressive) and we have to consider that there was a comment by the Applicant about 45 economic feasibility and the reason why they increased the number to makes it more 46 economically feasible for them to run the program. So I’m not sure how I feel about this 315, 47 but I’m not opposed to it being based on noise and traffic. I sort of wish that the relationship 48 here was a little better. I think there are issues that are maybe unrelated to this that they need to 49 17 work out like trash and parking in the street, pickups, but I really don’t… way to address this 1 issue it’s going to be very costly and very difficult to appease everyone. 2 3 Acting Chair Michael: So I will add a few comments. Most of the issues that I had have already 4 been questioned or addressed earlier and I believe that the reason why this matter was continued 5 from a prior meeting of the Commission was our perception was there hadn’t been adequate 6 opportunity for the Applicant to work with the neighbors even though they had made some 7 efforts those efforts weren’t successful and we distinctly had the impression in June that that 8 communication had really not occurred in a satisfactory manner. 9 10 I think based on my legal training there are some narrow issues that we have before us this 11 evening that based on the Public Comment there were other issues that maybe predated this 12 particular complication and there will be more issues in the future separate and apart from the 13 issues on the table. 14 15 I believe that the whole issue of neighborhood outreach, communication, and working together 16 on those issues is probably important in the experience both parties will have. That’s really my 17 main point is that it’s pretty striking as a Commissioner the absence of that process working well 18 when we first reviewed this in June and I really applaud the efforts of both the neighbors, Mr. 19 Caswell, the representative of the neighbors, the Principal, the architect and others who have 20 redoubled their efforts to open up dialogue because it’s clear it would bode well in the future. 21 With that, let me invite the Commission to make a Motion. 22 23 MOTION 24 Acting Chair Michael: Commissioner Tuma. 25 Commissioner Tuma: I’m going to move to Staff Recommendation with the following changes: 26 1) The Applicant be required to construct an 8 foot fence along the approximately 200 odd linear 27 feet are described. That they would be required to do that and that’s actually the only 28 modification, I’ll address some issues in comments but Staff Recommendation with a 29 requirement that the Applicant be required to construct an 8 foot fence at the Applicant’s 30 expense. I’ll comment as to why if I get a Second on the Motion. 31 32 SECOND 33 Acting Chair Michael: There’s a second from Commissioner Tuma, Tanaka 34 35 Acting Vice-chair Tanaka: Second. 36 37 Acting Chair Michael: Commissioner Alcheck. 38 39 Commissioner Alcheck: We haven’t heard… The point person for the neighbors, I’ll say I 40 believe they’ve had ample time to communicate with the other neighbors. Its 250 feet. We don’t 41 know that the neighbors on the other side want that. 42 43 Commissioner Tuma: That’s not what I’m asking for. I’m asking for essentially when Mr. 44 Caswell was up there he pointed out a starting point and ending point and I’m suggesting to end 45 it where he had requested. I had asked the question about the balance of it but given the fact that 46 this has been noticed, the other neighbors aren’t here to say anything about it. My proposal is 47 that it end where Mr. Caswell had noted, about 230 feet. I looked at the plans. It’s a little bit 48 hard to say but it’s somewhere in that neighborhood. 49 18 1 Commissioner Alcheck: Just to be really clear here are you suggesting that it’s on the property 2 line or inside the property line? 3 4 Commissioner Tuma: I don’t know. There is some question as to where the property line is. 5 6 Commissioner Alcheck: I only mention that because I believe again that there is a legal 7 requirement that you can’t get around in the State of California that requires that a property 8 owner to build on the property line at his sole expense. 9 10 Commissioner Tuma: Well let me go ahead and make some comments. One thing is I think our 11 Council has said in the context of the CUP we can in fact require it so in the absence of that I’m 12 going to go with that. Here’s my thinking. There is a requirement in the current Use Permit that 13 requires a 7 foot setback if you will but there is also a practical issue here which is, from what 14 we’ve heard from the Applicant, that they can’t do that and have enough room to turn with the 15 larger trucks so the reason for that 7 foot setback is to give more of a barrier to the neighbors and 16 in between a Commercial and a Residential Use. I understand this is all residentially zoned but 17 the fact of the matter is we have effectively a Commercial Use that’s abutting a Residential Use. 18 So my feeling was, let’s do a compromise or a trade-off here. We’ll give instead of coming up 19 with a requirement that would make essentially as I understand it, the operation infeasible, in 20 other words going to the 7 foot setback let’s compensate that by having a higher fence. The idea 21 is more of a barrier because that’s what the setback is all about. That’s the reason to make that 22 trade. Not have them go to what’s in the current Conditional Use Permit by way of a setback but 23 rather provide more of a buffer through a higher fence. To me that seems, I’ve had occasion to 24 build quite a bit of fencing myself in various different contexts, not in Palo Alto, so I don’t know 25 but typically with a two foot lattice on top of a six foot redwood it is not required to be 26 engineered but I’m not professing to say that’s the case in Palo Alto, I don’ know what the 27 answer to that is. But whatever it is I think that may be the cost of doing business here from the 28 perspective of the Applicant if they want to add the extra capacity they’ve got to give back some 29 extra buffer so that’s my thinking. 30 31 Acting Chair Michael: Thank you. There’s been a Motion and a Second. Would you like to say 32 anything further on support of your Motion? Would you like to comment on your Second 33 Commissioner Tanaka? 34 35 Commissioner Tanaka: My language is actually the same as Commissioner Tuma. I was 36 thinking about the other thing which is the parking issue which I’m still not really clear on but 37 assuming that 171 is a fair compromise it doesn’t solve the parking problem but I support the 38 Motion on the same rational Commissioner Tuma spoke about. 39 40 Commissioner Alcheck: I want to suggest that I’m a little worried about the requirement 41 because if we do require an engineered fence and sometimes these wind requirements require 42 you to do two feet underneath or even before and sometimes concrete posts. If there are trees on 43 the neighbor’s side of the property that are lining their fences, whatever is built could destroy 44 their roots and I mention this because I was involved in a project where they had to put up a 45 fence and they eliminated 67 trees along 295 feet, 67 35 year old trees and as soon as that came 46 apparent nobody wanted it. I want to avoid that in two months coming back here once we realize 47 it. I’m just going to voice that concern. I don’t know how many mature trees are in the back of 48 their property along this fence but that could be affected by this. 49 19 1 Acting Chair Michael: So is there any further? Commissioner Tanaka 2 3 Commissioner Tanaka: How many mature trees are there along the fence line? 4 5 Mr. Aknin: One thing that we could do between now and the City Council meeting is work with 6 our Building division as well as with the City Arborist to see if there are any conflicts and make 7 that information available before the City Council. 8 9 Rina Shah: I want to add that there is a chain link fence along the property line so for this fence 10 you will have to give us direction as to where the new fence has to go because the chain link 11 fence will not be removed from my understanding… (INAUDIBLE 1:33) …It’s on the church 12 property. On the property line. 13 14 Ms. French: If we can clarify the Motion: is this a fence that would be along the property line 15 basically 100% church cost would it be church property? 16 17 Commissioner Tuma: Where was the fence that was proposed to be built? On what piece of 18 property was that? 19 20 Rina Shah: The church. The current buffer is a 5 feet buffer. 21 22 Commissioner Tuma: That would be yes. What’s the reason to leave the chain link fence there? 23 24 Rina Shah: Safety and security. It’s strong and has lasted for so many years. It’s not a visual 25 barrier to the church and the redwood fence would actually provide a visual barrier from the 26 church to the neighbors. 27 28 Commissioner Tuma: If I could, I’d like to hear from the Applicant on this topic. He seems to 29 have something to say. If you can come to the microphone so it can get recorded? Thank you. 30 31 Mr. Miller: As in any school environment, security is of the utmost importance. We see many 32 wooden fences that have boards that kind of slide to the side once in a while so we strongly 33 recommend keeping the chain link fence for security. We can’t guarantee that wood fences 34 would turn out 50/50 or part of neighbors would be maintained. 35 36 Commissioner Tuma: Okay. Let me ask you, if the requirement were for the redwood fence to 37 be constructed at the church’s cost, and maintained at the church’s cost would that solve the 38 issue or would you still want to keep the chain link fence up? 39 40 Mr. Miller: We’d probably want to keep the chain link fence up. The other thing I might say 41 about the fence is that a there are things that structures over our property line, if we are forced to 42 put up a chain link fence, then we will be putting it on the property line or close to the property 43 line… The other issue is that if you force us to come inside the property line we’re taking the 44 landscape strip which we are at the maximum now. If we have to put a wooden fence in front of 45 the chain link fence, then that’s eating into that 7, that 5 feet of landscaping. 46 47 Acting Chair Michael: So I’d like to offer a friendly amendment and that would be that the 8 48 foot fence would be constructed and maintained by the church. 49 20 1 Ms. French: I’m sorry I missed that. 2 3 Acting Chair Michael: The friendly amendment is that would be constructed and maintained at 4 the expense and responsibility of the applicant. 5 6 Commissioner Tuma: I’ll take that. 7 8 Commissioner Tanaka: Me too. 9 10 Commissioner Alcheck: This fence is not on the property line, it’s on the interior, just inside of 11 it. 12 13 Acting Chair Michael: So, are there any other question or comments before we move on? 14 Commissioner Panelli? 15 16 Commissioner Panelli: It begs the question, if there is now a fence in the landscape strip, is it 17 okay to have a fence inside a five foot planter setback? If the answer is yes then I’d say let’s 18 progress to a vote. 19 20 Mr. Aknin: I would say yes because it’s serving the same purpose as the 5 foot landscape strip 21 that’s there to create a buffer, the fence is just there as more of a buffer. 22 23 Commissioner Panelli: It’s sort of implied but I wanted it explicit before I vote on it. 24 25 Ms. French: The code does say the landscape strip may be required to include a fence… 26 27 Commissioner Tuma: So, to the extent that it would otherwise be encroachment to that, it is 28 permitted. 29 30 Acting Chair Martinez: So having concluded our discussion let’s proceed to a vote. All in favor 31 of the Motion? Aye. Any opposed? One opposed. So the Motion passes with a 4 to 1 vote. 32 Commissioners Tuma, Michael, Tanaka and Panelli in favor and Commissioner Alcheck 33 opposed. 34 35 MOTION PASSED (4 – 1) 36 37 City of Palo Alto Page 1 PLANNING &TRANSPORTATION DIVISION STAFF REPORT TO: PLANNING & TRANSPORTATION COMMISSION FROM: Rina Shah, Project Planner DEPARTMENT: Planning and Community Environment AGENDA DATE: June 13, 2012 SUBJECT: 1095 Channing Ave [11PLN-00437]: Request by John Miller, on behalf of Elizabeth Seton School and Roman Catholic Bishop of San Jose, for a Conditional Use Permit Amendment allowing the operation of a new Pre- Kindergarten program within an expanded building, and an after school day care program, associated with an existing private school (K-8 program) at 1095 Channing Avenue. Zone: R-1. Environmental Assessment: Exempt from CEQA per section 15301. RECOMMENDATION Staff recommends that the Planning and Transportation Commission recommend that the City Council uphold the Director of Planning and Community Environment’s decision to approve Conditional Use Permit amendment 11PLN-00437 based upon the findings and conditions in the Record of Land Use Action (Attachment A). BACKGROUND On April 25, 2012, the Director of Planning and Community Environment tentatively approved the requested Conditional Use Permit amendment to allow the operation of a new pre- Kindergarten program, an expanded Kindergarten program and an after school extended care in a new building adjacent to the existing K-8 program. Within the prescribed 14 calendar day timeframe, one request for a public hearing was received for the application. The written request is included as Attachment F to this staff report. EXISTING CONDITIONS The project site is located in a residential zone, primarily accessed from Channing Avenue and bordered by single-family homes on west, east and north sides (Attachment B). Use Permits for the existing private educational facility have been in place for decades. The use permit #87-UP- 40, granted on October 29, 1987, amended use permits 59-UP-26 and 64-UP-7 and allowed the location and operation of a church, rectory, convent and school and the use of a portion of the City of Palo Alto Page 2 first floor of the existing convent for a Kindergarten classroom. The 99-ARB-57 and 99-UP-6 approvals allowed for a modular Kindergarten classroom addition. Hours of operation of the existing school are from 7 am to 5:30 pm Monday through Friday. The peak hours of drop-off and pick-up of students for both the existing school program and the proposed amendment to the program are as described in the applicant’s project letter dated received November 29, 2011 (Attachment E). There is a one-way entry from the easternmost driveway on Channing Avenue, and one-way exit from the westernmost driveway along Channing Avenue (see site layout sheet A1.1). There is an existing side parking area that serves as the main student access to the school with 40 parking spaces. PROJECT DESCRITION The St Elizabeth Seton Elementary School proposes to remove the existing modular Kindergarten structure and replace it with a new 3,383 square feet building, adjacent and attached to the existing K-8 school building. An amendment to an existing Conditional Use Permit is required for the operation of a new Pre-Kindergarten program and after school daycare. The number of students, including preschool, would not exceed 315 and 44 parking spaces would be provided by restriping of the existing parking area. The existing patterns of drop-offs before school would be unchanged. Because of the new after school program, the pick-up times would extend later in the day (until 6 pm). As described in the approval letter, dated April 25, 2012 (Attachment D), the proposal consists of the following components: (1) A new Pre-K program (2) An expansion of existing Kindergarten program (3) After school day care program (4) Hours of operation from 7 am to 6 pm Monday through Friday. The project’s landscape plans show removal and replacement of four trees on site. These have been reviewed and approved by the City arborist. Additionally, five feet of landscape buffer and screening are proposed to be maintained; new evergreen hedges and shrubs would be planted to provide visual screening along the fences abutting adjacent residential property lines (Site Plan, Attachment C). DISCUSSION Hearing Request On April 30, a request for hearing by Planning and Transportation Commission was received. The hearing requester, a residential neighbor, cited the following: 1. She noted that the convent building is not correctly labeled on plans; 2. Regarding the rules of church parking, she asked if the yellow stripes remarking each parking space will start 5 feet from the fence/property line; 3. She questioned the accuracy of the applicant’s statement, “no loss of parking spaces,” due to new construction. 4. She stated that the five foot setback rules are not being followed and asked staff to ascertain the accuracy of school’s proposed plans with required 5 feet parking setbacks. City of Palo Alto Page 3 5. She noted that cars parked up to the fence with only a thin amount of shrubbery and a chain link fence between property lines. 6. She asked if the traffic circulation will occur as it was before the amendment. Response On May 1, the applicant, John Miller Architects, addressed this neighbor’s issues regarding parking and restriping of parking lot with a revised site plan (Attachment C). The applicant confirmed her desire to continue with the hearing process. Her concerns are addressed below: 1. The plans have been revised to show the convent building as residence. 2. Pursuant to PAMC Section 18.54.040 (a), minimum standard for perimeter landscaping is five feet wide landscape strip. The project plans show five wide feet landscape strip between the exterior boundary of the parking area and the nearest adjacent property/fence line. 3. The project plans show 44 parking spaces, which is more than the existing 40 spaces and therefore there is “no loss of parking spaces” due to restriping. 4. Pursuant to PAMC Section 18.54.040 (h), wheel stops shall be installed to protect the required landscape areas and stop the wheel no closer than 5 feet from perimeter fencing. The project plans shall be revised to show wheel stops. 5. Pursuant to PAMC Section 18.54.040 (f)(1), a landscape screen or buffer consisting of a combination of trees and shrubs shall be used to create a dense visual buffer. The site plan sheet A1.1 (Attachment C) shows new trees and shrubs to be planted along the perimeter abutting residential property lines. 6. There is no change in drop-off and pick-up entry and exit areas. As per project plans dated March 08, 2012, there is a one-way entry from the easternmost driveway and one- way exit from the westernmost driveway along Channing Avenue. CONDITIONAL USE PERMIT FINDINGS The Conditional Use Permit approval is based upon the findings indicated under Palo Alto Municipal Code (PAMC) Section 18.76.010(c), subject to Conditions of Approval, listed below: (1) The proposed use, at the proposed location, as conditioned, will not be detrimental or injurious to property or improvements in the vicinity, and will not be detrimental to the public health, safety, general welfare, or convenience. This finding can be made in the affirmative in that the proposed building is located on the eastern corner behind the existing church and convent, aligned with the main internal circulation, and will replace an existing undersized Kindergarten structure with newer and larger facility providing both Kindergarten and Pre-Kindergarten classrooms with extended daycare and shall be within the allowable square footage for the site. Additionally, the new structure will provide a prominent entrance at the existing parent drop off and parking area. The new classroom expansion proposes to meet the maximum student enrollment of 315 students allowed for the use and there shall be adequate parking spaces to accommodate this conditional use. The traffic pattern and vehicular circulation shall be conducted in an orderly way and shall not generate excessive trip demand. New trees and landscaping is proposed in the 5-foot setback between the building and adjacent residential property line to provide additional buffering and replace the trees that are proposed to be removed within the new City of Palo Alto Page 4 building footprint. Conditions of approval have been imposed to ensure the project conforms to the submitted plans. (2) The proposed use will be located and conducted in a manner in accord with the Palo Alto Comprehensive Plan and the purposes of the zoning Ordinance. This finding can be made in the affirmative in that the proposed project is replacing an existing 1999 Kindergarten/restroom addition with a larger Kindergarten/restroom and Pre Kindergarten/restroom addition with after school daycare program that would be consistent with the Palo Alto Comprehensive Plan. The total proposed 3,383 square feet addition will include exterior changes and addition that will provide high quality design and site planning and shall be compatible to the existing structure in design and materials. The school shall be conducted in a manner that will support and promote the provision of comprehensive school and childcare services by public and private providers as a conditional use in R-1 zoning district and maintain Palo Alto’s varied neighborhoods while sustaining vitality of its public facilities. This finding can be made in the affirmative. POLICY IMPLICATIONS The proposed project is consistent with the Comprehensive Plan and staff believes there are no other substantive policy implications. TIMELINE This project is tentatively scheduled for Council Consent Calendar on July 23, 2012. A minimum of three votes is required for Council to remove the project from the consent calendar. ENVIRONMENTAL REVIEW This project is exempt from the provisions of the California Environmental Quality Act per Section 15301. ATTACHMENTS A. Record of Land Use Action B. Location Map C. Site Plan* D. Tentative Approval Letter, April 25, 2012 E. Applicant Submittal* F. Request for Public Hearing G. Plans (Commission only)* * Prepared by Applicant; all other attachments prepared by Staff City of Palo Alto Page 5 COURTESY COPIES: John Miller Rita Vrhel PREPARED BY: Rina Shah, Project Planner REVIEWED BY: Amy French, Acting Assistant Director of Current Planning DEPARTMENT/DIVISION HEAD APPROVAL: Curtis Williams, Director _____________________________________________________________________ City of Palo Alto June 13, 2012 Page 1 of 20 PLANNING& TRANSPORTATION 1 COMMISSION 2 MINUTES 3 4 ==================MEETINGS ARE CABLECAST LIVE ON GOVERNMENT ACCESS CHANNEL 26====================== Wednesday, June 13, 2012 Meeting 5 6:00 PM, Council Conference Room 6 1st Floor, Civic Center 7 250 Hamilton Avenue 8 Palo Alto, California 94301 9 10 ROLL CALL: 6:06 PM 11 12 Commissioners: Staff: 13 Eduardo Martinez – Chair (absent) Steven Turner, Advance Planning Manager 14 Susan Fineberg – V. Chair (absent) Donald Larkin, Sr. Assistant City Attorney 15 Samir Tuma Rina Shah, Planning Tech 16 Arthur Keller – Acting Chair Chitra Moitra, Planner 17 Greg Tanaka – Acting V. Chair Robin Ellner, Administrative Assoc. III 18 Mark Michael 19 20 21 22 Acting Chair Keller: Let me call the meeting to order of the Planning and Transportation 23 Commission for June 13, 2012. 24 25 Robin Ellner, Administrative Assoc. III: Vice Chair Fineberg, Acting Chair Keller, Chair 26 Martinez, Commissioner Michael, Commissioner or Acting, I’m sorry, Vice Chair Tanaka, 27 Commissioner Tuma. Four present. And before we start, the meeting of June 27th, thank you, 28 has been canceled so the next meeting will be July 11th. And that is it on the updates for tonight. 29 30 Steven Turner, Advance Planning Manager: Acting Chair Keller, I’d like to have our City 31 Attorney make a special statement due to our minimum member of Commissioners present 32 representing a quorum, but just a special statement from the City Attorney’s office. 33 34 Acting Chair Keller: Thank you, please do. 35 36 Donald Larkin, Sr. Assistant City Attorney: I was gonna point out that four is the, is a quorum, 37 but it’s barely a quorum. So if anybody does need to leave the dais for any reason this would be 38 the time to use that rarely used request for personal privilege to ask for a short recess if any of 39 the Commissioners need to leave the dais because all four Commissioners should remain at the 40 dais throughout the meeting. 41 42 Acting Chair Keller: Thank you. So, the first thing we have, the first thing we have is public 43 comment. So, I don’t have any cards from anybody who wishes to speak to Oral 44 Communications. Are there any cards? Ok. With that I will open Oral Communications and 45 close Oral Communications. The first item on our Agenda is 1095 Channing Avenue and a 46 _____________________________________________________________________ City of Palo Alto June 13, 2012 Page 2 of 20 request for a conditional use permit. And this is an Appeal of the request for the conditional use 1 permit, and I believe first we’ll have a Staff presentation. 2 3 NEW BUSINESS. 4 Public Hearing: 5 6 1. 1095 Channing Avenue: Request by John Miller, on behalf of Elizabeth Seton School and 7 Roman Catholic Bishop of San Jose, for a Conditional Use Permit Amendment allowing the 8 operation of a new Pre-Kindergarten program within an expanded building, and an after 9 school day care program, associated with an existing private school (K-8 program) at 1095 10 Channing Avenue. Zone: R-1. Environmental Assessment: Exempt from CEQA per section 11 15301. 12 13 Mr. Turner: Yes, thank you Acting Chair Keller, Steven Turner, Advance Planning Manager 14 from the Planning Department. Staff is recommending that the Planning and Transportation 15 Commission recommend that the City Council uphold the Planning and Community 16 Environments Director’s decision to approve the conditional use permit based upon the findings 17 and conditions contained within the draft record of land use action. 18 Commissioners, just a little bit of background before we get to an overview of the project by the 19 project Applicant and words from the Appellant. On April 25th the Director of Planning and 20 Community Environment tentatively approved the conditional use permit for an expansion of a 21 school function at an existing Church at 1095 Channing Avenue. This is a use permit that was 22 meant to take the place of previous use permits that have been granted on the site over the years. 23 A number of use permits have been granted. We have currently at least four use permits for the 24 site to allow the Church, the rectory, a residence, and other Church related uses. In 1987 there 25 was a use permit that tried to combine all of those use permits into one specific document and the 26 current request is for a further expansion of school uses upon the project site. And right now 27 those, the school programs represent a pre-kindergarten and a kindergarten program that are 28 currently taking place in modular buildings. The Church would like to construct permanent 29 facilities for the pre-kindergarten/kindergarten classes and that is essentially the request that is 30 before you today. 31 32 The existing use permit on the site does not cap the maximum number of students that could be 33 present on the facilities at any one time. That was a deficiency that Staff noted as we reviewed 34 this permit and therefore the proposed use permit has a cap of 315 students at any one time being 35 on the project site. The use permit also describes additional activities related to an afterschool 36 daycare program and combined with the pre-kindergarten and kindergarten programs would have 37 hours of operations from 7:00 a.m. to 6:00 p.m. Monday through Friday. 38 39 The project’s landscape plans show removal and replacement of trees on the site. Those have 40 been reviewed by the City Arborist and an additional landscape buffer has been indicated on the 41 plans to maintain a five foot minimum buffer between the Church and residential uses. Based 42 upon the materials contained within the project application, the review by City Staff, the Director 43 _____________________________________________________________________ City of Palo Alto June 13, 2012 Page 3 of 20 found that the proposed project would meet the findings for a conditional use permit. Those 1 findings are contained within your Staff Report and based upon that the Director made that 2 decision. 3 4 However, an interested member of the community requested a Public Hearing based upon that 5 decision and the process that we’re going through now for conditional use permits is that the use 6 permit is reviewed by the Planning and Transportation Commission. You’re to review that and 7 send your recommendation up to the City Council who will make a final decision. The person 8 requesting the hearing had a number of issues that are described within your Staff Report 9 including some mislabeling of specific uses on the plans, the requirement for a five foot 10 landscaped strip around the parking lot areas adjacent to residential uses, there was a question 11 about the number and amount of parking spaces on the existing site as compared to what was 12 proposed. So the person wanted to have some clarification about that, she also noted that the 13 plans did not contain information that would describe the level of landscaped screening between 14 the Church areas and the residential areas. And the final issue was with result, was with regards 15 to the automobile circulation plan for pick up and drop off of students on the site. And so in 16 response to those specific concerns the Project Architect addressed those and the response is also 17 contained in detail in your Staff Report to provide the landscape buffer, to describe the 18 screening, to describe the pedestrian drop off and circulation along the site as well as other 19 details that the Applicant can go into. 20 21 Based upon those responses from the Applicant, again the Staff reviewed the information and 22 found that we could still make the required findings for the conditional use permit and therefore 23 we are requesting that the Planning and Transportation Commission concur with that 24 recommendation and forward a recommendation to approval to the City Council. With me 25 tonight is Rina Shah from the Planning Division who is the Project Planner on the site. Also, 26 from the Applicant’s side we have John Miller, who is the Project Architect, and the Principal of 27 the school, Evelyn Rosa. And they will be making a presentation as well. That concludes the 28 Staff Report. Thank you. 29 30 Acting Chair Keller: Thank you Advance Planning Manager Turner. So I am going to open the 31 Public Hearing, we have the Staff recommendation and we actually opened the hearing and I 32 have the cards for the speakers? Do we have a speaker card for the Appellant? And if you wish 33 to speak and have not already submitted a speaker card, please do so. Do I have a card for the 34 Appellant? The Appellant. Excuse me. 35 36 Rina Shah, Planning Tech: Yeah, she’s here. Rita Vrhel. 37 38 Acting Chair Keller: Ok, great, thank you. Thank you. I wasn’t sure which one. Ok so this is 39 the Appellant. So, first by the Appellant a presentation by Rita Vrhel. I’m sorry if I’m 40 pronouncing your name incorrectly. And you will have up to 15 minutes. 41 42 Rita Vrhel, Appellant: I have some pictures for everybody. I have seven, I guess that will be 43 enough. Do you…do you want some? Ok, first of all I would like to start off by saying that I 44 live right next to the Church and to the school site. I would also like to say that I have no 45 objections to the school itself. The plans are fine, the drainage is fine, everything is fine. What I 46 _____________________________________________________________________ City of Palo Alto June 13, 2012 Page 4 of 20 have been objecting to and what I requested additional information on, and I was not provided 1 landscaping information, etcetera. I was provided the drawing which shows the traffic pattern 2 after I made my Appeal. 3 4 I just wanted to review a little bit about the school. My house was built in 1946; the school was 5 built in 1951. At some point, probably 15 years ago or so the local school population started to 6 decline and Elizabeth Seton was consolidated with Our Lady of the Rosary School, which was 7 over on Cowper Avenue. All the students were moved to Channing Avenue. It went from a K to 8 6 to a K to 8th grade. This is off the Elizabeth Seton School website. There were 251 students in 9 2002-2003, there were 248 students 2008-2009, there were 270 without preschool, currently. 10 There’s 300 with preschool, and the maximum number of students which is now being requested 11 is 315. The schools when they were consolidated, the Church had a mandate to serve 12 underprivileged children, minority students, Catholic students, and students that for the most part 13 do not live in the neighborhood. I only bring this up because it changes the tone of the school in 14 that most of these children, if not all, are driven to school. I have not seen any carpools; I have 15 seen very few children walking to school. I do see some children walking home from school, but 16 this is less than in the past. 17 18 I was involved in objecting to the cell tower that was proposed at the same property site. And so 19 one morning starting at 7:00 I was out handing out brochures in Spanish and English 20 encouraging the parents to become involved in the cell tower discussion. The traffic is quite 21 bunched up. If you look at the pictures I have provided to you, if we go to picture #2, this 22 shows, I’m sorry, if we go to picture #9. #9 and #10 show the school, the Church and the school, 23 and what happens is the traffic comes in, makes a right hand turn into the school property from 24 Channing and is directed in front of the what used to be the convent which is now called the 25 residence hall, over to the school which is this shown in #10, this 14 foot wide opening. This is 26 one way traffic. It’s also shown in photograph #11 and #12. And then the children are dropped 27 off in photograph #11 approximately where the cross is. And then the, the traffic continues 28 around the back side of the Church, over to the rectory, makes a left hand turn and goes out on 29 Channing. This is the way it has been done, I believe, for at least 10 years. This seems to have 30 solved the problem of getting the children into the school in an efficient fashion, minimizing 31 impact on the neighbors, minimizing two way traffic and the possibility of an accident, and, as 32 far as I know, there have not been any complaints about this pattern. I certainly have not 33 complained it at all. 34 35 With the stroke of a pen, the architect has now rerouted all the traffic for the entire 315 students, 36 which if we take 3 students a car, which I think is actually generous, there will be now 105 cars 37 going in this narrow space shown in photograph #1. I’m particularly concerned about this 38 because this is right next to my bedroom window. While I do have double paned windows and I 39 have put up a fence, and I have put up shrubbery, this space is 20 feet wide. Picture #2 shows 40 part of the property where the new school will be built. Picture #4 shows my car and the 41 neighbors, and another neighbor’s, kind of simulating going in and out in this very small space. 42 Many of the cars that I have observed going into the school are large SUV’s. Denali’s, 43 Suburban’s, Tacoma’s. They are not sedans. And you can see that there’s actually very little 44 space here. If you look at photograph #5, #6, #7, and #8, I’m showing you how much space 45 there actually is here. We’re talking about two to three feet on each side. I personally do not 46 feel that this is a very safe way to, with a stroke of a pen, reroute all the children coming into the 47 school. 48 _____________________________________________________________________ City of Palo Alto June 13, 2012 Page 5 of 20 Also, if you look at the map showing the property, I don’t know if you can put that one back up 1 there? You had it in beginning. There’s very few houses that are actually impacted by this. 2 There’s my house, there’s Doug and Claudia Beg, who have a three and a half year old and a one 3 year old. There’s the Caswell’s who are here tonight. There’s Trudy and her husband, I don’t 4 remember your name, I’m sorry. They’re here tonight. The large pie shaped house at 80 Kent, 5 they’re new owners, their last name is Bing. They are in China for a month and a friend of theirs 6 contacted me and they would be concerned about this. The people at 60 Kent are going to a 7 graduation. So you basically have at least 50% of the people impacted by this traffic change 8 here. 9 10 Additionally, if we look at, so what is happening is, so there will be at least 105 cars, more or 11 less, going by my bedroom window at 7:00 in the morning. They will circle around and, and 12 drop off and then they will come back down. Again, I think this is much too small of a space. 13 The other thing is that if you were to take a look at the site, and you can see that a little bit in the 14 photograph #3, this is the ivy that separates me from the Church. There is ivy, there is a chain 15 link fence, I have put up a bamboo fence, and there are some trees. It appears that the striping is 16 right up to the ivy. This is really not an effective noise barrier. It’s more actually of a nuisance 17 because for the last, I’ve been there since 1986, I have been trimming ivy on a regular basis. 18 19 If you look at picture #13, you will see two of the trash cans which are picked up at 6:15 in the 20 morning twice a week. The trashcans are rarely covered. We have an incredible rat population, 21 we also have a squirrel population, and all I’m asking is that when the when the Church, when 22 the school is approved, and I have no doubt that it be approved, that there be a provision so that 23 these garbage cans and recycle cans or whatever they are called have a lock on them so that we 24 don’t continue to have a rat problem, particularly given the amount of ivy. 25 26 Now, if you look at some of the plans, this plan, you can see, this is basically a chain link fence. 27 This is a chain link fence. This is a chain link fence. There used to be vegetation over here, but 28 a chain link fence really is not an adequate barrier from a school, a parking lot, and a Church. 29 We also have Church twice on Sunday and once on Saturday. So that basically means that with 30 this simple change of drop off plans the people involved will actually not be able to sleep in past 31 probably 7:00 six days a week. So all I’m asking is that the previous well-constructed, well 32 working, traffic flow pattern be reestablished and that the current suggested drop off pattern not 33 be adopted. I do not, again object to the school, I don’t object to the construction, I don’t object 34 to anything other than this change in the traffic flow pattern, which definitely will increase noise, 35 pollution, idling, irritation, and possibly decrease our property values. Thank you very much. 36 37 Acting Chair Keller: Thank you. We now have the Applicants for 15 minutes. And who is 38 speaking first? 39 40 Father Matthew Stanley, Pastor of St. Thomas Aquinas Parish: Yes, my name is Father Matthew 41 Stanley; I’m the Pastor of St. Thomas Aquinas Parish, which includes the three campuses, St. 42 Albert the Great, Our Lady of the Rosary, and St. Thomas Aquinas. So I am the one responsible 43 for the facilities, the grounds, and all of the buildings on our three campuses. The school has 44 been mentioned has been around for a long time, has received tremendous amount of support 45 from not only the parish community of St. Thomas Aquinas but the community of Palo Alto for 46 many, many years. The most important thing that we look at, you know, each and every day is 47 being good neighbors. That’s really at the very top of our list. We want to be good neighbors 48 _____________________________________________________________________ City of Palo Alto June 13, 2012 Page 6 of 20 and we work extremely diligently to be good neighbors. So I would like to introduce the 1 Principal of St. Elizabeth Seton School. She can go into more details. Her name is Evelyn Rosa. 2 3 Evelyn Rosa, Principal of St. Elizabeth Seton School: Good evening. I inherited this project just 4 a year ago when I was hired to be the Principal of St. Elizabeth Seton and I just want to say just a 5 few things. First of all the project has been completely funded by donors and everyone is very 6 enthusiastic about this particular project. I work for the Daughters of Charity who really want 7 preschool programs for their schools as well as a full day kindergarten program. Our school is 8 one of only two schools in the Dioceses of San Jose that does not have a full day kindergarten 9 and I’m actually implementing the full day program this coming year. We’re not waiting for the 10 building to be built in order to do that. 11 12 Our desire for a preschool and a full day kindergarten will directly impact learning at Seton, 13 which most members of the community are very concerned about. Our children are bilingual. 14 Some of them come into the school with limited English proficiency and by having a preschool 15 program and a full day kindergarten it will significantly impact, you know, their ability to learn 16 to read at an earlier age. We want to be good neighbors and I haven’t received any complaints 17 this year from any individual regarding traffic. And that’s basically all that I can say at this 18 point. 19 20 John Miller, Project Architect: Good evening. I’m John Miller, I’m the Project Architect. First I 21 wanted to say it’s been a pleasure working with the Staff. I’ve spent many telephone 22 conversations with Rina and we’ve been, worked very closely and I think it’s been a good 23 relationship and helpful for us, the Applicant. I also want to say that I’ve been working on this 24 project since ’09. We looked at many different options to put these two classrooms on the site 25 and I will in a second explain how it functions. I also want to say that we have over the past 26 three years worked with not only the Planning Department. The Building Department has 27 reviewed it, the Fire Department has reviewed it, Public Works has reviewed it, Traffic has 28 reviewed it, and the Arborist has reviewed it. So, it’s been a process where we have taken each 29 issue that come up and work with it. We see this as an opportunity to take care of this issue. The 30 plans have been in since December, so we’re anxious to get this resolved and move on and build 31 our building. 32 33 I’d like to explain a little bit about the site. The Google map is up and I’ve got a little, not very 34 strong, but you could see the playground at the top of the picture and back. The white area is the 35 school. The area on the right with the red brick is the religious residence. It’s where the nuns 36 used to be. The red brick roof in the middle, down by the street on the lower part of the picture 37 is the Church and the red roof building on the far left is the rectory. Could we move this up a 38 little bit so that we could get the street in? There we go. Perfect. So, the new building will be 39 built if you look at the white roof, the far end there’s a small rectangle that’s smaller than the rest 40 of the building. That is a modular kindergarten that will be, that’s the half size right there, and it 41 will be demoed and it its place will be the new pre-kindergarten and the kindergarten. The 42 reason that this was important, this placement, is that from right to left along the length of the 43 school is the main corridor with classrooms on the right and the left. So this is the only 44 circulation spine really within the school and the kindergarten and the pre-kindergarten to be 45 integrated with the school needed to be along that circulation spine. 46 47 _____________________________________________________________________ City of Palo Alto June 13, 2012 Page 7 of 20 In terms of, so that is why the building is there. We looked at many options. We looked at using 1 the religious residence; we looked at remodeling the religious residence. We looked at replacing 2 the religious residence, and about eight other different options. And so when we came to this 3 one we thought we had a really good solution that seemed to integrate well with the school. 4 5 In terms of traffic flow which is what we’re talking about tonight the, it’s a one way traffic flow 6 through the site and it enters, can you point where the entry is? Right there, the cars proceed 7 straight back and you can see that there’s a parking lot on the far right side. That will have 8 increased 4 spaces to 44 spaces. Currently that’s where the drop off is in the morning. We 9 understand that at one time it wasn’t there, it was more in front of the school, but that side 10 parking lot is always where the pickup has been. In terms of the way the children come and go, 11 there are some children that come before school starting at 7:00 a.m. There are, and then in the 12 afternoon, after school at 3:00 p.m. 80% of the kids stay on site for extended daycare. And 13 they’re picked up approximately one a minute. 14 15 I have a graph on my PowerPoint if we can get to that. It shows what we did in January is we 16 took a count; you need to go down about 4-5. Ok. That graph right there. A traffic survey was 17 taken for four days in January. Each bar represents a 15 minute increment, and the times that we 18 looked at it is a.m. peak and p.m. peak. So those, the small numbers at the bottom represent 15 19 minute intervals. As you can see, that between 7:00 and 7:15 a.m. if you look at the far left, 20 there’s approximately, was that nine cars? From 7:15 to 7:30, 15 cars arrive. 7:30 to 7:44, 25 21 cars. And then school’s starting at or about 8:00, 55 cars. And then of course there are 4 cars 22 afterward, the kids that are tardy. I shouldn’t have said that, but at any rate, so that’s the profile 23 of cars coming in the morning. 24 25 In the afternoon, as I said after school, which is roughly ends about 3:00, there’s 39 cars on 26 average come to pick up the kids at the end of school. Then throughout the afternoon in 15 27 minute increments, each bar you can see that it ranges anywhere from 17 to 8 cars in a 15 minute 28 increment. And then by 5:30 virtually everybody is gone, even though the extended daycare 29 stays open until 6:00, once in a while there’s an emergency, but for all practical purposes 30 everybody’s gone at 5:15. 31 32 So I’ve talked about traffic flow. Do you wanna… I’d like to briefly show you a closer view of 33 the floor plan which is this, right here. It’s oriented so that the Google picture had the school 34 right and left, the corridor. This has the picture oriented where the circulation path is up and 35 down with the parking lot to the left. As you can see this is a very important entry to the school. 36 It is an entry that is where they can control the flow of students in and out, and especially in the 37 afternoon it, the parking lot is where parents stop and they have to sign out their children. And 38 then that’s why over, it’s one a minute or so, there’s no big rush in the afternoon. 39 40 Could we go to the site plan? The other important thing is that the new buildings are in purple at 41 the top of the image. The school is primarily to the left of the purple area and the parking lot is 42 to the right of the purple area. I might add that the driveway is, meets regulations for fire safety. 43 The Fire Department felt that it was wide enough for their emergency use, but the critical point I 44 want to get to is that for pre-k kids they often have to be escorted in to the classroom by their 45 parents. And so, with the pre-k being the upper purple square in this drawing, you can see that 46 that side parking lot is really the only place that’s convenient for multiple parents to be able to 47 _____________________________________________________________________ City of Palo Alto June 13, 2012 Page 8 of 20 stop, take their children out and introduce them to the classroom. That is one of the strong 1 reasons why in some way or form that drop off and pickup needs to be maintained. 2 3 I’m not sure how much more time I have, I’ve covered most of the salient points. 4 5 Acting Chair Keller: You have about three minutes. 6 7 Mr. Miller: Ok. I don’t have much more to say except that we worked very hard with everybody 8 involved. We look forward to resolving any outstanding issues and the drawings are out to bid 9 right now for construction. So, we are, you know, ready to go and anxious and would like to 10 have this stop or interruption end so we can proceed with our project. That’s it. 11 12 Acting Chair Keller: Thank you. We’ll now have members of the public who wish to speak. 13 The first speaker is Trudy Eichstadt and will have three minutes. We have four speakers. 14 15 Ms. Trudy Eichstadt: Good evening, I’m Trudy Eichstadt and I live at 41 Kent. And we have 16 been living there since 1968, and I have been watching first the children would play right next to 17 our bedroom and on the car, on the parking lot, so we would hear children’s noise and that would 18 wake us sometimes. And we got very used to that and was fun, but time passed and we noticed 19 now more children, and more, and cars would come in and park, and that gradually has been 20 increasing. And we have now noticed, we have now our children living with us because they are 21 remodeling their house so they have been complaining to us two things, the increase of traffic 22 when the children are being dropped off and collected, and also the garbage collection trucks 23 because the garbage bins are right at our fence on the one side. 24 25 And so, my concern is that with the increase of numbers of children, there also will be more 26 traffic, and so if it’s possible to have maybe an abatement of the noise, a wall erected or more 27 landscaping because all the trees that were right at our fence have been removed. So we only are 28 separated by an ivy and chain link fence and from our side, the fence that we erected. So, so this 29 is the one issue that concerns me. 30 31 And also the second issue that is very annoying is the garbage bins that are left uncovered and 32 we have eight oak trees right on our property on the school property and our side, and we have so 33 many squirrels now and rats that it’s just a nonsense. I have to cover every plant in the garden if 34 I want to harvest the fruit or I want to harvest some vegetables, it’s just incredible. So if it is a 35 possibility to close those garbage bins or, you know, do something about that. And also we clean 36 the two lots; adjacent two lots are part of the parking area. And I clean, we clean our cul-de-sac, 37 the two lots, we remove candy wrappers constantly, things that the rats or the squirrels bring out 38 of the garbage bins they deposit on our lot or on the… And so, we have been doing that for 39 years and so I hope that the school will also be a little more aware of the amount of garbage that 40 is being left on the grounds and being taken by (interrupted—the buzzer went off). Thank you 41 very much. 42 43 Acting Chair Keller: Thank you. Our next speaker is, our next speaker is Lee Caswell and 44 following that is Klaus Eichstadt. 45 46 Mr. Lee Caswell: Ok, thank you. My name is Lee Caswell and I live at 1139 Channing Avenue. 47 And so it is a pleasure to meet the people from the Church. I don’t have any issue with the 48 _____________________________________________________________________ City of Palo Alto June 13, 2012 Page 9 of 20 Church, but as good neighbors I do have to say that that hasn’t been our experience and the fact 1 that I’m meeting them for the first time tonight with such a major project is indicative of that. I 2 do know the Facilities Manager at the Church, Chuck, on a first name basis because of a 3 repeating, repetitive set of issues where the Church made changes without thinking about 4 neighbor impact. So, I’ll put the AT&T tower first off, but second we’ve had a consistent issue 5 with putting very large luminescent lights that point into our house. And the Church has been 6 responsive and I do appreciate that, of changing and making changes to the lights, but I think 7 consistently making those changes without thinking about the impact. 8 9 This is a major impact. The number of cars coming into the street, right? I mean we’ve, we 10 have known about the Church and don’t have any issues and are actually pleased to see the 11 impact that the Church has on this level of the students, but the promise of having hundreds of 12 cars go right by our property line on a consistent basis I have no confidence that that’s gonna be 13 one minute drop off and pick up time. I don’t believe it. When you look at the tight 14 configuration of having cars come in and go out and seeing both the size of the cars and the fact 15 that there are a lot of kids involved. I believe that this is actually a more complicated pattern that 16 we haven’t looked at any of the implications on the street itself or on the ability for people to 17 navigate that a, that piece. And so I think we’re gonna have actually a large, a lot of cars 18 actually bunched up instead. 19 20 My requests are actually pretty simple. I think in any event the barriers between the Church and 21 our property line and Rita’s property line and the other neighbors here; we should take a really 22 hard look at noise abatement, making sure that that happens regardless of the traffic, the traffic 23 pattern. I also believe this traffic pattern, and I’m requesting specifically, that this be relooked at 24 and removed. Thanks. 25 26 Acting Chair Keller: Thank you. The next speaker is Klaus Eichstadt followed by Melissa Baten 27 Caswell. 28 29 Klaus Eichstadt: I make it very short because my wife already talked about most of the subjects I 30 would have talked, but one thing I’m an engineer and I wish every one of the cars was an electric 31 car obviously. [That what] a solution, but let’s face it, I mean this is a unique situation with this 32 school because most of the children are not from the, off the streets in the vicinity. They come 33 all from most, they cannot walk. And that I think is the biggest problem. 34 35 I don’t understand why not more is being done studying the way to have at least a very organized 36 carpool working, and even better if they couldn’t, couldn’t afford to have a bus coming from an 37 area where most kids come, could come. It would be cheaper for the parents, they don’t have to 38 drive so long distances to let the kids off, and I think the expenses for a smaller bus would be 39 well, well played, well done for the whole community. I mean I can’t understand. We have 40 sometimes bus running here in the City there are only two, three people on it. They are gas 41 powered and they are not being used well. Why not having a smaller bus, which has gas power 42 and could drop off probably more than 50% of the children, I’d bet could be dropped off on 43 Channing. I don’t understand why this is not in the future. 44 45 We are now trying to bring down traffic, trying to bring down consumption of gasoline, taking 46 advantage of the new technologies like electricity and gas, why is this not being attacked in a 47 more aggressive way? From the City itself? The City’s strong enough, and it’s a rich city. 48 _____________________________________________________________________ City of Palo Alto June 13, 2012 Page 10 of 20 There are a lot of engineers and people who can come up with plans which I think would work 1 and would bring down the traffic and the pollution and would make all the children happier. So 2 thank you. 3 4 Acting Chair Keller: Thank you and our final speaker is Melissa Baten Caswell. 5 6 Melissa Baten Caswell: Hi, I’m Melissa Baten Caswell, 1139 Channing Avenue. Thank you 7 Commissioners for allowing us to speak about this issue. My husband and I moved into the 8 house, the third house from the Church that directly boarders the parking lot 21 years ago. When 9 we moved into that house there were trees behind our house that were on the Church property 10 bordering the parking lot and our home. So there was a barrier at that time. Since that time, 11 there was also some more shrubbery than there is now. When I say shrubbery I don’t mean ivy. 12 The shrubbery today is mostly ivy, but there were actually shrubs there. Over time those trees 13 have been taken out for various reasons, but nothing’s been replaced. 14 15 The number of students of the school has increased, which we don’t mind. I grew up next to, 16 living next to a Church, and there’s something very lovely about hearing kids in the morning. 17 I’m on the School Board in Palo Alto as you know, and we serve over 12,000 students, over 600 18 of which come from East Palo Alto to our District, so I’m definitely a proponent of making sure 19 that we have good educational opportunities for as many students as possible. 20 21 But I am concerned about this traffic pattern. I’m concerned that there are cars idling in a circle 22 in a very tight space there. I’m concerned that there are going to be younger kids walking 23 around. Yes, parents hopefully will be walking kids in if it’s dangerous, but think about what 24 that looks like right now. You’re gonna have a parking area where people will come in and park. 25 You also, at the exact same time have cars, most of which are big cars for whatever reason, 26 coming and circling around the parking area as people are walking in with their children. 27 There’ll be cars idling. I mean this just doesn’t sound like a very safe situation for the kids. Plus 28 the idling cars put off quite a bit of pollution that’s going right into our backyards now because 29 there is no barrier except for this chain link fence. 30 31 So, I urge the Commissioners to push back on this traffic pattern. I think we need something 32 that’s more safe, and more neighbor friendly. And we definitely need either new shrubbery put 33 in place and new trees so there is a real barrier there, or some sort of sound wall. I just don’t 34 think we can be good neighbors the way it is right now. 35 36 I also want to say that 21 years ago when we moved in, we did meet the pastor of the Church and 37 he was very, he was a good neighbor, he did talk to us. But this is the first time my husband and 38 I have seen the Pastor, the Principal of the school. So, I’m just, I’d like to have a better 39 relationship. 40 41 Acting Chair Keller: May I ask you a question? Yes, thank you. I haven’t heard from any of the 42 neighbors or from the Appellant how the traffic was different before in terms of what differences 43 between how the current traffic is versus the proposed traffic pattern. 44 45 Melissa Baten Caswell: So I have not gone and studied the traffic, but I have seen this plan and 46 I’m concerned that this is a dangerous way to set it up. The traffic going down Channing at, 47 between 7:30 and 8:00 has become a backup every morning. It’s very hard for us to get out of 48 _____________________________________________________________________ City of Palo Alto June 13, 2012 Page 11 of 20 our driveways. I’m willing to put up with that cause that doesn’t seem unsafe, that seems like a 1 pain but not unsafe. This seems unsafe to me and I encourage the Commissioners to come over 2 and walk that parking lot, because I think you get a different sense in it than you do from the 3 pictures. 4 5 Acting Chair Keller: We have a three minute wrap up from the Applicant. 6 7 Mr. Miller: Thank you for your time tonight, thank you for your comments, I’ve written them 8 down. We look forward to working with these people and discussing their issues. I could give 9 you a half an hour on sound walls, but I think that’s maybe another time. But I did want to say is 10 that a couple things that I’ve heard now; I’d give you some background. The chain link fence, 11 it’s a commercial grade chain link fence. If we could go to my pictures, two down, and go two 12 more. You can see the post in the end. Go back one. This is the, basically the driveway on the 13 right and that fence of the neighbors on the left, as you can see it’s very dense. We looked at 14 replanting it, but taking plants out would make it less dense than what it is now. The chain link 15 fence is very important for children’s safety. As you can see on the right there’s a fence like that 16 around, a wood fence around the school a child could slip out very easily. The chain link fence 17 is very important for security. 18 19 And traffic patterns, as I said earlier the afternoon traffic patterns have always been the same. 20 That at one time, for many years, there was a drop off in front of the school. There are some 21 good parts about that. There are some minuses about that in particular parking, if you have to 22 take your child in. 23 24 The garbage, this is, they’re willing to work with that. I listened to the Principal, they’re 25 interested in making sure that it’s, it’s up to a standard. And if it takes more pickups or more 26 containers, that’s fine. And I think, I think that’s it. I don’t want to talk too much more, I’m 27 looking through my notes here. That’s all I have to say at this time. Any questions? 28 29 Acting Chair Keller: Questions? Commissioner Tuma. 30 31 Commissioner Tuma: Yes. I actually would like to know the answer to the question that was 32 asked before, which is what is the current traffic circulation pattern within the facility? 33 34 Mr. Miller: The current traffic circulation pattern is the pattern that I, I presented earlier. They 35 come in the parking, the street curb cut at the far, the bottom right. They go straight back and 36 then they circulate around, clockwise, counter clockwise to the drop off, as you can see where 37 the arrow is, and then the kids are, there’s an attendant out there who makes sure that things go 38 smoothly. And then the cars go back down the driveway, make a hard right and then go along 39 the front of the school, between the school and the Church, around the rectory and out. It’s been 40 reviewed by the traffic engineer and I think one of the virtues of this is that it has a long queue 41 available to it, the long (interrupted) 42 43 Commissioner Tuma: So is that the pattern that’s in practice today? 44 45 Mr. Miller: That has been in practice for the last couple years. Morning and afternoon. 46 47 Commissioner Tuma: And what, and how is what you’re proposing different? 48 _____________________________________________________________________ City of Palo Alto June 13, 2012 Page 12 of 20 Mr. Miller: It’s not. I think what may be, for many years the drop off was in the front of the 1 Church, or front of the school where the pointer is right now. And we’re willing to, you know, 2 to talk about that, but we also have to realize or everybody has to realize that getting those the 3 pre-k kids from the parking where the cars are directly to the pre-k is important. 4 5 Commissioner Tuma: Would it be feasible to have a split drop off location? 6 7 Mr. Miller: Yes. 8 9 Commissioner Tuma: Where you possibly could have the pre-k dropped off, because I 10 understand the proximity, especially with the little ones, but if you could somehow have, and you 11 know I’m not a traffic engineer, but would it possible to have two different locations, two 12 different patterns and not having them conflicting? 13 14 Mr. Miller: I’ve talked to the Principal as she said, she’s been here one year so she has instituted 15 a few things, more things are being instituted next year in terms of traffic control. And we would 16 like to sit down and discuss those, that concept. 17 18 Commissioner Tuma: Ok. And one other question I think it was mentioned earlier but I didn’t 19 quite, what is, by adding this facility, how many additional students are we talking about? 20 21 Mr. Miller: We are, as the conditions say, we are not increasing the maximum number because 22 the maximum number by the Catholic Church has always been considered 315. So, we would be 23 reducing students in the other classes to make sure that we would never go over 315. 24 25 Commissioner Tuma: Ok, so if I understand it you’re not proposing an increase in the number of 26 students that are permitted under the permit, and you’re not proposing a change to the current 27 traffic pattern. Is that right? 28 29 Mr. Miller: I think, I think as Staff said there, it wasn’t really spelled out in the previous 30 conditions of approval, the number of students, so this is the time to quantify that and in terms of 31 traffic patterns, no. I mean, these kids come many times; their parents are coming from work or 32 going to work in the morning. And so, you know, they have restricted flexibility in terms of how 33 they can get their kids to and from school. I think we’ve all had, you know, have had kids have 34 realized that it becomes very hectic. 35 36 Mr. Turner: Acting Chair Keller? 37 38 Acting Chair Keller: May I, Mr. Miller, one moment. I believe that Mr. Turner wishes to talk. 39 40 Mr. Turner: Yes Acting Chair Keller, it might be helpful for Mr. Miller to describe perhaps the 41 current approximate number of students that are served by the school as compared to the 42 proposed number of students that would result with this project. We understand I think the 43 maximum number of students would not exceed 315 students, but if you could just describe the 44 actual counts before and after. 45 46 Mr. Miller: The, the actual count now for K through 8th grade is 270. 265, on a good day. 47 48 _____________________________________________________________________ City of Palo Alto June 13, 2012 Page 13 of 20 Mr. Turner: And the proposed number of students as a result of this project? 1 2 Mr. Miller: We wouldn’t, as I said we wouldn’t increase it. There is room in the building and the 3 room that we’ve designed for 30. So they would expect to have, you know, fill that to capacity, 4 that 30. And so there may be an increase because of that, but as I said, no more than 315. 5 6 Commissioner Tuma: Ok, and then one last question for you which is in terms of the location 7 where the trash bin is currently, is there, is there a different location on the property that could 8 have, and I don’t want to move it all the way over to the other side because then you got 9 neighbors on the other side. But is there another location somewhere that could, could be used in 10 order to minimize the impact on the neighborhood on either side? 11 12 Mr. Miller: We were requested to build a roofed trash area. Right now it’s more of what we 13 could say is a casual area of where the cans are. I’ve talked to the Principal. They’re willing to 14 have more pickups. If we could schedule the pickups at certain times, if the, if the refuge 15 company can do that we would certainly entertain that. But in terms of finding another place, 16 this is a very tight site and we have studied the turning radiuses of the garbage trucks and they 17 are accommodated in that side parking lot. If they go towards, through the, between the Church 18 and the religious residence there, that gets down to I think it’s about 14 feet. So it gets very 19 narrow where those two buildings are. And as you can see, there’s not much maneuvering space 20 on the left side. So, the bottom line is, is that this, while it’s close to some neighbors, it’s not 21 directly behind the neighbors and between the trash enclosure there’s the 30 feet of landscaping 22 to the cul-de-sac behind. So their property goes all the way to the cul-de-sac behind. 23 24 Commissioner Tuma: Thank you. 25 26 Acting Chair Keller: Acting Vice Chair Tanaka. 27 28 Acting Vice Chair Tanaka: Actually my question was the same that Commissioner Tuma asked, 29 so thank you. 30 31 Mr. Miller: Ok. 32 33 Acting Chair Keller: Commissioner Michael. 34 35 Commissioner Michael: So I’d like to thank everybody both on behalf of the Applicant and the 36 neighbors who came in this evening to, to raise issues and give us information. I had to check 37 with the, with the Office of the Planning Commission to see if I had a conflict of (interrupted) 38 39 Acting Chair Keller: Just indicating that we’re talking about, these are questions for the, for the 40 architect, we’re not doing general comments. 41 42 Commissioner Michael: Ok, so questions for the architect have largely been asked by others. 43 Maybe you could address the sound wall issue, which I think you alluded you had some 44 information. The chain link fence with ivy seems to me to be a good solution for keeping kids 45 enclosed but a bad solution for noise. 46 47 _____________________________________________________________________ City of Palo Alto June 13, 2012 Page 14 of 20 Mr. Miller: Right. Well, landscaping is not a good acoustic barrier. An acoustician would say 1 the more weight the better. So you could go up to a more substantial wood wall with sound 2 deadening inside of it and then from there you go to, you know, big concrete barriers. 3 4 Commissioner Michael: What I didn’t get was whether there were any actual discussions with 5 the neighbors about alternatives to mitigate their concerns. 6 7 Mr. Miller: We didn’t hear any of these comments until the appeal period. 8 9 Commissioner Michael: But there was no outreach to the neighbors to seek out their comments? 10 11 Mr. Miller: We, the sign was out there. We, did we do any? I think, well the sign was out there. 12 Did we send out any fliers or not? We’ve had some coffees monthly. Maybe the outreach could 13 have been, could have been better, but, you know, the sign was out there starting in the first week 14 in December saying that, you know, we had plans and that we were considering a building 15 project. I’m talking about the white sign that you put out in front with the notice, public notice 16 on it. 17 18 Commissioner Michael: But there was no human contact? So the split drop off option, I guess 19 has been raised. What would be the, the traffic impact if you allowed the people who had the 20 pre-kindergarten drop off to go back but people dropping off older students to go in the current, 21 go left rather than back? 22 23 Mr. Miller: I think that’s a possibility. I’ve talked to the Principal and while we don’t know all 24 the logistics of it, you understand that kids come to school 180 times a year so that people get 25 into a pattern. And there will be a teacher out there, and student aides to help with the traffic 26 next year, which doesn’t happen now. So we could work with the parents on training them to go 27 to certain different, you know, to two different places depending upon the age of their child. 28 29 Commissioner Michael: If there were a split drop off, what’s the approximate head count that 30 would go back versus dropped off in the front? 31 32 Mr. Miller: Well, that’s, that takes some thought because the pre-k kids, they’re expecting half of 33 them to be siblings of children that are already in school. So, and I think we’d have to do some 34 analysis, but we would need at least capacity for 30 kids to go to the back. What that represents 35 in cars I’m not sure, and then the rest would have to go to the front. And we’d have to study, 36 because now we’ve got two drop off areas and only one exit. So after you drop off you’d have to 37 go through the second drop off area in front. For instance if you came with your pre-k child, 38 took them to their room and use the side parking lot, then you come out towards the front and go 39 past the front of the school which is where the second drop off we’re talking about. And so you 40 have a pinch point there. We don’t have really good chance to get two lanes of cars very well 41 one past the other. I’m willing to look at it. 42 43 Commissioner Michael: Although with the pinch point it seems you also would reduce the total 44 distance traveled by vehicles on the site by having them divert instead of going back. 45 46 Mr. Miller: That’s, yeah that’s true. 47 48 _____________________________________________________________________ City of Palo Alto June 13, 2012 Page 15 of 20 Commissioner Michael: So less pollution, less noise. 1 2 Mr. Miller: That’s true. That’s true. The other thing we’d have to do is that the parking spaces 3 now to the left of the entrance of the school, it’s represented where there’s a line of trees, so 4 they’re green circles. Right now those are striped for handicapped parking for the Church. So, 5 any piece of real estate here is used for multiple different functions depending upon the day. So 6 on Sunday’s that’s all handicapped parking so we would have to do some signage or somehow 7 work with the traffic engineer to have, we’d have to have at least some parking spaces in front of 8 the school, in front of the school. But, yeah, I think it could be worked out. 9 10 Commissioner Michael: Ok, thank you. 11 12 Acting Chair Keller: So, a couple of comments weren’t, a couple of questions weren’t, weren’t 13 addressed in terms of the split drop off, obviously anybody who wants to park could go to the 14 right along with the kindergarten and pre-k students, and anybody who wished not to park could 15 go to the left. So, you wouldn’t have to have additional parking spaces for the school in front of 16 the Church if you did it that way. 17 18 Mr. Miller: That’s a very good point. 19 20 Acting Chair Keller: The second thing is that I would suspect that older students would exit from 21 their cars more quickly than younger students would. And therefore the traffic for dropping off 22 older students would flow faster than the pinch point of people going around and dropping off in 23 the rear. 24 25 Mr. Miller: All I can say, all I can say is that to that point, it was in the front and it’s been moved 26 to the side and in terms of logistics for the school it’s worked very well because you have one 27 point of entry. You know, one important thing about schools is creating a secure perimeter and 28 the more points you have coming in and out the more chance you have of people you don’t 29 know. So, when you have two points of entry we have to have twice the staff, and be, you know, 30 vigilant for that. Right now the point that I haven’t said is that right now the front doors are 31 locked pretty much all the time. So everybody comes to the side. 32 33 Acting Chair Keller: Ok, thank you and two other quick comment questions. One is about the 34 trash enclosure. So you said that right now there’s a requirement that it be covered. Is, is that it 35 be in an enclosure as opposed to open? I assume that that’s the, is that correct? 36 37 Mr. Miller: We have a roof. That’s, and a new concrete pad. 38 39 Acting Chair Keller: Great, and is there enough trash capacity, and based on the trash pickups so 40 that all the trash can be placed inside the containers so that the containers can remain closed and 41 that there’s no overflow or trash on the, elsewhere? 42 43 Mr. Miller: I, when that came up I talked to the Principal and she assured me that some 44 accommodations can be made whether it’s more trash bins or more pickups. In fact last week 45 she had, at the end of school, an additional refuse pick up just because at the end of school you 46 have a greater amount. So, she’s, there’s a couple tools that we can use to work on that. 47 48 _____________________________________________________________________ City of Palo Alto June 13, 2012 Page 16 of 20 Acting Chair Keller: And I assume that we’re talking about the City bins that have a pretty hard, 1 pretty heavy cover so if they, we make sure that they stay, that they’re closed and when other 2 than when something is being placed in them that, that should work. 3 4 Mr. Miller: Yes. 5 6 Acting Chair Keller: Ok and the other issue that was brought up was about carpooling. Are, is 7 there a potential for carpooling? That is greater than what is achieved now? Is there a 8 carpooling program of any sort? 9 10 Mr. Miller: They can certainly ask about it but, as I mentioned earlier, most of the parents are 11 working parents. And in the morning they are either on their way to work, or in the afternoon 12 they are coming home from work. So it’s really, it’s not like the old days, you know, with the 13 yellow school bus, which I grew up with. It’s, parents are going in many different directions. So 14 carpooling would be a difficult task at this, because of that. 15 16 Acting Chair Keller: Alright, thank you. We now have three minutes from the Appellant, and 17 that again is Rita Vrhel, and you can respond to any of the comments that you’ve heard in your 18 three minutes. And there may be questions afterward. 19 20 Ms. Vrhel: Thank you, I was raising my hand. I didn’t realize the process. Ok, so you asked a 21 question about increasing students. If you’re going from 315 to 265 students, which is the 22 current level of students, you are increasing by 50 students. And I think probably given enough 23 time I could do the math, but that is an increase. So you’re increasing noise, you’re increasing 24 cars, you’re increasing everything. So, yes, the number of students will go from 315 from the 25 current 265. 26 27 The other thing is, you know, I’ve lived in my house since 1986 and the Principal is new, the old 28 one got kicked out after the cell tower fiasco. The Pastor and I have worked together. I don’t 29 know where this traffic pattern is coming up because there’s two things going on. One, the 30 traffic pattern previously was coming in right hand turn on Channing, going between the, yeah, 31 ok, so make a, yeah, however, yeah, that’s it. You go that way, make a left hand turn, yes, you 32 go past there you drop off the kids where the cross is, you go through the 14 foot wide thing, you 33 go around, make a, make a right hand turn, right hand turn, I’m sorry, left hand turn. Left hand 34 turn, you come down to Channing, you’re done. Ok. If you, you know, again I really urge you 35 to come over and actually look at this property because the chain link fence and the ivy is like 36 this. I can see my, my fence. The dried up ivy gets, gets caught up and there’s rats in there and 37 it’s really terrible so… they, that traffic pattern works for Sunday, it works for Saturday Church, 38 it has worked up until this last year. 39 40 Now maybe in the last year there have been changes made to the traffic pattern and that’s what 41 the other neighbors are complaining about, but, you know, would you want to live there if you 42 had 276 cars coming behind your house five days a week in the morning and the evening? Is this 43 what a residential property is about? I don’t think you’d want it for your kids. I don’t think 44 you’d want it for yourself. So let’s work together and solve this problem in an intelligent fashion 45 rather than saying that this is the way it is and we’re gonna have monitors out there, and this is 46 the only way it can be. You can unlock that door, you can have the kids come in here. If they’re 47 gonna have older siblings with the younger kids, the younger kids can take them in. You know, 48 _____________________________________________________________________ City of Palo Alto June 13, 2012 Page 17 of 20 younger kids only have to be taken into school the first week and then they see their, their friends 1 and they’re happy to go into. I don’t think we should redo the entire traffic pattern for three, for 2 thirty children. I mean this is just totally upsetting. Thank you very much. 3 4 Acting Chair Keller: I think there’re questions for you. Acting Vice Chair Tanaka. 5 6 Ms. Vrhel: Yes. 7 8 Acting Vice Chair Tanaka: So, can you tell me in your opinion when did the traffic change from 9 going the way you described it to the traffic pattern that’s described in our plans today? 10 11 Ms. Vrhel: You know, I don’t really know because, like I said I’ve been there since 1986 and the 12 traffic pattern has always been to go through the, the middle of the Church and minimize the 13 traffic on the neighbors. Again we have a new Principal who I have not met. So I, I’m not really 14 sure. I mean when I was talking to my neighbors today they were saying in the past year that 15 they have noticed an increase in idling, noise, traffic in the back. So maybe there was a change 16 at some point which I did not notice. Again, I do have double pane windows, but I do know that 17 after school and on Saturday and Sunday there is considerable noise as people, you know, have 18 conversations and I don’t have anything against that, I just realize that if we don’t protest at this 19 point this will become the way it will be for the rest of the time that we live there. 20 21 I would also like to point out that the, the architect said that they had looked at taking the 22 kindergarten, I mean the convent. The convent is a convent. When they kicked the nuns out 23 they tried to put a kindergarten in there and it’s against the zoning law. So to look at that again, 24 it’s against the zoning law. I mean, that’s absolutely false. And I don’t really know who’s living 25 there now. I don’t think its ministers and religious people, but I’ve never made a point of it 26 because there’s no noise. I’m only making a point now because I feel like this is very valid. 27 28 Acting Vice Chair Tanaka: Ok, so just to make sure I understood this, so, it very well, very well 29 may be that the traffic pattern is as drawn in the plans today, it’s just you weren’t aware until you 30 saw the plans. 31 32 Ms. Vrhel: You know, I do not, yes, you’re right. I do not, I went down and got the plans in 33 November. The, the change in traffic pattern was mentioned in the verbiage, but I did not see 34 this attached to the plans that, that I have here that I printed off. And I filed, I filed an Appeal in 35 April because I was told that there was a convention, a conditional Appeal. And I’m not sure 36 what happened between November and April, so I would’ve appealed this earlier if I had known 37 that there was a conditional granting of the approval. 38 39 Acting Vice Chair Tanaka: Ok, and the other question is in terms of the outreach. I think the 40 school said they did some coffee, monthly coffees? 41 42 Ms. Vrhel: Nothing. Nothing. I live right next to the Church. There has been no outreach, there 43 has been no coffee, there has been no flyers, there has been nothing. 44 45 Acting Vice Chair Tanaka: Ok, thank you. 46 47 Ms. Vrhel: Ok. 48 _____________________________________________________________________ City of Palo Alto June 13, 2012 Page 18 of 20 Acting Chair Keller: Ok, at this point we will close the Public Hearing and then we’ll have a 1 discussion, motions, and recommendations. Commissioner Tuma. 2 3 MOTION 4 5 Commissioner Tuma: Yeah, I’d like to make a Motion that we, Planning and Transportation 6 Commission, continue this matter to a date uncertain, during which we would allow adequate 7 time for the Applicant to work with the neighborhood to have discussions regarding the proposed 8 traffic pattern, the situation with the garbage, and the situation with noise. 9 10 SECOND 11 12 Acting Chair Keller: Motion by Commissioner Tuma, seconded by Commissioner Michael. Do 13 you wish to speak to your Motion? 14 15 Commissioner Tuma: I do. So what I’m hearing tonight is actually not a huge amount of 16 disagreement. I think that the, there hasn’t been an adequate, in my observation, an adequate 17 opportunity for the neighbors to sit down with staff from the Church and have an open 18 discussion. What I’ve heard tonight is some issues raised by the neighborhood, most of which it 19 sounds to me as if the Church is amenable to. And so, the difficult issues here around traffic 20 patterns, garbage, and noise are all things that I think with an adequate opportunity for folks to 21 sit down and talk about it could result in, in a good result. Probably a better result than we could 22 sort of dictate from up here. You all have to live with it. You all have to, you understand the 23 situation better. We could come up with all sorts of ideas, but that’s really not gonna be the best 24 result. The best result is for you all to sit down and chat about it. 25 26 It would, some words of caution from my perspective on both sides about those discussions. 27 One is that from the perspective of the Church, putting out a sign and saying anyone can come 28 by and talk about things is not the same as going door to door, reaching out to people, holding, 29 making sure that people come. And so, I don’t know what efforts were undertaken or weren’t 30 undertaken, but you certainly have the attention of the neighborhood now. I’m sure that if you 31 all could exchange phone numbers or what have you, you would come up with a way to get 32 together. 33 34 From the perspective of the neighborhood, this group is permitted up to 315 students now. They 35 are permitted to have the traffic pattern that they are requesting and so I would just say let’s try 36 to work something out that’s mutually agreeable and not try to take an opportunity to change 37 things around entirely. They do have certain vested rights, and the changes that they are asking 38 for here don’t dramatically impact those vested rights. So the, my word of, of caution in the 39 negotiations would be sort of to talk about how we can address the core issues here, let’s don’t 40 get into redesigning their whole site, having them do things that are difficult. 41 42 So, it doesn’t sound to me that you guys are that far apart, I think if you all work together and 43 have some discussions and Staff could or could not be involved in those depending on where 44 Staff wants to go with that, I wouldn’t make that a part of the Motion, but I suspect that in 45 relatively short order you will come back together and certainly if not resolved all the issues, 46 have them narrowed down to the point where we could, taking into account policy, could come 47 _____________________________________________________________________ City of Palo Alto June 13, 2012 Page 19 of 20 up with a way to resolve what’s ever left. But it sounds to me as if a lot of these things can be 1 resolved by simply taking time and I’d rather that you all came up with the solution then us. 2 3 Acting Chair Keller: Commissioner Michael. 4 5 Commissioner Michael: So I’d be hard pressed to improve upon Commissioner Tuma’s 6 comments, which I entirely second and support. I was gonna say earlier that I was very close to 7 being affected by conflict of interest on this matter because my house on Parkinson is very close 8 to the 500 foot radius that would exclude me and I grew up in a house that would be within a 500 9 foot radius on Kirby Place. And from my childhood I’m very familiar with the property and it’s 10 sort of interesting to have it come back tonight with this issue. 11 12 But I would say that as a Planning Commissioner one of the things that has been brought to my 13 attention that there are a lot of concerns about whether or not the Palo Alto process works. And I 14 don’t think this is really a question of the Palo Alto process. I think this really is a question of, 15 of actual, practical, direct communication between people whose interests are affected who 16 appear to be perfectly intelligent and willing to cooperate and come about with something that 17 would be entirely within whatever is permitted by the land use and zoning requirements. There 18 seems to be support for the school, seems to be support for the architectural work, but it’s sort of 19 appalling that the issues that we heard tonight weren’t, that actually had to come before us this 20 evening. And I would really exert anybody who’s in a position of leadership to do a better job of 21 leading and you have the full attention of the neighborhood and I’m close to being one of your 22 neighbors and I encourage you to, to work it out and I think you’ll arrive at the best solution. 23 24 Acting Chair Keller: Acting Vice Chair Tanaka, do you want to say anything? 25 26 Acting Vice Chair Tanaka: No, I think the comments made kind of reflect my opinion as well. I 27 think this is probably best, the majority of it try to solve I think in formal meetings, maybe or the 28 monthly coffees and, and may not even need to come back to us after those meetings. So thank 29 you. 30 31 VOTE 32 33 Acting Chair Keller: I have only one thing to add and that is it might be helpful for Staff to 34 understand in the noticing that we give about a project to the extent that we invite the members 35 of the public to talk to Staff about any concerns they have before it gets the stage that there’s an 36 issuance of a, of a conditional use permit and appeal. And in particular they only had the 37 opportunity to appeal because there was an issuance of a continuous, of a conditional use permit. 38 But on the other hand, for any other application are there opportunities when people find out 39 about application to weigh in and make their comments and have them considered by Staff. So 40 some understanding of the mechanism by which members of the public can talk to Staff during 41 the consideration of an application would be helpful so that we could resolve this in a, in general 42 in a process that works for everybody. Thank you. 43 44 Seeing no further lights, call for the vote. All in favor, say aye. (ayes) All opposed? So the 45 Motion carries unanimously with Commissioner Tuma, Acting Vice Chair Tanaka, Acting Chair 46 Keller, and Commissioner Michael all voting in the affirmative. 47 48 _____________________________________________________________________ City of Palo Alto June 13, 2012 Page 20 of 20 1 MOTION PASSED (4-0-0, Chair Martinez and Vice Chair Fineberg absent) 2 City of Palo Alto (ID # 3152) City Council Staff Report Report Type: Consent Calendar Meeting Date: 11/5/2012 City of Palo Alto Page 1 Summary Title: Award of Contract for 2012 STP Resurfacing Project: Lytton Avenue / Channing Avenue Title: Adoption of a Budget Amendment Ordinance in the Amount of $549,000 to Capital Improvement Program Project PE-86070 and Approval of Contract with JJR Construction, Inc. in the Amount Not to Exceed $785,716 for the 2012 Surface Transportation Program (STP) Resurfacing Project: Lytton Avenue / Channing Avenue From: City Manager Lead Department: Public Works Recommendation Staff recommends that Council: 1.Adopt the attached Budget Amendment Ordinance (BAO) in the amount of $549,000 for the Street Maintenance Program Project PE-86070 –2012 Surface Transportation Program (STP)Resurfacing Project: Lytton Avenue and Channing Avenue; 2.Approve and authorize the City Manager or his designee to execute the attached contract with JJR Construction, Inc.in an amount of $785,716 for Street Maintenance Program Project PE-86070 –2012 STP Resurfacing Project: Lytton Avenue and Channing Avenue;and 3.Authorize the City Manager or his designee to negotiate and execute one or more change orders to the contract with JJR Construction, Inc.for related, City of Palo Alto Page 2 additional but unforeseen work which may develop during the project, the total value of which shall not exceed $78,572. Background The Public Works Engineering Services Division manages construction contracts for concrete repair, preventive maintenance, resurfacing and reconstruction of various city streets on an annual basis. The candidate streets are surveyed biannually by Public Works Engineering Services staff and then rated by a computerized pavement maintenance management system (PMMS). Since 2003, the Public Works Engineering Services Division has implemented multiple annual street maintenance projects to avoid the typical 15% markup that prime contractors place on work that is performed by subcontractors. The multiple projects include Portland cement concrete street repairs, preventive maintenance, and asphalt concrete resurfacing. All streets identified for resurfacing have been coordinated with the City’s Utilities Department and Transportation Division of Planning and Community Environment Department to minimize cutting of newly resurfaced streets. Extensive public outreach will be conducted before and during the project’s construction phase to inform the community step by step throughout the process. Discussion Project Description Staff is recommending approval of the 5th of 6 street resurfacing contracts to be approved this fiscal year as part of an enhanced program to improve the condition of Palo Alto’s streets. This contract constitutes an expenditure of $785,716 for 106,000 square feet (1.3 lane miles) of improvements as part of an effort to raise the citywide Pavement Condition Index (a statewide scoring system) from 73 to 85 by 2022. In 2011, the City applied for a Surface Transportation Program grant administered through Caltrans. The City received an Authorization to Proceed (E-76) and was City of Palo Alto Page 3 awarded a $549,000 grant in April 2012. This project will complete the repaving of Lytton Avenue by resurfacing from Alma Street to Florence Street and will also repave Channing Avenue between Guinda Street and Lincoln Avenue. Prior to paving, concrete gutters and road base will be repaired and Channing Avenue will receive new exposed gutter pans. This contract also includes new Americans with Disabilities Act (ADA)curb ramps on Channing Avenue and Homer Avenue at Webster Street. The contract does not allow work to take place on Lytton Avenue during the downtown construction moratorium between Thanksgiving Day 2012 and New Year’s Day 2013. Green bike lanes will be installed in a separate contract after the repaving is completed per direction from the Transportation Division of Planning and Community Environment Department on both Channing Avenue and Lytton Avenue. The repaving of Lytton Avenue between Alma Street and High Street has been coordinated with the ongoing development on the corner of Lytton Avenue and Alma Street. The City’s paving contractor will repave the eastbound lanes (away from Alma) and the portion of the westbound lanes that are not affected by the development. As one of their conditions of approval, the developer’s contractor is required to pave the rest of the street after utility installations are completed. The major excavation work for the development is scheduled to be completed next month, ahead of the January start for the City’s contractor. That means that the biggest impact of heavy trucking will be completed before the paving work occurs, though there will still be heavy trucks in the area due to the project.Per the grant requirements, the City does not have the option to eliminate this block from the paving contract and repave it after the development is complete. Bid Process On August 20, 2012, a notice inviting formal bids (IFB) for the Alma Street HSIP Project was posted at City Hall, and was sent to 13 builder’s exchanges and 26 contractors. Bids were received from four (4)qualified contractors on September 11, 2012 as listed on the attached Bid Summary (Attachment C). City of Palo Alto Page 4 Summary of Bid Process Bid Name/Number 2012 STP Resurfacing Project: Lytton Avenue and Channing Avenue Proposed Length of Project 95 calendar days Number of Bid Packages Sent to Contractors 26 Number of Bid Packages Sent to Builder’s Exchanges 13 Total Days to Respond to Bid 22 Pre-Bid Meeting?Yes (mandatory) Number of Bids Received:4 Bid Price Range From a low of $856,716 to a high of $969,419 Bids ranged from a low bid of $856,716 to a high of $969,419 and ranged from 18% above to 34% above the engineer’s estimate of $722,588. Bids were higher than anticipated due to a higher than expected bid price for concrete road base repairs and also due to the much higher than estimated price to install green bike lanes. Staff has decided to delete the green bike lane scope from this contract and bid this work separately in order to save money.Staff has reviewed all bids submitted. The lowest bid totaling $785,716 (without the green bike lanes) was submitted by JJR Construction, Inc., and staff recommends that JJR Construction, Inc.be declared the lowest responsible bidder. Staff recommends awarding the contract to JJR Construction, Inc. in the amount of $785,716. The change order amount of $78,572, which equals ten percent of the total contract, is requested for related, additional, but unforeseen work which may develop during the project. Staff checked with the Contractor's State License Board and found that the contractor has an active license on file and references for the Contractor were positive. City of Palo Alto Page 5 Resource Impact Staff recommends adoption of a BAO in the amount of $549,000 to accept the STP reimbursable grant awarded by Caltrans to increase the Street Maintenance Capital Improvement Program Project PE-86070 budget.The Infrastructure Reserve (IR) will be reimbursed by the equivalent amount upon completion of the project and the BAO will have no net impact on the IR balance. The remaining funds required for the award of this construction contract are currently available in the Street Maintenance Capital Improvement Program (CIP)Project PE-86070. Policy Implications This project is in conformance with City of Palo Alto’s Comprehensive Plan and does not represent any changes to existing City policies. Environmental Review Street resurfacing projects are categorically exempt from the California Environmental Quality Act (CEQA) under Section 15301c of the CEQA Guidelines as repair, maintenance and/or minor alteration of the existing facilities and no further environmental review is necessary. Attachments: ·A: Budget Amendment Ordinance (DOC) ·B: Contract C13147438 (PDF) ·C: Bid Summary C13147438 (PDF) Attachment A ORDINANCE NO.xxxx ORDINANCE OF THE COUNCIL OF THE CITY OF PALO ALTO AMENDING THE BUDGET FOR THE FISCAL YEAR 2013 TO PROVIDE AN APPROPRIATION OF $549,000 TO CAPITAL IMPROVEMENT PROGRAM PROJECT NUMBER PE-86070, STREET MAINTENANCE, FOR THE SURFACE TRANSPORTATION PROGRAM RESURFACING PROJECT: LYTTON AVENUE AND CHANNING AVENUE The Council of the City of Palo Alto does ordain as follows: SECTION 1. The Council of the City of Palo Alto finds and determines as follows: A. Pursuant to the provisions of Section 12 of Article III of the Charter of the City of Palo Alto, the Council on June 18, 2012 did adopt a budget for fiscal year 2013; and B.In fiscal year 2013, the Council appropriated $4,653,635 for CIP Project PE-86070, Street Maintenance, for annual resurfacing, slurry seal, crack seal, and reconstruction of city streets. Included in CIP Project PE- 86070 is the Surface Transportation Program (STP) Resurfacing Project: Lytton Avenue and Channing Avenue; and C. In April 2012, the City was awarded an STP grant of $549,000 by the California Department of Transportation. An appropriation of $549,000 to CIP Project PE-86070 is needed to authorize expenditures related to the grant for repaving Lytton Avenue and Channing Avenue;and D. City Council authorization is needed to amend the 2013 budget as hereinafter set forth. SECTION 2.The sum of Five Hundred Forty-Nine Thousand Dollars ($549,000) is hereby appropriated to CIP Project PE- 86070, Street Maintenance, for the STP Resurfacing Project: Lytton Avenue and Channing Avenue. SECTION 3.The Capital Projects Fund will be reimbursed by grant funding from the California Department of Transportation in the amount of Five Hundred Forty-Nine Thousand Dollars ($549,000). SECTION 4.The transactions above will have no net impact on the balance of the Capital Projects Fund Infrastructure Reserve. SECTION 5. As specified in Section 2.28.080(a) of the Palo Alto Municipal Code, a two-thirds vote of the City Council is required to adopt this ordinance. SECTION 6. As provided in Section 2.04.330 of the Palo Alto Municipal Code, this ordinance shall become effective upon adoption. SECTION 7.The resurfacing project is categorically exempt from the California Environmental Quality Act (CEQA) under Section 15301c of the CEQA Guidelines as repair, maintenance and/or minor alteration of the existing facilities and no further environmental review is necessary. INTRODUCED AND PASSED: AYES: NOES: ABSTENTIONS: ABSENT: ATTEST:APPROVED: ______________________________________________________________ City Clerk Mayor APPROVED AS TO FORM:________________________________ City Manager ______________________________________________________________ Senior Assistant City Attorney Director of Public Works ____________________________________ Director of Administrative Services Invitation for Bid (IFB) Package 1 Rev. July 2012 CONSTRUCTION CONTRACT CONSTRUCTION CONTRACT Contract No. C13147438 City of Palo Alto and JJR Construction, Inc. PROJECT 2012 STP Resurfacing Project: Lytton Avenue / Channing Avenue Invitation for Bid (IFB) Package 2 Rev. July 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. July 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 Servic………………………………………………………...........................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 Invitation for Bid (IFB) Package 4 Rev. July 2012 CONSTRUCTION CONTRACT 16.6.1 Compensation ………………………………………………………………………………………….18 16.6.2 Subcontractors …………………………………………………………………………………………18 16.7 Contractor’s Duties Upon Termination ................................................................. 19 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. July 2012 CONSTRUCTION CONTRACT CONSTRUCTION CONTRACT THIS CONSTRUCTION CONTRACT entered into on November 5, 2012 (“Execution Date”) by and between the CITY OF PALO ALTO, a California chartered municipal corporation ("City"), and JJR CONSTRUCTION, 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 California Corporation duly organized and in good standing in the State of Ca, Contractor’s License Number 665645. 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 August 20, 2012, City issued an Invitation for Bids (IFB) to contractors for the 2012 Stp Resurfacing Project: Lytton Avenue / Channing Avenue (“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 2012 STP Resurfacing Project: Lytton Avenue / Channing Avenue ("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. July 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. July 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 ninety‐five calendar days (95) 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. July 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. July 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 Seven Hundred And Eighty Five Thousand, Seven Hundred And Sixteen Dollars ($785,716). [This amount includes the Base Bid and Add Alternates .] / / / / Invitation for Bid (IFB) Package 9 Rev. July 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. July 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. July 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: Matt Brunnings Or Invitation for Bid (IFB) Package 12 Rev. July 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: JJR Construction 1120 Ninth Avenue San Mateo, CA 94402 Attn: Carlos Raposo 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. July 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. July 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. July 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. July 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 long a period of time as City determines, in its sole discretion, appropriate, in which event City shall have no Invitation for Bid (IFB) Package 17 Rev. July 2012 CONSTRUCTION CONTRACT 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 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. Invitation for Bid (IFB) Package 18 Rev. July 2012 CONSTRUCTION CONTRACT 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. July 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. July 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. July 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, 22 Invitation for Bid (IFB) Package Rev. July 2012 CONSTRUCTION CONTRACT 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. 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: ___________________________ Public Works Director CONTRACTOR JJR Construction, Inc. By:___________________________ Name:_________________________ Title:________________________ PE-86070 2012 STP RESURFACING PROJECT: LYTTON AVENUE AND CHANNING AVENUE ATTACHMENT C: BID SUMMARY IFB 147438 ITEM # BASE BID DESCRIPTION UNITS QUANTITY 1 AC Milling Area SF 106,200 0.45$ 47,790.00$ 0.65$ 69,030.00$ 0.50$ 53,100.00$ 0.80$ 84,960.00$ 0.50$ 53,100.00$ 2 Asphalt Overlay 1/2" Max, Type A TON 1,510 95.00$ 143,450.00$ 100.00$ 151,000.00$ 130.00$ 196,300.00$ 104.00$ 157,040.00$ 112.00$ 169,120.00$ 3 PCC Base Repair, 6" Depth SF 11,100 10.00$ 111,000.00$ 13.30$ 147,630.00$ 13.00$ 144,300.00$ 14.70$ 163,170.00$ 14.00$ 155,400.00$ 4 AC Base Repair, 6" Depth TON 150 120.00$ 18,000.00$ 180.00$ 27,000.00$ 240.00$ 36,000.00$ 220.00$ 33,000.00$ 185.00$ 27,750.00$ 5 Traffic Calming LS 1 15,000.00$ 15,000.00$ 5,000.00$ 5,000.00$ 8,000.00$ 8,000.00$ 9,200.00$ 9,200.00$ 15,000.00$ 15,000.00$ 6 Interlayer Membrane LF 8,000 3.50$ 28,000.00$ 3.00$ 24,000.00$ 5.00$ 40,000.00$ 2.00$ 16,000.00$ 2.20$ 17,600.00$ 7 Crack Sealing LF 16,500 0.65$ 10,725.00$ 0.57$ 9,405.00$ 0.50$ 8,250.00$ 0.60$ 9,900.00$ 1.50$ 24,750.00$ 8 Adjust Utility Box to Grade EA 45 450.00$ 20,250.00$ 450.00$ 20,250.00$ 485.00$ 21,825.00$ 500.00$ 22,500.00$ 300.00$ 13,500.00$ 9 Adjust Manhole to Grade EA 9 600.00$ 5,400.00$ 500.00$ 4,500.00$ 935.00$ 8,415.00$ 800.00$ 7,200.00$ 500.00$ 4,500.00$ 10 Blue Pavement Markers EA 8 25.00$ 200.00$ 27.50$ 220.00$ 28.00$ 224.00$ 20.00$ 160.00$ 20.00$ 160.00$ 11 Thermoplastic Striping, Caltrans Detail 4 LF 1,076 2.00$ 2,152.00$ 1.10$ 1,183.60$ 1.20$ 1,291.20$ 1.10$ 1,183.60$ 1.00$ 1,076.00$ 12 Thermoplastic Striping, Caltrans Detail 22 LF 1,112 2.00$ 2,224.00$ 3.30$ 3,669.60$ 3.40$ 3,780.80$ 2.25$ 2,502.00$ 2.25$ 2,502.00$ 13 Thermoplastic Striping, Caltrans Detail 23 LF 220 3.00$ 660.00$ 3.80$ 836.00$ 4.00$ 880.00$ 2.25$ 495.00$ 2.25$ 495.00$ 14 Thermoplastic Striping, Caltrans Detail 24 LF 175 2.00$ 350.00$ 1.65$ 288.75$ 2.00$ 350.00$ 1.20$ 210.00$ 1.15$ 201.25$ 15 Thermoplastic Striping, Caltrans Detail 27 B LF 1,733 1.00$ 1,733.00$ 1.65$ 2,859.45$ 2.00$ 3,466.00$ 1.10$ 1,906.30$ 1.00$ 1,733.00$ 16 Thermoplastic Striping, Caltrans Detail 32 LF 145 2.00$ 290.00$ 6.60$ 957.00$ 7.00$ 1,015.00$ 4.50$ 652.50$ 4.50$ 652.50$ 17 Thermoplastic Striping, Caltrans Detail 38 LF 550 2.00$ 1,100.00$ 3.30$ 1,815.00$ 3.50$ 1,925.00$ 2.25$ 1,237.50$ 2.25$ 1,237.50$ 18 Thermoplastic Striping, Caltrans Detail 39/39A LF 1,176 1.50$ 1,764.00$ 2.20$ 2,587.20$ 2.25$ 2,646.00$ 1.50$ 1,764.00$ 1.50$ 1,764.00$ 19 Thermoplastic Striping, 12" WHITE LF 1,105 3.00$ 3,315.00$ 4.40$ 4,862.00$ 4.50$ 4,972.50$ 4.00$ 4,420.00$ 4.00$ 4,420.00$ 20 Thermoplastic Striping, 12" YELLOW LF 240 3.00$ 720.00$ 4.40$ 1,056.00$ 4.50$ 1,080.00$ 4.00$ 960.00$ 4.00$ 960.00$ 21 Thermoplastic Striping, 24" WHITE LF 2,580 7.00$ 18,060.00$ 8.80$ 22,704.00$ 9.00$ 23,220.00$ 9.00$ 23,220.00$ 7.50$ 19,350.00$ 22 Green Bike Lane Legends LS 1 4,500.00$ 4,500.00$ 71,000.00$ 71,000.00$ 45,000.00$ 45,000.00$ 33,000.00$ 33,000.00$ 30,000.00$ 30,000.00$ 23 Thermoplastic Legends EA 162 50.00$ 8,100.00$ 88.00$ 14,256.00$ 90.00$ 14,580.00$ 375.00$ 60,750.00$ 375.00$ 60,750.00$ 24 Type A Vertical Curb and Gutter, 2' Pan LF 1,645 50.00$ 82,250.00$ 49.85$ 82,003.25$ 56.00$ 92,120.00$ 55.00$ 90,475.00$ 60.00$ 98,700.00$ 25 Type A Vertical Curb and Gutter, 7' Pan LF 380 75.00$ 28,500.00$ 116.00$ 44,080.00$ 90.00$ 34,200.00$ 128.00$ 48,640.00$ 98.00$ 37,240.00$ 26 New Curb Ramp EA 14 1,500.00$ 21,000.00$ 1,850.00$ 25,900.00$ 3,000.00$ 42,000.00$ 2,100.00$ 29,400.00$ 2,700.00$ 37,800.00$ 27 ADA Ramp Upgrades EA 26 350.00$ 9,100.00$ 315.00$ 8,190.00$ 700.00$ 18,200.00$ 350.00$ 9,100.00$ 450.00$ 11,700.00$ 28 Concrete Sidewalk SF 2,100 10.00$ 21,000.00$ 8.10$ 17,010.00$ 10.00$ 21,000.00$ 9.00$ 18,900.00$ 9.80$ 20,580.00$ 29 Concrete Driveway SF 2,600 10.00$ 26,000.00$ 12.55$ 32,630.00$ 13.00$ 33,800.00$ 14.00$ 36,400.00$ 10.80$ 28,080.00$ 30 Reset Catch Basin EA 3 600.00$ 1,800.00$ 1,000.00$ 3,000.00$ 2,500.00$ 7,500.00$ 1,200.00$ 3,600.00$ 2,200.00$ 6,600.00$ 31 Demo Concrete SF 500 4.00$ 2,000.00$ 4.00$ 2,000.00$ 5.00$ 2,500.00$ 4.50$ 2,250.00$ 5.00$ 2,500.00$ 32 Inert Recycling TON 2,431 5.00$ 12,155.00$ 3.00$ 7,293.00$ 5.00$ 12,155.00$ 1.10$ 2,674.10$ 8.00$ 19,448.00$ 33 Traffic Control LS 1 65,000.00$ 65,000.00$ 38,000.00$ 38,000.00$ 36,000.00$ 36,000.00$ 47,260.00$ 47,260.00$ 90,000.00$ 90,000.00$ 34 Signage LS 1 3,000.00$ 3,000.00$ 5,500.00$ 5,500.00$ 6,000.00$ 6,000.00$ 1,940.00$ 1,940.00$ 1,750.00$ 1,750.00$ 35 Planter Area Conform LS 1 6,000.00$ 6,000.00$ 5,000.00$ 5,000.00$ 2,500.00$ 2,500.00$ 5,800.00$ 5,800.00$ 9,000.00$ 9,000.00$ BASE BID TOTAL 722,588.00$ 856,715.85$ 928,595.50$ 931,870.00$ 969,419.25$ INTERSTATE GRADING AND PAVING, INC. C. F. ARCHIBALD PAVING, INC.ENGINEER'S ESTIMATE JJR CONSTRUCTION, INC. GRANITE CONSTRUCTION COMPANY City of Palo Alto (ID # 3197) City Council Staff Report Report Type: Consent Calendar Meeting Date: 11/5/2012 City of Palo Alto Page 1 Summary Title: Award of Contract to Ideal Computer Services, Inc. for Hardware Support Title: Award of Contract to Ideal Computer Services, Inc. for Hardware Support From: City Manager Lead Department: IT Department Recommendation Staff recommends that the Council approves the award of contract to Ideal Computer Services, Inc. for the maintenance and support of the City of Palo Alto’s Hewlett Packard Equipment. Executive Summary The City of Palo Alto’s Information Technology Department (ITD) has a need for the support and maintenance of their Hewlett Packard equipment. The ITD issued a Request for Quotation (RFQ) for those services. The cost of these services is not to exceed $21,404 per year. This contract award will be for one year with an additional four one-year extensions for a total of up to five years, pending the Council’s annual budget approval. Background The City has numerous Hewlett Packard servers that run various City applications used in day-to-day operations. These servers need maintenance and replacement parts from time to time. To ensure that the City does not have to keep a stockpile of replacement parts that may or may not ever get used, the City has outsourced this function to a third party vendor. Discussion The City has used various vendors over the years to support its Hewlett Packard City of Palo Alto Page 2 servers. There were a total of five bids received. As each bidder was bidding on the same equipment listing, the lowest responsive bid was selected. Timeline Ideal Computer Services, Inc. was chosen as the third party deserving of an award of contract and being selected as the City’s provider of Hewlett Packard equipment service and maintenance for the ITD. Summary of City Bid Process ITD Temporary Staffing Proposed Length of Project 60 months Number of Solicitations Emailed 5 Total Days to Respond to Bid 5 Pre-Bid Meeting 0 Number of Company Attendees at Pre-Bid Meeting N/A Number of Bids Received: 5 Bid Price Range From a low of $21,403.92 per year to a high of $335,994.95 per year. Staff has reviewed all bids submitted and recommends that the bid from Ideal Computer Services, Inc. at $21,403.92 per year be accepted and Ideal Computer Services, Inc. be declared the lowest responsible bidder. This bid reflects a cost savings compared to the highest bid of $1,427,854.75 over the five-year contract. Resource Impact The funds for the contract will come from the Techology Fund. Environmental Review Approval of this contract does not constitute a project under the California Environmental Quality Act (CEQA); therefore, no Environmental Assessment is required. Attachments: City of Palo Alto Page 3 S13145506 Ideal (PDF) HP Hardware Maintenance Quote Review (XLSX) Vendor:Quote:Five Years:Savings Year 1:Savings Year 5: Ideal 21,403.92$ 107,019.60$ -$ -$ Abtech 38,208.00$ 191,040.00$ 16,804.08$ 84,020.40$ Systems Maintenance Services 50,424.00$ 252,120.00$ 29,020.08$ 145,100.40$ Signature Technology 115,704.00$ 578,520.00$ 94,300.08$ 471,500.40$ HP 335,994.95$ 1,679,974.75$ 285,570.95$ 1,427,854.75$ City of Palo Alto (ID # 3239) City Council Staff Report Report Type: Consent Calendar Meeting Date: 11/5/2012 Summary Title: Appeal of AT&T DAS Project - Phase 2 Title: Appeal of Director’s Architectural Review Approval of the Collocation by AT&T Mobility LLC of Wireless Communications Equipment on 15 Pole- Mounted Wireless Communication Antennas and Associated Equipment Boxes on Existing Utility Poles Within City Rights-of-Ways Near the Following Locations: 528 Homer; 896 Melville; 1491 Greenwood; 1061 Fife; 1496 Dana; 697 Wildwood; 973 Embarcadero Rd; 671 Seale; 731 Lincoln; 1594 Walnut/Embarcadero side; 1280 Newell; 643 Coleridge; 401 Marlowe; 1196 Hamilton; 933 N. California. From: City Manager Lead Department: Planning and Community Environment Recommendation Staff recommends that Council uphold the Director of Planning and Community Environment’s decision to approve the Architectural Review application for 15 wireless communication facility (WCF) installations by AT&T Mobility LLC (AT&T), based upon the findings and conditions of approval described in the Record of Land Use Action (Attachment A). Executive Summary AT&T’s application is for Architectural Review of 15 wireless communication facilities (WCFs) collocated on existing utility poles within City rights-of-way and jointly owned by the City and Pacific Bell Telephone Company dba AT&T of California, known as the Palo Alto Outdoor DAS (Distributed Antenna System) project Phase 2. The 15 installations propose one antenna placed on a pole extension at the top of each pole, and equipment cabinets placed lower down on the pole face (between 10 feet and 20 feet above grade). The pole locations were reviewed regarding their aesthetic impacts and consistency with the Phase 1 design approval (Council action 01/23/12), and on September 17, 2012 the staff level Architectural Review approval was issued for the project. Staff received an appeal of this decision by a resident who cited concerns regarding the appropriate application of the Palo Alto Noise Ordinance (Title 9) and suggesting staff has not interpreted this statute correctly for the AT&T DAS projects. Background On March 6, 2012, AT&T submitted an application for Architectural Review for the Phase 2 of Outdoor Distributed Antenna System (DAS) installations at 15 locations. The project was determined to be a collocation project and, according to Palo Alto Municipal Code (PAMC) Section 18.42.110, requires approval of an Architectural Review application, followed by the issuance of encroachment permits. The use itself is considered a permitted use, such that no Conditional Use Permit (CUP) is needed. In January 2012, the Council, on appeal, reviewed the Phase 1 DAS project for 20 installations and upheld the Director’s decision to approve the project (CMR #2393). At that time the issues that were raised by the appellants focused on the need for a wireless master plan for the entire city, and concerns for aesthetic impacts, potential health risks, noise, impacts on property value, type of technology proposed, and the safety and reliability of the actual installations. These issues were discussed in the associated CMR and can be viewed online for additional details. The Council approved the applications. In addition to the Phase 1 and 2 applications, AT&T has submitted for Architectural Review of the remaining two phases of the project, for a total of 75 installations. These four phases are a part of AT&T’s build-out to provide adequate coverage and/or additional capacity for wireless communications. AT&T is subject to a license agreement that allows AT&T to collocate the DAS antennas and equipment on the City’s portion of the utility poles. The Council approved the standard license agreement on July 25, 2011 (CMR #1756). Following the Council’s decision on the Phase 1 application, subsequent Architectural Review applications for DAS installations, following the same prototype design as the approved design, were to be reviewed at staff level and be subject to public notice and Council appeal, but ARB public hearings were not to be required. Neighbor notification is provided and public comments are reviewed by staff for each location. Actions by the Director of Community Environment on the applications are posted on the City’s website and courtesy notices of the actions are mailed to neighbors within 300 feet of each pole. The Director’s decisions on staff level AR applications are also noted on the next available ARB meeting agenda. Review Process The standard procedure for the review of an appealed Architectural Review application is for placement on the Council consent calendar within 30 days of the filing of an appeal. Council can decide to pull the item off consent, only if at least three Councilmembers concur, and then the project is scheduled for a future public hearing date (PAMC 18.77.070(f)). Project Description The approved design for the DAS installations is shown in Figure 1. The existing utility poles range in height from 28 to 52 feet and the pole top extension, on average, is about 8.25 feet. The equipment proposed on the pole face is the same for all the poles and is comprised of (1) a power disconnect box located nine feet above grade; (2) a remote prism cabinet (52.4”H x 12.15”W x 10.125”D) located approximately 10’-5” above grade; (3) a back-up battery cabinet (27”H x 22”W x 18”D) located approximately 15’-9” above grade; (4) an optical network interface box (13”H x 13”W x 3.75”D) located approximately 19’ above grade; and (5) related wiring. At the top of the pole extension, one antenna radome (24”H x 16” Base Diameter) would be placed in-line with the pole. Figure 1: Approved Design Discussion Appeal The appeal of this application was submitted by Mr. Tony Kramer, a resident living on Ferne Avenue. The appeal was directed at the whole project (all 15 sites). The appellant’s stated concern is, “the Planning Department is not correctly applying the Palo Alto Noise Code (PAMC 9.10) to the AT&T DAS applications.” No installation is planned adjacent to Mr. Kramer’s home, however. Mr. Kramer is specifically concerned about the application of the residential noise standards, as opposed to the public property standards, to the AT&T DAS installations. It is his belief that the residential standards for noise should be applied to all installations, because they are within 25 feet of the private residential property. His letter is included as Attachment C of this report and provides additional background on his position. Staff Response to Appeal Issue As outlined in PAMC Section 9.10.050, the public property noise limit specifies that no person shall produce on public property a noise level more than 15 dB above the local ambient at a distance of 25 feet or more from the source. The definition of local ambient means the lowest sound level repeating itself during a six-minute period as measured with a precision sound level meter; the code specifies that the minimum sound level shall be 40 dBA when determining noise levels outside (not inside a structure), and therefore, noise production in excess of 55 dBA at a distance of 25 feet away from the source would violate the noise ordinance. The noise requirements for residential properties, as set forth in PAMC 9.10.030, is that noise levels cannot exceed six dB above the local ambient (40 dBA minimum) at the property plane. According to AT&T, the two pieces of equipment that would produce sound are the back-up battery cabinet and the prism remote. All other elements proposed (antenna and wiring) do not produce noise. On June 6, 2012, Hammett & Edison Inc. performed a noise analysis at a powered installation in front of 255 N. California Avenue. The results of this study state that the noise level produced by the equipment, including the ambient noise, is approximately 44.5 dBA at a distance of 25 feet away from the pole. Based on this data, the conclusion is that the equipment is compliant with the Noise Ordinance. The details of the noise analysis are in Attachment D. Mr. Kramer has also claimed that staff has previously indicated that the stricter residential standard would apply to the AT&T installations. Staff concurs that the initial response from the Planning Director and City Attorney’s Office was to that effect, though the discussion primarily was focused on the installation of equipment in a “public utility easement” (PUE) across private property. After further consultation with the Attorney’s office and comparison to other approvals, however, staff determined that the residential standard would apply in a PUE, since that is an easement across residential property, but is not applicable for installations in the public right-of-way or on public property, such as parkland. Staff does believe that, as indicated in the noise measurements at 255 N. California Avenue, lower noise levels (nearer the residential standard) can be readily achieved and that every effort should be made to attain the lowest level reasonable. To further address the noise concern, therefore, staff has included the following two Conditions of Approval: For installations in the City right-of-way, the Applicant shall endeavor to minimize the noise at the property line boundary with adjacent residential property, and shall attempt to keep such noise below 6dB above the ambient level most of the time, when fans are running at their normal setting. If such a standard is not reasonably achievable for a site, then the Applicant voluntarily agrees to use commercially reasonable efforts to ensure that the noise level does not exceed 6 dB above the ambient noise level at the nearest location of a residential structure. Under no circumstances shall the noise exceed the noise standard in Municipal Code 9.10.050 (i.e., +15dB over ambient at 25 feet). The applicant shall submit a sound analysis of an operating installation within two months of the project installation/operation. The analysis shall clearly delineate how the installation complies with the previously listed condition regarding noise. Applicant may be required to submit these reports periodically for the life of the project, as determined by the Director of Planning AT&T has agreed to the above conditions and has stated that it will make all feasible attempts to minimize the noise production from their installations. AT&T has now installed DAS antennas and equipment on at least five sites, including 255 North California, 464 Churchill, 1720 Webster, 370 Lowell, and 1345 Webster. Council members may wish to visit one or more of these sites to assess the noise impacts from a layperson’s standpoint. Staff has visited the sites and believes that the noise is minimal adjacent to the pole and barely audible from 25 feet away. Citywide Wireless Communications Study The City staff is pursuing a citywide communications study to identify the best approach to providing such service across the city, including the potential use of utility substation sites for wireless communications towers. A Request for Proposal is currently out to possible contractors, and proposal responses should be in within the coming week. Staff will then work with the selected vendor to report back to Council in early 2013 regarding the status and opportunities for the more comprehensive plan. The Utilities Department will also be updating the Council soon regarding its evaluation of a city wi-fi network, as recommended by the Utilities Advisory Committee. Policy Implications The proposed project is consistent with the Comprehensive Plan and staff believes there are no other substantive policy implications. The project is supported by the following Comprehensive Plan Policies: (B-13) Support the development of technologically-advanced communications infrastructure and other improvements that will facilitate the growth of emerging telecommunications industries; and (B-14) Work with electronic information network providers to maximize potential benefits for Palo Alto businesses, schools, residences, and other potential users. Resource Impacts The costs of project review by all staff and consultants is recovered by Architectural Review application fees paid by AT&T. Pursuant to the City’s standard license agreement, AT&T will pay the City $270 per year per installation, or a total of $4,050 per year for the 15 sites. Environmental Review The project is categorically exempt from the provisions of the California Environmental Quality Act (CEQA) per section 15303 of the CEQA Guidelines. Attachments: Attachment A: Record of Land Use Action (DOC) Attachment B: Location Map (PDF) Attachment C: Appeal by Tony Kramer dated October 2, 2012 (PDF) Attachment D: Hammett & Edison Noise Memorandum dated July 27, 2012 (PDF) Attachment E: Applicant's Submittal Information (PDF) Attachment F: Project Plans (hardcopies to Councilmembers and Libraries only) (TXT) Prepared By: Clare Campbell, Planner Department Head: Curtis Williams, Director City Manager Approval: ____________________________________ James Keene, City Manager 1 ACTION NO. 2012-xx RECORD OF THE COUNCIL OF THE CITY OF PALO ALTO LAND USE ACTION FOR AT&T DAS PROJECT PHASE 2: ARCHITECTURAL REVIEW 12PLN-00090 (AT&T, APPLICANT) On November 5, 2012, the Council upheld the Director of Planning and Community Environment’s September 17, 2012 decision to approve the Architectural Review application of the co-location by AT&T of (Distributed Antenna System, a.k.a. DAS) wireless communications equipment on 15 existing utility poles making the following findings, determination and declarations: SECTION 1. Background. The City Council of the City of Palo Alto (“City Council”) finds, determines, and declares as follows: A. On March 6, 2012, AT&T applied for Architectural Review for the co-location of wireless communications equipment (Distributed Antenna System) on 15 existing utility poles located within City rights-of-ways near the following locations: 528 Homer; 896 Melville; 1491 Greenwood; 1061 Fife; 1496 Dana; 697 Wildwood; 973 Embarcadero Rd; 671 Seale; 731 Fulton; 1594 Walnut/Embarcadero side; 1280 Newell; 643 Coleridge; 401 Marlowe; 1196 Hamilton; 933 N. California. The proposed equipment would include one antenna at the top of each pole and two equipment boxes on the side of each pole (“The Project”). B. On September 17, 2012, following staff review, the Director of Planning and Community Environment (Director) approved the Architectural Review (AR) application. Notices of the Director’s decision were mailed notifying neighbors of the decision. D. On October 2, 2012, within the prescribed timeframe, an appeal of the Director’s decision was filed by a resident, Mr. Tony Kramer. SECTION 2. Environmental Review. This project is exempt from the provisions of the California Environmental Quality Act per Section 15303 of the CEQA Guidelines. SECTION 3. Architectural Review Findings. 1. The design is consistent and compatible with applicable elements of the Palo Alto Comprehensive Plan. This finding can be made in the affirmative in that the project, as conditioned, incorporates a more streamlined design that conforms with policies that encourage quality development that is compatible with surrounding development and public spaces. The project is also supported by the following Comprehensive Plan Policies: (B-13) ATTACHMENT A 2 Support the development of technologically-advanced communications infrastructure and other improvements that will facilitate the growth of emerging telecommunications industries; (B-14) Work with electronic information network providers to maximize potential benefits for Palo Alto businesses, schools, residences, and other potential users. 2. The design is compatible with the immediate environment of the site. This finding can be made in the affirmative in that the proposed design, as conditioned, blends with the existing utility poles that are located within various residential neighborhoods within the City. 3. The design is appropriate to the function of the project. This finding can be made in the affirmative in that the design of the equipment is not excessive for the intended utility use and has been improved with the required conditions of approval to streamline the design with the back-up battery cabinet placed above the prism and elimination of one antenna. 4. In areas considered by the board as having a unified design character or historical character, the design is compatible with such character. This finding is not applicable to this project. 5. The design promotes harmonious transitions in scale and character in areas between different designated land uses. This finding is not applicable to this project. 6. The design is compatible with approved improvements both on and off the site. This finding can be made in the affirmative in that the project, as conditioned, is compatible with the existing utility poles. 7. The planning and siting of the various functions and buildings on the site create an internal sense of order and provide a desirable environment for occupants, visitors and the general community. This finding is not applicable to this project. 8. The amount and arrangement of open space are appropriate to the design and the function of the structures. This finding is not applicable to this project. 9. Sufficient ancillary functions are provided to support the main functions of the project and the same are compatible with the project’s design concept. This finding is not applicable to this project. 3 10. Access to the property and circulation thereon are safe and convenient for pedestrians, cyclists and vehicles. This finding can be made in the affirmative in that the circulation under and around the utility pole is not impacted. 11. Natural features are appropriately preserved and integrated with the project. This finding is not applicable to this project. 12. The materials, textures, colors and details of construction and plant material are appropriate expression to the design and function. This finding can be made in the affirmative, see Findings 2, 3, and 4 above. 13. The landscape design concept for the site, as shown by the relationship of plant masses, open space, scale, plant forms and foliage textures and colors create a desirable and functional environment. This finding can be made in the affirmative in that the project, as conditioned, will be required to plant some additional street trees at some locations. The placement and selection of the street trees will be reviewed and approved by Public Works and Utilities to assure the plantings will be consistent with City standards. 14. Plant material is suitable and adaptable to the site, capable of being properly maintained on the site, and is of a variety which would tend to be drought-resistant to reduce consumption of water in its installation and maintenance. This finding can be made in the affirmative, see Finding 13. All City street trees are regularly maintained and will use only the required amount of water needed for establishment and maintenance. 15. The project exhibits green building and sustainable design that is energy efficient, water conserving, durable and nontoxic, with high-quality spaces and high recycled content materials. This finding is not applicable to this project. The scope of the project is small and there is limited opportunity to incorporate green building design into the sign installations. 16. The design is consistent and compatible with the purpose of architectural review as set forth in subsection 18.76.020(a). This finding can be made in the affirmative in that the project design, as conditioned, promotes visual environments that are integrated into the aesthetics of the immediate environment of an industrial utility facility. SECTION 4. Architectural Review Approval Granted. Architectural Review Approval is hereby granted for the Project by 4 the City Council pursuant to Chapter 18.77 of the Palo Alto Municipal Code. SECTION 5. Plan Approval. The plans submitted for Building Permit shall be in substantial conformance with those plans prepared by AT&T titled Palo Alto ODAS, consisting of 48 pages, and received May 15, 2012, except as modified to incorporate the conditions of approval in Section 6. A copy of these plans is on file in the Department of Planning and Community Development. SECTION 6. Conditions of Approval. Planning Division 1. The project shall be in substantial conformance with the approved plans and related documents received May 15, 2012, except as modified to incorporate these conditions of approval. 2. All conditions of approval shall be printed on the cover sheet of the plan set submitted to obtain any permit through the Building Inspection Division. 3. Any modifications/additions to the approved plans shall be approved by Planning prior to construction and installation. 4. The project approval shall be valid for a period of one year from the original date of approval. In the event a building permit(s), if applicable, is not secured for the project within the time limit specified above, the approval shall expire and be of no further force or effect. 5. For all pole installations, the backup battery cabinet shall be placed above the prism box. 6. For the life of the project, the size of the battery cabinet shall be reduced as technology improves so as to maintain the smallest battery cabinet needed. 7. The antenna, cabinet boxes, and pole extension shall be painted either “Rock Brown” or “Sand Brown”, with a matte finish, to match the existing color and finish of the utility pole, and all other equipment (i.e. wiring and related hardware) shall be painted with a matte finish to blend in with the background material/color of the pole. 8. The project shall be reviewed by the Utilities Department to determine if the pole is feasible for the placement of the 5 proposed equipment and antennas. If the Utilities department does not support the placement of the equipment on the pole, the applicant shall submit a new Architectural Review application to the Planning Division for review of proposed alternative pole selection. 9. For sites that require new street tree installations, the applicant shall coordinate with the Public Works Tree Division, Utilities Department, and Transportation Division to gain approval for the placement and selection of tree type. If the City departments do not support the placement of a city tree for screening purposes for the identified locations, then that site is no longer approved for the equipment installation and the applicant shall be required to submit a new Architectural Review application to the Planning Division for review of proposed alternative pole selection. 10. The applicant, in coordination with City departments, shall (1) analyze all proposed sites to determine whether new street trees can be added in the immediate vicinity for screening purposes and (2) add additional trees where feasible. 11. The preferred selection for new street trees shall be evergreen trees, as deemed appropriate by Public Works and the Utilities department. 12. Unless the City agrees to a modification of this condition, the requirements to install new street trees shall be 100% the responsibility of the applicant and shall be completed prior to the installation of pole equipment. 13. For installations in the City right-of-way, the Applicant shall endeavor to minimize the noise at the property line boundary with adjacent residential property, and shall attempt to keep such noise below 6dB above the ambient level most of the time, when fans are running at their normal setting. If such a standard is not reasonably achievable for a site, then the Applicant voluntarily agrees to use commercially reasonable efforts to ensure that the noise level does not exceed 6 dB above the ambient noise level at the nearest location of a residential structure. Under no circumstances shall the noise exceed the noise standard in Municipal Code 9.10.050 (i.e., +15dB over ambient at 25 feet). 14. The applicant shall submit a sound analysis of an operating installation within two months of the project installation/operation. The analysis shall clearly delineate 6 how the installation complies with the previously listed condition regarding noise. Applicant may be required to submit these reports periodically for the life of the project, as determined by the Director of Planning. 15. The applicant shall perform a radio frequency (RF) analysis for each of the twenty installations to document the RF emissions for the installed and operating equipment. This analysis shall be submitted to the City within two months of the project installation/operation. Applicant may be required to submit these reports periodically for the life of the project, as determined by the Director of Planning. 16. If for any reason the project requires modification from the approved plans in any way, the applicant shall contact Planning staff for a determination on whether the change requires a new application for Architectural Review and Historic Review, if applicable, to be submitted. 17. Pole 3 (1491 Greenwood): An additional street tree shall be required to the right side of pole. 18. Pole 4 installation shall be at 1061 Fife. 19. Pole 6 (697 Wildwood): An additional street tree shall be required to the west side of pole. 20. Pole 7 installation shall be at 973 Embarcadero. 21. Pole 8 installation shall be at 671 Seale. 22. Pole 9 installation shall be at 731 Lincoln. 23. Pole 10 installation shall be at 1594 Walnut on the Embarcadero side. 24. Pole 12 (643 Coleridge): The unused pole that is proposed to be replaced is supported with the addition of one tree to screen views on the Embarcadero side. The small triangular area where a screen tree could be planted appears to be private land; AT&T will need to discuss the tree planting and maintenance with the property owner. 25. Pole 13 (401 Marlowe): An additional street tree shall be required to the east side of pole. 26. Pole 15 installation shall be at 933 N. California and battery boxes should be mounted towards the tree. 7 27. All cost recoverable charges related to this Planning entitlement process, per the cost recovery agreement, shall be paid in full and in a timely manner; these include charges for two consultants hired for peer review of this project. Non-payment may result in the withholding of other city required permits and or approvals required for the project to move forward to the construction phase. Fire Department 28. The applicant shall submit a completed copy the document entitled “Optional Checklist for Local Government to Determine Whether a Facility is Categorically Excluded.” If the applicant is required to submit an Environmental Assessment (EA) to the FCC, please indicate if it has been submitted and the date submitted. Electric Utility 29. Electric Utility shall not perform any operations and/or engineering until a Master License Agreement is signed between AT&T and the City of Palo Alto. AT&T shall not attach any equipment on the City's portion of any utility pole until the Master License Agreement is signed by both parties. The Master License Agreement will determine the procedures, policies, fees and responsibilities for DAS work on joint utility poles. SECTION 7. Indemnity. To the extent permitted by law, the Applicant shall indemnify and hold harmless the City, its City Council, its officers, employees and agents (the “indemnified parties”)from and against any claim, action, or proceeding brought by a third party against the indemnified parties and the applicant to attack, set aside or void, any permit or approval authorized hereby for the Project, including (without limitation) reimbursing the City its actual attorneys fees and costs incurred in defense of the litigation. The City may, in its sole discretion, elect to defend any such action with attorneys of its own choice. SECTION 8. Term of Approval. Architectural Review Approval. The approval shall be valid for one year from the original date of approval, pursuant to Palo Alto Municipal Code Section 18.77.090. 8 PASSED: AYES: NOES: ABSENT: ABSTENTIONS: ATTEST: APPROVED: _________________________ ____________________________ City Clerk Director of Planning and Community Environment APPROVED AS TO FORM: ___________________________ Senior Asst. City Attorney PLANS AND DRAWINGS REFERENCED: Those plans prepared by AT&T titled Palo Alto ODAS, consisting of 48 pages and received May 15, 2012. © 2010 AT&T Intellectual Property. All rights reserved. AT&T and the AT&T logo are trademarks of AT&T Intellectual Property. Page 1 •P1N2B – 671 Seale Ave P1N23B – 1061 Fife Ave P1N31A – 1591 Walnut •P1N6A – 933 California Ave P1N24A – 1496 Dana Ln P1N31B – 1280 Newell Rd •P1N15A - 528 Homer Ave P1N26A – 697 Wildwood Ln P1N33A– 643 Coleridge Ave •P1N19A - 1011 Channing Ave P1N27A– 973 Embarcadero Rd P1N35A – 401 Marlowe St. •P1N22A - 1491 Greenwood Ave P1N30A – 731 Lincoln Ave P1N36A – 1196 Hamilton Ave Palo Alto Phase 2 Nodes e-mail: bhammett@h-e.com Delivery: 470 Third Street West • Sonoma, California 95476 Telephone: 707/996-5200 San Francisco • 707/996-5280 Facsimile • 202/396-5200 D.C. WILLIAM F. HAMMETT, P.E. DANE E. ERICKSEN, P.E. STANLEY SALEK, P.E. ROBERT P. SMITH, JR. RAJAT MATHUR, P.E. KENT A. SWISHER ANDREA L. BRIGHT ___________ ROBERT L. HAMMETT, P.E. 1920-2002 EDWARD EDISON, P.E. 1920-2009 BY E-MAIL JD3235@ATT.COM July 27, 2012 John di Bene, Esq. AT&T Mobility 4430 Rosewood Drive Pleasanton, California 94588 Dear John: As you requested, we have visited the AT&T Mobility oDAS node recently installed at 255 North California Avenue in Palo Alto, California, in order to assess the noise levels from that installation and to evaluate those actual levels against both the city's noise limit and the projected levels. On the morning of June 6, 2012, using one of our Quest Technologies Type 2200 Sound Level Meters (Serial No. SBF110001, under current calibration by the manufacturer), we observed a minimum* noise level of 44.5 dBA at a distance of 25 feet from the pole. That is the distance specified for compliance with the city's municipal code Section 9.10.050, which limits an increase in noise to 15 dBA, measured at 25 feet, for facilities not located on private property. The ambient reading at that location with the AT&T node shut off was 42.1 dBA, so the actual increase was 2.4 dBA, well below the 15 dBA allowed by the code. Removing† the 42.1 dBA ambient level from the 44.5 dBA level with the AT&T equipment turned on indicates that the equipment by itself produced noise at 25 feet of approximately 40.8 dBA. This compares well with the manufacturer's data, given in our report dated November 1, 2011, which averaged 40.9 dBA to the front and sides. Therefore, we conclude from these measurements that noise from the AT&T Mobility oDAS nodes has been accurately represented by the manufacturer and that, indeed, the noise increase easily meets the Palo Alto limits. Please let us know if any questions arise on these measurements or this analysis. Sincerely yours, William F. Hammett * Intended to represent the noise from continuous, fixed sources, separate from the varying levels due to intermittent sources including traffic, wind, voices, and planes. † Using appropriate mathematical conversions. MACKENZIE & ALBRITTON LLP 220 SANSOME STREET, 14TH FLOOR SAN FRANCISCO, CALIFORNIA 94104 TELEPHONE 415 / 288-4000 FACSIMILE 415 / 288-4010 October 29, 2012 VIA ELECTRONIC MAIL Mayor Yiaway Yeh Vice Mayor Gregory Scharff Council Members Patrick Burt, Sid Espinosa, Karen Holman, Larry Klein, Gail Price, Greg Schmid and Nancy Shepherd City Council City of Palo Alto 250 Hamilton Avenue Palo Alto, California 94301 Re: Appeal of AT&T DAS Project – Phase II 12PLN-00090 Architectural Review City Council Consent Agenda November 5, 2012 Dear Mayor Yeh, Vice Mayor Scharff and Council Members: We write to you on behalf of our client AT&T Mobility (“AT&T”) to recommend that you adopt the findings and decision of the Planning Division to approve AT&T’s distributed antenna system (“DAS”) Phase II (the “Approval”) and not remove the Approval from the Council’s November 5, 2012 consent agenda. The arguments raised in the appeal by Tony Kramer (the “Appeal”) seek to distort the clear and plain meaning of the Palo Alto Municipal Code (the “PAMC”) and have been thoroughly considered and addressed by the Planning Division in Condition 13 of the Approval. The Council should uphold the Approval without further delay, and avoid giving credence to Mr. Kramer’s tortured interpretation of the Palo Alto Noise Ordinance. I. Palo Alto Noise Ordinance It is clear from a full reading of the Palo Alto Noise Ordinance, PAMC Chapter 9.10, that noise thresholds are classified by the land use designation of the source, as follows: • PAMC §9.10.030, Residential property noise limits, limits noise produced on residential property to six dB above ambient outside of the property plane; Palo Alto City Council October 29, 2012 Page 2 of 2 • PAMC §9.10.040, Commercial and industrial property noise limits, limits noise produced on commercial or industrial property to eight dB above ambient outside of the property plane; and • PAMC §9.10.050, Public property noise limits, limits noise produced on public property to 15 dB above ambient at a distance for 25 feet or more. This plain reading – that sound levels are classified by the originating source – has been affirmed by at least three reports to the City regarding the AT&T DAS project, including: • the Staff Report for the January 23, 2012, Council approval of the AT&T DAS Phase I application (“As specified in PAMC Section 9.10.050, the public property noise limit specifies that no person shall produce on public property a noise level more than 15 dB above the local ambient at a distance of 25 feet or more from the source”) (emphasis added); • the third-party engineering report of Hammett & Edison, Inc., Consulting Engineers dated November 1, 2011 (“noise levels originating from property in the zones indicated”); and in • the peer review conducted by RCC Consulting Inc. dated May 4, 2012 (“In my opinion, the noise ordinance seems to be based on the location of the noise source … based on my interpretation of code, Section 9.10.050 would apply to DAS installation on the public right-of-way, even if located immediately next to residential property”). Basing noise thresholds on the source land use designation is internally consistent with the Noise Ordinance as well. PAMC §9.10.060(f)(2) provides differing noise origination limitations between “residential zones” and “public streets, sidewalks and parking lots.” Similarly, unique noise requirements are imposed upon street sweepers and refuse collection activity, which operate on public rights-of-way. Finally, Mr. Kramer’s tortured interpretation of the Noise Ordinance makes no sense and taken to its logical conclusion, would even prohibit casual conversation on Palo Alto sidewalks in residential zones.1 II. Approval Condition 13 Condition 13 of the Approval follows the clear and plain meaning of the Noise Ordinance consistent with prior interpretations for noise originating from public property. This condition states that “Under no circumstances shall the noise exceed the noise standard in Municipal Code 9.10.050 (i.e., +15dB over ambient at 25 feet).” This condition was further modified by Planning Division staff in cooperation with AT&T such that AT&T shall “endeavor to minimize the noise at the property line boundary with adjacent residential property, and shall attempt to keep such noise below 6dB above the 1 Under Mr. Kramer’s interpretation, a casual conversation on a sidewalk in a residential zone (estimated at 60dB) would exceed 6dB above residential ambient noise (assumed at 40 dB) immediately inside the property plane, thereby violating PAMC §9.10.030. Palo Alto City Council October 29, 2012 Page 3 of 3 ambient level.” As written, this condition continues the plain and only clear reading of the noise ordinance while providing additional voluntary concessions from AT&T to minimize noise from its facilities. Any effort to make the voluntary concessions of AT&T into a code requirement would violate the clear meaning and prior consistent interpretations of the Noise Ordinance by the City. Conclusion AT&T has made every effort to be sympathetic to Mr. Kramer’s concerns regarding noise from its DAS network. Mr. Kramer’s concerns cannot, however, justify tortured interpretations of the plain meaning and longstanding consistent interpretation of the Noise Ordinance by the City. We encourage you to avoid creating confusion by parsing words in otherwise clear ordinance language and affirm the Planning Division decision through simple approval of the consent calendar. Very truly yours, Paul B. Albritton cc: Grant Kolling, Esq. Clare Campbell New Cingular Wireless PCS, LLC Application for Development Review Permit Outside Distributed Antenna System (DAS) City of Palo Alto March 6, 2012 3 Project Description AT&T is interested in deploying an outside “distributed antenna system” (DAS) to bolster voice and data capacity in areas of the City of Palo Alto. DAS is comprised of a network of small, low power antennas, usually placed on poles, which are connected to common radio equipment within a limited geographic area. This system would fill coverage and capacity gaps within areas of the City that are experiencing high density demand for mobile wireless services. The DAS proposed by AT&T would support the development of technologically advanced communications infrastructure that will facilitate the growth of emerging wireless telecommunications industries in the City of Palo Alto. In addition, residents as well as public safety are increasingly reliant on mobile devices. Data suggests as much as 70% of all mobile calls are made inside buildings and 50% of all calls to 911 are made on mobile devices.1 The Police Department reminds residents to know where their phones are to help report crimes. Also, in the event of disasters, first responders and affected residents rely on their cell phones. The DAS system thus will help improve service coverage and reliability and thus help enhance public safety efforts within the City. AT&T’s DAS technology is capable of serving multiple carriers with very minimal equipment installation. It is AT&T’s intent that its DAS will not only meet the existing demand but also provide the infrastructure for deployment of future 4G demands. 1 National Emergency Numbers Association - “It is estimated that of the 240+ million calls that were made to 9-1-1 in 2006, at least 100 million of them were made by wireless telephone users—that’s 50 percent. This is a huge increase from nearly 4.3 million wireless 9-1-1 calls just 10 years ago, and it is anticipated that the number will continue to rise, both due to cellular and IP-based WiFi and WiMAX forms of wireless service.” 4 Scope of Work This application is for a Development Review Permit and is being proposed for the construction of the 15 (page 11) of approximately 80 (page 12) DAS nodes on existing utility poles within the City of Palo Alto. The initial application of 20 nodes has already been submitted and approved by the City. This second group of nodes will provide wireless service in the area of northeastern Palo Alto between University Ave. and N. California Ave. The exact locations of the 15 proposed nodes are depicted on exhibit 11 of this application. The remaining node locations will be applied for on separate applications to address the remaining coverage needs within the City of Palo Alto. Under Section 1.1307(b)(1) of the Federal Communication Commission’s rules; the proposed low powered wireless facilities are “categorically excluded” as they are fully compliant with FCC requirements for limiting human exposure to radio frequency (RF) energy and are identified as unlikely to cause exposure in excess of the FCC’s guidelines (page 13 - 18). Please see the attached Federal Communications Commission – Local and State Government Advisory Committee Checklist. The facility also will comply with California Public Utility Commission General Orders - 95 and 170. AT&T intends to utilize its existing infrastructure within the City to minimize the impact of deploying DAS on residents of the City of Palo Alto. The DAS system will primarily use existing underground fiber to connect the DAS nodes to the DAS radio equipment hub which is located inside the local AT&T central switching office. 5 AT&T Mobility will purchase local fiber transport from AT&T California. If AT&T California does not have fiber to any node location, it will be necessary to place new fiber and in a few instances new conduit. In these instances, new conduit will be necessary only from the nearest manhole or pole to the node; generally, this should be between 50 to 250 feet. If fiber or power is not already located in the manhole, it generally can be pulled through existing conduit without the need for additional trenching or new conduit. In an effort to minimize trenching, power and fiber can share the same trench where feasible. All of the DAS nodes will be located within the public ROW on existing utility poles. Replacement of a utilities pole will be necessary if the pole is found to be noncompliant with General Orders - 95 and 170. For utility poles that must be replaced, it will remain at the existing height unless a change is requested by AT&T California or Palo Alto Utilities. On August 4th, 2011 AT&T attended a preliminary study session for this DAS project with the Palo Alto Architectural Review Board. As a result each node locations were reviewed and aesthetics guidelines from the ARB panel were adhered to where possible. The battery cabinets were moved higher on the pole to avert it from line of sight. And where applicable, nodes were moved to avoid being in front of second story windows. Also, nodes locations were reassessed to account for maximum screening with the available foliage. (page 19 - 20) The DAS nodes consist of a remote prism antenna (which is 24 inches tall with a 16-inch diameter) that is mounted on top of the existing/replacement poles. The antenna is mounted at the top of a 6 feet tall fiber glass extension that is mounted to the top of the pole. In total, the extension will be 8 feet above the top of the utility pole in order to maintain GO95 separation. This is shown on page 21. 6 For a utility pole mounted cabinet design, a 10 inches high by 5.5 inches wide by 5 inches deep quick disconnect, a 11 inches high by 4 inches wide by and 3/8 inches deep ground bus bar mounted 9 feet above the ground line. Above that sits a Tyco remote cabinet that is 52.4 inches tall by 12.2 inches deep by 11.2 inches wide. And above that is the Alpha battery cabinet that is 27 inches high by 22 inches wide by 18 inches deep. Lastly, above that is a demark box that is 13 inches tall by 13 inches wide by 3.75 inches deep. This is shown on page 30. All the attached equipment is configured such that it blends into the width of the pole. Equipment is tan/beige, and designed to blend in with equipment usually found in the streetscape. Two of the cabinets produce measureable acoustical results. Both have theoretical maximum acoustical performance of 46dB, without isolating ambient noise from the environment, at a distance of 20 feet, which is a rough approximation of the typical distance from a user on the ground. AT&T Mobility expects the actual acoustical performance of the cabinet to be quieter than these theoretical maximums. Description of Construction The antenna structure installation may involve the removal and replacement of the utility poles. A new foundation will be excavated (size dependent on soil conditions), and conduits containing coaxial cables (from the Remote cabinet), and power. Trenching will typically extend to a depth of 36 inches below grade. The following is a description of the work involved in the installation of the Myers cabinet and ground mounted remote. The typical sequence for construction of these nodes will be as follows: 7 · Remote & Myers cabinet excavation and trenching -- An excavation will be made via backhoe to accommodate the proposed concrete slab for the equipment/meter cabinet with trenching from the cabinet location to the pole(s) and/or power connection point, as necessary. An additional trunk will haul and hold supplies. Excavated material will be exported from the site using a dump truck. Backhoe and dump truck will be manned and idling throughout the excavation process and then turned off; generator on truck will run during construction. · Utility pole replacement -- The existing foundation will be removed and replaced with new foundation adequate for new pole installation. · Electrical Installation -- Once conduit and cabinet are in place, cables will be installed to connect the new cabinet to the serving manhole. The power panel will be set by an electrical contractor. SCE will then be called to set the power meter. · Testing -- Final testing of cabinet equipment and antennas will be performed after electrical power is provided to the site. · Duration and Estimated Personnel -- Typical duration for active construction of each node will be 10 days with 2 trucks and 1-3 workers, with traffic control and Department of Transportation approvals required for lane closures associated with trenching, excavation of pad and caisson foundations, and setting of the pole. 8 NORTH PALO ALTO Polygon1 Existing Coverage In-Building Service In-Transit Service Outdoor Service Legend Existing Site City Boundary 9 NORTH PALO ALTO Polygon1 Proposed (Top) Coverage In-Building Service In-Transit Service Outdoor Service Legend Existing Site City Boundary 10 Palo Alto DAS all forecasted Nodes 0 0.4 0.8 1.2 1.6 20.2 Miles PALO ALTO 280 280 101 101 82 114 109 82 M I D D L E F I E L D R D A L M A S T SAND H I L L R D ORE G O N E X P Y EMBARCADERO RD COU N T Y R O U T E G 3 UNIV E R S I T Y A V E W B A Y S H O R E R D J U N I P E R O S E R R A B L V D FO O T H I L L E X P Y SAN A N T O N I O A V E SAN T A C R U Z A V E FA B I A N W A Y G A R C I A A V E PU L G A S A V E CHA R L E S T O N R D AMPHIT H E A T R E P K W Y E B A Y S H O R E R D W M I D D L E F I E L D R D N S H O R E L I N E B L V D ARA S T R A D E R O R D OLD M I D D L E F I E L D W A Y E CHAR L E S T O N R D W CH A R L E S T O N R D BA Y S H O R E P K W Y A L M A S T ORE G O N E X P Y F O O T H I L L E X P Y COU N T Y R O U T E G 3 CHA R L E S T O N R D Legend Polygon 1 Polygon 2 City Bounds 1212 13 14 15 16 FCC Radio Frequency Protection Guide FCC Guidelines Figure 1 Frequency (MHz) 1000 100 10 1 0.1 0.1 1 10 100 103 104 105 Occupational Exposure Public Exposure PCS CellFM Po w e r De n s i t y (m W / c m 2) The U.S. Congress required (1996 Telecom Act) the Federal Communications Commission (“FCC”) to adopt a nationwide human exposure standard to ensure that its licensees do not, cumulatively, have a significant impact on the environment. The FCC adopted the limits from Report No. 86, “Biological Effects and Exposure Criteria for Radiofrequency Electromagnetic Fields,” published in 1986 by the Congressionally chartered National Council on Radiation Protection and Measurements (“NCRP”). Separate limits apply for occupational and public exposure conditions, with the latter limits generally five times more restrictive. The more recent standard, developed by the Institute of Electrical and Electronics Engineers and approved as American National Standard ANSI/IEEE C95.1-2006, “Safety Levels with Respect to Human Exposure to Radio Frequency Electromagnetic Fields, 3 kHz to 300 GHz,” includes similar limits. These limits apply for continuous exposures from all sources and are intended to provide a prudent margin of safety for all persons, regardless of age, gender, size, or health. As shown in the table and chart below, separate limits apply for occupational and public exposure conditions, with the latter limits (in italics and/or dashed) up to five times more restrictive: Frequency Electromagnetic Fields (f is frequency of emission in MHz) Applicable Range (MHz) Electric Field Strength (V/m) Magnetic Field Strength (A/m) Equivalent Far-Field Power Density (mW/cm2) 0.3 – 1.34 614 614 1.63 1.63 100 100 1.34 – 3.0 614 823.8/ f 1.63 2.19/ f 100 180/ f2 3.0 – 30 1842/ f 823.8/ f 4.89/ f 2.19/ f 900/ f2 180/ f2 30 – 300 61.4 27.5 0.163 0.0729 1.0 0.2 300 – 1,500 3.54 f 1.59 f f /106 f /238 f/300 f/1500 1,500 – 100,000 137 61.4 0.364 0.163 5.0 1.0 Higher levels are allowed for short periods of time, such that total exposure levels averaged over six or thirty minutes, for occupational or public settings, respectively, do not exceed the limits, and higher levels also are allowed for exposures to small areas, such that the spatially averaged levels do not exceed the limits. However, neither of these allowances is incorporated in the conservative calculation formulas in the FCC Office of Engineering and Technology Bulletin No. 65 (August 1997) for projecting field levels. Hammett & Edison has built those formulas into a proprietary program that calculates, at each location on an arbitrary rectangular grid, the total expected power density from any number of individual radio sources. The program allows for the description of buildings and uneven terrain, if required to obtain more accurate projections. 17 RFR.CALC™ Calculation Methodology Assessment by Calculation of Compliance with FCC Exposure Guidelines Methodology Figure 2 The U.S. Congress required (1996 Telecom Act) the Federal Communications Commission (“FCC”) to adopt a nationwide human exposure standard to ensure that its licensees do not, cumulatively, have a significant impact on the environment. The maximum permissible exposure limits adopted by the FCC (see Figure 1) apply for continuous exposures from all sources and are intended to provide a prudent margin of safety for all persons, regardless of age, gender, size, or health. Higher levels are allowed for short periods of time, such that total exposure levels averaged over six or thirty minutes, for occupational or public settings, respectively, do not exceed the limits. Near Field. Prediction methods have been developed for the near field zone of panel (directional) and whip (omnidirectional) antennas, typical at wireless telecommunications base stations, as well as dish (aperture) antennas, typically used for microwave links. The antenna patterns are not fully formed in the near field at these antennas, and the FCC Office of Engineering and Technology Bulletin No. 65 (August 1997) gives suitable formulas for calculating power density within such zones. For a panel or whip antenna, power density S = 180 BW 0.1 Pnet D2 h , in mW/cm2, and for an aperture antenna, maximum power density Smax = 0.1 16 Pnet h2 , in mW/cm2, where BW = half-power beamwidth of the antenna, in degrees, and Pnet = net power input to the antenna, in watts, D= distance from antenna, in meters, h= aperture height of the antenna, in meters, and = aperture efficiency (unitless, typically 0.5-0.8). The factor of 0.1 in the numerators converts to the desired units of power density. Far Field. OET-65 gives this formula for calculating power density in the far field of an individual RF source: power density S = 2.56 1.64 100 RFF2 ERP 4 D2 , in mW/cm2, where ERP = total ERP (all polarizations), in kilowatts, RFF = relative field factor at the direction to the actual point of calculation, and D= distance from the center of radiation to the point of calculation, in meters. The factor of 2.56 accounts for the increase in power density due to ground reflection, assuming a reflection coefficient of 1.6 (1.6 x 1.6 = 2.56). The factor of 1.64 is the gain of a half-wave dipole relative to an isotropic radiator. The factor of 100 in the numerator converts to the desired units of power density. This formula has been built into a proprietary program that calculates, at each location on an arbitrary rectangular grid, the total expected power density from any number of individual radiation sources. The program also allows for the description of uneven terrain in the vicinity, to obtain more accurate projections. 18 FID Design_Sta Site Sector Node_numCNU_NUM Lat_Pole Long_Pole Pole_Ht PA_Pole_no Locations Fielding Notes 13 in-design 2 A N15A CCU1331 37.446331 -122.155006 48' 5267 520 Homer Ave near Cowper Ave Feasible - Channing House Health Care Center under construction (2 stories). No tree screening. Equipment streetside. alternate 2 A N15A CCU1331 37.446148 -122.155241 5270 Side of 803 Cowper (on Homer Ave) Probably not feasible - End pole. Small deciduous street trees to rt and left. Small 2nd story window. Pole probably too full. Not adequate climbing space. No more poles SW of this. alternate Not feasible 2 A N15A CCU1331 Not Feasiible Not Feasiible 5266 520 Homer Ave near Cowper Ave Not feasible - Channing House Health Care Center under construction (2 stories). No tree screening. 60 AZM blocked by tall residential Channing House. alternate Not feasible 2 A N15A CCU1331 Not Feasiible Not Feasiible 5265 Side of 850 Webster (on Homer Ave)Not feasible - Blocked by Channing House and trees. 17 in-design 2 A N19A CCU1331 37.448408 -122.146441 42' 5120 875/895 Melville Ave near Channing Ave Feasible - On property line. Screened by evergreens from left and rear. 2nd story window, but screened by trees. Equipment streetside. alternate Not feasible 2 A N19A CCU1331 Not Feasiible Not Feasiible 5119 895 Melville (corner of Channing Ave)Not feasible - On corner. Trees blocking antennas. Cable box on side. alternate 2 A N19A CCU1331 Not Feasiible Not Feasiible 5118 1011 Channing Ave Feasible with pole replacement - Guy pole. Too short. Screened. No 2nd story window. Could only work if replace with 50' pole. alternate Not feasible 2 A N19A CCU1331 Not Feasiible Not Feasiible 5122 869 Melville Ave Not feasible - Antennas blocked by pine tree. 2nd story window. alternate Not feasible 2 A N19A CCU1331 Not Feasiible Not Feasiible 5123 863 Melville Ave Not feasible - Antennas blocked by pine tree. 2nd story window. 20 in-design 2 B N22A CCU1331 37.447890 -122.139826 42' 5156 1491 Greenwood Ave @ Newell Rd Feasible - One deciduous street tree on left (S). No second story window. Equip streetside. alternate Not feasible 2 B N22A CCU1331 37.448238 -122.139846 5155 930 Newell Rd Not feasible - Redwood behind would block 300 AZM. alternate 2 B N22A CCU1331 37.447521 -122.139845 5157 1010 Newell Rd Feasible - Mature deciduous street tree on right (N). No 2nd story window. alternate 2 B N22A CCU1331 37.447222 -122.139722 5158 1050 Newell Rd Feasible - Mature deciduous street tree on right (N). No 2nd story window. 21 in-design 1 A N23B CCU1331 37.451381 -122.148860 38' 5905 991 Addison Ave near Fife Ave Feasible - Between properties. No 2nd story window. Tree on S side but not tall enough to provide screening. Equipment could fit under the streetlight on street side. alternate 1 A N23B CCU1331 37.451608 -122.148886 5885 1091 Fife Ave Feasible - Trees screen from W, N and E. Partially screened second story across the street. Equipment could go streetside under streetlight. alternate 1 A N23B CCU1331 37.451600 -122.148529 5883 1115 Fife Ave Feasible - No tree screening and no room to add tree. No 2nd story window. Equipment could go on S or E side of pole. alternate 1 A N23B CCU1331 37.451608 -122.149395 5887 1061 Fife Ave Feasible - 2nd story window across the street. Screened by Magnolia on E side. Equipment to go streetside. Would have to move riser to make room to attach. alternate Not feasible 1 A N23B CCU1331 37.450916 -122.148889 5906 971 Addison Not feasible - Tree blocks 210 sector. Equipment not screened. Screened 2nd story window across the street. 22 in-design 1 B N24A CCU1331 37.451500 -122.138589 43' 5002 Side of 1496 Dana, across from 705 Newell Rd Feasible - Tree behind pole, Equipment in front. No 2nd story. Pole is by garage and between houses. Trees across street. alternate 1 B N24A CCU1331 37.452011 -122.138280 5001 670 Newell Feasible - Corner pole, but 20' back from corner. Across street from 2nd story window. Tree on north side of pole. alternate 1 B N24A CCU1331 37.451315 -122.138729 7062 1499 Kings Lane side (on Newell) Feasible - No 2nd story, no trees by pole. Equipment on west side of pole (toward corner). No place for tree because of corner and guy wires. alternate 1 B N24A CCU1331 37.450921 -122.138984 5004 1498 Kings Lane side (on Newell) Feasible - Screened by deciduous street trees in both directions, equipment on street side. On side of and between properties. Best back- up. 24 in-design 1 C N26A CCU1331 37.448356 -122.127112 38' 4340 Side of 697 Wildwood Ln (on Channing) Feasible - Have to replace pole. Already has an extension. Between properties. No 2nd story. Evergreen screening from E. Place equipment on W (left side). alternate Not feasible 1 C N26A CCU1331 Not available Not available Rear of 693 Wildwood Ln Not feasible - Pole in yard. No access. alternate Not feasible 1 C N26A CCU1331 Not available Not available Rear of 703 Wildwood Ln Not feasible - Pole in yard. No access. 25 in-design 1 C N27A CCU1331 37.445766 -122.130796 43' 4447 985 Embarcadero Rd Feasible - Screened from N, E and W. Well screend from 2nd story window. Equipment on NW side of pole. alternate 1 C N27A CCU1331 37.445925 -122.130291 4446 993 Embarcadero Rd Feasible - Cable Box. Screened from N by Oak and E by mature evergreen tree. No 2nd story window. Equipment on streetside (S) of pole alternate 1 C N27A CCU1331 37.445623 -122.131351 4448 973 Embarcadero Rd Feasible - Between properties. No 2nd story window. Mature evergreen trees on N and S side. Equipment on street side. 1 in-design 2 C N2B CCU1331 37.439269 -122.139951 42' 5" 4662 655 Seale Feasible - Mature deciduous street tree on right. No 2nd story window. alternate 2 C N2B CCU1331 37.439293 -122.139986 4661 651 Seale Feasible - End pole. Deciduous street trees on both sides and pine tree behind. No 2nd story. alternate 2 C N2B CCU1331 37.439093 -122.140188 4663 627 Seale Feasible - No tree screening. 2nd story house next store, but set back behind front section of house. 28 in-design 2 A N30A CCU1331 37.446718 -122.148728 53' 5981 1061 Fulton St @ Lincoln Ave Feasible - Corner pole with plenty of space. Screened on rt and left with deciduous trees. Equipment streetside on Fulton. alternate Not feasible 2 A N30A CCU1331 37.446955 -122.148493 5991 Side of 1061 Fulton (on Lincoln) Borders 1090 Lincoln Not feasible - Pine tree blocks antennas. alternate 2 A N30A CCU1331 37.447214 -122.148248 5965 1090 Guinda St. Feasible - Corner pole with 2nd story window across street. Mature deciduous tree on left (south) side. alternate 2 A N30A CCU1331 37.446389 -122.149167 5990 731 Lincoln Ave Feasible - Deciduous trees on all sides. 2nd story window across street. 29 in-design 2 C N31A CCU1331 37.443233 -122.139106 52' 4617 1806 Mark Twain St. (on Embarcadero)Feasible - Evergreen street tree to left. No 2nd story. alternate 2 C N31A CCU1331 37.443413 -122.138449 4618 836 Embarcadero Rd (Corner of Emb and Mark Twain) Feasible - Evergreen street tree to left (east). No 2nd story window. Art Center and Library across street, set back. alternate 2 C N31A CCU1331 37.443137 -122.139428 4616 816 Embarcadero Rd (25' from corner of Newell) Feasible - 25' from corner. No 2nd story window (dormer only). Art Center and Library across street, set back. 10 original candidate 2 B N31B CCU1331 37.444572 -122.139812 43 5165 1497 Hopkins Ave - Corner of Newell Rd Feasible - Corner pole not preferred by Planning. On corner by Rinconada Park Tennis Courts and power substation. PA Main Library across the street. Equipment placed under streetlight. in-design 2 B N31B CCU1331 37.444568 -122.140333 42' 8" 5183 1497 Hopkins Ave Feasible - Not corrner, in front of tennis court, substation across the street. Decid street trees to rt and left and redwoods across street, and not in direction of intended coverage (AZM 280 only). alternate Not feasible 2 B N31B CCU1331 37.444669 -122.139721 5166 1213 Newell Rd. Not feasible - In front of Palo Alto Main Library. 25' guy pole located within the branches of large deciduous tree which would block coverage. alternate 2 B N31B CCU1331 37.444410 -122.139869 7423 Side of 1498 Hopkins Ave. On Newell 15' frm corner Feasible - on Newell 15' from corner. Adjacent to power substation and tennis courts. Across the street from Main library. No adjacent house. Alternative Aesthetics Fielding Analysis 19 Alternative Aesthetics Fielding Analysis alternate Not feasible 2 B N31B CCU1331 37.444333 -122.139877 5167 Side of 1498 Hopkins Ave. Not feasible - No room to attach at top. In front of substation, so no adjacent house. Large tree for screening. 30 in-design 2 C N33A CCU1331 37.441983 -122.143388 22' 6" 27Embarcadero Rd & Middlefield Rd (opposite 668 Coleridge) Feasible - Pole away from house with screening to north and west. House has 2nd story window, but not close. Pole is only 25' high and RF requires 40'. Pole will have to be replaced. alternate Not feasible 2 NPL N33A CCU1331 37.441983 -122.143388 5433 643 Coleridge Ave Not Feasible - Redwoods behind block 300 AZM. Pole adjacent to sideyard about 50' from house. alternate 2 NPL N33A CCU1331 37.442004 -122.143495 5406 Side of 643 Coleridge Ave - on Embarcadero Feasible - No tree screening. 300 AZM faces tall redwood across street. Not sure if is an RF issue. PA sub-transmission pole (No ATT). 32 original candidate 1 A N35A CCU1331 37.457016 -122.150827 56' 6" 6122 Palo Alto Ave (side of 400 Marlowe St) Feasible - House to on south side ot the pole w/ visible 2nd story window. Attach to N side of pole. Some tree screening on east side of pole. in design 1 A N35A CCU1331 37.457089 -122.150427 44' 1" 6123 Across from side of 400 Marlowe St on Palo Alto Ave. Feasible - On Palo Alto Ave., adjacent to (on south side of) creek. Not in front of a house. Trees on 3 sides. Attach to west side to preserve climbing space. Streetlight and transformer on the pole. alternate 1 A N35A CCU1331 37.457097 -122.151232 6120 1184 Palo Alto Ave. Feasible - No tree cover. Not directly adjacent to a house. Equipment could go on N or E side. alternate Not feasible 1 A N35A CCU1331 37.457223 -122.151239 6121 Across from 1184 Palo Alto Ave. Not feasible - Guyed pole supporting 6120. Would have to remove top of oak to use the pole and replace with taller pole. Tree blocking antenna coverage. alternate Not feasible 1 A N35A CCU1331 37.456476 -122.150528 6124 456 Marlowe St. Not feasible - No room to attach. No tree cover. 2nd story window across the street. 33 in-design 1 A N36A CCU1331 37.454153 -122.146945 43' 6" 5850 Side of 1196 Hamilton Ave @ Lincoln Ave Feasible - Set back 30' from corner. Screened on 3 sides by trees. No adjacent 2nd story window. alternate Not feasible 1 A N36A CCU1331 37.453986 -122.147003 25'?Side of 1196 Hamilton Ave @ Lincoln Av (next pole to S) Not feasible - Old pole w/ no significant attachments, probably to be removed. No pole number or readable markings. Too short. alternate Not feasible 1 A N36A CCU1331 37.453832 -122.147014 1245 1187 Lincoln Ave. Not feasible - Some tree screening but there is cable box on pole and no room to attach our equipment. Between two houses. alternate Not feasible 1 A N36A CCU1331 37.453515 -122.147007 5856 1145 Lincoln Ave Not feasible - One deciduous tree screening from north. Between properties. Climbing space is all taken up on pole. Not feasible unless conduits can be moved. 5 original candidate 1 C N6A CCU1331 37.443041 -122.131179 42' 4469 917 N California Ave near Louis Rd Feasible - Screened on both sides by magnolias w/ deciduous tree behind. 2nd story window behind, but mostly screened by trees. Equipment on left. in-design 1 C N6A CCU1331 37.442816 -122.131445 41' 4470 Side of 2181 Louis (on N California) Feasible - Good screening by hedge in back. No 2nd story window. Equipment streetside. Might have to move conduit to accommodate equipment. Best candidate. alternate 1 C N6A CCU1331 37.443316 -122.130950 4468 Side of 2170 Bellview Dr (on N California) Feasible - No tree screening, 2nd story window, 25' from corner. Equipment on rt. alternate 1 C N6A CCU1331 37.443653 -122.130619 4467 933 N. California Ave Feasible - Screened by magnolia tree on left that encompasses pole. No 2nd story window. Equipment on street. Good back-up candidate. 20 PRISM REMOTE INSTALLATION ******PROPRIETARY INFORMATION****** NOT FOR USE OR DISCLOSURE OUTSIDE OF ADC TELECOMMUNICATIONS OR THEIR CUSTOMERS 50 ' - 0 " 6' 6 " 43 ' - 6 " 21 ' - 1 0 " 12 ' - 4 " 12 ' - 4 " 2'-0" 1' - 0 " 4" U GUARD EXOTHERMIC (CAD) WELD TO GROUND ROD 10'-0" 9' - 0 " 20 ' - 8 7 / 8 " QUAD BAND/ QUAD BAND BATTERY CABINET- ALPHA MMOE 24 ' - 1 / 8 " 24 ' - 1 1 7 / 8 " DUAL BAND X-POL TRI-SECTOR ANTENNA 52 ' - 3 " CABLE GAUGE BETWEEN UTILITY POLE GROUND BAR AND GROUND ROD #2 AWG SOLID PLACED IN LIQUID TIGHT NON METALIC CONDUIT COAXIAL CABLE WILL BE ½” FOR ALL RUNS >/= 1'-0" 5" x 5 " F I B E R G L A S S E X T E N S I O N 6' - 0 " 6" 21 6500 Note Only Page 1 City of Palo Alto (ID # 3206) City Council Staff Report Report Type: Consent Calendar Meeting Date: 11/5/2012 City of Palo Alto Page 1 Summary Title: Cablecasting System Agreement with the Media Center Title: Approval of Agreement Between the City of Palo Alto on Behalf of the Cable Joint Powers Agency and the Midpeninsula Community Media Center, Inc. for Cablecasting Equipment Funding Support From: City Manager Lead Department: IT Department Recommendation Staff recommends that the City Council approve an agreement between the City of Palo Alto on behalf of the Cable Joint Powers Agency and the Midpeninsula Community Media Center, Inc., in an amount not to exceed $55,000, for a new cablecasting system to support the government channels. Background In 1983, a Joint Exercise of Powers Agreement was entered into by the cities of Palo Alto, East Palo Alto, Menlo Park, the Town of Atherton and portions of San Mateo and Santa Clara counties (the Joint Powers) for the purpose of obtaining cable television service for residents, businesses, and institutions within these jurisdictions. Cable television franchise holders provide various forms of compensation (e.g., public, education, and government (PEG) access fees; local channels; franchise fees, etc.) to pay for use of the public rights-of-way. The City of Palo Alto has been given the sole authority to act on behalf of the Joint Powers. Palo Alto has established a joint cable working group (Working Group) to consider all cable service issues and funding decisions related to the Joint Powers. The Joint Powers has designated a nonprofit Community Access Organization, the Midpeninsula Community Media Center (Media Center), to operate and administer its PEG facilities, equipment and channels. City of Palo Alto Page 2 Discussion The Media Center’s existing master control equipment (cablecasting system) needs to be replaced. The current cablecasting system was purchased in 2003 and has reached the end of its useful life. This equipment is used to broadcast local community programs on cable channel numbers 26, 27, 28, 29, and 30. The system stores video content received from Joint Powers locations (City halls and various locations on the municipal I-Net). It sends the video content to Comcast and AT&T for transmission on our local channels and streams the video live over the Internet. The cost of the new cablecasting system is estimated at $151,573. The Media Center has requested that the Joint Powers fund the portion of the system that sustains the government channels, in an amount not to exceed $55,000. In October 2012, the Joint Powers’ Working Group approved this funding request. Staff requests that the Council approve the proposed agreement between the City of Palo Alto on behalf of the Joint Powers and the Media Center, in an amount not to exceed $55,000, to pay for the portion of the new cablecasting system linked to the government channels. This funding request is consistent with the Joint Powers funding priorities. These funding priorities include “Media Center support to operate the PEG channels.” Historically, the Joint Powers has contributed to government channel equipment needs. As an example, in 2007, the Joint Powers funded an expansion of the cablecasting system (in the amount of $7,000) when East Palo Alto added its Council meetings to the government channel line-up. Resource Impact Funds for the agreement are available in the Cable Fiduciary Fund. As of June 30, 2011, the Cable Fund has reserves in the amount of $726,021. Policy Implications This funding request is consistent with the Cable Fiduciary Fund reserve policies. Attachments: Attachment A - Cablecasting Equipment Agreement (PDF) City of Palo Alto (ID # 3158) City Council Informational Report Report Type: Consent Calendar Meeting Date: 11/5/2012 November 05, 2012 Page 1 of 3 (ID # 3158) Title: Annual Report Sand Hill Road Development Agreement Subject: Final Annual Public Review of Stanford University's Compliance with Development Agreement for the Sand Hill Road Corridor projects From: City Manager Lead Department: Planning and Community Environment RECOMMENDATION Staff recommends that the City Council: 1. Find that Stanford University has complied in good faith with the terms and conditions of the development agreement (“Agreement”) for the final 2011-2012 reporting period; and 2. Find that Stanford University is not in default with the terms and conditions of the Agreement and confirm that the Agreement has now terminated. BACKGROUND In June 1997, the City Council approved Comprehensive Plan amendments, zoning changes and design applications for the Sand Hill Road Corridor Projects (Projects). The Projects include the Stanford West Apartments (Apartments), Senior Housing, Shopping Center modifications and a set of roadway modifications, including the widening of Sand Hill Road to four lanes from Santa Cruz Avenue to Arboretum Road and a two-lane extension from Arboretum Road to El Camino Real. A development agreement vesting these approvals was entered into between Stanford and the City and was effective on August 14, 1997 and continued for fifteen years from the effective date. The development agreement requires annual City Council review of Stanford’s compliance. This report covers Stanford’s 2011-2012 activities and will be the final annual report for the project. DISCUSSION The attached August 29, 2012 memo (Attachment A) from Stanford Management Company describes Stanford’s 2011-12 activities related to implementation of the development agreement. Construction related to the Sand Hill Road Corridor Projects was completed during earlier reporting periods. Post-construction activities include: Stanford West Apartments are now in their eleventh year of occupancy and the number of Below Market Rate (BMR) units remains at 120 units in accordance with the Agreement. The on-site retail store and the Children’s Creative Learning Center, a child care center at November 05, 2012 Page 2 of 3 (ID # 3158) the Stanford West Apartments, also continue operations with Stanford continuing to subsidize the store to offset the on-going loss from operations. The Classic Residence Senior Housing by Hyatt, operating on its seventh year, changed its corporate name to Vi in June 2010 and the community is now named Vi at Palo Alto. The independent living units are 98% sold with a stable wait list and the Health Care Center, with 38 assisted living units, 24 memory support units and 44 skilled nursing units, is also operating at high occupancy levels. The community is a participant of the Palo Alto Green renewable energy program. The Roads phase of the Sand Hill Road Project was completed during earlier reporting periods. Stanford continues to maintain private street improvements and landscaping within portions of Sand Hill Road, El Camino Real, Quarry Road, and Arboretum Road consistent with the Agreement. Simon Property Group, the lessee and operator of the Stanford Shopping Center, withdrew its application to expand the Stanford Shopping Center on April 2009. The expansion would have required amending the Sand Hill Road Corridor Projects Development Agreement. The annual reporting period has traditionally ended on July 31st. Since the Term of the Agreement ended just 2 weeks after July 31, 2012, this last and final reporting period was extended two weeks past the traditional date to correspond with the end of the Agreement’s Term. The term of the Sand Hill Road Corridor Projects Development Agreement terminated on August 14, 2012. RESOURCE IMPACT There are no impacts from the development agreement compliance program that affect the City’s General Fund. POLICY IMPLICATIONS This report does not represent any changes to existing City policies. ENVIRONMENTAL REVIEW Finding Stanford University’s compliance with the Terms of the Agreement is not a project under the California Environmental Quality Act, and no environmental assessment is required. Attachments: Attachment A: August 29, 2012 Memo from Stanford Real Estate Office (PDF) Prepared By: Roland Rivera, Senior Planner November 05, 2012 Page 3 of 3 (ID # 3158) Department Head: Curtis Williams, Director City Manager Approval: James Keene, City Manager City of Palo Alto (ID # 3043) City Council Staff Report Report Type: Consent Calendar Meeting Date: 11/5/2012 City of Palo Alto Page 1 Summary Title: Amendment for Group 4 Contract: Mitchell Park Library & Community Center Title: Approval of Contract Amendment No. Six with Group 4 Architecture, Inc., for Additional Design Services for the Mitchell Park Library and Community Center Project, to Add $692,810 for a Total Amount Not to Exceed $8,595,231, which includes funding for all three Libraries Utilizing Bond Funds From: City Manager Lead Department: Public Works Recommendation Staff recommends that Council Approve and Authorize the City Manager to execute Amendment No. Six to Contract C09130744 with Group 4 Architecture, Inc. (Attachment A), to add $692,810 for additional construction administration services for a total contract amount of $8,595,231, of which $5,760,725 is for the MPLC project (this represents a 14% increase in the MPLCC budget for architectural services) and related Tolling Agreement (Attachment B). Executive Summary The Mitchell Park Library and Community Center (MPLCC) project has experienced construction delays. The current schedule from Flintco shows project completion being achieved in Spring 2013, approximately one year later than the original scheduled date for project completion of April 29, 2012. Group 4 Architecture, Inc. (Group 4) is contracted to provide construction administration services for the MPLCC project. The contract includes a schedule for the completion of these services on September 4, 2012. In order to have City of Palo Alto Page 2 Group 4 continue to provide these essential services from September 5, 2012, through June 30, 2013, staff recommends that the contract be amended to revise the schedule and to increase the compensation. In addition, to preserve the City’s rights to seek contribution against Group 4 for additional costs, including consulting costs, related to such delay, staff also recommends the Council approve the attached Tolling Agreement. Background Measure N, which passed on November 4, 2008, includes funding for construction of a new and expanded Mitchell Park Library and Community Center (MPLCC), renovation of the Downtown Library, and renovation and expansion of the Main Library. Detailed history of the design development can be found in past City Manager’s Reports to Council (CMR:286:02, CMR:119:06, CMR:343:06, CMR:434:06, CMR:225:07, CMR:321:08, CMR:473:08, CMR:149:09, CMR:334:10 and CMR:435:10). Discussion Due to a one-year delay in the MPLCC construction and the unusually large number of change orders, claims, substitutions, requests for information, and submittals from the general contractor, Flintco, construction administration services provided by Group 4 have exceeded the anticipated original funding in their contract. Additionally, the Schedule of Performance in the contract has September 4, 2012, as the milestone date for the construction administration services to be completed. The project delays and the unusually large number of documents submitted by Flintco that require Group 4’s review and approval has dictated the need to amend Group 4’s contract. Group 4’s contract includes provisions as to what constitutes additional services. Amongst 14 different additional services listed are attending additional meetings, providing more than two reviews of submittals, detailed review of substitution requests, and work required to correct non- conforming work of the contractor. Group 4 has provided documentation that quantifies the amount of time they have spent performing these additional services tasks. Accordingly, on July 20, 2012, the City’s Project Manager issued an City of Palo Alto Page 3 authorization for additional services for one of these tasks and a letter authorizing the transfer of $120,810 from the Project Closeout task to the Construction Administration task in order to pay Group 4 for performing these additional tasks. Staff recommends that Council approve replenishing the $120,810 transferred out of the Project Closeout task so that Group 4 can be compensated for that task when it is performed. Staff recommends that Group 4’s amendment include extending the schedule for completion of construction administration services from September 5 to June 30, 2013, and to add $692,810 of compensation as follows: Construction Administration services: $560,000 Reimbursables: $ 12,000 Replenish Project Closeout services budget: $120,810 Total: $692,810 Staff intends ultimately to pursue recovery of these additional consultant costs from Flintco, as the construction delay was largely caused by Flintco’s errors and inefficiencies. In addition, to the extent any of the project delay was caused by Group 4, Group 4 has agreed to a Tolling Agreement which allows the City to pursue its claims against Group 4 following resolution of the dispute with Flintco. Group 4 Contract for Main Library The Group 4 contract for all of the Measure N Library Bond projects is quite large and has become unwieldy and cumbersome. Consequently, staff plans to come back to Council in the near future to enter into a new contract with Group 4 that will encompass the remaining Main Library services instead of amending the existing contract to add those services. The current contract has services that go through the construction bid and award phase. The new contract will have services that start with construction administration and end with project closeout services. The compensation amount will be negotiated and included in the staff report at the time staff seeks Council approval of the new Main Library contract. City of Palo Alto Page 4 Resource Impact Funds for the recommended Group 4 contract amendment are available in CIP PE- 09006. The Group 4, Turner and Flintco contracts and contract amendments encumbered to date as well as this proposed amendment are as follows: Contract Group 4 Architecture Turner Construction Flintco Construction Original contract $3,827,280 $138,198 $24,365,000 Original Contingency -10% $2,436,500 Additional Contingency -10% $2,436,500 Amendment 1 $92,034 $432,000 n/a Amendment 2 $312,396 $3,008,250 n/a Amendment 3 $3,192,000 $205,297 n/a Amendment 4 $258,041 n/a n/a Amendment 5 $220,670 n/a n/a Amendment 6 $692,810 n/a n/a Total Contract Value to Date $8,595,231 $3,783,745 $29,238,000 Note: The Group 4 and Turner amounts are for all three Measure N library projects. Policy Implications Amending this contract does not conflict with any current City policy. Timeline Construction of the new Mitchell Park Library and Community Center began in September of 2010 and staff anticipates the facility opening to the public in Spring 2013. City of Palo Alto Page 5 Attachments: A: Contract with Group 4 Amendment No 6 (PDF) B: Tolling Agreement (PDF) 1 S:/013/Tolling Agreement TOLLING AGREEMENT This Tolling Agreement (the “Tolling Agreement”) is entered into effective September 4, 2012 (the “Effective Date”) by and between the City of Palo Alto, a California chartered municipal corporation (“CITY”), GROUP 4 ARCHITECTURE, RESEARCH + PLANNING, INC., a California corporation (“G4”) (hereinafter collectively referred to as “the Parties”). NOW THEREFORE, in consideration of the premises, the mutual covenants herein contained, and other good and valuable consideration the receipt and adequacy of which is hereby acknowledged, the Parties agree as follows: 1. To assist in the defense of any potential claims by Flintco, Inc., against the City, concerning its work on the demolition of an existing library and community center at Mitchell Park and the construction of a new joint library and community center (“Mitchell Park Project”), the Parties agree to toll all statutes of limitations and contractual time bars with respect to the Parties’ rights, if any, arising out of and/or relating to that certain written Contract No. C09130744 between City and G4 (together with all amendments and exhibits, the “Contract”) in connection with the design and development, bidding and construction, and/or any pre‐construction, construction management, construction administration, closeout/warranty services or other design related services provided by G4 to City for the Mitchell Park Project, which tolling shall be from the Effective Date of this Tolling Agreement to its expiration or termination. 2. Except as to the effect of the statutes of limitations provisions as stated in Paragraph 1 above, the Parties agree that upon expiration or termination of this Tolling Agreement, each party will have the same procedural rights, duties, positions and defenses as they had before this Tolling Agreement was signed. 3. The Parties agree that this Tolling Agreement shall be in effect until such time as all legal claims by Flintco, Inc. relating to the construction of the Mitchell Park Project are resolved or this Tolling Agreement is terminated under the terms of Paragraph 12 hereof or on December 31, 2015, whichever comes first, and shall expire at that time unless renewed or extended by a writing signed by the Parties. 4. The Parties agree that this Tolling Agreement does not apply to claims, if any, which were barred by limitations as of the Effective Date. Further, this agreement shall not operate to waive, limit, modify or otherwise affect any claims or defenses, or any rights and obligations that any of the Parties may possess against any other Party, except for the tolling effect agreed to herein. 5. The Parties agree this Tolling Agreement shall not be offered in evidence as an admission of liability, nor shall it be used in any way, including in discovery, as evidence thereof. 6. The Parties agree that this document constitutes the entire agreement of the parties regarding the subject matter hereof, that there are no unwritten terms and conditions, and that this is an integrated document which can be modified only in writing signed by all the Parties. 2 S:/013/Tolling Agreement 7. The Parties warrant that each of them have been advised by legal counsel of its own choice as to the terms and conditions of this Tolling Agreement and the legal significance thereof. 8. By signing below, the Parties each acknowledge that they have read this Tolling Agreement and are fully aware of its contents. 9. Notwithstanding anything to the contrary in this Tolling Agreement, nothing in this Tolling Agreement shall prevent City from tendering any claims it receives from Flintco, Inc. to Group 4 under the indemnity provisions of the Contract, nor shall prevent G4 from tendering any claims it has against the City. 10. This Tolling Agreement shall be binding and enforceable against the Parties hereto and any assigns or successors‐in‐interest. The Parties declare and represent that no promise, inducement or agreement not herein expressed has been made to any of their representatives, and this Tolling Agreement contains the entire agreement between the Parties. The terms of this Tolling Agreement are contractual in nature and not mere recitals. The signatories below warrant that they have appropriate authority to execute this Tolling Agreement and understand and acknowledge that all adverse parties are relying on this warranty of authority. 11. This Tolling Agreement may be executed in one or more original or facsimile counterparts, each of which shall be deemed an original, but also which together will constitute one and the same instrument. 12. This Tolling Agreement may be terminated at any time after June 30, 2013, by any Party hereto upon ninety (90) days’ written notice to the other Party, which notice shall be effective upon date of receipt after mailing by first‐class certified mail or first‐class registered mail, postage pre‐paid, by UPS or Federal Express Overnight delivery, at the addresses as listed in Paragraph 13. 13. Notices under this Tolling Agreement shall be given as follows: To City: City Attorney Attn: Cara Silver 250 Hamilton Avenue Palo Alto, CA 94301 To G4: GROUP 4 ARCHITECTURE, RESEARCH + PLANNING, INC 211 Linden Avenue South San Francisco, CA 94080 and Pandell Law Firm, Inc. 1990 North California Boulevard, Suite 1010 Walnut Creek, CA 94596 City of Palo Alto (ID # 3221) City Council Staff Report Report Type: Consent Calendar Meeting Date: 11/5/2012 City of Palo Alto Page 1 Summary Title: Approval of Amendment No 4 for Turner for Mitchell Park Library & Community Center Title: Approval of Contract Amendment No. 4 for Additional Construction Management Services with Turner Construction, Inc., to add $2,052,016 for a Total Amount Not to Exceed $5,835,761 for all three Libraries Utilizing Bond Funds From: City Manager Lead Department: Public Works Recommendation Staff recommends that Council approve and authorize the City Manager to execute Amendment No. Four to Contract C10131631 with Turner Construction, Inc. (Attachment A), to add $2,052,016 for additional construction management services for the MPLCC project for a total contract amount of $5,835,761, of which $5,265,334 is for the MPLCC project. This represents a 64% increase in the MPLCC budget for construction management services. Executive Summary The Mitchell Park Library and Community Center (MPLCC) project has experienced substantial construction delays and an unusually large number of change orders. The current schedule from the contractor (Flintco) shows the project being completed in Spring 2013, approximately one year later than the original scheduled date for project completion. Construction problems include Flintco’s failure to properly schedule and coordinate work and inspections, the failure and City’s rejection of defectively installed building components, and Flintco’s failure to properly manage key subcontractors through the course of the project. City of Palo Alto Page 2 The City hired Turner Construction Co. to provide construction management services for the MPLCC project. The City’s contract requires Turner to perform construction management services for a maximum “not to exceed” amount, regardless of project delays. However, given the extensive delays experienced on the project, Turner contends that it is owed additional compensation. In addition, Turner has indicated to the City that if the City does not pay it additional funds, it will begin removing personnel from the project, which could further extend the project completion date and raise project costs. To avoid additional delays on the MPLCC and to avoid a mid-project contract dispute with Turner, Turner and the City have negotiated a contract amendment that will keep Turner on the job at a staffing level commensurate with the existing construction activity while at the same time reserving the City’s rights to assert that Turner is not entitled to such additional funds. The amendment is structured so that the City may recover some or all of these funds from Turner depending upon the outcome of future proceedings. Given the need to complete the project without further delays or contractual disputes, it is important to fund Turner at this time so that any further construction delays are minimized and the MPLCC is open and available for public use. Background Measure N, which passed on November 4, 2008, includes funding for renovation of the Downtown Library, construction of a new and expanded Mitchell Park Library and Community Center (MPLCC), renovation and expansion of the Main Library and renovation of temporary facilities to accommodate the various library closures. The City entered into an agreement with Group 4 Architecture, Research + Planning, Inc. (Group 4) to provide the architectural services and with various contractors to provide the construction of the three libraries and the temporary facilities. The City issued a Request for Proposals (RFP) for the construction management services for all of the facilities and Turner Construction, Inc. (Turner) was selected. On September 14, 2009, the City and Turner entered into a contract for Turner to provide preliminary construction management services for the Downtown and MPLCC projects. Amendments One (June 28, 2010), Two (August 5, 2010), and Three (September 12, 2011) to the Turner contract were subsequently approved by Council to add construction management services and compensation for all of the Measure N projects. City of Palo Alto Page 3 Discussion Flintco Pacific, Inc. (Flintco) is currently one year behind the original project schedule. Additionally, Flinto has produced an unusually large number of project documents, including change orders, claims, substitutions, requests for information, and submittals that require a substantial amount of extra time by Turner to process. Flintco’s failure to properly schedule and coordinate their work and inspections has resulted in Turner spending additional time to intercede in these activities. Consequently, construction support services provided by Turner have far exceeded those budgeted by Turner. Staff recommends amending Turner’s contract to extend the schedule for completion of construction management (CM) services, including testing and inspection (T&I) services, to the completion of the project and to add $2,052,016 in compensation as follows: Comp Escrow Total CM services from 6/1/12 to 9/4/12:$487,016 $487,016 CM services from 9/5/12 to 12/31/12:$680,000 $680,000 CM services from 1/1/13 to completion: $510,000 $510,000 T&I services from 7/1/12 to completion:$375,000 $375,000 Total compensation $1,055,000 Total compensation in escrow $997,016 Grand total $1,055,000 $997,016 $2,052,016 Contractual Protections for City The negotiated contract amendment provides several contractual provisions that safeguard the City’s right to later argue that Turner is bound by the limits in the original “not to exceed” contract. First, approximately half of the funds (approximately $1,000,000) will be escrowed in a set aside account administered by the City. These funds will not be released until there is a final resolution between the parties as to whether Turner is entitled to additional funds. If the parties are not able to mutually resolve this issue, the dispute will be submitted to a binding arbitration for resolution. City of Palo Alto Page 4 Second, the contract amendment provides that both the funds as well as the additional cash payments made under the agreement (approximately $1,000,000) are subject to a Reservation of Rights which permits the City to later challenge Turner’s entitlement to such funds. Like the escrow funds discussed above, if the parties are not able to resolve the entitlement issue on their own, the dispute will be submitted to binding arbitration for resolution. Finally, the contract amendment contains a Tolling Agreement which allows the City to defer any contractual or other claims it may have against Turner until after the project is completed and any disputes with Flintco are resolved. In construction disputes it is common for the City’s consultants to assist the City in asserting or defending claims against and by the Contractor after the job is complete. If such a dispute arises and the contractor is successful in prosecuting a claim against the City, the City may elect to seek contribution from the consultants and their insurance carriers. The contribution phase of a construction lawsuit generally comes after the claim with the primary contractor is resolved. The Tolling Agreement allows the City to preserve its ability to seek contribution without having to file a claim prematurely. The Tolling Agreement is attached to Amendment 4 as Exhibit E. Resource Impact A separate staff report has been prepared for an amendment to the Group 4 contract adding $692,810 in compensation. Funds for the recommended Turner and Group 4 contract amendments are available in CIP PE-09006. The Group 4, Turner and Flintco contracts and contract amendments encumbered to date as well as the proposed amendments are as follows: Contract Group 4 Architecture Turner Construction Flintco Construction Original contract $3,827,280 $138,198 $24,365,000 Original Contingency -10%$2,436,500 Additional Contingency -10%$2,436,500 City of Palo Alto Page 5 Amendment 1 $92,034 $432,000 n/a Amendment 2 $312,396 $3,008,250 n/a Amendment 3 $3,192,000 $205,297 n/a Amendment 4 $258,041 $2,052,016 n/a Amendment 5 $220,670 n/a n/a Amendment 6 $692,810 n/a n/a Total Contract Value to Date $8,595,231 $5,835,761 $29,238,000 Note: The Group 4 and Turner amounts are for all the Measure N library projects. Policy Implications Amending this contract does not conflict with any current City policy. Timeline Construction of the new Mitchell Park Library and Community Center began in September of 2010 and staff anticipates the facility opening to the public in Spring 2013. Attachments: ·A -Turner Contract (PDF) CITY OF PALO ALTO CONTRACT NO. CI0131631 AMENDMENT NO.4 TO CONTRACT NO. CI0131631 BETWEEN THE CITY OF PALO ALTO AND TURNER CONSTRUCTION COMPANY This Amendment No.4 ("Amendment") to contract No. C 10131631 ("Contract") is entered into and made effective on October 31,2012, by and between the CITY OF PALO ALTO, a California Charter City ("CITY"), and TURNER CONSTRUCTION COMPANY, a California corporation with offices located at 60 S. Market Street, Ste. 1100, San Jose, California 95113 ("CONSULTANT") (City and Consultant may be referred to collectively as "parties" or separately as a "party"). RECITALS: WHEREAS, on September 14, 2009, the City and Consultant entered into the Contract concerning, among other libraries in Palo Alto, the Mitchell Park library and community center ("Project"); and WHEREAS, on June 28,2010, the parties entered into Contract Amendment No.1; and WHEREAS, on August 5, 2010, the parties entered into Contract Amendment No.2; and WHEREAS, on September 12, 2011, the parties entered into Contract Amendment No.3 (The Contract and Amendments Nos. 1,2 and 3 are collectively referred to as the "Contract"); and WHEREAS, the contractor, Flintco, Inc., ("Contractor") hired to build the Project has failed to complete the Project within the time specified in the related construction contract; and WHEREAS, a dispute (the "Dispute") has arisen between City and Consultant over the interpretation of the Contract, whereby on the one hand City contends the Contract is a "not to exceed" contract for the completion of all work on the Project whenever completed such that Consultant is not entitled to any additional compensation under the existing Contract, and whereby on the other hand Consultant contends that the Contract was for a specific term for Construction Phase Services related to Substantial Completion such that Consultant is entitled to additional compensation to continue to provide such Services after that term; and WHEREAS, the parties have agreed to enter into this Amendment on the terms set forth belew-in ereer-te keep-Gensultant--en the-P.rejeet by eemp@nsating~and advanGing-the--sum.s to Consultant on the terms and conditions set forth below and in the attachments and Exhibits hereto; and WHEREAS, in light of the foregoing, the parties wish to amend the Contract as set forth below. NOW THEREFORE, in consideration of the covenants, terms, conditions, and provisions of this Amendment, the parties agree: SECTION 1. The Recitals set forth above are hereby incorporated in and made a part of this Amendment and the Contract by this reference. The parties agree that nothing contained in this Amendment No.4, including all attachments and Exhibits hereto, is intended in any way to be an admission or concession regarding, and in no way will be interpreted to impact their respective positions, rights, claims and remedies associated with the Dispute, and that the description of the Dispute, above, is for general reference and not intended to limit or constrain either party's position with respect to the Dispute. SECTION 2. Exhibit "A" to the Contract entitled "SCOPE OF SERVICES," is hereby amended to add the following: On or before February 1, 2013, the parties will work together to implement a plan to have City-designated personnel assist Consultant in or perform certain Claims-related and other aspects of the Contract, including services which Consultant contends are not included within Consultant's Scope of Services as set forth in Contract Exhibit "A". Nothing herein is intended to modify Consultant's obligation to perform Services under the Contract. If it is determined that such City-designated personnel perform services that were within Consultant's Scope of Services as set forth in Exhibit "A", as attached to Amendment No.3 to the Contract, City reserves all rights to claim that all such sums so paid are recoverable from Consultant under the Reservation of Rights procedures set forth in Exhibit C. SECTION 3. SECTION 4 of the Contract, "NOT TO EXCEED COMPENSATION" is hereby amended to read: Subject to the Reservation of Rights and Set-Aside provisions set forth in Exhibit "C", attached and incorporated by this reference, the compensation paid to CONSULTANT for performance of the Services described above and in Exhibit "A," including payment for both professional services and reimbursable expenses, shall not exceed Five Million, Three Hundred Six Thousand, Three Hundred Fifty-Three Dollars ($5,306,353.00). In the event Additional Services are authorized, the total compensation for services and reimbursable expenses shall not exceed Five Million, Eight Hundred Thirty-Five, Seven Hundred Sixty-One Dollars ($5,835,761.00). The applicable rates and schedule of payment are set out in Exhibit "C", entitled "COMPENSATION," which is attached to and made part of this Agreement. Additional Services, if any, shall be authorized in accordance with and subject to the ------J3rov-is-iens-or.-E-1(hi,bit~ ". ON YhT-ANT-s-Aall B0t-n~0ei-v-e-an:Y-G0mpeBsali0A-f0r-Additi0Jlal 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 6. The following exhibits to the Contract are hereby amended to read as set fOl1h in the following attachments to this Amendment, which are incorporated in full by this reference: 2 a. EXHIBIT "C" entitled "COMPENSATION" as attached hereto. b. EXHIBIT "C-1" entitled "Hourly Rate Schedule" as attached hereto. SECTION 7. Tolling Agreement: The parties agree to enter into the Tolling Agreement attached hereto as Exhibit "E", and which is hereby incorporated by this reference, wherein the parties shall agree to toll any and all statutes of limitations and contractual time bars as indicated. The Tolling Agreement shall survive the termination of the Contract, unless earlier terminated as provided therein. SECTION 8. Except as herein modified, all other provisions of the Contract, including any exhibits and subsequent amendments thereto, shall remain in full force and effect. In particular (and without in any way whatsoever affecting all such other provisions of the Contract referred to herein, including any exhibits and subsequent amendments thereto), the Term of the Contract as previously set forth in Section 2 ofthe Contract entered into on the 14th day of September, 2009 between the parties is again acknowledged to end June 1, 2013. [REMAINDER INTENTIONALLY BLANK -SIGNATURE PAGE FOLLOWS] 3 IN WITNESS WHEREOF the parties have by their duly authorized representatives executed this Amendment on the date first written above. CITY OF PALO ALTO: CONSULT ANT: By: _________ _ TURNER CONSTRUCTION COMPANY City Manager BY~~~ Name: n0J tiYI· OO'Jrue lill APPROVED AS TO FORM: Title: ~ N , §en2mJ 1v\.0!0.C(fY By: _________ _ Ci ty Attorney 4 EXHIBIT "C" (page 1 of 5) COMPENSATION The CITY agrees to compensate the CONSULTANT for professional services performed in accordance with the terms and conditions of this Agreement as modified by this Amendment, and as set forth in the budget schedule below. Compensation shall be calculated based on the hourly rate schedule attached as exhibit C-l up to the not to exceed budget amount for each task set forth below. For Subconsultants, such as Inspections, special inspections, electronic document services, and photographic documentation services, the CITY agrees to compensate the CONSULTANT for services performed in accordance with the terms and conditions of this Agreement as modified by this Amendment, and as set forth in the budget schedule below. Compensation shall be calculated based on the actual cost ofthe sub consultant, plus a fee of 5%, up to the not to exceed budget amount for each task set forth below. Subject to the Reservation of Rights and Set Aside provisions below, the compensation to be paid to CONSULTANT under this Amendment for all services described in Exhibit "A" ("Basic Services") and reimbursable expenses shall not exceed Five Million, Three Hundred Six Thousand, Three Hundred Fifty-Three Dollars ($5,306,353.00). CONSULTANT agrees to complete all Basic Services, including reimbursable expenses, within this amount provided that in the event that testing, inspection, and/or other subconsultant services exceed the amount allotted herein, the parties will negotiate a separate agreement for how such testing, inspection, and other subconsultant services will be provided and paid for. In the event CITY authorizes any Additional Services, the maximum compensation shall not exceed Five Million, Eight Hundred Thirty-Five, Seven Hundred Sixty-One Dollars ($5,835,761.00). 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. CONSULTANT shall perform the tasks and categories of work as outlined and budgeted below. The CITY's project manager may approve in writing the transfer of budget amounts between any ofthe tasks or categories listed below provided the total compensation for Basic Services, including reimbursable expenses, does not exceed $5,306,353.00 and the total compensation for Additional Services does not exceed $529,408.00. 5 EXHIBIT "C" (page 2 of 5) COMPENSATION DESCRIPTION: NOT TO EXCEED AMOUNT BASIC SERVICES Downtown Librarv Phase I -Design Phase A Pre-construction Phase Downtown Library Phase II -Construction Phase A Turner Staff Services B Testing and Special Inspections C Electronic Documents Downtown Library Phase ill Post Construction & Warranty Phase $ 17545 $ 345,00.0 $ 12,000 $ 20,000 F Turner Staff Services $ 10,000 TOTAL DOWNTOWN LIBRARY BASIC SERVICES Mitchell Park Phase I -Design Phase A Preconstruction Mitchell Park Phase II -Construction Phase A Turner Staff Services Al *Turner Staff Services after July 1, 2012 A2 *A portion of Turner's Staff Services for June 2012 B *Testing and Special Inspections B1 'Testing and Special Inspections after May1, 2012 C Electronic Documents & Photo Recording D Extended Construction Duration Mitchell Park Phase III -Post-Construction Phase A3 Turner Staff Services TOTAL MITCHELL PARK BASIC SERVICES Main Librarv Phase I $ 404,545 $ 107,292 $1,835,000 $1,530,000 $ 190,721 $ 445,000 $ 375,000 $ 135,000 $ 115,000 $ 45,000 $4,788,013 (Design Phase for Main Library & Concept Design Phase for Temporary Main Library) 'Date references are included for ease of reference related to the Reservation of Rights and Set Aside provisions of this Amendment only, and for no other purpose. However, nothing in this Amendment will permit Turner to retroactively bill City for any work performed prior to May 1, 2012. 6 7 A.l A.2 EXHIBIT "C" (page 3 of 5) COMPENSATION Turner Staff Services -Temporary Library for Main Turner Staff Services -Permanent Main Library $ 15,000 $ 90,500 TOTAL MAIN LIBRARY BASIC SERVICES (Design Phase Only) $ 105,500 ALLOWANCE FOR REIMBURSABLE EXPENSES DT Library (not to exceed) DESCRIPTION: NOT TO EXCEED AMOUNT MP Library (not to exceed) Main Library TOTAL ALLOWANCE FOR REIMBURSABLES TOTAL BASIC SERVICES (including Allowance for ReimbursabLes) ADDITIONAL SERVICES: ALLOWANCE FOR ADDITIONAL SERVICES -Not to Exceed DT Library MPLCC Main Library TOTAL ALLOWANCE FOR ADDITIONAL SERVICES TOTAL NOT TO EXCEED COMPENSATION REIMBURSABLE EXPENSES $ 5,000 $ 11,295 $ 2,000 $ 18,295 $5,306,353 $ 42,632 $ 476,026 $ 10,750 $ 529,408 $5.835.761 The administrative, overhead, secretarial time or secretarial overtime, word processing, photocopying, in-house printing, insurance and other ordinary business expenses are included within the scope of payment for services and are not reimbursable expenses. ADDITIONAL SERVICES The CONSULTANT shall provide additional services only by advanced, written authorization ------c-:-:·O-=l1~l fhe-CITY. The CO SUCTA1"lT artrfe--rry"s pToje ~11'ra:nager's request, slraU sllbml a detailed written proposal including a description of the scope of services, schedule, level of effort, and CONSULTANT's proposed maximum compensation, including reimbursable expense, for such services based on the rates set fmih in Exhibit C-l . 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. 8 EXHIBIT "C" (page 4 of 5) COMPENSATION RESERVATION OF RIGHTS Any "not to exceed" sums in whatever amounts actually paid to Consultant or paid to any set- aside account under this Amendment No.4 to the Contract or paid to City-designated personnel pursuant to Section 2 of this Amendment No.4 are specifically made without prejUdice to the City's right to claim that no such sums are payable hereunder by reason ofthe previously executed Contract, including any amendments thereto, and without prejudice to Consultant's right to claim that all such sums payable to Consultant under this under Amendment No.4 to the Contract are valid, payable obligations by the City and that such additional sums are owed to Consultant. Nothing in this Amendment prevents Consultant from making any claim for compensation for out-of-scope/extra services for which it believes it is entitled. Any payment made by City to Consultant or City-designated personnel under this Contract Amendment No.4, either directly or to any set-aside account shall not affect in any way City's ability to assert it is not required to make such payment under the Contract or any amendment thereto. SET-ASIDE SUMS _Upon the timely, proper and documented invoicing by Consultant, and instead of making payments on such invoicing directly to Consultant, CITY will deposit the following amounts into a "set-aside" account with the City (the "Set-Aside Account") as follows: 1) $340,000 of the amount listed for Contract Exhibit C, Basic Services Mitchell Park Phase II -Construction Phase, Line Al Turner Staff Services provided on and after July 1, 2012 ("First Set-Aside Amount"); 2) $510,000 of the amount listed for Contract Exhibit C, Basic Services Mitchell Park Phase II -Construction Phase, Line Al Turner Staff Services incurred and invoiced following the First Set-Aside Amount and following City's payment of$680,000 to Consultant for Mitchell Park Phase II -Construction Phase, Turner Staff Services ("Second Set-Aside Amount"); 3) $102,016 of the amount listed for Contract Exhibit C, Basic Services Mitchell Park Phase II -Construction Phase, Line C, designated for Electronic Documents and Photo Recording ("Third Set-Aside Amount"); and 4) Contract Exhibit C, Basic Services Mitchell Park Phase III -Post-Construction Phase, bne-A-3-E$45;000) Turner-8taff-Serviees-("F0urth--Set-Asiee Ameunt"). The First Set-Aside Amount, Second Set-Aside Amount, Third Set-Aside Amount and Fourth Set-Aside Amount (collectively the "Set-Aside Sum") will be held by the City in the Set-Aside Account until such time as the City and Consultant 9 EXHIBIT "C" (page 5 of 5) COMPENSATION agree to release them or a ruling has been made as to the disposition of the Set-Aside Amount in a binding dispute resolution proceeding between the parties. This Amendment shall be considered joint set-aside account instructions and the signatures of both parties or a ruling in a binding dispute resolution procedure will be required to release the funds from the Set-Aside Account. The City shall, within three (3) business days of each deposit, provide Consultant with written notice confirming the deposit of any and all funds into the Set-Aside Account described herein. The parties agree to promptly execute and provide all documents reasonably requested and required by the City in order to administer (e.g., open, deposit funds, release funds and close) the Set-Aside Amount described herein. Notwithstanding the foregoing, if the CITY and CONSULTANT have been unable to agree in writing to the release ofthe Set-Aside Amount and/or entitlement to the funds paid by CITY to TURNER subject to the Reservation of Rights as noted above, then within ninety (90) days after the CITY's final resolution (e.g., the dates of any ofthe following: settlement agreement; judgment following trial; or judgment following an award in binding arbitration) of any and all claims by or against Contractor, the CITY AND CONSULTANT shall submit the dispute surrounding the Set-Aside Amount and/or all Reservation of Rights funds noted above to final and binding arbitration to be conducted by a single arbitrator from Judicial Arbitration and Mediation Services ("JAMS") of San Jose, California, or any successor entity. The arbitrator shall be jointly selected by the CITY AND CONSULTANT or, if they are unable to agree within fourteen (14) days ofthe first written proposal of an arbitrator, appointed in accordance with the then-current JAMS arbitrator appointment process and subject to all JAMS procedural and discovery rules then in effect. This provision shall not be construed as an agreement to submit any other claims or actions either party has or may have against one another to JAMS arbitration and such other claims or actions shall be governed by the terms set forth in the Contract. 10 CITY OF PALO ALTO CONTRACT NO.: C10131631 EXHIBIT "C-l" POSITION Project Executive Project Manager Project Engineer/Cost Engineer MEP Engineer Scheduler Estimator Administrative Accounting POSITION Project Executive Project Manager Project Engineer/Cost Engineer MEP Engineer Scheduler Estimator Ad min istrative Accounting POSITION Project Executive Project Manager Project Engineer/Cost Engineer MEP Engineer Scheduler Estimator Administrative Accounting HOURLY RATE SCHEDULE Revised 29 October, 2012 Attached to Amendment 4 11 HOURLY RATES 2009 2010 $232 $239 $164 $169 $105 $108 $155 $159 $126 $130 $168 $173 $ 63 $ 65 $101 $104 2011 $246 $174 $111 $164 $134 $178 $ 66 $107 2013 2012 $253 $180 $115 $169 $138 $183 (Corrected Rate) $ 68 $110 $261 (New Rate) $185 (New Rate) $118 (New Rate) $174 (New Rate) $142 (New Rate) $188 (New Rate) $ 70 (New Rate) $113 (New Rate) EXHIBIT "E" TOLLING AGREEMENT This Tolling Agreement (the "Tolling Agreement") is entered into effective October 30, 2012 (the "Effective Date") by and between the City of Palo Alto, a California chartered municipal corporation ("CITY"), TURNER CONSTRUCTION COMPANY, a New York corporation ("TURNER") (hereinafter collectively referred to as "the Parties"). NOW THEREFORE, in consideration of the premises, the mutual covenants herein contained, and other good and valuable consideration the receipt and adequacy of which is hereby acknowledged, the Parties agree as follows: 1. The Parties agree to toll all statutes of limitations and contractual time bars with respect to the Parties' rights, if any, arising out of and/or relating to that certain written Contract No. CI0131631 between City and Turner (together with all amendments and exhibits, the "Contract"), the design and development, bidding and construction of the Mitchell Park Library/Community Center (the "Project"), and/or any pre-construction, construction management or closeout/warranty services provided by Turner to City for the Project, which tolling shall be from the Effective Date of this Tolling Agreement to its expiration or termination. 2. Except as to the effect of the statutes of limitations provisions as stated in Paragraph 1 above, the Parties agree that upon expiration or termination of this Tolling Agreement, each party will have the same procedural rights, duties, positions and defenses as they had before this Tolling Agreement was signed. 3. The Parties agree that this Tolling Agreement shall be in effect until such time as all legal claims by Flintco, Inc. relating to the construction of the Project are resolved through a settlement or through trial or binding arbitration, or this Tolling Agreement is terminated under the terms of Paragraph 13 hereof, and shall expire at that time unless renewed or extended by a writing signed by the Parties. 4. The Parties agree that this Tolling Agreement does not apply to claims, if any, which were barred by limitations as of the Effective Date. Further, this agreement shall not operate to waive, limit, modify or otherwise affect any claims or defenses, or any rights and obligations that any of the Parties may possess against any other Party, except for the tolling effect agreed to herein. 5. The Parties agree this Tolling Agreement shall not be offered in evidence as an admission of liability, nor shall it be used in any way, including in discovery, as evidence thereof. 6. The Parties agree that this document constitutes the entire agreement of the parties regarding the su ~jec . rna er ereof, -llia Thre are no unwrinen teilTIS an con ltlOns an lallnlS Ir an integrated document which can be modified only in writing signed by all the Parties. 7. The Parties warrant that each of them have been advised by legal counsel of its own choice as to the terms and conditions of this Tolling Agreement and the legal significance thereof. 8. By signing below, the Parties each acknowledge that they have read this Tolling Agreement and are fully aware of its contents. 12 9. Notwithstanding anything to the contrary in this Tolling Agreement, nothing in this Tolling Agreement shall prevent City from tendering (a "Tender") any claims it receives from Flintco, Inc. to Turner under the indemnity provisions of the Contract; however, notwithstanding any other provision herein, the acceptance or rejection by Turner of such Tender shall constitute and effect a termination of this Tolling Agreement effective upon sixty (60) days after receipt of such acceptance or rej ection. 10. This Tolling Agreement shall be binding and enforceable against the Parties hereto and any assigns or successors-in-interest. The Parties declare and represent that no promise, inducement or agreement not herein expressed has been made to any of their representatives, and this Tolling Agreement contains the entire agreement between the Parties. The terms of this Tolling Agreement are contractual in nature and not mere recitals. The signatories below warrant that they have appropriate authority to execute this Tolling Agreement and understand and acknowledge that all adverse parties are relying on this warranty of authority. 11. This Tolling Agreement may be executed in one or more original or facsimile counterparts, each of which shall be deemed an original, but also which together will constitute one and the same instrument. Copies of signatures hereon shall be treated the same as originals. 12. From and after substantial completion of the Project, this Tolling Agreement may be terminated at any time by any Party hereto upon thirty (30) days' written notice to the other Party, which notice shall be effective upon date of receipt after mailing by first-class certified mail or first-class registered mail, postage pre-paid, by UPS or Federal Express Overnight delivery, at the addresses as listed in Paragraph 14. Any such notices sent via U.S. mail shall be deemed received three (3) days after sending; sent via overnight mail shall be deemed received the day after sending; sent via e-mail or facsimile shall be deemed sent the same day as sending provided that a copy of such notice also is sent via U.S. Mail. 13. Notices under this Tolling Agreement shall be given as follows: To City: City Attorney Attn: Cara Silver 250 Hamilton Avenue Palo Alto, CA 94301 To Turner: TURNER CONSTRUCTION COMPANY Attn: Kevin Antonelli and Tom Tripp 60 Seuhh Mafket Sl.reet,Su·ite-l1·00 San Jose, CA 95113 And copy to Hopkins & Carley Attn: Jay M. Ross, Esg. 70 South First Street San Jose, CA 95113 13 15. Each person executing this Tolling Agreement represents-that he or she is fully aut1lOrized to execute and deliver this Tolling Agreement on behalf of snch person or entity. [REMAINDER INTENTIONALLY BLA K -SIGNATURE PAGE FOL OWS] • 14 IN WITNESS WHEREOF the Pruties have executed this Tolling Agreement effective as of the Effective Date. CITY OF PALO ALTO By: ____________ _ Name: ------------ Title: ___________ _ TURNER CONSTRUCTION COMPANY BY:I~TU44 NameiYafrDI . An~\k ) TitJe VP ~,E\~\ ~Y- 15 City of Palo Alto (ID # 3236) City Council Staff Report Report Type: Consent Calendar Meeting Date: 11/5/2012 City of Palo Alto Page 1 Summary Title: Resolution to Fix Employer Medical Contributions for FCA Title: Adoption of Resolution of Intent to Fix the Employer's Contribution Under the Public Employee's Medical and Hospital Care Act with Respect to Members of the Palo Alto Fire Chiefs' Association and Rescinding Resolution No. 8666. From: City Manager Lead Department: Human Resources Recommendation Staff recommends that Council adopt the attached resolution fixing the City of Palo Alto’s healthcare premium costs under the Public Employees’ Medical and Hospital Care Act (PEMHCA) for Palo Alto’s Fire Chiefs’ Association. BACKGROUND The City of Palo Alto contracts with CalPERS to provide its employees with healthcare. On March 5, 2012, Council approved the new Memorandum of Agreement for the Palo Alto Fire Chiefs’ Association (FCA). This unit currently has four (4) budgeted full-time positions and includes the classifications of Battalion Chief and Emergency Medical Services Director. A critical bargaining objective has been to continue reducing medical costs which until earlier this year, the City had paid the entire premium amount and carried the risk for all premium increases for the employees in this group. A key structural change to City employee compensation plans has been to implement employee medical contributions. DISCUSSION In an ongoing effort to address escalating medical costs, agreement was reached providing for City of Palo Alto Page 2 employee contributions toward medical premiums for actives and future retirees from this unit. Under the provisions of the new MOA adopted in March 2012, members started contributing 10% toward medical premiums with the City picking up the remaining 90% of the total premium cost. For active employees in FCA this became effective March 10, 2012. There have been no retirements in this unit since that date, however in order to implement the Memorandum of Agreement provisions for any future retiree in this bargaining group, the CalPERS contract amendment process requires Council to approve the attached resolution so that they can administer the updated benefit provisions. RESOURCE IMPACT The active employee contribution of 10% toward medical effective March 10, 2012 was estimated to provide $1,845 in savings for FY 12. In FY 13, the savings will be approximately $5,998. The FY 13 Adopted Budget does not require adjustment to accommodate this contract amendment. POLICY IMPLICATIONS This recommendation is consistent with City Council direction to achieve structural changes in employee compensation for short-term and long-term savings. ENVIRONMENTAL REVIEW This is not a project under the California Environmental Quality Act (CEQA). Attachments: Reso Fire Chiefs Employer Contribution (PDF) ** NOT YET APPROVED ** 1 Resolution No. ________ Resolution of Intention of the Council of the City of Palo Alto to Fix the Employer’s Contribution Under the Public Employees’ Medical and Hospital Care Act for Palo Alto Fire Chief’s Association R E C I T A L S A. Government Code Section 22892(a) provides that a local agency contracting under the Public Employees' Medical and Hospital Care Act shall fix the amount of the employer's contribution at an amount not less than the amount required under Section 22892(b)(1) of the Act; and B. City of Palo Alto, hereinafter referred to as Public Agency is local agency contracting under the Act for participation by members of the Palo Alto Fire Chiefs. NOW, THEREFORE, the Council of the City of Palo Alto does RESOLVE as follows: SECTION 1. That the employer’s contribution for each employee or annuitant shall be the amount necessary to pay the full cost of his/her enrollment, including the enrollment of his/her family members in a health benefits plan up to a maximum of Government Code 22892 per month, plus administrative fees and Contingency Reserve Fund Assessments. // // // // // // // // // // ** NOT YET APPROVED ** 2 SECTION 2. That the City of Palo Alto has full complied with any and all applicable provisions of Government Code Section 7507 in electing the benefits set forth above. INTRODUCED AND PASSED: AYES: NOES: ABSENT: ABSTENTIONS: ATTEST: __________________________ _____________________________ City Clerk Mayor APPROVED AS TO FORM: APPROVED: __________________________ _____________________________ Sr. Deputy City Attorney City Manager _____________________________ Director of Human Resources _____________________________ Director of Administrative Services City of Palo Alto (ID # 2289) City Council Staff Report Report Type: Consent Calendar Meeting Date: 11/5/2012 City of Palo Alto Page 1 Summary Title: I-Net Agreement with Comcast Title: Approval of Agreement Between the City of Palo Alto on Behalf of the Cable Joint Powers Agency and Comcast Corporation of California IX, Inc. For The Use of Fiber; Approval of Agreement Between the City of Palo Alto on Behalf of the Joint Powers and the Cities of Palo Alto, East Palo Alto and Menlo Park, and the Town of Atherton for Storage and Operation of I-Net Equipment; and Approval of Agreement Between the City of Palo Alto on Behalf of the Joint Powers and the Palo Alto Unified School District, the Ravenswood City School District, the Menlo Park City School District, the Las Lomitas Elementary School District, and the Sequoia Union High School District Covering Shared I-Net Responsibilities; and Approval of Agreement Between the City of Palo Alto on Behalf of the Joint Powers and Internet Systems Consortium, Inc. Covering the Provision of Internet Services to I-Net Connected Institutions From: City Manager Lead Department: IT Department Recommendation Staff recommends that Council: 1) Approve an agreement between the City of Palo Alto on behalf of the Cable Joint Powers Agency and Comcast of California IX, Inc. for the use of fiber in the amount of $29,148.24 per year for a period of five years. 2) Approve an agreement between the Cable Joint Powers Agency and the cities of Palo Alto, East Palo Alto and Menlo Park, and the Town of Atherton for storage and operation of institutional network equipment. City of Palo Alto Page 2 3) Approve five agreements between the City of Palo Alto on behalf of the Cable Joint Powers Agency and the Palo Alto Unified School District, the Ravenswood City School District, the Menlo Park City School District, the Las Lomitas Elementary School District, and the Sequoia Union High School District, respectively, covering shared institutional network responsibilities. 4) Approve an agreement between the City of Palo Alto on behalf of the Cable Joint Powers Agency and Internet Systems Consortium, Inc. covering the provision of Internet Services to institutional network connected institutions. Background In July 1983, the cities of Palo Alto, Menlo Park, East Palo Alto, the Town of Atherton, and portions of the County of San Mateo and the County of Santa Clara created a Joint Powers Agency (JPA) for the purpose of obtaining cable television service within these jurisdictions. The parties gave the City of Palo Alto the sole authority to act as the administrative agency for the JPA. In 2000, the City entered into a franchise agreement with AT&T. In 2002, the franchise was transferred to Comcast Corporation. The 2000 franchise agreement required Comcast to complete an upgrade of the cable system, which included the construction of a dark fiber optic institutional network (I-Net). This network connects 70 public schools, public buildings and community centers in the JPA service area for delivery of data, video and voice services. Comcast finalized construction of the I-Net at the end of 2005. In 2006, the JPA designed the network architecture and purchased equipment (in the amount of $1.1 million) for the I-Net. At the present time, the following I-Net connections are active (or being activated), as follows: City of Palo Alto: hub connection City of Menlo Park: 3 site connections & hub connection City of East Palo Alto: 3 site connections & hub connection Town of Atherton: 2 site connections to be activated & hub connection Palo Alto Unified School District: 17 site connections Ravenswood City School District: 9 site connections Menlo Park City School District: 4 site connections Las Lomitas Elementary School District: 3 site connections City of Palo Alto Page 3 Sequoia Union High School District: 1 site connection Media Center: public, education, and government channel connections The heaviest users of the I-Net are the schools in the JPA service territory, with approximately 80 percent of the active connections. The I-Net has given schools significantly greater bandwidth and network performance, and schools utilize the I-Net as their primary telecommunications network. Community members use the I-Net to create and distribute programs on the local area public channels that promote and celebrate individual expression, local achievements, education, cultural exchange, arts appreciation, and civic engagement. The I-Net also supports the broadcast capabilities of the local area Media Center. The Media Center is responsible for operating and managing the JPA’s public, education, and governmental channels (channel numbers 26, 27, 28, 29, 30, 75, and 76) and facilities. Discussion On January 1, 2007, the Digital Infrastructure and Video Competition Act of 2006 (DIVCA) went into effect. This new law permanently changed the franchising and regulatory structure for the provision of cable television services in California. Under DIVCA, franchises are granted by the California Public Utilities Commission (CPUC) rather than by local governments. On January 2, 2008, Comcast was granted a state franchise by the CPUC. As a state franchisee, Comcast is not obligated to provide I-Net facilities or services, after July 24, 2010, the date the local cable franchise expired. Since December 2009, City staff representatives have negotiated with Comcast for the continued provision of the I-Net fiber. Staff has reached a proposed fiber use agreement with Comcast (Attachment A). The key terms of the agreement are discussed below. Term: The agreement is effective for a period of 5 years (through 2017). Rate: The fiber will be charged at a rate of $75 per fiber mile per month. Amount: The total annual cost is $29,148.24, for a total cost not-to-exceed $145,741.20. Core Fiber: The agreement covers I-Net core fiber that is shared by all of the I-Net users. This fiber connects the four I-Net hubs (located in the City of Palo Alto, the City of East Palo Alto, the City of Menlo Park and the Town of Atherton). A drawing of the I-Net fiber, including the core fiber, is provided in Attachment D. City of Palo Alto Page 4 Site Fiber: The agreement covers site fiber that serves JPA sites in the City of East Palo Alto (Corporation Yard, Housing and Community Service Department, Police Department), the City of Menlo Park (Onetta Harris Community Center/Belle Haven Senior Center, Belle Haven Police Substation, Belle Haven Child Development Center) and the Town of Atherton (Library, Holbrook-Palmer Park). The City of Palo Alto does not utilize any site fiber. The site fiber that serves the schools is not covered in this agreement. The School Districts have executed separate agreements with Comcast covering their use of I-Net site fiber. PEG Fiber: DIVCA contains provisions designed to preserve and protect the continued provision of local public, education, and governmental (PEG) programming. Comcast has agreed to provide the PEG fiber that serves the connections to the Media Center at no charge. Agreement for Storage and Operation of I-Net Equipment The JPA has routing and switching equipment located at the four I-Net hubs as follows: 1) the City of Palo Alto hub; 2) in the City of Menlo Park hub; 3) in the City of East Palo Alto hub; and 4) Town of Atherton hub. The proposed Agreement for Storage and Operation of the I-Net Equipment (Attachment B) grants the JPA the right to store and operate this equipment within each JPA member’s jurisdictional boundary and to install, maintain, repair and remove the equipment as needed. Agreement with JPA-area School Districts Because of the uncertainty regarding the future of the I-Net, the I-Net users made a decision not to develop long-term plans for network operations, maintenance, and replacement needs. Following approval of the I-Net Agreement with Comcast, long-term plans will be developed. The proposed Agreement with JPA-area School Districts makes it clear that any costs associated with operation and maintenance of the I-Net would be shared by I-Net participants. The Agreement also delineates ownership and responsibility for I-Net equipment. This agreement has already been signed by the five JPA-area School Districts. A representative agreement for the Palo Alto Unified School District is attached (Attachment C). Agreement with ISC for the Provision of Internet Services At the present time, Internet Systems Consortium (ISC) provides fee free Internet Service to JPA-area School Districts and the Media Center via the I-Net. The Schools and the Media Center would like to enter into formal agreements with ISC for this Service. The JPA plans to use its best efforts to facilitate written agreements between the parties. The JPA makes no City of Palo Alto Page 5 commitment that its efforts will be successful. In the meantime, the proposed agreement with ISC (Attachment E) covers the provision of Internet Services to I-Net connected institutions. Resource Impact The JPA members have set aside money, in a Cable Fiduciary Fund, to sustain I-Net functionality. These funds total approximately $725,000 and will be used to pay for the fiber use agreement with Comcast. These funds will also be used to pay the JPA’s share of I-Net operational and maintenance costs. The JPA receives franchise fees of $1.6 million annually, should additional funds be needed in the future to support the I-Net. Attachments: Attachment A - Agreement with Comcast for Use of Fiber (PDF) Attachment B - Agreement for Storage & Operation of INET Equipment (PDF) Attachment C - Letter Agreement with Schools (PDF) Attachment D - I-Net Drawing (PDF) Attachment E - Letter Agreement with ISC (PDF) 110901 dm 0073581 ATTACHMENT B AGREEMENT FOR STORAGE AND OPERATION OF INSTITUTIONAL NETWORK EQUIPMENT This Agreement for Storage and Operation of Institutional Network Equipment (the “Agreement”), dated as of _________, 2012 (the “Effective Date”), is entered into by _______________________________________, a _____________ (the “JPA Member”), and the Cable Joint Powers, a California joint action agency organized and existing under the Joint Exercise of Powers Act, California Government Code section 6500 et seq. (the “JPA”)(individually, a “Party” and, collectively, the “Parties”), in regard to the following facts and circumstances: RECITALS: A. In 1983, the cities of Palo Alto, East Palo Alto and Menlo Park, the town of Atherton, and the counties of San Mateo and Santa Clara executed a joint powers agreement (the “JPA Agreement”) for the purpose of creating a joint powers agency, charged with issuing a community antenna television franchise agreement (the “Franchise Agreement”) and facilitating the provision of cable services in a service area, covering the jurisdictional boundaries of the JPA Members. B. In 2000, the JPA granted a Franchise Agreement to TCI Cablevision of California, Inc., now Comcast of California IX, Inc. (“Comcast”). Under the Franchise Agreement, provision is made for an institutional network (“I-Net”), consisting of public, education and government (“PEG”) head-end links and I-Net links. The JPA required Comcast to provide funding to acquire and support the I-Net equipment and to provide for the distribution of PEG programming to subscribers over the I-Net. The Franchise Agreement authorizes the City of Palo Alto (the “City”), as administrator for the JPA, to designate a community access organization (the “CAO”) to manage the PEG channels. C. The I-Net connects public schools, public buildings and community centers in the JPA’s service area. The heaviest users of the I-Net are the public schools. The public schools utilize the I-Net as their primary telecommunications network and, as a consequence, public schools located in the JPA service area were afforded the opportunity to avoid leased line telecommunications costs, and gain significantly greater bandwidth and network performance. Community members use the I-Net to create and distribute programs on the PEG channels that promote and celebrate individual expression, local achievements, education, cultural exchange, arts appreciation, and civic engagement. D. Each JPA Member has certain I-Net routing and switching equipment (the “I-Net Equipment”) that are owned by the JPA, yet are located within the JPA Member’s jurisdictional boundary. The JPA wishes to receive from each JPA Member the right and permission to store and operate (including install, maintain, repair, remove and replace) 110901 dm 0073581 the JPA’s I-Net Equipment within each JPA Member’s jurisdictional boundary, and enjoy the right of ingress and egress to install, maintain, repair and remove the I-Net Equipment located within each JPA Member’s jurisdictional boundary. IN CONSIDERATION OF the recitals and following covenants, terms and conditions, the Parties agree, as follows: AGREEMENT: 1. The Recitals of this Agreement constitute a part of and are integrated in to this Agreement. 2. The term of this Agreement shall commence on _______________, ____, and shall continue for a term of five years. 3. The JPA Member hereby grants to the JPA and its representatives, agents and contractors, including, without limitation, the City, as the JPA administrator, (A) the right of ingress and egress to any building of structure owned by the JPA Member, which houses the I-Net Equipment, upon reasonable prior notice to the JPA Member, and (B) the right to install, maintain, repair, remove and/or perform other work in connection with the I-Net Equipment within the JPA Member’s jurisdictional boundary. The JPA Member agrees to maintain connectivity of the I-Net Equipment with Comcast’s dark fiber optic backbone located within the JPA Member’s jurisdictional boundary, and furnish power to the I-Net Equipment at the JPA Member’s sole cost and expense. 4. By acceptance of this Agreement, the Parties expressly understand and agree that the JPA will not indemnify, defend and hold harmless the undersigned JPA Member from and against any and all liability, loss, or damage, which may be suffered or incurred by the JPA Member in connection with the Parties’ exercise of rights and performance of obligations under this Agreement, except to the extent such liability, loss or damage arises as a result of the JPA’s negligence or willful misconduct. 5. Except as otherwise provided herein, neither the JPA nor the JPA Member shall be required to provide insurance coverage which extends to acts and omissions of each Party hereto in connection with this Agreement, and each Party represents and warrants that it does self-insure against any and all liability, loss and damage in the ordinary course and scope of conducting its business. 6. The duties of a Party shall be not assigned or transferred to any third party without the express written approval of the other Party. Any unapproved assignment or transfer will be null and void. 7. A waiver by a Party of any breach or violation of any covenant, term or condition of this Agreement or of the provisions of any ordinance or law shall not be construed to be a waiver of performance of any other covenant, term, condition, ordinance or law, or of any subsequent breach or violation of the same. The acceptance 110901 dm 0073581 by a Party of any payment or damages which may become due hereunder will not be deemed to be a waiver of any subsequent breach or violation by the other Party of any covenant, term, condition, ordinance or law. 8. This Agreement may be terminated upon the occurrence of an “event of default” by a Party (the “Defaulting Party”). An “event of default” will constitute a material breach of this Agreement, if it is not cured in a timely manner. 8.1 The term “event of default” means the occurrence of any of the following: (a) the failure to perform any material covenant, or obligation set forth in this Agreement or any Exhibit, if such failure can be readily remedied and is not remedied within thirty (30) days after written notice of default is given; (b) a Party files a petition or otherwise commences or acquiesces in the commencement of a proceeding under any bankruptcy, insolvency, reorganization or similar law, makes an assignment for the benefit of its creditors, has an administrator, receiver, trustee, conservator or similar official appointed with respect to it or any substantial portion of its property or assets, or is generally unable to pay its debts as they fall due; (c) the transfer of this Agreement or any material obligation arising under this Agreement and the Exhibits, whether voluntarily or by operation of law, without the consent of the other Party; and (d) the failure to make, when due, any payment required by this Agreement if such failure is not remedied within ten (10) business days after written notice of default is given. 8.2 If an event of default occurs and is continuing with respect to the Defaulting Party, the other Party (the “Non-Defaulting Party”) will have an election of rights and remedies, in addition to all other rights and remedies afforded or provided by law or in equity or as otherwise provided in this Agreement, to which the non-defaulting Party may resort cumulatively, or in the alternative: (a) the right to terminate this Agreement by giving thirty (30) days’ prior notice of termination, in which event this Agreement will terminate on the date set forth in the notice of termination; (b) the right to demand performance of an act which otherwise cure the violation or any breach; and (c) the right to suspend performance of any of its material obligations, including, without limitation, the right to withhold any payments due to the Defaulting Party under this Agreement. 9. A Party will be temporarily excused from the performance or further performance of any of its covenants or agreements hereunder and such Party’s nonperformance shall not be deemed an event of default under this Agreement for any period to the extent that such Party is prevented, hindered or delayed for any period of time not in excess of thirty (30) days from performing any of its covenants or agreements, in whole or in part, as a result of an act of God, war, civil disturbance, court order, or other cause beyond that Party’s reasonable control, including, without limitation, any denial of access to the City’s facilities in order to perform the Services and complete the Project. The Parties hereby agree to use reasonable efforts to remedy the effects caused by the occurrence of the event giving rise to a Party’s temporary nonperformance of its covenants or agreements under this Section. A Party will provide notice promptly to the other Party to the extent that Party relies on the provisions of this 110901 dm 0073581 Section to temporarily excuse its failure to perform any of its covenants or agreements hereunder. 10. All notices required to be given hereunder shall be, in writing, and mailed, postage prepaid, by certified mail, addressed, or e-mailed, as follows: To JPA: JPA Administrator c/o City of Palo Alto Post Office Box 10250 Palo Alto, CA 94303 ATTN: Melissa Cavallo, Cable Coordinator Melissa.Cavallo@CityofPaloAlto.org To JPA MEMBER: ATTN: 11. In the exercise of rights and performance of obligations, each Party acts at all times as an independent contractor and not as an employee of the other Party. Nothing in this Agreement shall be construed to establish a partnership, joint venture, group, pool, syndicate or agency between the JPA and the JPA Member. No provision contained herein shall be construed as authorizing or empowering either Party to assume or create any obligation or responsibility whatsoever, express or implied, on behalf, or in the name of, the other Party in any manner, or to make any representation, warranty or commitment on behalf of the other Party. In no event will either Party be liable for (i) any loss incurred by the other Party in the course of its performance hereunder, or (ii) any debts, obligations or liabilities of the other Party, whether due or to become due. 12. If a dispute between the Parties arises under this Agreement, the Parties will endeavor to resolve informally at a meeting of each Party’s designated representatives who may be responsible for and exercise the appropriate authority to resolve all disputes hereunder; and (b) if the Dispute remains unresolved after thirty (30) days, the Parties agree that the dispute shall be submitted to the Franchise Review Board, as such body is designated in the Franchise Agreement, which shall render a final decision regarding such dispute. 13. The following miscellaneous provisions shall apply under this Agreement: 13.1 This Agreement will be governed by and construed in accordance with the laws of the State of California. The Parties will comply with applicable laws pertaining to their obligations arising under this Agreement. 13.2 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 or in the United States 110901 dm 0073581 District Court for the Northern District of California in the County of Santa Clara, State of California. 13.3 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. 13.4 If a court of competent jurisdiction finds or rules that any provision of this Agreement, the Exhibits, or any amendment thereto is void or unenforceable, the unaffected provisions of this Agreement, the Exhibits, or any amendment thereto will remain in full force and effect. 13.5 All Exhibits referred to in this Agreement and any addenda, appendices, attachments, and schedules that, 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. 13.6 This Agreement may be executed in any number of counterparts, each of which will be an original, but all of which together will constitute one and the same instrument. 13.7 This Agreement represents the entire understanding and agreement between the Parties and they supersede 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. 13.8 The Parties agree that the normal rule of construction to the effect that any ambiguity is to be resolved against the drafting party will not be employed in the interpretation of this Agreement or any Exhibit or any amendment thereof. 13.9 On the Effective Date, each Party represents and warrants to the other Party that: (a) it is duly organized, validly existing and in good standing under the laws of the jurisdiction of its formation; (b) the execution, delivery and performance of this Agreement and the Exhibits are within its powers, have been duly authorized by all necessary action and do not violate any of its governing documents, any contracts to which it is a party or any law, rule, regulation, or order; (c) the Agreement and the Exhibits and any other document executed and/or delivered in accordance with this Agreement constitutes its legally valid and binding obligation enforceable against it in accordance with its covenants, terms, conditions and provisions; (d) it has not filed and it is not now contemplating the filing for bankruptcy protection or, to its knowledge, threatened against it which would result in it being or becoming bankrupt; (e) there is not pending or, to its knowledge, threatened against it or any of its affiliates any legal proceedings that could materially adversely affect its ability to perform its obligations under this Agreement and the Exhibits; and (f) no event of default or potential event of default with respect to it has occurred and is continuing and no such event or 110901 dm 0073581 circumstance would occur as a result of its entering into or performing its obligations under this Agreement and the Exhibits. IN WITNESS WHEREOF, the Parties have by their duly authorized representatives executed this Agreement and certain Exhibits, as appropriate, as of the Effective Date. JPA ________________________________ Name: Title: APPROVED AS TO FORM: __________________________ APPROVED: __________________________ Assistant City Manager __________________________ Director of Administrative Services JPA MEMBER ________________________________ Name: Title: APPROVED AS TO FORM: ________________________________ Name:___________________________ Title:____________________________ City of Palo Alto COLLEAGUES MEMO November 05, 2012 Page 1 of 2 (ID # 3282) DATE: November 5, 2012 TO: City Council Members FROM: Vice Mayor Scharff, Council Member Schmid, Council Member Holman SUBJECT: COLLEAGUES MEMO FROM VICE MAYOR SCHARFF AND COUNCIL MEMBERS HOLMAN AND SCHMID REGARDING RE-EVALUATION OF GROUND FLOOR RETAIL PROTECTIONS IN THE DOWNTOWN COMMERCIAL DISTRICT Recommendation Staff should return to Council with a detailed proposal to require retail retention in some or all of the Downtown Commercial (CD) district outside of the current Ground Floor (GF) Retail Overlay, and to extend the Downtown Ground Floor (GF) Retail Overlay to areas of Downtown that would form a pedestrian gateway to new developments and facilities in or around the transit station. The proposal should also examine bringing into compliance any non-conforming uses within the Downtown Commercial (CD) District within the Downtown Ground Floor (GF) Retail Overlay particularly on University Avenue. Furthermore staff should also examine the sites taken out of the Ground Floor (GF) Retail Overlay list in 2009 and recommend whether the designation should be extended to these and/or other properties in the area. Background On November 16, 2009, the City Council voted to remove Ground Floor retail protection from 13 properties along University, Alma, Hamilton and High. These were described as ‘on the periphery of the downtown’ and ‘outside of the retail core’ of University Avenue and its side streets. The ordinance change also included deleting requirements elsewhere in the Downtown Commercial (CD) zone that until that time mandated that existing retail and personal service uses could not be converted to office space. In the interim, several retail properties in the CD zone have converted to office space including Fraiche Yogurt and a shoe store on Emerson Street, the Blue Chalk Café, and Jungle Copy. Other stores, some long-standing Palo Alto retailers, are rumored to be under consideration for conversion to office. In particular, the Emerson Street corridor provides a rich retail-restaurant November 05, 2012 Page 2 of 2 (ID # 3282) corridor, including Gordon Biersch, Mantra, Empire Grill and Tap Room, Buca de Beppo, Stanford Florist, Richard Sumner Gallery and other establishments, all of which are now vulnerable to office conversion. In addition, at the November 2009 Council meetings, staff and Council members acknowledged that the sites removed from the GF overlay in the Hamilton/Alma/University block could become more attractive for retail use as the entry to the train station and connections with Stanford are enhanced. The Planning Director suggested that the proposed Ordinance changes “return to the City Council in a few years to discuss updates, benefits or unintended consequences, and make modifications, if necessary.” Given the approval of the Lytton Gateway project and desirability of better connections to the Stanford Shopping Center and the west side of El Camino Real as part of the Stanford Medical Center approvals and resultant Development Agreement funding to enhance that connection, and the potential for enhancements to the pedestrian tunnels at University Avenue and Lytton Avenue, the City should examine the pedestrian-retail environment in the Downtown Area and consider an extension of the GF Zone to the emerging ‘gateway’ areas of Lytton, University, Alma, Hamilton and High Streets. Conclusion Given the changes in the economic climate in Palo Alto and Silicon Valley, particularly recent and proposed substantial increases in Downtown office space, the City should examine options to assure a vital retail environment and services to support Downtown and the community. This is an appropriate time to re-evaluate the rules for Ground Floor Retail in the Downtown Commercial District. City of Palo Alto (ID # 3176) City Council Staff Report Report Type: Action ItemsMeeting Date: 11/5/2012 Summary Title: Stevenson House Loan Commitment Title: Adoption of Budget Amendment Ordinance to Provide Appropriation of $1 Million for a Loan Commitment for the Rehabilitation of Stevenson House From: City Manager Lead Department: Planning and Community Environment Recommendation Staff recommends that the City Council approve the Palo Alto Senior Housing Project, Inc. request to commit $1,000,000 for the rehabilitation of Stevenson House by adopting the attached Budget Amendment Ordinance to allocate $1,000,000 from the Stanford University Medical Center Project’s Infrastructure, Sustainable Neighborhoods and Communities, and Affordable Housing community benefit payment for the rehabilitation. Executive Summary Palo Alto Senior Housing Project, Inc. (PASHPI) has requested $1,000,000 of City funds in order to finance the complete rehabilitation of the Stevenson House facility, a 120-unit senior affordable development that has served the City’s extremely low, very low and low income senior population for forty-three years. Council approval of the recommended actions will formalize the City’s commitment to provide financial assistance for the rehabilitation. A Budget Amendment Ordinance (BAO) is attached. The formal loan documents will be brought forth for Council consideration in April/May 2013. Background Stevenson House, located at 435 E. Charleston Road, has been serving extremely low, very low and low income Palo Alto seniors for forty-three years. Built in 1968, Stevenson House consists of 120 studio and one bedroom units. In addition to providing affordable housing, it offers services, meals and social programs for its residents. Currently, more than 80% of the resident population has incomes that qualify as extremely low income. Palo Alto Senior Housing Project, Inc. (PASHPI) is the developer, owner and operator of Stevenson House. Originally funded through HUD Section 202 funds, the building has been well maintained over its lifespan. However, certain building system components have recently begun to near the end of their useful lives. PASHPI has received Community Development Block Grant (CDBG) funding to repair some of those systems but a more comprehensive recapitalization is necessary to insure the long term viability of the facility. Over the past 17 years, the City of Palo Alto has provided CDBG funds to assist in repairing some of the older systems. Approximately $1.2 million has been allocated to the Stevenson House since 1995. The breakdown of CDBG funding for Stevenson House is presented in the table below: Discussion Project Site and Description Stevenson House is comprised of three buildings which house 120 units, a commercial kitchen and other support space, on a 2.32 acre site. Two buildings are three story structures and the third building is two stories. Some of the amenities that are provided for the residents include health, social, recreational and art programs. In addition, a nurse visits on a weekly basis to provide simple tests, advice and referrals. Because of its location, the residents are within close proximity to services offered in Mitchell Park and Cubberley Community Center. Scope of Rehabilitation Project The existing structures will be completely rehabilitated to insure their long term functionality. The proposed rehabilitation work for Stevenson House includes: Seismic Upgrades to the buildings New Roof Re-pipe Building Water Distribution Systems Finalize Sewer Line Replacement Fiscal Year Project Description Allocation Amount 1994/1995 Accessibility $21,000.00 1991/1992 & 1992/1993 Deck/Fire Alarms $55,000.00 1997/1998 Building A Reroof $48,000.00 2002/2003 Emergency Call System $50,000.00 2004/2005 Hot Water Piping & Freezer Project $83,260.00 2006/2007 Windows & Doors $370,000.00 2007/2008 Radiant Heating Project $144,259.00 2008/2009 (CDBG-R) Sewer Pipe System Repair & Renovation $34,100.00 2010/2011 Sewer Repair Project $478,808.00 TOTAL $1,208,427.00 Improve Accessibility to Apartments and Common Areas Reconfigure Common Area Spaces. New Finishes and Appliances to Apartment Units Project Financing and Budget PASHPI proposes to retain a fee interest in the land and enter into a ground lease with the new Tax Credit Limited Partnership of which an affiliate of PASHPI will be the managing general partner. Proceeds from the lease to the Limited Partnership to PASHPI will be used to help finance the rehabilitation of the buildings in the form of a seller carryback loan. The Project budget for the proposed rehabilitation is $40,549,000. The proposed funding sources are as follows: Low Income Tax Credit $10,522,000 Tax Exempt Bonds $11,900,000 County Loan $4,000,000 Seller Carryback Loan $13,200,000 Capitalized Soft Loan Interest $637,000 City of Palo Alto $1,000,000 Total Budget $40,549,000 The Uses of the funds include: Prepaid Ground Lease $6,000,000 Acquisition of Improvements $13,200,000 Architect, Engineer & Other Consultants $1,836,000 Construction and Permits $11,262,000 Financing Costs $2,580,000 Contingencies & Reserves $1,557,000 Other Costs (Legal, Insurance, Relocation, etc.) $4,114,000 Total Use of Funds $40,549,000 Project Timeline The rehabilitation work is projected to start in the Summer 2013. PASHPI is in the process of securing other financing. June 2012 County to approve funding application July 2012 Submit HUD prepayment October 2012 City to approve funding commitment March 2013 Submit TCAC/CDLAC applications May 2013 Close on City Loan July 2013 Close on Construction Loan Begin Construction Loan Agreement Staff anticipates that the City’s $1,000,000 Loan Agreement will be similar to other approved loans. The loan will be evidenced by a Note and Deed of Trust secured by the property. The Note will bear simple interest at 3% per annum, and payments will be made from residual receipts over and above the project’s net operating income expenses and will be divided among other funding agencies based on the City’s proportionate share of its funding to total development costs. No interest will accrue and no payments will be required until after the project is constructed and occupied. Due to the deep affordability of the rents, it is not expected that cash flow will be sufficient to pay the annual interest in full. The proposed project will be affordable to extremely low and very low income households, and the affordability restrictions will be in place for a minimum of 55 years after the issuance of a certificate of occupancy. Some of the City’s standard loan terms described here may need to be modified to meet the requirements of other lenders or funding programs for construction or permanent sources of funds. The loan documents will be brought back to the Council for consideration in April/May 2013. Resource Impacts The proposed source of funding for the $1.0 million Stevenson loan is from monies targeted under the Stanford University Medical Center (SUMC) Development Agreement (DA) for “Infrastructure, Sustainable Neighborhoods and Communities, and Affordable Housing.” Although the balance for Infrastructure, Sustainable Neighborhoods and Communities and Affordable Housing is $7.5 million, the DA stipulated that a minimum of $1.7 million must be allocated for affordable housing. Staff requests that Council indicate its firm intent to loan $1.0 million from these monies for the Stevenson project by approving the attached Budget Amendment Ordinance. Since loans will not be made from the SUMC Fund, the BAO requests a transfer of $1.0 million from the Affordable Housing of the SUMC Fund to the Residential Housing In-Lieu Fund. It is anticipated that the loan will be needed in April-May 2013. At that time, staff will bring loan documents for the $1.0 million loan amount. It is important to note that fund allocations from the SUMC will be discussed with Council on November 13, 2012. Some SUMC funds have been allocated to Project Safety Net and to site and circulation planning and design for the 27 University site. Typically, the City would utilize funds from the Residential Housing and Commercial Housing Funds for the Stevenson project. Currently, the fund balances in those funds are $4.7 million and $1.6 million, respectively. Staff proposes, however, to allocate these funds to another affordable housing development (Maybell Avenue Site Acquisition by the Palo Alto Housing Corporation, Staff Report 3183). Council’s approval of the BAO will increase the Residential Housing Fund by $1.0 million for a balance of $5.7 million. Policy Implications The actions recommended in this report implement the City’s adopted Housing Element policies and programs supporting the development of very low and extremely low income housing. Policy H-12 calls for encouraging, foster and preserve diverse housing opportunities for very low-, low- and moderate-income households. In addition, Policy H-18 supports housing that incorporates facilities and services to meet the health care, transit, or social service needs of households with special needs, including seniors and persons with disabilities. The project is a 100% affordable housing project and serves seniors who are earning 30 to 60 percent of the area wide median income. A large percentage of Palo Alto’s seniors are in this targeted income range. This population is underserved in the City and cannot afford to pay market rate rents. Please note that because the Stevenson House units are already deed restricted, the City will not receive any “credit” towards its 2007-2014 Regional Housing Needs Allocation (RHNA) numbers. Environmental Review The work proposed is all in the nature of maintenance and rehabilitation of the existing facility, which is exempt from review under the California Environmental Quality Act (“CEQA”) pursuant to CEQA Guidelines section 15301. Attachments: Attachment A: Budget Amendment Ordinance (DOCX) Prepared By: Tim Wong, Senior Planner Department Head: Curtis Williams, Director City Manager Approval: ____________________________________ James Keene, City Manager ATTACHMENT A ORDINANCE NO. ORDINANCE OF THE COUNCIL OF THE CITY OF PALO ALTO AMENDING THE BUDGET FOR FISCAL YEAR 2013 TO PROVIDE ADDITIONAL APPROPRIATION OF $1,000,000 FROM THE STANFORD UNIVERSITY MEDICAL CENTER (SUMC) INFRASTRUCTURE, SUSTAINABLE NEIGHBORHOODS AND COMMUNITIES, AND AFFORDABLE HOUSING FUND FOR A LOAN COMMITMENT FOR STEVENSON HOUSE REHABILITATION The Council of the City of Palo Alto does ordain as follows: SECTION 1. The Council of the City of Palo Alto finds and determines as follows: A. Pursuant to the provisions of Section 12 of Article III of the Charter of the City of Palo Alto, the Council on June 18, 2012 did adopt a budget for Fiscal Year 2013; and B. The 2011 Stanford University Medical Center (SUMC) Development Agreement provided funds for use in connection and with infrastructure, sustainable neighborhoods and communities, and affordable housing; and C. Available balance in the Infrastructure, Sustainable Neighborhoods and Communities, and Affordable Housing Fund is Seven Million Five Hundred Eighty-three Thousand, Three Hundred Thirty-three Dollars ($7,583,333); and D. An amount of One Million Seven Hundred Twenty Thousand Four Hundred Eighty-eight Dollars ($1,720,488) was specifically identified in the agreement to be used in the same manner as funds collected by the City pursuant to its housing fee ordinance; and E. An allocation in the amount of One Million Dollars ($1,000,000) is needed for a loan commitment to Palo Alto Senior Housing Project, Inc. (PASHPI); and F. Funding for the loan will be transferred to the Residential Housing In-Lieu Fund; and G. City Council authorization is needed to amend the Fiscal Year 2013 Operating Budget as hereinafter set forth. SECTION 2. The sum of One Million Dollars ($1,000,000) is hereby appropriated to Grants and Subsidies in the Residential Housing In-Lieu Fund and the Affordable Housing portion of the SUMC Infrastructure, Sustainable Neighborhoods and Communities, and Affordable Housing balance is reduced by One Million Dollars ($1,000,000). SECTION 3. The Affordable Housing portion of the SUMC Development Agreement Fund is hereby reduced by One Million Dollars ($1,000,000) to Seven Hundred Twenty Thousand Four Hundred Eighty-eight Dollars ($720,488). SECTION 4. The balance of the Infrastructure, Sustainable Neighborhood and Communities, and Affordable Housing portion of the SUMC Development Agreement Fund is reduced to Six Million Five Hundred Eighty-three Thousand Three Hundred Thirty-three Dollars ($6,583,333). SECTION 5. As specified in Section 2.28.080(a) of the Palo Alto Municipal Code, a two-thirds vote of the City Council is required to adopt this ordinance. SECTION 6. As provided in Section 2.04.330 of the Palo Alto Municipal Code, this ordinance shall become effective upon adoption. SECTION 7. The proposed rehabilitation project is for repair and maintenance of an existing structure and is exempt from review under the California Environmental Quality Act pursuant to CEQA Guidelines section 15301. INTRODUCED AND PASSED: AYES: NOES: ABSTENTIONS: ABSENT: ATTEST: APPROVED: __________________________ ___________________________ City Clerk Mayor APPROVED AS TO FORM: ___________________________ City Manager __________________________ ___________________________ Director of Public Works ___________________________ Director of Administrative Services City of Palo Alto (ID # 3242) City Council Staff Report Report Type: Action ItemsMeeting Date: 11/5/2012 Summary Title: Parking Program Update Title: Update of Parking Program and Review and Direction on Parking Policy Strategies From: City Manager Lead Department: Planning and Community Environment Recommendation Staff recommends that Council review this Parking Program Update and provide direction to staff on the Parking Policy Strategies outlined, focused on parking supply options, technology and residential improvements. Executive Summary In the spring of 2011, the City began extensively monitoring downtown parking utilization in response to resident concerns that downtown parking structures were underutilized and on- street parking was intruding into adjacent residential neighborhoods. Extensive parking data collection efforts began immediately in both the Downtown and California Avenue Business Districts so that parking utilization baselines and strategies could be developed for Council consideration along with input from business and residential interests. On July 16, 2012, the City Council discussed a range of proposed work efforts by staff, but focused on potential residential permit parking program (RPPP) for the Professorville neighborhood. The Council directed staff to not proceed with the RPPP at this time and instead to focus on several other parking and zoning efforts. The Council asked for more specifics and an update of the efforts prior to the end of the year. This update provides a summary of parking strategies implemented-to-date within the Background section and outlines policy strategies for enhanced parking supply, technology solutions, and residential improvements in the Discussion section for consideration of the Council. Staff will be making substantive progress on these items over the coming 3-6 months subsequent to Council direction. Background The Council directed at the July 16, 2012 meeting that staff would not move forward with the trial Residential Permit Parking program for Professorville at this time, but would 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. Zoning studies and revisions, including study of the downtown cap on nonresidential space, the use of bonuses and transfer rights, variable parking ratios for office uses, and how to treat non-conforming parking sites; and e. Evaluation of paid parking options. Amendments to the main motion further directed that staff should evaluate: a. Parking exemptions; b. A Transportation Demand Management Program for downtown; c. Underutilized private parking garages; d. Funding options for new public parking garage sites; e. Zoning disincentives to having two car garages; f. Selective parking for those homes without a driveway or garage; and g. The use of the $250,000 from the Lytton Gateway Project earmarked for neighborhood parking preservation. Council asked that Staff to return to Council in three months with check in and return with an update before the end of the year. The Council’s July 16 Action Minutes are included as Attachment D and the full minutes are included as Attachment E. The remainder of this Background section recounts efforts to date and the Discussion section outlines the programmatic effort to address parking in the next 3-6 months. Parking Assessment Districts Both the Downtown and California Avenue Business Districts include parking assessment districts that provide parking for the respective areas. The parking assessment districts include fees paid by property owners/merchants to help repay city bonds issued to cover the cost of parking garage construction and permit fees that are used to cover the operations and maintenance costs of the parking programs including staff costs for the distribution of permits and parking enforcement. In the downtown, fees from parking permits also help to pay for police enforcement. Table 1 provides the current fee structure program for the Downtown and California Avenue Business Districts – Parking Assessment Programs. The table also provides a brief comparison of parking permit fees to those from Redwood City, San Jose, and San Francisco for Council reference. Table 1 Downtown and California Avenue Business Districts Parking Assessment Fee Program Parking Fee Palo Alto Local Agency Comparisons Downtown District California Ave District Redwood City San Jose San Francisco Assessment Fee $1.11/SQ FT * - - - Permit (Monthly) $45.00 $14.33 $30 to $60 $100 $215 to $395 Permit (Annual) $420.00 $123.00 $330 to $660 $1,200 $2,580 to $4,740 Day Permit $16.00 $7.00 None None None * Cal Av Assessment Fee varies by Parcel. Local employees working within the Districts are allowed to purchase parking permits to park in garages or on surface lots pending permit availability. Employees working outside of the assessment districts, however, are not allowed to purchase parking permits, but can purchase Day Passes to park within the facilities. When the two assessment districts were formed, the assessment districts allowed the City to issue bonds for the construction of parking structures and provided a guaranteed revenue mechanism through the assessment fee to pay the bonds back. Assessment districts are not common for jurisdictions, as many more typically opt to fund parking garage construction on their own and then recover the cost of construction strictly through monthly permit sales. Parking Permits In 2011 the City began evaluating changes in the parking permit distribution process in order to better allocate permits to employees within the districts, to fill up underutilized parking garage space, and to reduce parking intrusion to adjacent residential neighborhoods. The following parking permit program changes were implemented: Establish Monthly Parking Permits Distribution Thresholds Permits were previously distributed on a quarterly basis based on parking occupancy counts counted by the City’s parking enforcement unit. The amount of permits available at each lot varied per quarter depending on the results of the parking occupancy counts. Using historical data, the City established a maximum number of permits that should be released at any given time and the City continues to monitor parking occupancy to determine whether the threshold should be increased or decreased. The maximum number of permits released at any given time and the percentage of permits over supply by parking facility is provided in Table 2. Permit sales in the Downtown were up 9% in 2011 compared to 2010 and up 13% in 2012-to-date compared to 2010. In the California Avenue Business District permit sales have remained consistent with prior years. Permit Wait List Management Previously, anyone wishing to obtain a permit within a district could sign up for as many sites as they wanted in efforts to obtain a permit as quickly as possible. This resulted in unusually high wait list numbers at each facility or district in the case of the California Avenue Business District where a parking permit allows a permit holder to park at any parking garage or surface lot. The City now only allows a person getting on the wait list for a parking permit to do so once, and for only one site. In addition, the City charges a $10.00 fee to get onto a wait list, which is credited towards the ultimate first purchase of a parking permit. The number of persons waiting for a parking permit within the two assessment districts is provided in Table 3; the changes in permit wait list management are beginning to have a positive impact with shorter wait lists now than in previous years. California Avenue District – Permit Distribution Previously, because there was no limit on the number of permits or types of permits that a person could obtain within a district, it was not uncommon for someone in the California Avenue District to be on the wait list multiple times. Signing up on the wait list multiple times was a common practice of start-up owners trying to get permits for future employees. With the policy change to only distribute one permit per person, people who are on the wait list multiple times are contacted for permit availability, but only allowed for one permit to be registered to them. For the additional permits that the person may have been waiting for, the permits are allowed to be distributed to members of the same company but the permits are registered to the other individuals directly. This practice does allow for “hopping” of the wait list but there were only a few individuals who were on the wait list multiple times and staff anticipates that this condition will be phased out over the next six months. Unlike Downtown, previously distributed permits in the California Avenue Business District did not require permit holder validation at the time of renewal. People leaving the district simply passed their permits to other people, thereby delaying permit availability for people legitimately on the wait list. This resulted in unusually long permit wait times, sometimes in excess of one year. The City now requires a person renewing a parking permit to prove that they are a valid permit holder to whom the permit was originally distributed. If the person cannot show proof that they are the original permit holder, they are only being allowed a one-time renewal warning and then are required to get on the wait list as the permit will be cancelled at the end of the permit term. Online Permit Management System In the spring of 2012 the City awarded a contract to Progressive Solutions to develop and implement an online permit management system for the City. Using the maximum permit thresholds established by the City, the City can now release permits weekly (instead of quarterly) as they become available. The system also allows for monthly permit renewal versus the traditionally available quarterly or annual renewal options; the monthly permits costs shown in Table 1 reflect the current quarterly fee divided by three. Implementation of the system was delayed through the fall while the online wait list form was being developed. The City also just finalized hosting details for the system server. The wait list module is scheduled to be completed in October and the system should be launched in November. Persons are still required to return to City Hall to obtain their first permit and to validate proof of employment within their business district; the requirement to return to Revenue Collections may eventually be phased out and permits distributed by mail as additional technology enhancements are made. Table 2 Parking Permit Distribution Thresholds Lot Name # Hourly Spaces # Permit Spaces Total # Spaces Max # Permits % Permits to Supply Downtown - Parking Garages Q Alma/High (North) - 134 134 205 153% R Alma/High (South) 77 134 211 200 149% S/L Bryant St 381 307 688 575 187% WC Cowper/Webster 201 388 589 630 162% CC City Hall 187 519 706 820 158% B Ramona/University 63 - 63 - - 800 High Street 10 53 63 85 160% Downtown – Surface Parking Lots O Emerson/High 78 - 78 - - A Emerson/Lytton 68 - 68 - - C Ramona/Lytton 50 - 50 - - F Florence/Lytton 46 - 46 - - H Cowper/Waverly 90 - 90 - - D Hamilton/Waverly 86 - 86 - E/G Gilman St - 87 87 130 149% P High/Hamilton 51 - 51 - - KT Lytton/Kipling-Waverly 40 67 107 96 143% N Emerson/Ramona 48 - 48 - - X Sheridan Hotel - 36 36 55 153% California Avenue Business District California Avenue* 915 30 945 710 75% * Parking permits valid for any garage or lot. Table 3 Parking Permit Wait List as of October 18, 2012 Lot Wait List Lot Wait List CC 99 R 93 CW 152** S 70 EG 41 X 11 KT 4 Q 27 CAL AVE 333 ** Permit distribution temporarily suspended due to active construction at lot. Day Permits The Bryant Street (Lot S/L) and Cowper/Webster (Lot C/W) garages have permit machines that allow drivers to purchase daylong parking permits. Use of the machines has been extremely successful with each unit averaging $8,000 in sales per month each. Each of the downtown parking garages offer three (3) hours of free hourly parking, but requires rigorous enforcement to identify and cite violators. Day Permits may also be purchased at Revenue Collections in City Hall at a cost of $16.00 per day for Downtown and $7.00 per day for California Avenue. The City has also switched to “scratcher” day permits in 2012 in both districts to curb violators who were photocopying the previous paper permit formats. Parking Way-Finding Signage The City deployed 49 parking banners throughout the Downtown in January 2012 to help better guide motorists to surface parking lots and garages. The banners were reviewed and approved by the Architectural Review Board prior to implementation. The City also fabricated signs that matched the banners. However, the signs were ineffective due to the architectural color tones used and sign implementation stopped. There are 125 existing guide signs to parking facilities throughout the Downtown and 40 around the California Avenue Business District. The same parking banners used in Downtown will be presented later this fall to the California Avenue merchants as part of the California Avenue – Transit Hub Corridor Streetscape Project for input so that deployment in that district can occur before next Spring; the City estimates 40 up to 20 banners can be deployed around the existing California Avenue area parking structures and surface lots. The City is continuing its research on effective parking guide signs as discussed further in this report. Neighborhood Parking Preservation Staff spent the first half of the year trying to develop draft policies and pilot projects for a Professorville Residential Permit Parking (RPP) program. The general community consensus on a Professorville RPP pilot program showed that such a program was not supported by the broader neighborhood and Council directed that staff should focus on identifying a range of parking solutions within the Downtown core area and to identify appropriate technologies and strategies to advance as part of a comprehensive parking program for the City. The remainder of this report focuses on proposed parking strategies and policies for Council consideration to help improve the efficiency of parking operations and conditions in residential neighborhoods as a comprehensive parking program is further developed and implemented. The recommendations in the Discussion section are priotized in a time line provided in Attachment A. Discussion The modifications to the City’s permit management program are showing a positive change in the City’s ability to more quickly distribute permits. The impact has been more profound in the Downtown Business District where permits are managed by lot, rather than the California Avenue Business District, where permits can be used at any surface lot or garage and where changes in permit distribution will have a gradual effect over the next year. Permit management has also been the focus of the City’s efforts to get vehicle users to obtain and use permits. Permit management will be ongoing for efficiency purposes but new strategies beyond permit management are now required to enhance the parking program in both districts. It should be noted that in the Downtown District, the Cowper-Webster Garage (Lot C/W) is currently undergoing facade improvements that have resulted in the temporary loss of permit parking through the construction period. Persons with permits for the Cowper-Webster Garage are being temporarily allowed to park at the Bryant Street Garage (Lot S), further slowing down permit distribution at that garage as well. Construction at the Cowper-Webster Garage should be complete before the start of the Holiday shopping season. Several other key efforts are underway to enhance parking supply, more efficiently use available supply, reduce parking demand, and address the impacts of new development. Downtown Parking Garage and Attendant Parking Study The City completed a Request for Proposals (RFP) solicitation in October and will be awarding a contract this fall to complete a feasibility study for an additional parking structure(s) in the Downtown. The study will focus on five surface parking lot sites including: Lot D Hamilton Avenue & Waverley Street Lot EG Gilman Street Lot P High Street between University Avenue & Hamilton Avenue Lot O High Street between University Avenue & Lytton Avenue Caltrain Lot Urban Lane between University Avenue and PAMF For each of the sites the feasibility study will identify potential Parking Garage Footprints, Parking Space Counts, 3D Modeling of Parking Structure Massing, Constructability Factors, and Engineer’s Estimates. Staff will also evaluate potential funding options in its report-out to Council. The Constructability Factors will include elements to determine which sites provide the best value for parking versus construction constraints, such as: parking space count; private property impacts (during and post-construction); construction staging impacts; number of driveway/pedestrian access points for convenience measure; cost; adjacent land uses to determine whether a preferred long-term land use opportunity would be lost if garage construction were pursued; and utility relocation impacts. The study will also include an Attendant Parking Study to determine whether the deployment of a parking attendant program may be a viable option to temporarily or permanently supplement the City’s parking permit program needs. The Attendant Parking Study will determine the number of additional parking spaces that can be gained at each of the existing parking garages in Downtown and provide program outlines to implement them on a trial basis including key-return stations. Two options for attendant programs are typically used: a) where a motorists parks the vehicle themselves, guided by an attendant, and the keys are then handed over to the attendant in case the vehicles needs to be moved; or b) a motorists leaves the vehicle with the attendant who then parks the vehicle. In other cases, a motorist may be issued a valet card to confirm car release later and the vehicles are typically parked behind other parked cars. The study will also focus on likely hours of operation to maximize benefit and minimize cost. The Palo Alto Downtown (PAD) Business and Professional Association – Parking Committee, which is responsible for helping the City provide oversight on the Downtown Parking Assessment District, has indicated a preference towards immediately implementing an attendant pilot project, focused on permit parking. Staff believes such a trial for permit spaces should proceed, however, only after the work on the Cowper-Webster garage is complete and all spaces are then available, and probably after the Holiday season, to avoid any confusion for shoppers. Funding for the trial would come from the Downtown Permit Fee program. The study will take up to 6 months to complete and the results presented to the City Council in the spring. The study is funded substantially by a community benefit contribution from the Lytton Gateway Project, which provided $60,000 to complete the study. The study will cost $100,000 and the gap is being funded by the City through the Capital Improvement Program (CIP), PL-12000 (Transportation & Parking Improvements). The results of the study will be used to determine whether the City should pursue construction of a new parking structure using its own local funding, enterprise funding to build a parking structure in conjunction with additional office facilities, or to pursue a private partnership with land developers to help build a parking facility. The City currently has approximately $2.6 million in the Downtown In-Lieu Parking Fee program (once the building permit is issued for Lytton Gateway, expected prior to the end of the year). During the July 2012 discussion on parking the Council expressed interest in also pursuing opportunities to make available private structure parking for public parking. Staff surveyed the existing private lots around downtown and found them either fully parked or inaccessible due to security procedures. Recommendation No. 1: Direct staff to implement a trial Parking Attendant Valet Parking Program for permit parking in at least one garage, beginning shortly after the first of the year in 2013. The study should monitor operations, estimate costs, and identify benefits/challenges with implementation. Downtown Cap Study Staff is currently developing a Request for Proposals to study the land use types, densities, and recent and projected development around the Downtown to determine future land use and parking needs/strategies to support land use changes. The study is a requirement of the City’s Zoning and Comprehensive Plan, which establishes a Downtown Cap of 350,000 square foot net increase since the adoption of the 1986 Downtown Plan. The Zoning Ordinance requires a re- evaluation of the cap when a 235,000 square foot “study threshold” is met. That threshold is nearly met with the approval of the Lytton Gateway project approved earlier this year and will be exceeded if the 135 Hamilton Avenue and 636 Waverley projects are approved. While the 27 University project is not within the bounds of the Downtown zone prescribed in the 1986 study, staff will be reviewing ways to appropriately consider it in the Downtown study and specific impacts would be considered in that project’s Environmental Impact Report . Staff expects that the Downtown Cap Study will cost approximately $100,000-$150,000 and will take approximately 6 months to complete. The budget does not currently include funding for the study, but staff proposes that at least some of the funding come from the Lytton Gateway “Neighborhood Parking Preservation” benefit (of a total $250,000) and perhaps be supplemented by other development project contributions. Recommendation No. 2: Direct staff to pursue the RFP for the Downtown Cap study, and report back to Council in six months regarding results and recommendations. Zoning/Parking Revisions and Transportation Demand Management (TDM) Program Staff will, simultaneous with the Downtown Cap study, review a variety of zoning provisions related to parking, particularly in Downtown. Staff has recently proposed and Council has enacted a moratorium on one such zoning provision that exempted up to 1.0 floor-area ratio from parking requirements for certain properties. Staff expects to also evaluate: a. Other exemptions from parking requirements, including but not limited to transfer of development rights (TDR); b. Parking reductions for transit proximity, mixed use, transportation demand management (TDM) measures, and for affordable and senior housing; c. Appropriate ratios of parking, particularly for office development, more reflective of recent employee densities, and possible parking incentives for retail over office uses; d. How conversions of existing uses to more intense office uses are treated/managed in the zoning requirements; and e. The relationship between required/covered parking and floor area, particularly for homes (e.g., to avoid discouraging garages, though respective of historic issues where applicable) Planning and Transportation staff also will work with on-call transportation consultants to initiate a Transportation Demand Management (TDM) Program for the City and its employees to demonstrate exemplary means of reducing work and non-work trips. This effort will be a precursor to facilitating a downtown-wide TDM program, coordinated with the Palo Alto Downtown and area businesses to take advantage of programs that can benefit the Downtown as a whole. Recommendation No. 3: Direct staff to develop zoning ordinance revisions to address parking impacts from development, including: a) parking ratios, b) parking exemptions, c) requirements for both TDM programs for new development; and to work with the Downtown businesses to develop a coordinated downtown area TDM effort. Technology Enhancement: Garage Parking Access and Revenue Control Equipment The City’s new Permit Management System will allow the City to more easily distribute permits but when used in combination with garage parking access controls (gates) the City will also be able to track parking permit usage to further manage the permit program. For example, the City currently does not have any data that shows how regularly people use their parking permits. Later this fiscal year, the City will release its first ever transportation survey that aims to measure transportation mode use by region of the City. The high percentage of permits sold over supply (Table 2) shows that within the Downtown, people are likely regularly using another form of transportation to get to work such as Caltrain or are choosing to park elsewhere when it’s more convenient, even though they have a permit. Garage Parking Access control is another step the City can take in the long-term management of its parking infrastructure by helping to reduce operations costs for enforcement. The access controls regulate entry and exit from a garage and allow visitors to continue to enjoy the current three hours of free parking to support downtown business activities, but include Revenue Control equipment that allow visitors to stay parked beyond the free 3-hour period at a fee up to the $16.00 day permit fee. Staff has a prepared a Draft Request for Proposals (RFP) so that cost estimates can be determined and to “bring the best of the technology” to the city for review with participation from the Downtown Parking Committee. The Draft RFP proposes conversion of the Bryant Street Garage (Lot S/L) to gate control with revenue collection elements but identifies the Alma Street/High Street Garage (Lot R) as an alternative site for inclusion depending on bid results. The City estimates the cost of installing Garage Parking Access and Revenue Control Equipment at each garage at approximately $250,000. The RFP proposes unique technology development through the use of QR Codes in combination with apps for processing of payments as a convenience alternative to motorists. The same technology would allow businesses to establish convenient validation alternatives for visitors, patron and employee parking needs. The RFP was shared with the Palo Alto Downtown (PAD) Parking Committee during its September and October 2012 meetings. Concerns have been expressed about the controls being the first step to imposing “paid” parking on downtown, but staff believes that this technology actually provides flexibility for a wider range of parking options, with no increase in parking costs for those visitors staying less than 3 hours. Revenue realized from the metering beyond the free 3- hour period could be partially dedicated towards the Parking In-Lieu Fee program to help fund construction of future parking facilities, consistent with the setup of typical assessment district programs. Funding for a trial garage parking access and revenue control equipment project is available within the existing CIP but, if interested, funding through the current Parking Assessment or Parking In-Lieu fee program are viable alternatives. Recommendation No. 4: Direct staff to release an RFP for Garage Parking Access and Revenue Control Equipment for near-term deployment, and to involve the Downtown Parking Committee in the operations and design process. Technology Enhancement: Parking Occupancy Tracking and Dynamic Way-Finding Directing motorists immediately to available parking helps to reduce greenhouse gas emissions, enhances the customer experience in the downtown, improves the economic vitality of the downtown, and improves safety for bicyclists and pedestrians. The City currently does not have any mechanism in place to monitor parking occupancy “real-time,” so deployment of dynamic way-finding with accurate information is not feasible, nor is pushing parking availability information online feasible either. The City has outreached to three vendors over the past year to help develop new technology to monitor parking occupancy and tabulate information that can be made available to the public online, through apps, and to Parking Guidance Systems that offer dynamic way-finding technology. Unfortunately, no viable option has yet been identified. The City was approached by Streetline Networks in partnership with Cisco Systems over the summer to deploy their technology to monitor and push parking occupancy information online but that was not desirable due to the high on-going annual operations cost. The Streetline Networks/Cisco System solution included one free year of service and included maintenance of field equipment, but the solution though would cost the City over $350,000 per year. Solutions such as that of Streetline Networks only make sense at locations where metering is utilized to offset the cost of the technology, as is the case in the cities of San Francisco and Los Angeles. Staff is not recommending metering on-street parking spaces at this time, but does want to identify parking monitoring solutions that can be City-owned solutions versus leased to reduce long- term operations costs. Effective monitoring of parking occupancy also introduces the ability to consider congestion-pricing parking on-street if the Council wants to consider that type of technology in the future. Being immediately adjacent to the second largest Caltrain Station along the Peninsula supports that type of activity by making alternative modes of transportation more attractive to people over driving. The City will continue to try and outreach to technology firms to develop new market solutions for the City. The Gate Parking Access and Revenue Control Equipment would allow for dynamic way-finding to be deployed, highlighting parking availability at parking structures. Alternative solutions may include establishing detection technology only now, that may be used later by future Garage Parking Access technology, to estimate garage occupancy. In the meantime, the City will continue its seasonal parking occupancy data collection of the Downtown and California Avenue Business Districts, that includes counting each vehicle parking space on-street and within each parking facility by time-of-day to track changes in parking patterns. The City collected parking occupancy data in the Spring/Fall/Winter 2011 and is scheduled to collect data gain in early November. Data collection includes monitoring parking occupancy between 12AM-2AM, 8AM-10AM, 12PM-2PM, and 7PM to 9PM on a weekday and 12PM-2PM on a Saturday. Recommendation No. 5: Direct staff to continue research of technology-based parking solutions to monitor parking occupancy. Electric Vehicle Parking The City currently has 7 electric vehicle charging stations available in the Downtown at the Civic Center Parking Garage (Lot CC – Level A, 3 chargers), Bryant Street Garage (Lot S/L – Level 2, 3 chargers), and the Alma/High North (Lot R – Level 2, 1 charger). The charging stations are extremely popular and realize regular occupancy usage throughout a typical week. There are no charging stations available in the California Avenue Business District. The City has considered the development of a Request for Proposals for the development of a privately- owned network of electric vehicle charging stations network. The Stanford Shopping Center currently has 3 charging stations including Northern California’s only Rapid Charging (Level 3) Charger. The Stanford Shopping Center chargers are privately owned and require a fee-per-use to charge. Development of a private network of chargers in Palo Alto would operate under the same model and convert the existing charging stations into the private network to avoid competition with the private network given the high cost to install the network. To meet the immediate demand for electric vehicle charging in the City, staff recommends conversion of at least five (5) parking spaces in the California Avenue Business District to electric vehicle charging spaces and an additional six (6) parking spaces in the Downtown. Staff recommends additional Level 2 Chargers similar to those currently deployed that can charge a vehicle in as fast as 2 hours. The Downtown Library, which was renovated last year, includes infrastructure for providing electric vehicle charging stations in its parking lot; this could be a location for some of the additional Downtown spaces. The City has 6 electric charging stations included as part of development conditions of approval for the 101 Lytton Gateway Project (4 chargers) and the Edgewood Plaza (2 Chargers) shopping center. These stations will not be available until next year when construction at each site is complete. Recommendation No. 6: Direct staff to pursue the installation of 6 additional electric vehicle charging stations in Downtown and up to 5 electric vehicle charging stations around California Avenue. Bicycle Parking and Bicycle Share Programs The City has approximately 150 bicycle racks (250 bicycle capacity) in the Downtown. This includes 6 recently deployed bicycle corrals deployed around Downtown which offer up to ten bicycle parking spaces in lieu of one on-street parking space. Downtown has an additional three bicycle corrals planned for installation this calendar year as part of the New Apple Store construction at University Avenue & Florence Street (2 bicycle corrals) and one at Lyfe Kitchen, which requested installation by the City this fall. The City offers free installation of bicycle corrals upon submittal of an application (Attachment B) and investigation by the City, including outreach to adjacent businesses to validate support for installation of the facility. In the California Avenue Business District, the City has 24 existing bicycle racks (77 bicycle capacity). The City has a dozen additional bicycle parking facilities identified for the California Avenue Business District for a future bicycle parking capacity of up to 130 bicycles as part of the active California Avenue Transit Hub Corridor Streetscape project including 6 bicycle corrals. Business owners may request free installation of bicycle racks within the public right-of-way following an engineering investigation by staff. Where installation of bicycle racks within the public right-of-way is not feasible for convenient, the City offers free bicycle racks to business and property owners for their installation on their private property; persons interested in free bicycle racks may simply contact the city via email at transportation@cityofpaloalto.org. The Valley Transportation Authority (VTA) Bicycle Share Program will be providing 100 bicycle share bicycles to Palo Alto as part of its partnership program with the Metropolitan Transportation Commission (MTC) to deploy a program along the Peninsula. The program was delayed due to technology development but should return to the City with a deployment schedule by the end of the year. The sites reviewed by the Architectural Review Board include: University Avenue & Emerson Street (adjacent to Lytton Plaza in an on-street Parklet), King Plaza at City Hall, University Avenue & Cowper Street, the University Avenue Caltrain Station, and the California Avenue/Park Boulevard Park Plaza. Additional facilities will be provided around the Stanford Campus as part of the program. As part of the bicycle share investigation, staff identified dozens of additional potential bicycle share sites including the Stanford Research Park, libraries and community centers, senior facilities, and Midtown but during this initial deployment both MTC and the VTA request to keep the deployment focused along the Caltrian stations. As bicycle share deployment continues, staff will outreach to existing business parks to solicit and encourage participation in the program. Recommendation No. 7: Direct staff to pursue additional bicycle parking stations around both the Downtown and California Avenue Business Districts. Residential Parking Policies During the discussion of the Professorville trial Residential Permit Parking (RPP) program in July, the Council requested that staff consider options to allow designated on-street parking spaces for historic homes within the Professorville neighborhood that do not have on-site parking (driveways and/or garages), since consideration for RPP programs is being deferred until a broader parking program is put in place. In response to the Council request, staff has developed two policy approaches focused more collectively to the entire neighborhood concerns: 1) On-Street “Disabled Accessible” Parking Spaces The City does not currently have a policy to allow for the installation of on-street parking spaces for the disabled within residential neighborhoods. Staff recommends Council consider a policy allowing for residents to apply the consideration of on-street accessible parking spaces in front of their homes for convenience and quality of life benefits. If the Council is supportive of this concept, staff will return with a draft policy and application for the Council’s review to define the criteria and investigation that staff would be required to complete to ensure consistent distribution of accessible parking spaces. The policy would address factors including costs of installation and maintenance of the accessible parking, proof of “accessibility” need, and compliance and misuse/removal procedures if abused. The accessible spaces would not be designated spaces for the applicant but by providing the space immediately in front of one’s residence increases the likelihood of having the space available for use by the resident. As an accessible space, however, the parking could be used by any motorist displaying a valid accessible placard issued by the State of California. 2) Neighborhood Short-Term and Commercial Loading Zones One of the frequent concerns from residents adjacent to business districts includes the lack of parking for service vehicles such as landscapers, plumbers, etc., who are trying to provide basic services to residents but cannot do so at times depending on parking availability. Professorville residents who do not have any on-site parking facilities feel an even greater impact. Staff recommends consideration of the deployment of Neighborhood Short-Term and Commercial Loading Zone spaces around the Professorville and Downtown North neighborhoods, at least one per block and spaced a maximum of 500-FT apart to allow for parking availability to accommodate basic service vehicles and short-term parking needs. The spaces can be either a short-term parking restriction (30-minutes) or commercial/service vehicle use (2-hours) to support residents. This solution provides an equitable solution for all residents regardless of whether the homes are historic or not. If the Council is supportive of this concept, staff will provide outreach to neighborhood groups to identify the appropriate on-street parking spaces to support these activities and then will return to the Council following input from the Planning & Transportation Commission for implementation of a demonstration project in the Spring. 3) On-Street Parking Spaces in the Professorville Area During the July 2012 parking discussion, the Council requested that staff consider options to help alleviate parking impacts to homes around the Professorville area without garages, driveways, or other on-site parking. Staff has identified eleven homes around that Professorville area without on-site parking (see Attachment C), additional sites may exist. The proposed Neighborhood Short-Term/Commercial Loading Zone spaces would offer solutions equitably to the community, but may not be enough for residents of these particular homes. If the Council is supportive of such a solution staff will initiate outreach with affected residents and return with a policy for adoption. Staff expects that any related implementation would be on a trial basis. Recommendation No. 8: Direct staff to return to the City Council for consideration of an On-Street Accessible Parking Space Policy. Recommendation No. 9: Direct staff to initiate outreach to residents in Professorville and Downtown North to develop short-term parking space strategies. Recommendation No. 10: Discuss and provide direction for On-Street Parking Permits for homes in the Professorville area without parking or driveways. Parking Permit Management Regular parking permit management and recent enhancements have proven effective to date to more quickly get permits to vehicle users and should be continued. Permit management has benefited the Downtown Business District more quickly than the California Avenue Business District due to the permits being designated to individual facilities. The California Avenue Business District has two parking garages, each of which realize high occupancy during peak noon periods on top floors, but much lesser use at other times. The availability of new parking permits in the California Avenue Business District that can be used only at top floors of each garage may be helpful in more quickly distributing permits to motorists and help to fill underutilized portions of the garages and allow for premium first floor parking to be retained for visitors until after the noon peak hour. Recommendation No. 11: Direct staff to begin discussions with California Avenue merchants focused around the development of new parking permit strategies. Timeline This report recommends several project and policy considerations for the Council focused around further developing parking strategies to develop a comprehensive Parking Program for the City. Staff will return to the Council within three months with a more defined schedule for the implementation of solutions the Council identifies as appropriate for further consideration or immediate implementation. Resource Impact Two new contracts are being pursued as part of the Parking Program, including a $100,000 contract for a Downtown Parking Garage and Attedant Valet Study and $100,000-$150,000 for the Downtown Cap/TDM Study. Each contract will be submitted separately to Council for approval, along with any necessary Budget Amendment Ordinances. This staff report includes recommendations for helping to develop a Parking Program Master Plan. After Council provides feedback on which recommendations to pursue, staff will return to the Council within 3 months with a more refined cost program. Environmental Review This report requests direction from Council on parking strategies that it would like staff to pursue, but at this time no specific projects affecting the environment ar being approved. Each project within the Parking Program may require additional environmental review for compliance with CEQA requirements and will be evaluated prior to implementation. Attachments: Attachment A: Summary of Parking Work Program (PDF) Attachment B: Bicycle Corral Application (PDF) Attachment C: Professorville Homes w/No Driveways - Oct 2012 (PDF) Attachment D: City Council Action Minutes of July 16, 2012 (PDF) Attachment E: City Council Full Minutes of July 16, 2012 (PDF) Attachment F: Public Comments (PDF) Prepared By: Jaime Rodriguez, Chief Transportation Official Department Head: Curtis Williams, Director City Manager Approval: ____________________________________ James Keene, City Manager 1 Nov ‘11 Dec Jan ‘12 Feb Mar Apr May Jun FY2014 Tasks Permit Management Garage Study - Garage Analysis - Valet Analysis Pilot Valet Study Downtown Cap Study Neighborhood Programs - ADA On-Street - Short Term Alternatives/Homes with No Off-Site Parking Technology Solutions Cal Ave Parking Program Parking Program Task Timeline Pending Council Input On‐Street Bicycle Corral Application Bicycle Corrals are enhanced bicycle parking facilities installed on‐street within a traditional vehicle parking space or appropriate on‐street location. The bicycle corral includes a green textured pavement treatment to help designate the space from adjacent vehicle parking spaces with a 10‐bike, bicycle rack. Yellow parking blocks are installed on each end of the bicycle corral to prevent vehicle parking intrusion. The City of Palo Alto installs bicycle corrals to help promote bicycling activity and to help provide visible and secured bicycle parking in high‐use bicycle areas. The bicycle corral installations are a partnership between the City of Palo Alto and the adjacent property owners/businesses through a maintenance agreement (attached). The City provides installation of the bicycle corrals while the property owners/businesses take on maintenance around the bicycle corrals. For a bicycle corral to be considered in front of your business or property, please complete the application below and return to the City of Palo Alto – Transportation Division. Business Owner Property Owner – (Optional) Company Name: Contact Person: Address: Palo Alto, CA 94301 Day Phone: Email: Signature/Date: 1. Preferred Bicycle Corral Location 2. Estimated amount of bicycle activity on weekday and weekends Note: After submission of the application, Transportation staff will contact the applicant to discuss location feasibility and determine if bicycle parking demand exists. Submit to: City of Palo Alto – Transportation Division Staff Review: 250 Hamilton Avenue Date: Palo Alto, CA 94301 O: (650) 329‐2441 F: (650) 329‐2154 Recommend Install: Yes transportation@cityofpaloalto.org No Director Approval: Professorville Historic Neighborhood Homes without accessible Off-Street Parking October 23, 2012 City of Palo Alto (ID # 3289) City Council Staff Report Report Type: Meeting Date: 11/5/2012 Summary Title: HSR & Caltrain Update Title: Status Report on Current High Speed Rail and Caltrain Electrification Issues Submitted for Council Review and Comment From: City Manager Lead Department: Planning and Community Environment Background It has been four years since Proposition 1A was passed by the voters in November 2008, essentially starting the California High-Speed Rail (HSR) project as it is known today. The project continues to face many of the same obstacles it has in the past including a lack of identified funding sources, local and regional opposition to its design and implementation plans, and debatable ridership figures; however, the California High Speed Rail Authority (CHSRA) did achieve a major objective in July when the State legislature approved approximately $8B in funding for initial construction in the Central Valley and Bookends. Moreover, the CHSRA is proceeding with the implementation of a system that shares tracks with Caltrain, called a Blended System. While the Blended System removes some of the City’s concerns, a commitment that HSR not expand beyond a Blended System has not been given by the CHSRA. Based on the uncertain future funding for the project, its continued litigation, and evolving design it has been difficult for staff to predict what and when will happen with this project. Staff continues to implement Council’s position that the City of Palo Alto should oppose HSR because the current project fundamentally contradicts the measure presented to the voters under Proposition 1A in 2008 and the business plan is fatally flawed and not credible. Below are updates on each of the major subject areas related to HSR and Caltrain. Federal Legislative Update Federal support for HSR continues to waver as the Republican controlled House of Representatives pushes for decreased government spending against the Democratically controlled Senate and Presidency. HSR specifically has become a target of this push because it once represented one of the President’s key transportation initiatives. Working with the City’s federal lobbyist, Van Scoyoc Associates, staff has closely monitored legislative action in Washington DC on this issue. Currently, the House has no funding in place for HSR. The Senate has a $100M place-holder for higher-speed rail this fiscal cycle but the issue has gotten little attention as legislators deal with reelection bids. Additionally, no funding for higher-speed rail was included in the continuing resolution that is funding the federal government through March 2013. If Mitt Romney is elected as President it is expected that no additional federal HSR expenditures will occur for the foreseeable future. If President Obama is reelected it is expected that an attempt to designate some limited additional funds for HSR will occur, yet, that greatly depends on the future make-up of Congress. State Legislative Update State legislative support for HSR continues to remain relatively strong with the Democratic controlled Assembly, Senate, and Governorship. Support has wavered in the last year as some legislators have become unsatisfied with the management of this project by the CHSRA. The dissatisfaction among Democrats is demonstrated by the “no” votes made against party lines by Senators Simitian, Lowenthal, DeSaulnier, and Pavley on HSR funding bill SB 1029 on July 6, 2012. However, despite the four Democratic “no” votes, the bill was ultimately passed. Working with the City’s state rail lobbyist, the Professional Evaluation Group (PEG), staff has closely monitored legislative action in Sacramento on this issue leading up to, during, and following the appropriation process. Staff and the PEG have now shifted their focus to monitoring ways the CHSRA may try to expedite the implementation of HSR at the expense of due process, including environmental review. Staff and the PEG have been particularly concerned about the growing possibility of California Environmental Quality Act (CEQA) exemptions or alternations. These exemptions would make it far easier for the CHSRA to construct this project but would be done so at the expense of the State’s environmental protection mandates. Another issue staff is currently watching is the upcoming vote on Proposition 30. Proposition 30 is a tax increase that adds substantial tax revenue to the State’s general fund. If this tax increase is not approved, trigger cuts to a variety of State programs would occur. Unknown to staff though is the impact those trigger cuts would have on both the public perception of HSR and the Governor’s support of the project. Additionally, polling has indicated that the passage of SB 1029 has made some voters unwilling to vote for Prop. 30. Finally, staff has been working with the PEG on finding representatives in the Assembly or Senate to sponsor SB 1029 clean-up legislation. This clean-up legislation would confirm in writing a number of assumptions that were made during the passage of SB 1029 but didn’t make it into the actual bill language. These assumptions include a guarantee that all existing and future CHSRA funding allocations now and in the future are limited to a two-track system, making the appropriation contingent on no HSR related alterations of CEQA, and guaranteeing that Caltrain is the lead agency for the San Francisco to San Jose segment. Regional Update The City of Palo Alto continues to stay actively involved in the Peninsula Cities Consortium (PCC). The PCC continues to hold their meetings on the first Friday of every month unless otherwise scheduled and includes the six cities of Atherton, Belmont, Brisbane, Burlingame, Menlo Park, and Palo Alto. Recently, the PCC has been focused on monitoring the legislative environment in Sacramento and evaluating the impacts and implications of a Blended System for HSR and Caltrain. The San Mateo County Rail Corridor Partnership made up of numerous cities in San Mateo County continues to hold periodic meetings but has not done so in quite some time. They currently do not have a future meeting scheduled. California High Speed Rail Authority Update In 2012, the CHSRA has both accomplished a number of their objectives and undergone a number of changes. The most obvious organizational objective they have realized this year is the passage of SB 1029. Although not under their control, the passage of SB 1029 (or a similar authorization bill) approving the expenditure of over $8B in HSR bond and stimulus funds was critical to their plan to begin building the Initial Construction Segment (ICS) in the Central Valley. This expenditure is particularly relevant to Palo Alto because it also authorizes funds for the electrification of the Caltrain corridor in anticipation of a future Blended System. Related to the CHSRA’s support of SB 1029 is their continued effort to complete environmental review documents. On May 3, 2012 the CHSRA certified the Final Environmental Impact Report (EIR) for the Merced to Fresno section and is currently in the draft review process for the Fresno to Bakersfield EIR. Once both of these documents are finalized the CHSRA will be able to begin construction on the ICS; however, that does not take into account the growing role that litigation is taking in this project and its impact on construction timelines. The CHSRA has scheduled a closed session on November 14th related to seven open lawsuits, some of which directly challenge their desire to begin construction of the ICS in the Central Valley. Those seven lawsuits are listed below: 1) John Tos; Aaron Fukuda and County of Kings v. California High Speed Rail Authority, Sacramento Superior Court Case No. 34-2001-00113919 2) City of Chowchilla v. California High-Speed Rail Authority, Sacramento Superior Court No. 34-2012-80001166 3) County of Madera v. California High-Speed Rail Authority, Sacramento Superior Court No. 34-2012-80001165 4) Timeless Investments, Inc. v. California, Sacramento Superior Court No. 34- 2012-80001168 5) Town of Atherton v. California High-Speed Rail Authority, Sacramento Superior Court No. 34-2008-80000022 6) Town of Atherton v. California High-Speed Rail Authority, Sacramento Superior Court No. 34-2010-80000679 7) Town of Atherton v. California High-Speed Rail Authority, Court of Appeal, Third Appellate District, Case No. C070877 The CHSRA has also had a number of staff changes. The most prominent change has been the hiring of Jeff Morales to serve as CEO, replacing Roelof van Ark who stepped down in March. Previously, Morales has served as Director of the California Department of Transportation, Executive Director of the Chicago Transit Authority, and Senior Vice President and Director of Strategic Initiatives and Government Relations for Parsons Brinckerhoff Americas. Other notable hires include the hiring of Ben Tripousis, formerly with the City of San Jose, as the Northern California Regional Director and Frank Vacca, formerly the Chief Engineer of Amtrak, as its Chief Program Manager. Caltrain Update The Peninsula Corridor Joint Powers Board (PCJPB), which oversees Caltrain, has been working on their plan to electrify the Caltrain corridor since the early 2000’s. Yet, for the first time in that approximately 10 year time horizon, funding has been identified for that plan with the passage of SB 1029. The complex task Caltrain now faces is how to implement stage one of the Blended System, an electrified Caltrain corridor including positive train control constructed to handle six peak hour trains per direction, the with the understanding that in the future the CHSRA plans to run up to four more additional peak hour trains per direction (for a total of 10 peak hour trains per direction). To put those figures in context, Caltrain currently runs five peak hour trains per direction. An increase to six peak hour trains per direction represents a 20% increase and an increase to 10 peak hour trains per direction represents a 100% increase. The increase in service is being addressed by Caltrain in two ways: one, Caltrain is studying the impacts that such an operation will have on the corridor itself and the number and length of tracks that will be required to support this increased level of service; and two, the impacts that this increased level of service will have on vehicular, bicycle, and pedestrian traffic running along the corridor and in adjacent neighborhoods, and how those impacts will have to be mitigated. Currently, City of Palo Alto staff is working with Caltrain staff as they prepare their grade crossing and traffic analysis report due to be completed in early 2013. This report will look at three different levels of service (six Caltrain trains and zero CHSRA trains per peak hour per direction; six Caltrain trains and two CHSRA trains per peak hour per direction; and six Caltrain trains and four CHSRA trains per peak hour per direction) and their resulting impacts related to things such as gate down times, vehicular movements, and train horn noise levels. The report will serve as the basis for a complex regional conversation that will have to occur about what impacts, what if any impacts are acceptable, and how they should be mitigated, specifically related to grade crossings. Additionally, Caltrain will also be releasing their service plan and operations simulation report in early 2013. This report will analyze the viability and pros and cons of different operation models for the three service levels referenced above. The most significant decision that will have to be made stemming from this report is where additional passing tracks will be constructed if they are needed. As a result of the complex conversations and decisions that will have to be made regarding electrifying the corridor for a Blended System, Caltrain has chosen to convene a policymaker working group with representatives from the 17 cities and three counties located along the corridor. This group had their first meeting on September 17th and decided to meet monthly starting in November. In September, Councilmember Burt was nominated by Mayor Yeh to represent the City of Palo Alto. Additionally, a similar working group of city and county staff also meets monthly to provide input and direction related to this process and City staff has been actively engaged in these meetings. Caltrain staff has also said that they will be updating their 2009 MOU with the CHSRA in the coming months. The reason for the update stems from changes that have occurred since the 2009 MOU was signed and their desire for the 2009 MOU to reflect those changes. The most obvious example is the introduction of the Blended System concept since the original MOU was signed and the parameters outlined in the nine-party Blended System funding MOU finalized in May of this year. Additionally, the role of the Peninsula Rail Program (the joint body formed to represent the interests of Caltrain and the CHSRA in the San Francisco to San Jose segment) has changed greatly since 2009. The proposed revisions to the MOU will be brought before the PCJPB for discussion purposes only at their November 2012 meeting before being voted on at their January 2013 meeting. Litigation Update The City of Palo Alto is currently a petitioner in two lawsuits regarding HSR and filed an amicus brief in a third. In the latter two cases the City of Palo Alto has been represented by Stuart Flashman, an attorney specializing in environmental, land use, and elections law. Staff consulted with Flashman to provide the update below: Atherton I Litigation related to the first lawsuit, commonly known as Atherton I (Sacramento Superior Court No. 34-2008-80000022), is now in its third round. Palo Alto was not a petitioner but did file an amicus brief in the case. After that case was partially successful and a writ of mandate was issued, there were objections raised to the return on that writ, and those objections were addressed in a unified proceeding along with Atherton II. Atherton II Atherton II (Sacramento Superior Court No. 34-2010-80000679) is a joint lawsuit filed by the cities of Atherton, Menlo Park, and Palo Alto, with additional petitioners and plaintiffs. Atherton II gave the City a partial victory. The trial court ruled that the CHSRA did not sufficiently take into account the movement of rail right-of-way (ROW) eastward from its current location south of San Jose. This movement of ROW eastward was ruled to have impacts to Monterey Highway and adjacent properties significant enough that those impacts must be studied at the program (or initial) level of environmental review. The court also ruled that the CHSRA did not sufficiently analyze the impacts to roadways along the Peninsula that will have lanes removed for construction of the HSR four-track Pacheco alignment. The City was unsuccessful in its arguments that the Altamont route was not sufficiently studied, that study of impacts from elevated sections along the Peninsula was improperly deferred, and that the CHSRA had not justified in its continued use of its ridership model. All of these issues are currently being argued on appeal. On the ridership issue, the question was whether the CHSRA's decision to accept and continue to use its ridership model was supported by substantial evidence when numerous reviews of the model had found it highly flawed, unreliable, and unsuitable for forecasting purposes. The trial court found that the Authority was entitled to rely on the professional judgment of its modeling consultant. The court also pointed to some passages in the Institute for Transportation Studies (ITS) review of the model as support. On appeal, the City is arguing that a consultant's professional opinion is not substantial evidence unless supported by factual evidence. We are also arguing that the Court misinterpreted the ITS comments, and when viewed properly, they offer no support for the CHSRA's continued use of the model. Atherton III Atherton III involves objections to the return and motion to discharge the writs from Atherton I and Atherton II. Atherton III does not have a separate case number because it is a consolidated proceeding continuing the trial court consideration of both Atherton I and Atherton II cases. Atherton III challenges the return of writ filed by the CHSRA and will be heard in trail court on November 9th. The challenge asserts that the CHSRA has still not properly addressed what it should have in the program level EIR. A major point of contention is that the CHSRA has since introduced the concept of a Blended System in implementation discussions, design, and funding plan but has refused to evaluate the alternative as an independent alternative. The CHSRA has instead evaluated the Blended System as a part of a larger implementation strategy. A second major point is that the PCJPB submitted a comment letter on the revised program level EIR and said it would not support a four-track alignment on the right of way it controls. Therefore, the City contends the CHSRA has not completed its necessary diligence by identifying where that four-track system could be constructed seeing as the PCJPB does not want the four-track system on their ROW which they own and control. Additionally, the City feels the CHSRA has failed to adequately evaluate the Altamont alternative alignment. Specifically, the City feels the CHSRA has not sufficiently evaluated using a Blended approach to the Altamont alignment. The CHSRA says it is not feasible, but opponents argue that it has not provided substantial evidence to support that determination. Prepared By: Richard Hackmann, Department Head: Curtis Williams, Director City Manager Approval: ____________________________________ James Keene, City Manager