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HomeMy WebLinkAbout2011-12-05 City Council Agenda Packet12/05/2011 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. CITY OF PALO ALTO CITY COUNCIL Agenda posted according to PAMC Section 2.04.070. A binder containing supporting materials is available in the Council Chambers on the Thursday preceding the meeting. REVISED Special Meeting Council Chambers December 5, 2011 6:00 PM ROLL CALL STUDY SESSION 1. Palo Alto Golf Course Re-configuration Resulting From the San Francisquito Flood Control Project SPECIAL ORDERS OF THE DAY 2. Community Group Presentation - Partners In Education PiE 3. Selection of Candidates to Be Interviewed for the Architectural Review Board for One Term Ending on September 30, 2014 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 or Oral Communications period to 30 minutes. CONSENT CALENDAR Items will be voted on in one motion unless removed from the calendar by two Council Members. 4. Approval of Amendment No. 1 to add the amount of $192,798 to Contract No. C11136167 with Siegfried Engineering Inc. for a Total Contract Not to Exceed Value of $284,740 for Providing Final Design and Construction/Bidding Services for the Regional Water Quality Control Plant Landscaping Project 5. Finance Committee Recommendation to Accept the SAP Security Audit 2 12/05/2011 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. 6. Approval of a Contract With Spencon Construction, Inc. in the Amount of $703,490.38 for the FY 2012 Sidewalk, Curb, and Gutter Repairs Project 7. Approve and Authorize Amendment No. 1 to Contract C10135247 with Veolia ES Technical Solutions, LLC for Additional Funding for the Second Contract Year in the Amount of $49,910 and for the Third Contract Year in the Amount of $105,500 for Provision of Services for Transportation and Disposal of Ash for the Regional Water Quality Control Plant 8. Approval of a Contract with Promium, LLC in the Amount of $190,349 to Install Hardware and Software for a Laboratory Information Management System (LIMS) at the Regional Water Quality Control Plant 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 up to three minutes for concluding remarks after other members of the public have spoken. ACTION ITEMS Include: Public Hearings, Reports of Committees/Commissions, Ordinances and Resolutions, Reports of Officials, Unfinished Business and Council Matters 9. Response to Alternative Scenarios for Sustainable Communities Strategy (SB375), Designation of Planned Development Areas, and Update of Regional Housing Needs Allocation Process (RHNA) 10. Adoption of a Budget Amendment Ordinance Amending the Fiscal Year 2012 to Provide Additional Appropriations of $1,520,426 to Fund the Implementation of the Blueprint Process Plan for the Development Center COUNCIL MEMBER QUESTIONS, COMMENTS, AND ANNOUNCEMENTS Members of the public may not speak to the item(s).   CLOSED SESSION Public Comments: Members of the public may speak to the Closed Session item(s); three minutes per speaker.   11. CONFERENCE WITH REAL PROPERTY NEGOTIATOR Authority: Government Code Section 54956.8 Property: 2785 Park Blvd., Assessors Parcel No. 147-08-052 Negotiating Party: Essex Park Boulevard, LLC City Negotiators: James Keene, Steve Emslie, Lalo Perez Subject of Potential Negotiations: Price and Terms of Payment CONFERENCE WITH REAL PROPERTY NEGOTIATOR Authority: Government Code Section 54956.8 Property: 2747 Park Blvd., Assessors Parcel No. 132-31-071 Negotiating Party: Brown Fairchild-Park Investment Company, L.P. City Negotiators: James Keene, Steve Emslie, Lalo Perez Subject of Potential Negotiations: Price and Terms of Payment ADJOURNMENT 3 12/05/2011 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. Persons with disabilities who require auxiliary aids or services in using City facilities, services, or programs or who would like information on the City’s compliance with the Americans with Disabilities Act (ADA) of 1990, may contact 650-329-2550 (Voice) 24 hours in advance. 4 December 5, 2011 MATERIALS RELATED TO AN ITEM ON THIS AGENDA SUBMITTED TO THE CITY COUNCIL AFTER DISTRIBUTION OF THE AGENDA PACKET ARE AVAILABLE FOR PUBLIC INSPECTION IN THE CITY CLERK’S OFFICE AT PALO ALTO CITY HALL, 250 HAMILTON AVE. DURING NORMAL BUSINESS HOURS. Additional Information Supplemental Information Council and Standing Committee Meetings City-School Packet Standing Committee Packets from the City Clerk Schedule of Meetings Schedule of Meetings from the City Clerk Tentative Agenda Tentative Agenda from the City Clerk Public Letters to Council City of Palo Alto (ID # 2355) City Council Staff Report Report Type: Study SessionMeeting Date: 12/5/2011 December 05, 2011 Page 1 of 10 (ID # 2355) Council Priority: City Finances, Land Use and Transportation Planning Summary Title: Palo Alto Golf Course Reconfiguration Title: Palo Alto Golf Course Re-configuration Resulting From the San Francisquito Flood Control Project From:City Manager Lead Department: Community Services Recommendation This is a study session to discuss options relating to reconfiguration of the Palo Alto municipal golf course, as a result of the San Francisquito Creek JPA capital project east of 101. While this report presents options related to reconfiguration of the golf course, staff recognizes there are other issues and questions related to the golf course that Council may want to discuss. Executive Summary The San Francisquito Creek Joint Powers Authority (SFCJPA), an agency serving residents in a 45-square-mile watershed that includes the City of Palo Alto, has entered into a contract with Forrest Richardson & Associates (Richardson) to perform design services for the reconfiguration of several holes of the Palo Alto Municipal Golf Course (Golf Course) to accommodate a new creek levee that will be built as part of the San Francisquito Creek Flood Protection and Ecosystem Restoration Capital Project (Project). . The purpose of the Project is to provide the flood protection elements needed to protect homes, businesses, and other facilities in the cities of Palo Alto and East Palo Alto downstream of Highway 101, and provide sufficient conveyance to accommodate future flood protection projects upstream of the Project reach. Richardson has developed six Golf Course reconfiguration options for discussion (Attachment A). Option A is the simplest and least expensive option. Options B through F are more complex alternatives. Richardson has created these alternatives in an effort to leverage this opportunity of the flood control project and at the same time design a December 05, 2011 Page 2 of 10 (ID # 2355) more interesting, inviting and playable Golf Course that has the potential to make the Golf Course more financially viable in the future. Public input and Richardson’s analysis favor the configuration in Plan D. There are numerous financial implications associated with the reconfiguration project that need to be considered, among them are: 1.How would the City fund construction of a design option that seeks to improve the Golf Course beyond flood control mitigation funds from the SFCJPA (options B through F) and, 2.Should the City take this opportunity to make other Golf Course investments in conjunction with the Project such as replacing the golf course restroom, replacing additional greens, replacing more of the existing irrigation system and, 3.How will the City and the SFCJPA mitigate for the inevitable lost revenues from customer fees during Golf Course re-construction, and how do those losses compare to the value of flood protection which would reduce the risk of future closures and clean up after flood events, and 4.Should the City engage Stanford Hospital to negotiate a mutually acceptable arrangement to accept soil resulting from their hospital expansion project for the benefit of reconfiguration and improving the terrain of the Golf Course? Staff recognizes that Council will need more information in order to make a decision on the most appropriate Golf Course design option. This study session is an opportunity for Council to hear the Golf Course Architect’s explanation of the alternative designs and to engage in a discussion about the opportunity this project represents along with the design and financial challenges that must be overcome. Following the study session staff was planning to schedule a meeting with the Finance Committee to evaluate the various financial implications of the project. Background The San Francisquito Creek (Creek) watershed encompasses a 45-square-mile basin, extending from Skyline Boulevard to San Francisco Bay. The watershed includes public lands and numerous private landowners in the cities of East Palo Alto, Menlo Park, Palo Alto, Portola Valley and Woodside, unincorporated areas of San Mateo and Santa Clara Counties, and Stanford University. The Creek represents the boundary between the two counties in the lower watershed. As the last relatively unaltered urban creek system in the South Bay, the Creek begins at the December 05, 2011 Page 3 of 10 (ID # 2355) confluence of Corte Madera Creek and Bear Creek, just below Searsville Dam in Stanford University’s Jasper Ridge Biological Preserve. The mouth of the Creek opens to the San Francisco Bay adjacent to the Palo Alto Airport and the Baylands Nature Preserve.The system contains over 71 miles of creek bed, and the main stem is 14 miles long. The lower reach of the Creek runs through urbanized areas. In 1998, the Creek’s banks overflowed, causing $28 million in documented damage to homes and businesses in Palo Alto alone. East Palo Alto and Menlo Park also suffered significant damage as a result of this flood. Other significant flooding and high-flow events have occurred in 1955, 1958, 1982, 2002 and 2005. In response to the 1998 one-hundred year flood event, which has been characterized as a 45-year event, local agencies formed the SFCJPA in May 1999 as a joint action agency, “empowered to protect and maintain San Francisquito Creek and its environs.” Founding members of the SFCJPA are the cities of East Palo Alto, Menlo Park and Palo Alto, the Santa Clara Valley Water District and the San Mateo County Flood Control District. In early 2009, the SFCJPA hired a hydrologic consultant firm to conduct a preliminary technical analysis of several candidate alternatives intended to determine feasibility, hydraulic performance, and develop preliminary cost estimates for a preferred alternative that would provide the flood protection and ecosystem restoration elements sought by the SFCJPA for the Creek’s reach between Highway 101 and San Francisco Bay. In 2010, design and environmental planning began on the Project. The Project’s design is currently at the 60% level of development. The Golf Course was constructed in the mid-1950’s, on approximately 184 acres of flat former salt marsh and bay fill. The course was designed by noted golf course architects, William P. and William F. Bell, of Pasadena, California. The Golf Course, designed as an 18-hole facility with a par of 72, is a classic championship course that measures over 6,800 yards from the back tees. The original facility included a large practice putting green, a three-building Eichler-designed clubhouse/golf shop complex and parking lot. In the mid 1970’s, improvements were made to replace the clubhouse buildings. At that time, holes 3, 10, 11 and 18 were also renovated under the direction of golf architect, Robert Trent Jones, Jr. Further improvements were made to the Golf Course in 1998. The improvements included the rebuilding of Greens # 4, 5, 7, 8, 11, 13, 15, 16; the rebuilding of new Tees on Greens # 4, 7, 13, 15; the rebuilding of Fairways on Greens #4, 7, 13, 15, 16; a new storm drain station along with drainage and 35 catch basins throughout the course; new irrigation system; and a new irrigation pump station. (See Attachment A –Current Golf Course configuration) The Golf Course is located on a December 05, 2011 Page 4 of 10 (ID # 2355) relatively flat site, which ranges in elevation from 4.4 feet below mean sea level to 7.5 feet above mean sea level. The capital improvements in 1998 were funded through public debt issuance of $7 million, and will expire in 2018. Golf Course revenue is expected to pay for all operating costs including debt service annually. In 2008, the City of Palo Alto (City) conducted a Golf Course operational study that describes in detail the conditions of the Golf Course, future needs, and opportunities (Attachment B –Executive Summary, Golf Course Operational Study) Discussion The proposed flood control levee alignment will encroach onto the Golf Course. Conceptual alternatives for reconfiguration of the Golf Course necessitated by the levee realignment have been contemplated by the City, SFCJPA, and the SFCJPA’s design consultant on the Project and will likely involve changes to holes 12, 13, 14, 15, 16, 17, at a minimum and possibly 4 as well. Modifications to holes not directly impacted by the levee realignment will be required in order to maintain minimum separation distances between fairways as required for golfer safety. Given the anticipated scale of the changes that will be needed within the Golf Course, in January 2011, SFCJPA and City staff concurred that a golf course architect should be secured under a separate design contract in order to maintain fairness and transparency in the consultant selection process for this significant element of the Project. On June 9, 2011, SFCJPA staff, City staff, and members of the Golf Advisory Committee interviewed six golf course architects. After careful consideration, a unanimous decision was made to select Richardson. Richardson’s experience working with high saline turf conditions, renovations on other Bell designed courses, the hand-picked team he selected to ensure all work tasks can be accomplished for this project, and his experience working with a variety of agencies were key factors in his selection. In addition, his experience in conducting public outreach forums and making presentations, his demonstrated knowledge in successful golf course operations, and his understanding that this project should integrate cohesively with the rest of the Baylands were additional factors in his selection. Richardson will develop an updated golf course master plan with the help of Palo Alto stakeholders as part of his contract’s scope of work. He believes strongly that we should not redesign a portion of the golf course in a vacuum, but rather we should take a comprehensive view to ensure the entire 18-holes playing experience is maintained or enhanced. This approach was very well received by City staff and we are genuinely excited by the concepts that are emerging. Richardson has given particular thought to how the golf course can be designed in such a way to effectively utilize space and December 05, 2011 Page 5 of 10 (ID # 2355) enhance the golfer experience in order to result in an increase in the patronage of the golf course, rounds of play and generate revenue. It is helpful to think about this Golf Course planning project in two parts. Part A being the reconfiguring of the Golf Course that is unavoidable due to the flood control work. Part A will be funded mostly or entirely by the SFCJPA depending on the Golf Course design chosen. That is, if the City chooses to take this opportunity to enhance the golf course beyond what is required to mitigate the flood control work the City will need to find additional funding sources to pay for the incremental difference in costs. The SFCJPA is not able to provide improvements to the Golf Course that go beyond mitigation of the flood control project. Part B of the Golf Course planning project is the long-range master planning. This includes a vision for the club-house, practice facility, parking area and entrance. This more comprehensive long-range planning is important to do concurrently so that the design to reconfigure the Golf Course (Part A) is unified with the long-term vision of the Golf Course asset. The comprehensive long-range plans may not occur for some time, pending further financial analysis. Staff has shared the existing 1994 Golf Course Master Plan with Richardson, along with the 2006 staff report that explored the potential for sports playing fields on the Golf Course (Attachment C), and the 2008 Golf Course Operational Analysis by Economics Research Association (Executive Summary Attachment B, and related staff report Attachment D). Some of the expected benefits and associated improvements from this design project will include: §a course which uses less water and labor to maintain §integrated naturalized areas to reduce the turf footprint and create interest §some new greens which will provide better conditions §improved consistency of greens ball roll (quality of play) §several new fairways, and tees §improved pace of play §better overall drainage §improved wildlife habitat §replacement of some of the deteriorating irrigation system on many of the reconfigured holes, and §a more interesting course which we expect will increase rounds of play and revenue for the City. December 05, 2011 Page 6 of 10 (ID # 2355) Public outreach meetings with Richardson have been built into the scope of work and contract with the SFCJPA. The public meetings will ensure that Golf Course stakeholders and the public have multiple opportunities to ask questions, make suggestions, and receive updates on the project. The first public meeting was held on August 18, 2011, at the Bay Café at the Golf Course. SFCJPA staff, City staff, and Richardson discussed the Project and gathered information on what the golfers liked and disliked about the current Golf Course. SFCJPA Project Manager Kevin Murray answered questions about endangered species that might be affected by the project. Mr. Murray explained that measures were in place to avoid impacts to federally protected steelhead, California clapper rail, and salt marsh harvest mouse. The design should include best ways to conserve water and enhance wildlife habitat. All nesting wildlife will be protected during construction. Richardson presented his work on the reconfiguration of the golf course at the second public outreach forum on October 24, 2011 (Attachment E –Summary of the October 24 Public Meeting) and then again at the Parks and Recreation Commission’s regular meeting held on October 25, 2011. Richardson recently completed Golf Course evaluations, an aerial survey and topographic map, six different schematic design options for the course reconfiguration, and at the request of the City, a separate contract between Richardson and the City for long-range master plan work. The six design concepts were based on the ‘likes’ and ‘dislikes’ expressed by staff and stakeholders during the first public outreach meeting on August 18, 2011. See Attachment A for the six Golf Course design options. Option A is the simplest and least expensive alternative representing mitigation required of the SFCJPA with no additional Golf Course enhancements. Options B through F are more complex and attempt to leverage this opportunity to design a more interesting playable golf course. Public input and Richardson’s analysis favor option D for a variety of reasons including a routing comparison study (Attachment F), landscape sustainability, aesthetics, and playability and uniqueness of the tee-to-green features. See Attachment G for a Memo from Richardson comparing options A to D. The cost difference between option A and D is estimated to be a total of $520,000, excluding alternate items (Attachment G). There will be at least eight more public meetings with Richardson as the Project moves forward, including meetings with the Golf Advisory Committee, Parks and Recreation Commission, Planning and Transportation Commission, Architectural Review Board, City Council, and the SFCJPA Board of Directors. All meetings will be posted and advertised by City Staff. December 05, 2011 Page 7 of 10 (ID # 2355) Tentative Timeline The timeline is driven by the SFCJPA who hopes to begin levee realignment work in 2013. Ideally the reconfiguration of the Golf Course would occur in the fall/winter of 2012. Summary: Public Outreach 9/2011-3/2012 Completed Golf Design 4/2012 Construction (Tentative) 12/2012 Detailed: Tentative Time-line 1 Golf Advisory and General Public 8/18/2011 2 Parks and Recreation Commission 10/28/2011 3 Golf Advisory and General Public 10/24/2011 6 City Council 12/5/2011 4 Architectural Review Board Dec/Jan 5 Planning Transportation Commission Dec/Jan 6 Parks and Recreation Commission Feb/Mar 7 Finance Committee Feb/Mar 8 Architectural Review Board Feb/Mar 9 Planning Transportation Commission Feb/Mar 10 Golf Advisory and General Public Mar/Apr 11 SFCJPA Board Mar/Apr 12 City Council April Resource Impact This Project will be funded by the SFCJPA to which the City contributes $98,000 annually. A budget of $137,000 for design and $2,000,000 to $3,000,000 for construction for the reconfigured portion of the Golf Course has been established. Any golf course improvements recommended by Richardson that go beyond the flood control mitigation would be incurred at the City’s full expense. There are numerous financial implications to be considered and additional information is needed to provide specific financial impacts: Lost Revenue Staff recognizes that there will be a short-term loss of revenue due to decreased rounds played during the Golf Course reconfiguration construction period. The construction period is unknown at this time but could begin as early as fall/winter 2012. The anticipated revenue loss is difficult to quantify at this time. The construction will undoubtedly impact the number of rounds played and affect the City’s tenants (Brad December 05, 2011 Page 8 of 10 (ID # 2355) Lozares from the Golf Course Pro Shop and Tom Talai at the Bay Cafe Restaurant). Staff is working with SFCJPA to explore appropriate mitigations as the timeline and levee design work progresses, and will discuss options with the City Council and/or the Finance Committee, after the financial impacts have been further assessed. For a point of reference, during the capital improvements at the Golf Course in 1998-99, the City experienced a 25% reduction in annual play. Such a comparable reduction today would translate to $500,000 annually in lost revenues. Staff is working with the JPA to explore appropriate mitigations as the timeline and levee design work progresses and will discuss all mitigation options with the Finance Committee. Staff is in the process of contracting with a third-party Golf Course Appraiser to help define a more accurate estimate of revenue loss due to the anticipated construction. The SFCJPA maintains that the flood protection provided to the Golf Course by the Project represents a long-term benefit, as future revenue losses due to closure and clean up in response to flood events will be reduced. Stanford Soil Stanford University Medical Center (SUMC) expansion will result in a need by SUMC to dispose of a considerable amount of excavated soil. That soil may be available for use in the proposed improvements to the Palo Alto Muni Golf Course and/or the Levee Project. This may represent an opportunity to both support the SUMC project and provide additional funding to support the Golf Course re-configuration project. See Attachment H for a memo prepared by Richardson. Staff intends to reach out to Stanford to get a better understanding of whether a mutually beneficial arrangement is possible. The soils would be used to raise the level of the golf course to both correct significant drainage problems and to improve the contour of the golf course to add interest and visual appeal. It is also believed that by raising the level of the golf course above mean tide level, negative salt impacts to the irrigation system could be reduced and thereby lowering golf course maintenance and repair costs. Return on Investment Investing City funds into the Golf Course, beyond SFCJPA mitigation, will require an understanding of return on investment (ROI). If for example, the City pursues design option D the City will need to provide $500,000 or more to make up the incremental difference between the SFCJPA mitigation funding and construction costs for an enhanced design. Presumably the final design will bring several benefits such as reduced water use with increased natural areas and fewer acres requiring maintenance along with a more interesting and appealing golf experience; and provide an opportunity to increase rounds of play and revenue generated from fees. Staff is in the process of December 05, 2011 Page 9 of 10 (ID # 2355) contracting with the National Golf Foundation to provide independent ROI analysis on the preferred design options being considered. Moreover, the existing Golf Course irrigation system is failing. The high salt intrusion has compromised the system resulting in regular main-line breaks. The capital improvement to the irrigation system in 1998 is not lasting as long as initially anticipated. Consequently, does it make financial sense, and is it financially feasible, to make additional capital improvements to the Golf Course, such as replacing more of the irrigation system than is called for by flood control mitigation, during the reconfiguration project? Infrastructure Blue Ribbon Task Force Staff recognizes that there is an Infrastructure Blue Ribbon Committee (IBRC) working on a report for Council to address a significant infrastructure back-log facing the City. The infrastructure back-log represents and enormous challenge for the City and this flood control / Golf Course reconfiguration project will need to complement the comprehensive infrastructure improvement plan that will emerge from the IBRC report. Pat Markevitch, Parks and Recreation Commissioner, is a member of the IBRC and has kept the committee informed about the pending flood control / Golf Course reconfiguration project. Once the additional information is received staff will provide funding recommendations, but at this time any operating expense would come from the General Fund Budget Stabilization Reserve and infrastructure would come from the General Fund Infrastructure Reserve both of which are financially challenged. Alternative use of the Golf Course site This staff report assumes the City Council wants to have a public golf course. It should be noted that other options for use of the golf course land is possible. The land is dedicated park land and there is an annual debt service of approximately $550,000 (that expires in 2018), currently being paid for by golfing revenue. This may make alternatives uses of the land more challenging but the financial implications of not having a public golf course is an alternative, that some may wish so consider. Policy Implications The Project is consistent with Policy C-24 and Policy C-26 of the Comprehensive Plan, which encourages reinvesting in aging facilities to improve their usefulness and appearance and avoiding deferred maintenance of City infrastructure; and maintaining and enhancing existing park facilities. This Project also supports Policy N-10, which calls for the City to work with the Santa Clara Valley Water District and other relevant December 05, 2011 Page 10 of 10 (ID # 2355) regional agencies to enhance riparian corridors and provide adequate flood control by use of low impact restoration strategies. Environmental Review This Project will be subject to environmental review under provisions of the California Environmental Quality Act (CEQA).The SFCJPA will follow the CEQA Guidelines and prepare an Environmental Impact Report (EIR) for the Project. A wetlands delineation study was performed for the Project. The delineation was conducted to assist the SFCJPA in determining the type and extent of wetlands in the delineation study area that may be subject to regulation by the U.S. Army Corps of Engineers under Section 404 of the Clean Water Act and Section 10 of the Rivers and Harbors Act. A separate environmental document may be needed if and when recommended elements of Richardson’s Golf Course Master Plan are implemented. A tree survey and arborist’s report for the project area should commence in September, 2011. A meeting with the City Arborist took place on August 18, 2011, at which time the requirements of the project to comply with the City's Tree Ordinance was made clear to the consultant. Attachments: ·Attachment A -PAGC Design Options (PPT) ·Attachment B -Executive Summary, Golf Course Operational Study 2008 (PDF) ·Attachment C -CMR 168-06 (PDF) ·Attachment D -CMR 446-08 (PDF) ·Attachment E -Public Forum Summary 10-24-11 (PDF) ·Attachment F -Routing Comparison Study (PDF) ·Attachment G -Richardson Memo -Option A vs D (PDF) ·Attachment H -Richardson Memo -Stanford Soil (PDF) Prepared By:Robert De Geus, Manager Department Head:Greg Betts, Director, Community Services City Manager Approval: James Keene, City Manager Attachment A •Design Goals and Objectives •Existing Golf Course Configuration •Six Golf Course Design Options •Estimated costs for option A and D G O A L S & O B J E C T I V E S —Golf Course •Accommodate the Creek Mitigation & Project Budgets •Improve Playing Conditions —Turf, Drainage, Irrigation •Provide Consistency —Playing Conditions, Features, etc. •Integrate Appropriate Safety Guidelines •Allow for Efficient Management —Pace-of-Play •Allow for More Flexible Yardages —Women, Beginners, Seniors •Enhance Landscape & Reduce Water Use —Baylands Theme •Uphold the Bell Legacy —Establish Marketability •Create a More Memorable Golf Experience — “Wow”Factor •Phase the Work Appropriately — 9-holes In Play •Establish a Roadmap for the Future Plan A •5 New Greens •7 Older Greens Retained •6.5 Reconfigured Holes •Lowest Area of Impact •Low Overall Improvement Plan B •7 New Greens •4 Older Greens Retained •7.5 Reconfigured Holes •Nominal Area of Impact •Med. Overall Improvement Plan C •8 New Greens •4 Older Greens Retained •8.5 Reconfigured Holes •Nominal Area of Impact •High Overall Improvement Plan D •8 New Greens •5 Older Greens Retained •8.5 Reconfigured Holes •Nominal Area of Impact •High Overall Improvement Plan E •6 New Greens •5 Older Greens Retained •8.5 Reconfigured Holes •Larger Area of Impact •High Overall Improvement Plan F •12 New Greens •3 Older Greens Retained •12 Reconfigured Holes •Largest Area of Impact •High Overall Improvement P R O B A B L E C O S T E S T I MA T E S Plan Option A Plan Option D Base Work $ 3,247,386 Based on schematic planning October 2011. Professional fees and environmental assessment are assumed covered by SFCJPA under separate contract(s). $ 3,720,080 Project Management (2.5%)81,185 93,002 Contingency (7.5%)249,643 285,981 $ 3,578,213 $ 4,099,064 PALO A LTO G OLF C OURSE C ONFIGURATION PROJECT | SFCJPA Prepared November 9, 2011 Summary of Public Forum Among Golf Groups & Customers Held: October 24th, 2011, 6:30pm at Palo Alto Golf Course This meeting was advertised and open to the public. The City circulated a sign-in sheet. There were approximately 20 members of the public present, including members of the golf associations. There were also staff members present, representing the golf operators and Parks Department. Kevin Murray (SFCJPA) attended as well. Forrest Richardson had the opportunity to present his work on the reconfiguration of the golf course. The work during the past eight weeks has included course evaluations, an aerial survey and topo map. Six different schematic design options for the course reconfiguration were presented via a PowerPoint presentation that also included background on the San Francisquito Creek, its historic alignments and the early development of the golf course (c. 1956). In addition, based on a request of the city and through a separate contract between Forrest Richardson & Assoc. and the City of Palo Alto, an extended master plan for the entire golf facility (clubhouse and practice areas) was presented in schematic form. Consideration taken into account for the six design concepts were based on likes and dislikes gathered from stakeholders during the first public outreach meeting on August 18th. Additionally, the in-depth analysis of the golf course, re-alignment of the San Francisquito Creek, and staff reports about conditions and issues were a part of the process for coming up with options. The six design options for the course reconfiguration included: A Reconfigure 6.5 holes; least area of impact to the course; lowest overall course improvement B Reconfigure 7.5 holes; low area of impact to the course; low overall course improvement C Reconfigure 8.5 holes; nominal area of impact to the course; considerable overall course improvement D Reconfigure 8.5 holes; nominal area of impact to the course; high overall course improvement E Reconfigure 8.5 holes; large area of impact to the course; high overall course improvement F Reconfigure 12 holes; largest area of impact to the course; high overall course improvement with an accommodation for one soccer field FORREST RICHARDSON &ASSOC. G O L F CO U R S E A R C H I T E C T S DRAFT (Summary of Public Forum October 24th, 2011 — Continued) All six schematic design options maintained course length, while reducing 25-40 acres of maintained turf, transforming those areas to native Baylands plants and grasses. Plan Options C, D, E and F have significantly more native landscape introduced than A and B. All of the designs had their own separate costs and impacts to the course. One design option (F) was presented to address the longstanding question of whether athletic fields could be accommodated on the site while preserving the public’s desire to maintain course length and quality. The design (F) presented could not find space for more than one NCAA sized soccer field. This design option shows shared parking with the current sports center west of the golf course and also involves the remodel of seventy-five percent of the golf course (12 holes). This option would be the most expensive reconfiguration approach plus the cost of the soccer field and required separation screening from the golf course area. All designs would allow 9 holes to be open for play during construction. This requirement coincides with the public’s need to play the course during reconfiguration work and meets the operation need to maintain golf customer loyalty and as much revenue as possible. In response to the city’s request for an extended master plan, Brian Curtis of Forrest Richardson & Assoc. presented conceptual plans for the clubhouse site, including parking, practice areas, event areas, cart storage and an on-course rest room. Associated with this work were integration of public trails, an improved entry and a focus on making the golf facility more useful for the non-golfing public. Curtis discussed incorporating the Baylands landscape theme into the master plan and how bringing elements of the reconfigured golf course into the clubhouse areas and entry would be a great benefit. A conceptual site plan (including trails, entry, signage locations, new practice greens, an expanded range tee and an event lawn) was presented. Conceptual building elevations were presented for the clubhouse (expanded 31% to accommodate 250-300 person events, a larger kitchen and grill area, expanded patio areas, additional rest rooms and a small proshop addition); a cart storage building; a Range Performance Center (to accommodate teaching facilities and high-tech video); an on-course rest room; and a bag drop area. The existing cart storage area below the clubhouse would be converted to storage for banquet and proshop inventory, needs that are now not being served. The conceptual elevations use a combination of wood, stone, and glass materials to change the appearance of the 1980s clubhouse and will reinforce the landscape theme that is proposed to bring the Baylands look and feel to the building, breezeways and patio spaces. Curtis presented historical documents showing the original Eichler clubhouse created for the Palo Alto Golf Course. While the goal is not to try and recreate the Eichler building out of the 1980s era building, the design approach was to celebrate the Mid-century Modern era of the 1950s course by adapting the building and grounds to a lower and more light-friendly building. Curtis also spoke of sustainable (LEED) concepts that could be integrated. Among them are recycling of water used in cart washing, window designs to bring light and heat to the building naturally, and more reliance on outdoor areas that do not require conditioned space and artificial ventilation. The clubhouse site area, practice area improvements and clubhouse expansion work could be undertaken all at once or over a period of years. The proposed building concepts, including the outdoor spaces for the bar and grill, wedding lawn, patios, and event area, are all configured to have great impact with the least amount of cost practical. An idea to begin with the Range Performance Center was mentioned as a away to temporarily house the proshop and operations of the course while the clubhouse work was being performed. (Summary of Public Forum October 24th, 2011 — Continued) Many of the improvements may increase use and revenue to the City, such as expanding the event areas and seating capacity of the clubhouse. Other improvements, such as trail access to bring bikers and hikers into the clubhouse area for food and beverage offerings, may have nominal impact to revenue, but are important to the overall Baylands trail plan and goals. Questions posed by those attending included the following, with discussion in italics: • Where will the funding originate to complete the improvements? Staff commented that the necessary reconfiguration of the golf course would be funded by the SFCJPA, with areas such as the practice areas and certain improvements not associated with the flood mitigation work needing to be funded by the City. There was also discussion that the overall Master Plan work (clubhouse, parking, etc.) were being undertaken so that informed decisions could be reached and that the best possible planning be considered for the whole facility, not just the portions of the golf course to be reconfigured. • Will the course be open during the reconfiguration work? Forrest Richardson told the audience that at least 9 holes would remain open at all times, and that the goal is to have those holes playing to non-temporary greens. • Will the length of the course be less after the work? Forrest Richardson told the audience that all of the design options retain existing length, but would allow for more flexibility for beginners, seniors and women players. • Will there be more views of the Bay (with higher elevation differences)? Each design option presents a different level of meeting this goal. Options A and B do not provide much more view opportunities than currently enjoyed. Options C, D, E and F provide increased opportunities. • Why was the question of losing a part of the golf course areas for soccer re-visited? Staff reminded the audience that this has been a longstanding question and it was determined that the question should be addressed in concert with the present reconfiguration options. It was pointed out that based on public input in the past, as well as the recent forum held in August, the criteria to maintain length and the type of course desired by the public (regulation length, 6,800 yards) precluded conversion of the golf course to 9 holes or make wholesale changes to a completely different type of (shorter) course. The option showing a soccer field amounts to the threshold of change that could accommodate soccer while still upholding the needs of the length and type of course, and the creek realignment. Forrest Richardson summarized by indicating that the plan options had been evaluated for cost and impact, but that these evaluations were preliminary only at this stage. The pace-of-play consultant, Bill Yates has formed an opinion on the most efficient reconfiguration option from a operations perspective, and this will be used to help zero in on the best option. Following the presentation and questions the audience was invited to review the plans in person and to ask questions. The plans were set out across the room and about half of those attending stayed for as long as an hour to look at details and ask questions about the options and Master Plan. (Summary of Public Forum October 24th, 2011 — Continued) Rob de Geus invited the public to also attend the Parks Commission meeting on October 25th. He noted that the same presentation would be made for the Board and that the public would be invited to make comments directly to the Board as they consider the options and master plan implementation. The following comments were gathered from those attending and reviewing the plans: • The clubhouse expansion would be very exciting and is long overdue; several felt that the costs could be justified as much more revenue would be generated from groups • There were concerns over some areas shown on the plans relative to safety; these be addressed as designs are developed and a final approach is selected • Plan D was identified as a favorite among several public participants because it seems to address a lot of the public’s desire for more views, better hole orientation (to wind, etc.) and a more exciting golf course • Plan F was criticized for taking golf course land away in favor of soccer; there was skepticism about whether the course could remain open for play with so many holes impacted • Several attending wanted copies of the plan options so they could review them in more detail; staff noted that they would be made available in the coming week • The idea for a Range Performance Center was liked by several people with comments about how this type of facility would put Palo Alto on the map and result in many more new golfers joining to use the public golf course • There were questions about how many trees would be removed; this question cannot be answered until designs are more developed, but any work would follow the City’s tree ordinance and would take into account the introduction of the Baylands theme and landscape appropriate to the site • Comments were made about the need to incorporate sustainable design to the buildings and how that was all but missing from most areas of the facility in its present state of disrepair and older technology • Several comments applauded the new trails and access to the clubhouse by non-golfers (Prepared 11-9-11) 2 3 3 7 E AS T OR AN G E WO OD AV E N UE M E M OR AN D U M T H E M OUN TAI N H OUS E PH OE NI X , ARI ZO NA 8 5 02 0 USA tele 602-906-1818 web golfgroupltd.com FORREST RICHARDSON &ASSOC. G O L F C O U R S E A R C H I T E C T S Member: American Society of Golf Course Architects October 18, 2011 Kevin Murray & Rob De Geus Forrest Richardson SFCJPA – Palo Alto Golf Course – Potential Soil Import from Stanford I am addressing this to you both as it remains clearly a SFCJPA and City matter to weigh the potential benefit of imported soil from the Stanford University Medical Center project. Consideration is given to the opportunity presented by Stanford University Medical Center (SUMC) future expansion plans wherein considerable soil may be available for use in proposed improvements to the Palo Alto Muni Golf Course and/or the Levee Project. SUMC will have a need to dispose of excavated soils from a building expansion program. The current understanding of the material available is: Late 2011 25,000 cubic yards (CY) May – Sept 2012 275,000 CY 2013 180,000 CY With respect to any golf course improvements, soil is the basis for providing shape, character and slope for surface drainage. The possibility of obtaining any additional soils without the need to excavate onsite materials is desired, particularly in the instance of Palo Alto Muni where the site is relatively flat and the material could add immensely to the reconfiguration success. In consideration of whether or not a deal can be structured between SUMC and SFCJPA and/or the City of Palo Alto to accept these soils, there are several considerations. Those being the timing of the events, location of any proposed stockpiles, and the cost/savings balance between the parties of interest. In the instance of the first available 25,000 CY in late 2011, it is a given that the design team would like to have this material available for use for the golf course reconfiguration. This amount of soil is relatively small with respect to the needs of most golf course improvement projects and its use is easily identifiable as useful and cost effective once the soils are onsite at the golf course. We do, however, recognize that it may not be feasible to find a place for this material before the required time. Finding a suitable location would, most likely, require a selected plan so the material is not stored where it would require A factor which will play heavy in SUMC’s efforts on how to dispose of the soils generated by their project is the market value of the off-hauled soils. If a buyer is found, as in if another outside party has a need for soils, that off-haul could potentially be a source of revenue for SUMC. Conversely, and most likely in the DAT E : TO : FR O M : R E GAR D I N G : current economic state, if SUMC must at their own expense carry the burden of off-hauling this material to some site distant, then that is an additional expense to SUMC’s project. At present, SUMC is anticipating this instance and therein is the potential benefit to the Golf/Levee project. At current haul rates, providing a closer location for soil disposal is a savings to SUMC. In general, if one half to one hour is saved per truckload of off-haul costs, that is a projected savings of $2 to $4 per CY of soil for SUMC. Extrapolation of that savings to SUMC yields: First 25,000 CY $50,000 to $100,000 Balance of 455,000 CY $910,000 + It would be reasonable to assume a deal could be structured to allow SUMC to deliver and stockpile soils to a given location at the golf course and also assume all incidental costs that would occur as a part of that delivery. Those incidentals would include, planning and permitting the haul, preparation of the stockpile site, dust control, haul route maintenance, fine grading the stockpile and erosion control measures for the stockpile. Alternately, in lieu of SUMC carrying the incidental burden, SFCJPA or the City of Palo Alto could charge a fee to accept the soil and then use fee proceeds to cover incidental costs or provide general revenue. It is suggested that an attempt be made to structure a deal for at least the first 25,000 CY delivered to the golf course. This material would be stockpiled either between holes 5 & 16 adjacent to the airport property line and/or between holes 13 & 14, clear of the proposed levee footprint. It is suggested that firstly SUMC is approached via a meeting, and thereafter followed by preparation of a site plan and scope of work definition if SUMC is agreeable. Such plans and scope would need to be prepared by HDR with input by FRA. This work scope would include: a. Stockpile prep grading, haul road maintenance and repairs. b. Importing the soil and placing it in a non-structural stockpile, including dust control c. Fine grade stockpile d. Apply hydro seeding for temp erosion control e. State a performance period, ie; all work to be complete within 3 weeks f. The Golf Course would need to coordinate access and any golf restrictions, remove and cap any conflicting irrigation heads or piping. It is further suggested that the projected costs for the above referenced design work be integrated into the cost as a separate item for SUMC to reimburse. Regarding future potential import of larger quantity of soil to the golf course, it would be best to place that material where needed, when needed for it to be of best value to the golf course improvements. If stockpiled in areas away from its final use, the re-handling and final placement of that soil would add to the golf project costs. Depending on stockpile location from final placement, that additional cost is estimated at between $2 and $4 per cubic yard. Making some guess on the amount eventually taken of between 50,000 and 200,000 CY, that impact would range from $100,000 to $800,000. Certainly the benefit of the soils use to the end product of the golf course improvements must be weighed against such costs. However, if the final design of the reconfiguration of the course mandates additional soil be imported from an offsite source during construction, then having a dedicated stockpile source would be advisable. It is easier (cheaper) to draw from such stockpile than for the proposed golf course contractors having the need to include the purchase of such materials from a presently unknown source when bidding the project. Breakdown of estimated cost to accept the first 25,000 CY of soil: Cost (estimated) to place 25,000 cy of stockpile, Palo Alto Muni Golf Course FRA HDR Contracted Total___ Extra Design costs 2,500 2,500 5,000 Prep site for stockpile 3 AC 1,800 5,400 5,400 Place soil - Dozer, water truck* 69.4 hrs 220 15,278 15,278 Fine grade 3 ac 300 900 900 Hydroseed 3 ac 2,500 7,500 7,500 Repair routes 1 LS 2,500 2,500 2,500 _______ * 1 truck every 3 min = 360 cy/hr $ 35,578 Please call with questions. We believe that a decision on the desired plan approach (selection of a design plan) will be needed before too much more is determined on this issue. As you are aware, we are currently working to maintain project pace with the schematic design options — the first look at that work will take place next week at the scheduled City meetings. __________________________________ Forrest Richardson,ASGCA (with Dale Siemens) City of Palo Alto (ID # 2291) City Council Staff Report Report Type: Special Orders of the Day Meeting Date: 12/5/2011 December 05, 2011 Page 1 of 1 (ID # 2291) Council Priority: Community Collaboration for Youth Well-Being Summary Title: Community Group -Partners In Education PiE Title: Community Group Presentation -Partners In Education PiE From:City Manager Lead Department: Community Services Attachments: ·Attachment A -Palo Alto Partners in Education Fact Sheet (PDF) Prepared By:Robert De Geus, Manager Department Head:Greg Betts, Director, Community Services City Manager Approval: James Keene, City Manager     Palo Alto Partners in Education (PiE) is our community’s education foundation that raises  private funds for all Palo Alto public schools. Founded in 2005 from the merger of two previous  foundations, PiE serves all the schools in the Palo Alto Unified School District (PAUSD).  As state  funding for schools decreases and our school populations grow, PiE is a necessity, not a luxury,  for maintaining the kind of outstanding public schools education that our community wants for  its kids.    Excellent public schools are the cornerstone of a thriving community, attracting the vibrant,  committed, and intellectual population whose civic contributions have so marked Palo Alto  throughout its history.  Consistently ranked among the top districts not just in California, but in  the United States, PAUSD’s outstanding reputation continues to attract these amazing people  to Palo Alto, propping up our home values and helping maintain a distinctively diverse and  interesting community.    PiE equitably distributes funds raised on a per‐child basis directly to schools, making every child  in our community a reason to give.   This year, PiE provided more than half of every school’s  supplemental funding, enriching education, providing caring and expert staff, and helping all  students meet their potential.  PiE donations for guidance, teaching assistants and aides, arts,  supplemental science, additional electives, and teacher mentoring make a qualitative  difference on every campus in PAUSD.    PiE provides a buffer from the volatile education funding process, helping to preserve critical  staff and programs even as districts throughout California are forced to cut instructional time.   PiE helps to provide the education that our community expects and our children deserve.    Interested in giving?  PiE welcomes donations from all walks of our community.  Please mail a  check to Partners in Education, P.O. Box 1557, Palo Alto, CA 94302, or donate online at  www.papie.org/donate.  PiE is a 501(c)(3) nonprofit; donations are tax‐deductible as provided  by the law.    Palo Alto Partners in Education  Executive Director:  Kathy Schroeder, kschroeder@papie.org  www.papie.org  650‐329‐3990  CITY OF PALO ALTO OFFICE OF THE CITY CLERK December 5, 2011 The Honorable City Council Palo Alto, California Selection Of Candidates To Be Interviewed For The Architectural Review Board For One Term Ending On September 30, 2014 Enclosed are eight applications submitted for one term, ending on September 30, 2014 on the Architectural Review Board. Three applicants, Robert Kuhar, Lee Lippert, and Richard Pearce interviewed on October 24, 2011. A video of the interviews can be viewed at the Community Media Center’s website, <http://midpenmedia.org/watch/pacc_webcast/pacc_ondemand2.html>. Copies of all applications are attached. Some applications may be redacted at the request of the applicant. A full set of non-redacted applications will be emailed to Council Members directly. At the Council Meeting on December 5, 2011, the City Council will select the candidates to be interviewed for the Architectural Review Board, with the interview date to be determined. The applicants who have not yet interviewed are as follows: 1.Laurie Abbott Chase 2.Ron Halfhill 3.Ivan Kisyov4.Brent McClure 5.Jacqueline Zuhoski The applicants who interviewed previously are as follows: 6.Robert Kuhar7.Lee Lippert 8.Richard Pearce REPORT PREPARED BY:Ronna Jojola Gonsalves, Deputy City Clerk Updated: 11/29/2011 5:39 PM by Ronna Gonsalves Page 2 ATTACHMENTS: ·Abbott Chase Application (PDF) ·Halfhill Application (PDF) ·Kisyov Application (PDF) ·McClure Application (PDF) ·Zuhoski Application (PDF) ·Kuhar Application (PDF) ·Lippert Application (PDF) ·Pearce Application (PDF) Department Head:Donna Grider, City Clerk Updated: 11/29/2011 5:39 PM by Ronna Gonsalves Page 3 City of Palo Alto (ID # 1804) City Council Staff Report Report Type: Consent Calendar Meeting Date: 12/5/2011 December 05, 2011 Page 1 of 4 (ID # 1804) Summary Title: RWQCP Landscaping Contract Amendment Title: Approval of Amendment No. 1 to Add the Amount of $192,798 to Contract No. C11136167 with Siegfried Engineering Inc. for a Total Contract Not to Exceed Value of $284,740 for Providing Final Design and Construction/Bidding Services for the Regional Water Quality Control Plant Landscaping Project From:City Manager Lead Department: Public Works RECOMMENDATION: Staff recommends that Council: Approve and authorize the City Manager or his designee to execute contract Amendment No. 1 (Attachment A) to Contract No.C11136167 with Siegfried Engineering Inc., in the amount of $192,798 for final design and bidding/construction services for the Regional Water Quality Control Plant landscaping. This amount includes $187,798 for basic services and $5,000 for additional services for a total contract amount not to exceed $284,740.00. BACKGROUND: The Regional Water Quality Control Plant (RWQCP) is a 25-acre facility owned and operated by the City of Palo Alto that treats wastewater from the East Palo Alto Sanitary District, Los Altos, Los Altos Hills, Mountain View, Palo Alto, and Stanford University. Facility expansion and improvement projects over the last 40 years have included conditions that the RWQCP install and maintain landscaping around the periphery of the facility to provide visual screening for visitors to the surrounding Baylands. Mature landscaping screens much of the RWQCP; however, the current condition of the landscaping is inadequate. Some of the planted vegetation is in poor health or has died. Many areas have become overgrown and the irrigation system is no longer functional. Goals for the exterior landscaping project are to: ·Screen the RWQCP from the Baylands; ·Define a path system at the corner of Embarcadero and Harbor Road for safer pedestrian travel; ·Select a plant palette that is beneficial to native wildlife; ·Irrigate with recycled water to decrease potable water use; December 05, 2011 Page 2 of 4 (ID # 1804) ·Use interpretive signage in the project areas illustrating how the RWQCP helps protect the Baylands from pollution; At the start of this project, the southeast edge of the Plant (see Attachment B for project site locations) had been identified as one of the landscaping project areas and a conceptual design for it had been drawn. This site had been previously landscaped to meet a 1986 RWQCP construction requirement and was in need of maintenance and relandscaping. In 2010, this site had been identified as a possible location for a composting facility. The November 2011 passage of Measure E undedicated this area as parkland allowing further analysis of its potential use as a composting facility. Because this site may eventually be approved for construction of a compost facility, a final landscape design will not be prepared as part of this project and the site will not be relandscaped at this time. To do so would risk spending money on a project which may then have to be removed. Although it may be several years before a composting facility is approved or built, it is not recommended that the site be landscaped in the interim because of the estimated design costs and probable construction costs totaling approximately $270,000. If the potential composting facility is not approved for construction, discussion will resume about relandscaping this area and will leverage the conceptual designs developed by Siegfried Engineering Inc. Goals for the interior RWQCP landscaping project are to: ·Create meeting areas and safer wayfinding for the RWQCP tours provided to the public; ·Demonstrate sustainable landscape design and include how recycled water use is an essential and beneficial part of contemporary landscaping ·Become certified as a Bay-Friendly Gardening Landscape and incorporate related topics into the RWQCP tour discussion; and ·Improve the aesthetics and professional look of the RWQCP interior. It should be noted that the area at the entrance to the RWQCP had been under consideration to become the new location for the City’s Recycling Center after its closure at the Landfill site in 2012. At of its July 5, 2011 meeting, the Council Finance Committee, directed staff to formulate a plan to retain the site as a Household Hazardous Waste (HHW) Station, but to remove the Recycling Center elements. Project managers from both the landscaping and the HHW Station projects are working collaboratively to synchronize efforts and are using the same design consultant; the Wastewater Treatment Fund is funding the landscaping design for the potential HHW Station to simplify project management and because the RWQCP entrance would have required new landscaping and signage regardless of the potential HHW Station or other projects that have been discussed to date. The RWQCP conceptual landscape designs (Attachments C, D, E) have been developed with extensive input from public stakeholders interested in Baylands protection, native plants and wildlife conservation; from the business community along Embarcadero Way; December 05, 2011 Page 3 of 4 (ID # 1804) City staff from Parks and Open Space, Planning, and Public Works; and Commissioners from the Architectural Review Board, Parks and Recreation Commission, Art Commission, and the Planning and Transportation Commission. DISCUSSION SEI was hired September 2010 to draft conceptual designs for the RWQCP Landscaping Project. SEI completed conceptual landscape designs for project sites around the periphery and inside the RWQCP at a cost of $86,124. The current contract (C11136167) allows the City to proceed with SEI for final design and construction/bidding services, if the City so chooses, without reissuing a new Request for Proposal. SEI has provided excellent services and staff recommends that the City use SEI to provide final design and construction/bidding services. As stated above under “Background”, the southeastern edge of the RWQCP has been deleted from this project due to the possibility that an Energy/Compost facility may be constructed there. Following a determination on a potential Energy/Compost facility, consideration of landscaping for this area will resume. RESOURCE IMPACT Funds for this project are included in the FY 2012 Wastewater Treatment Enterprise Fund budget Capital Improvement Program Project WQ-80021. The scope of this project will be modified at midyear to include services for landscaping. POLICY IMPLICATIONS Authorization of this project does not represent a change in existing City policies. ENVIRONMENTAL REVIEW The southeast portion of the RWQCP landscaping project fulfills an existing condition from a 1986 mitigated negative declaration for a Plant expansion project. The remaining landscaping project areas around and within the Plant meet the criteria for an existing facilities exemption pursuant to Section 15301 of the California Environmental Quality Act Guidelines. NEXT STEPS Pending Council approval of the SEI contract amendment, the tentative project timeline is as follows: ·Commence final design process (December 2011); ·Tree walkthrough with Advisory Committee members to discuss tree condition and those trees that will be removed from the RWQCP construction site (January, 2012); ·Planning Department and Architectural Review Board (if applicable) review (March 1, 2012); ·Complete review (August, 2012); ·Draft and process construction contract (Summer 2012); December 05, 2011 Page 4 of 4 (ID # 1804) ·Planting and construction (Fall 2012); and ·Completion of construction (Spring 2013). Attachments: ·Amendment 1 to C11136167_Siegfried (PDF) ·Project sites (DOC) ·Conceptual Design for Perimeter RWQCP (DOC) ·Conceptual Design for Interior RWQCP (PDF) ·Conceptual Design Recycled Water Tank (DOC) Prepared By:Julie Weiss, Environmental Specialist Department Head:J. Michael Sartor, Interim Director City Manager Approval: James Keene, City Manager AMENDMENT No.1 TO CONTRACT No.Cll136167 BETWEEN THE CITY OF PALO ALTO AND SEIGFRIED ENGINEERING, INC. This Amendment No.1 to Contract NO.Cll136167 ("Contract") is entered into October 3, 2011, by and between the CITY OF PALO ALTO, a charter city and a municipal corporation of the State of California ("CITY"), and SIEGFRIED ENGINEERING, INC., a California corporation, located at 3244 Brookside Road, Suite 100, Stockton, CA 95219 ("CONTRACTOR"). R E CIT A L S: WHEREAS, parties for the inventory; and the Contract provision of was entered into between the conducting tree and irrigation terms, agree: WHEREAS, the parties wish to amend the Contract; NOW, THEREFORE, in consideration of the conditions, and provisions of this Amendment, covenants, the parties SECTION 1. Section 4 is hereby amended to read as follows: "SECTION 4. NOT TO EXCEED COMPENSATION. The compensation to be paid to CONSULTANT for performance of the Services described in Exhibit "A", including both payment for professional services and reimbursable expenses, shall not exceed Two Hundred Seventy-nine Thousand Seven Hundred Forty Dollars ($279,740.00). In the event Additional Services are authorized, the total compensation for services and reimbursable expenses shall not exceed Two Hundred Eighty-four Thousand Seven Hundred Forty Dollars ($284,740.00). The applicable rates and schedule of payment are set out in Exhibit "C-I", entitled "HOURLY RATE SCHEDULE," which is attached to and made a part of this Agreement." SECTION 2. The following exhibit (s) to the Contract is/are hereby amended to read as set forth in the attachment(s) to this Amendment, which are incorporated in full by this refer- ence: a. Exhibit "A" entitled "SCOPE OF SERVICES". b. Exhibit "B" entitled "SCHEDULE OF PERFORMANCE". c. Exhibit "C" entitled "COMPENSATION". 1 110926 sm 010 CITY OF PALO ALTO CONTRACT NO.: CII136167 EXHIBIT" A" SCOPE OF SERVICES Consultant.services to provide preliminary investigation, conceptual design and environmental analysis for the renovation of landscaping at the 28 acre Palo Alto Regional Water Quality Control Plant (RWQCP), located at 2501 Embarcadero Way, Palo Alto. Existing landscaping inclndes mature tree and shrub screening around the periphery of facility buildings (see map at Attachment B-1), mostly Australian tree species within the Plant, and some vegetation lining the corridor to Renzel Marsh. This landscaping shall be incorporated into the new landscaping plan to the fullest extent possible. Final plans and specifications should accommodate the fact that the final design may be installed in phases. The consultant shall help plan and attend meetings as needed with RWQCP staff and other internal City stakeholders, attend up to four Advisory Committee meetings (comprised of public members and RWQCP staff and other internal stakeholders), and if necessary, meetings for boards and commissions that shall be determined during the initial Advisory Committee meeting. RWQCP staff shall coordinate with the CONSULTANT, draft agendas, organize and facilitate internal stakeholder and Advisory Committee meetings and distribute minutes. SCOPE OF SERVICES I. BASIC SERVICES PRELIMINARY DESIGN Task 1--8ite Investigation 1. Consultant shall: a) meet with RWQCP and other internal stakeholders (Parks, Planning, etc.) to review scope of service, project goals, budget, Advisory Committee member list and to develop a preliminary time line to include any necessary meetings with commissions, review boards, City Council, etc. Update project schedule throughout project as necessary. b) investigate and verifY existing site conditions by reviewing survey data and as-built documents, existing landscaping and RWQCP site plans c) coordinate with both City staff and utility companies to identifY and address potential issues regarding site utilities d) obtain and review the following from the links provided: i) zoning and Comprehensive Plan policies and goals http://www.cityofualoalto.org/knowzone/news/details.asp?NewsID-725&TargetID-130 http://www.ciiyofualoalto.org/knowzone/city projects/land use/comprehensive plan. asp Professional Services Rev. January 11, 2010 \\CC-TERRA\jarreo!\PURCHDOc\SAP Bids and Proposals\RFP\RFP136167 landscape Inventory and Design Development RWQC\Docs related to contract\Contract Cl1136167 SIEGFRIED ENGINEERlNG.doc CITY OF PALO ALTO CONTRACT NO.: Cll136167 ii) the Baylands Master Plan http://www.cityotpaloalto.orgicivicalfi1ebankiblobdload.asp?BlobID=14882 iii) RWQCP recycled water goals http://www.citvotpaloalto.onddepts/utl/news/details.asp?NewsID=729&TargetID=10 iv) State and local water efficiency ordinance requirements http://wwW.water.ca. gov IwateruseefficiencY/landscapeordinance/technical.cfm v) Tree Technical Manual (Sections 6.25-6.35, Tree Survey and Protection RepOlt), Site and Design (D) Review process (Chapter l8.30(G) http://www.cityotpaloalto.orgicivicaifilebankiblobdload.asp?BlobID=10752 vi) Bay Friendly Certification requi~ements http://www.stopwaste.orgldocsibay-friendly landscape guidelines - all chapters. pdf e) perform a general analysis to identify any significant issues regarding applicable codes and environmental clearance requirements :1) Evaluate soil conditions as necessary to infonn appropriate conceptual design plans g) provide an Autocad-generated site plan to be referred to as RWQCP Existing Landscaping Site Plan for the external Plant boundary. The plan shall: i) inventory and draw the location of existing trees and sp..rubs 'On the nort.h and east sides ofthe Plant, portions of the west side of the Plant that are not slated for inclusion in the potential future Recycling Center which has already be surveyed, and designated areas within the Plant as shown on the attachment B-1. Buildings are notrequired to be surveyed. The inventory shall fully incorporate two existing tree surveys from Public Works for the southern Plant area and western section ofthe Plant that is under consideration to become a recycling center. The inventory shall be compatible with Autocad 2010 and shall comply with the City of Palo Alto Tree Technical Manual Standards and Specifications (Sections 6.25-6.35, Tree Survey and Protection Report). The inventory shall be provided in both pdf and Autocad 2010 formats and shall identify the health of each noting any that are dead, diseased or in need of removal. ii) identify and map existing irrigation pipe that is working and that which is in need of replacement to determine if pipes and an existing water source are available. This information shall be used to upgrade and redesign the irrigation system which must eventually be compatible with the Parks Department Central Control Et driven Maxicom System. RWQCP will provide copies of the historical 2 Professional Services Rev. January 11, 2010 \\CC-TERRA\jarreol\PURCHDOC\sAP Bids and Proposals\RFP\RFP136167 landscape Inventory and Design Development RWQC\Docs related to contract\Contract Cll136167 SlEGFRlBD ENGINEERING.doc CITY OF PALO ALTO CONTRACT NO.: Cll 136167 irrigation plans. New irrigation drawings shaH be provided in Autocad 2010 and pdf fonnats. h) work with project manager to plan and hold first Advisory Committee kickoff meeting and gather input to develop conceptual design alternatives for RWQCP landscaping tasks outlined in this scope and on Attachment B-2. Meeting shall also serve to educate Advisory Committee on existing site conditions using the RWQCP Existing Landscaping Site Plan that CONSULTANT shall develop. Consultant shall attend meetings, prepare meeting minutes and, incorporate input from meetings into subsequent plan iterations and provide presentations as needed. Deliverables: 1. Two (2) full-sized sets of RWQCP EXisting Landscaping Site Plan 2. Two (2) half-size sets of RWQCP Existing Landscaping Site Plan 3. Plans in pdf and Autocad fonnats 4. Meeting minutes Task 2 Project Design 1. Conceptual Design a) Consultant shall prepare conceptual design documents based on Advisory Committee feedback including a minimum of two alternatives to include probable irrigation and construction costs for each. Drawings shall include plans showing site layout, rough grading, drainage, existing landscaping, site utilities and irrigation components for: i) the enhancement of existing vegetation screening around the RWQCP facility to minimize visibility and noise (as feasible) . .Dfthe RWQCP from Baylands Park. Screening must also obscure visibility of the flare that shall be constructed in 2010 on the southern portion of the RWQCP. Consultan.t shall confer with project manager for this effort to incorporate screening that is already planned for this project ii) the redesign of the southern portion of the perimeter plant landscaping to become a habitat corridor leading to Renzel Marsh which shall support native wildlife. The consultant shaH assume that existing trees shall not be removed from this area unless they are diseased, damaged or pose a significant barrier to the successful installation of trees and other vegetation in the area. iii) landscaping for the future Recycling Center which may be approved for construction in 2011 (see Attachment B-3) iv) conceptual landscape alternatives to the existing moat in front ofRWQCP operations bUilding. Concepts shall include demonstration rainwater collection devices, semi-penneable hardscape and potentially a small pondless water feature 3 Professional Services Rev, January II,2010 \\CC-TERRA \jarreo1\PURCHDOC\SAP Bids and Prop05a!s\RFP\RFPI36167 Landscape Inventory and Design Development RWQC\I)ocs related to contract\Contract C11136167 SIBGFRlBD ENGINEERING.doc CITY OF PALO ALTO CONTRACT NO.: Cll136167 and other enhancements that illustrate sustainable landscape design and practices v) landscaping around the recycled water tank featuring recycled water use, interpretive signs, and possible pondless water feature vi) landscaping within the RWQCP as indicated in Attachment B-2 which will enhance site aesthetics vii) Landscape improvements shall: I. Comply with the Baylands Master Plan and City of Palo Alto Comprehensive Plan goals and policies 2. Include an irrigation design that can be converted to the City's Central Control . Et driven Maxicom System 3. Meet requirements for Bay Friendly Certification (www.stopwaste.org) and strive to exceed those requirements for sustainable design and practices via: • soil preparation • water-conserving irrigation, the use ofrecycJed water and minimal potable water use . • solar-powered water features and lighting • locally sourced landscape and hardscape materials • plant selection • semi-permeable hardscaping, rain barrels and cisterns • habitat for native bird and auimal species • Zero Waste by reducing, reusing and recycling materials b) Internal Review: Meet with internal stakeholders (department staff) to present the two conceptual designs, vet for any siguificant issues and' obtain consenstls before meeting with Advisory Conunittee. CONSULTANT shall revise conceptual designs as needed prior to Advisory Conunittee. Conceptual designs should be provided electronically and web-ready. Work Products and Deliverables 1. Two (2) full-size sets of each Conceptual Design drawings 2. Ten (10) half-size sets of each Conceptual Design drawings 3. Conceptual Design phase statement of probable construction costs 4. Electronic versions of the above (PDF, Autocad) 5. Meeting minutes 2. Second Advisory Committee Conceptual Design Review Consultant shall confer with R WQCP staff and a) Help plan and attend second Advisory Conunittee meeting to present the two conceptual designs from Task 1 b with the goal of identif'ying a preferred alternative. 4 Professional Services Rev. January 11, 2010 \\CC·TERRA\jarreol\PURCHDOC\SAP Bids and I'roposa]s\RFP\RFP136167 landscape Inventory and Design Development RWQC\Docs related to contract\Contract C11136167 SIEGFRIED ENGINEERING.doc CITY OF PALO ALTO CONTRACT NO.: Cll136167 b) Revise the preferred alternative identified in the second stakeholder meeting. This version of the conceptual plan shall include: 1. A suggested plant palette of trees, shrnbs and other species tolerant of recycled water andlor Baylands soil that are appropriate for possible use in this project. Include graphic representations of different size and type plants at maturity for public review. II. An indication of imy maintenance considerations, including long term monitoring and mitigation of plant material tolerance to soil and irrigation salinity. 111. A probable construction cost estimate. 3. Third Advisory Committee Meeting Consultant shall: a) attend and help plan third Advisory Committee meeting to present the revised conceptual design. b) If previously determined by the Advisory Committee, consultant shall help prepare study sessions for the City's Park and Recreation Commission, Plarming and Transportation Commission, Architectural Review Board andlor City Council. Work Products and Deliverables: l.Two (2) full-size sets ofthepreferred conceptual design drawing 2.Ten (to) half-size sets ofthe preferred conceptual design drawing 3.Conceptual design phase statement of probable construction costs 4.Electronic versions of the above (PDF, Autocad) 5.Meeting minutes 4. Finalized Conceptual Design and Advisory Committee Review Consultant shall: . a) Incorporate feedback, as needed, from commissions, the Architectural Review Board and the third Advisory Committee meeting as needed. b) Ifnecessary, work with project manager to plan and hold the fourth and final Advisory Committee meeting (or alternative review process) for review and approval of the Finalized Conceptual Design. Work Products and Deliverables: l.Two (2) full-size sets of the preferred conceptual design drawing 2.Ten (to) half-size sets of the preferred conceptual design drawing 3.Conceptual design phase statement of probable construction costs 4.Electronic versions of the above (PDF, Autocad) 5 Professional Services Rev_ January II. 2010 \\CC-TERRA\jarreo]\PURCHDOC\sAP Bids and Proposa!s\RFP\RFP136167 Landscape Inventory and Design Development RWQC\Docs related to contract\Contract C11136167 SlEGFRTED ENGINEERING.doc CITY OF PALO ALTO CONTRACT NO.: CII136167 5.Meeting minutes c) Upon completion of the Accepted Conceptual Design complete an Administrative Draft Initial study in preparation for the Design Phase and Construction. II. FINAL DESIGN AND CONSTRUCTION SERVICES The City reserves the right to solicit other consultants for Fiual Design, or enter into agreement with Siegfried to issue a contract addendum for Final Design, construction bidding assistance and services during construction. END OF SCOPE 6 Professional Services Rev. January t I, 2010 \\CC-TERRA\jarreol\PURCHDOC\SAP Bids and Proposals\RFP\RFP136167 landscape Inventory and Design Development RWQC\Docs related to contract\Contract Cll136167 SIEGFRIED ENGINEERING.doc .iII- •• SIEGFRIED h. Flow line and lip of gutter i. Edge of pavement j. Fire Hydrants k. Water Meters I. Gas meter risers or meter boxes m. Sanitary sewer clean-out boxes n. Monuments o. Street improvements including striping B. 60% Construction Documents 1. Based on previous input from the Advisory Committee, provide drawings, specifications, and other 60% deliverable documents as needed for staff and Advisory Committee review. 2. Provide statement of probable construction costs C. 95% Construction Documents 1. Siegfried will address all the comments and concerns issued during the 60% design review. The design will be the true reflection of City's intent for this project and meet all specification requirements listed in the Conceptual Design Proposal. 2. Provide final design phase statement of probable construction costs 3. Provide sufficient sets of drawings, information and cut sheets for submission to the City of Palo Alto's Planning Department for formal review. 4. Once the 90% Final Design has been approved by RWQCP Project Manager, prepare and submit materials for the City's formal review process including Draft Initial Study and mitigated negative declaration documentation. 5. Assist staff in responding to questions or issues that may arise about the draft initial study and CEQA documentation. D. Final Construction Documents 1. Siegfried will revise the final design based on City's comments and Siegfried's own internal review and quality control. 2. The design at this stage will include construction documents with plans, specifications, design calculations and a final construction cost estimate. 3. Prepare the design package to secure applicable permitting and soliciting construction I procurement for each task. 4. Provide one unbound copy and one Microsoft Word electronic copy of the final specifications. 5. Provide two wet stamped hard copies, one digital copy in PDF format and one in AutoCAD 3D Civil 2010 format of the final stamped plans. Provide two hard copies and one digital copy in Microsoft Word format of the final specifications. Task 2 -Attend stakeholder meetings -Siegfried will plan for: 1. Up to two (2) meetings with Advisory Committee to receive initial input and review iterations of the Final Design which will detail plant and building materials, sign age and other landscaping components. 2. Up to two (2) meetings with Plant Palette Selection subcommittee of the Advisory Committee. 3. Occuring on the same day and following one of the above mentioned Plant Pallet meetings, Siegfried will attend one (1) on-site walkthrough with Advisory Committee and Executive staff to discuss those trees that are to be removed and respond to concerns and requests for more information. 4. City Council and Commission Meetings to include (total time includes: The key to success is having a dedicated team that remains intact throughout the duration of the entire project 3 .111" •• SIEGFRIED meeting preparation, travel, and waiting time at each meeting unless otherwise noted): a, Discussions with Art Commission and Art Commission subcommittee (up to two (2) two-hour meetings) to discuss the required art piece and its eventual location b, RWQCP Internal Stakeholder meeting (up to two (2) one-hour meetings) c, Parks and Recreation Commission (meeting preparation and packets only) d, Architectural Review Board (meeting preparation and packets only) e, Planning and Transportation Commission (meeting preparation and packets only) f, City Council Work Products and Deliverables: a, Full-size or half size sets as required of the preferred proposed drawing for each staff, Advisory, Commission our Council meeting as follows: Advisory Committee (15) Architectural Review Board (15) Parks and Recreation Commission (15) Planning and Transportation Commission (30) Art Commission (15) City Council (28) RWQCP stakeholders (15) b, Electronic versions of all iterations of drawings as requested by staff (PDF, jpg, AutoCAD 2010) c, Meeting minutes III -SERVICES DURING BIDDING AND CONSTRUCTION Task 1 -Services During Bidding 1, Siegfried will assist the City in preparation of up to one (1) distinct bid package. The package will include full-sized original drawing set(s), and a digital plot bid package for the City's use in printing, and an electronic version of the Construction Documents, 2, Siegfried will respond to the requests for clarification and/or information from prospective bidders in consultation with City staff as it relates to the construction project 3, Siegfried will, prepare meeting materials, attend, answer relevant questions and assist the City at the pre-bid conferences and the walk through, 4, Siegfried will assist the City with preparation of Project addenda and furnish the originals required for addenda, 5, Siegfried will meet with the project manager to review the estimates of probable construction costs and to confirm that the design is still within the City's approved construction budget. Task 2 -Services During Construction-Future Phase for Information Only This Phase will be awarded upon Council approval of the Construction contract and is included in this scope for information only, Each service will be provided for up to two (2) distinct bid packages over a potential period of three (3) years, 1, Siegfried will review submittals from the contractor for conformance with the Contract Documents, Siegfried will review and return the submittal comments to the City within ten calendar days, 2, Siegfried will prepare written response to the Requests for Information (RFI) submitted by the contractor, Siegfried will review, comment and At a recent ARB meeting, one board member responded with, "grand slam, A plus" when praising our product and efforts to blend form and function at Eleanor Pardee Park in Palo Alto 4 111111" 111111 SIEGFRIED return the RFI responses within seven calendar days. 3. Siegfried will review and validate the Contract Change Order requests submitted by contractor for accuracy and correctness, as requested by the City. 4. As requested, Siegfried will attend periodic Project Progress Meetings with the Contractor. Please allow for one meeting per month, at the minimum, during the construction phase. 5. Siegfried will review the "as-built" or "red line" drawings and documents maintained by the contractor during construction. Upon construction completion, Siegfried will prepare full size and half size (11"X17") sets and one electronic copy of the record drawings. The electronic copy will be in AutoCAD 3D Civil 2010 format, PDF and jpg as requested. The record drawings will consist of annotated contract drawings and electronic files showing changes in design and construction. 6. Siegfried will provide an archeologist and a wildlife biologist to provide necessary assessments, site visits and review to meet all RWQCP draft mitigated negative declaration requirements. 7. Ensure that construction does not occur during gray fox denning season (April-through October and in conjunction with CDFG recommendations) IV -REIMBURSABLE SERVICES Allowance for reimbursable expenses will be set as part of the Agreement of Services. Reimbursable expenses include: 1. Expenses for reproduction, special handling of drawings, specifications or documents which are specifically needed to meet requirement of the Agreement. Expenses of data processing and photographic production which are specifically needed to meet requirement of the Agreement. All drawings are to be provided in AutoCAD 2010, PDF andjpg formats. 2. Expenses for transportation in connection with the performance of Basic and/or Additional Services per the City's travel policy. V -ADDITIONAL SERVICES Additional services will not be rendered without first receiving written authorization from the City. Siegfried and the City must arrive at an agreed upon, not-to-exceed fee and method of payment prior to Siegfried proceeding with any additional service. Siegfried will provide billing rate schedule for the life of the project. Additional services may include: 1. Making revisions required by reason or causes beyond the control of the Siegfried. 2. Providing services due to unforeseen issues or performance of either City or City's construction contractor for work designed under this scope of service and based on information provided by the City's construction contractor. 3. Providing other special studies not covered under Basic Services 4. Providing drawings, specifications and/or other supporting data in connection with contract change orders when such contract change orders are not necessitated by design errors or omissions by Siegfried. 5. Additional drawings of new or modified design elements 6. Additional reproduction of drawings, presentations 7. Providing any other additional services not otherwise included, or not customarily furnished in accordance with Siegfried's generally accepted professional practice, when so requested by the City and mutually agreed upon, in writing. 8. Additional unanticipated meetings for Advisory Committee, staff, commissions, architectural review, or City Council meetings. All incoming documents will be date stamped, logged, assigned, and marked with the appropriate file number, and routed to the appropriate party for action 5 .iII" •• SIEGFRIED 9. Additional meetings that may be needed to satisfy the interest of City Councilor various City Commissions VI -TIMELINE OF KEY MILESTONES 1. Assuming Council approval, commence final design process and plan Advisory Committee, Art Commission and Plant Palette subcommittee meetings (October 2011) 2. Tree walkthrough with Advisory Committee members to discuss tree condition and those trees that will be removed from the RWQCP construction site (October 2011) 3. Assist in review of Canopy proposal to make RWQCP landscaping project a demonstration site (October 2011) 4. Submit final design, draft initial study and MND to Planning and begin formal review-includes Commissions and Council meetings (February 1, 2012) 5. Complete formal review (JunelJuly 2012) 6. Draft and process construction contract (summer, 2012) 7. Plant/construct in (fall, 2012) 8. Completion of construction (spring, 2013) WORK PLAN PROJECT MANAGEMENT As Siegfried's Landscape Architect and Project Manager, Robert Norbutas, ASLA, will continue to be the principal point of contact for the City throughout this phase of the project, and be responsible for the lead day-to-day communications. Paul Schneider, Siegfried's Principal-In-Charge will also continue to be responsible for Quality Control. Paul and Robert have worked closely and effectively together over th,e last year on the preliminary design phase of this project, and both are intimately familiar with the project. Effective project management delivered in a professional manner is critical to the success of this project. Siegfried will continue to use our tested and proven project management techniques to provide a cost-effective and responsive delivery of our technical products. Proposed steps Siegfried will use on this project will include: Moving forward with our comprehensive and thorough Work Plan which includes significant City and stakeholder involvement Use an earned value system to accurately track progress, and keep the City and stakeholders informed as to project status Prepare comprehensive progress reports and hold progress meetings with the City and stakeholders during this phase of the project to review budget, scope, and time line. Continue to maintain an open line of communication for information, questions, ideas, and feedback. QUALITY AND COST CONTROL All work performed under this contract will be conducted in accordance with the Siegfried Quality Control Program. Siegfried's Quality Control Manager on this project, Paul J. Schneider, P.E., will establish a Plan specifically for this project. Mr. Schneider has over twelve years of experience in his field of expertise, providing quality control for projects throughout the Bay Area and beyond. Additionally, Mr. Schneider has served as Principal-in-Charge and Quality Control Manager for the initial phase of this project, thus he understands the processes During one of our visits, we were told that the habitat corridor was once a beautiful garden-like setting, it is our goal to design a plan that restores this area to it's natural beauty 6 ·lIIm •• SIEGFRIED and procedures of the City, their desire for a successful project, and all details surrounding this project. TOPOGRAPHIC SURVEY For the final design phase of this project, Siegfried will require the completion of a Topographic Survey of the sUbject design areas. For this task we will utilize City survey crews which are led by licensed surveyors. The Topographic Survey will give our design team valuable data that is necessary to complete this project. CEQA COMPLETION Continuing to work with ESA, Siegfried's Environmental Consultant on the first phase of this project, we will complete the CEQA process. CONFORMANCE WITH RECYCLED WATER GOALS The Palo Alto Recycled Water Project is currently in Phase 3 of the Palo Alto Regional Water Quality Control Plant's ongoing expansion of its regional recycled water system. The predominant use of recycled water for this project is landscape irrigation. Our goal, through our landscape design, is to create a plan that conforms with all recycled water goals and takes into consideration your future recycled water goals as well. DESIGNED FOR YOUR FUTURE LONG RANGE FACILITY PLAN Our goal is to prepare final construction documents that will not impede your fulure developments. Our designs will be prepared in a manner which will allowthe City and all future Plant engineers to easily read, understand, and interpret them. STAKEHOLDER PROCESS The technique used by Siegfried to enhance communicatiDn and project understanding is known as the Stakeholder Process. As implemented in the preliminary design phase of this project, Siegfried will continue to participate in stakeholder meetings to gain valuable feedback regarding our designs and to ensure that our approved preliminary concepts are being delivered as promised. A detailed list of specific stakeholder events is shown under Task 2 of the Scope of Work. • 7 .a'" •• SIEGFRIED INTERIOR LANDSCAPE DESIGN The interior landscape design area consists of landscaping within the RWQCP gates including the Recycled Water tank area, Administration and Operations buildings, and moat area. , Siegfried will advance the approved concepts utilizing our in house team which consists of: Landscape Architects Civil Engineers Survey Crews Structural Engineers The site will be designed in accordance with state, federal, and local codes and ordinances. The image to the right depicts the overall site plan which incorporates all areas within the RWQCP gates that will receive the landscape improvements. EXTERIOR LANDSCAPING This area consists of landscaping along both Embarcadero Road and Harbor Road. This area, being located outside of the ~lit '~~ RWQCP gates, has a large amount of interface with public land, RWQCP land, and heavy public usage. To make this a successful area, Siegfried will work to carefully coordinate the elements by taking full advantage of the many internal and external stakeholder meetings we have, and will, participate in. HABITAT CORRIDOR This area consists of landscaping design for the south-east area of the RWQCP project area referred to as the Habitat Corridor. The final design for this area will not occur until City Council has determined the ultimate use for this area and final design may not occur until construction begins on other RWQCP locations. Once approved to provide the final design services, our wildlife biologist and Bay Friendly Advisor will be heavily involved with this corridor due to the sensitive nature of the plant material and animals. I 8 SIEGFRIED PROJECT STAFFiNG Siegfried has structured a project team with the professional expertise, project experience, and depth of resources necessary to meet the needs for this phase of the project. In addition, our team is committed to never changing throughout the duration of the project, giving us the ability to continue our strong relationships with the City and project stakeholders. KEY PROJECT TEAM MEMBERS NAME -ROBERT J. NORBUTAS, ASLA TITLE -PROJECT MANAGER, LANDSCAPE ARCHITECT RESPONSIBILITIES Mr. Norbutas will continue to serve as Project Manager and lead Landscape Architect. He will provide management, design development, technical support, production of drawings, consultant coordination, and attend stakeholder meetings. NAME -PAUL J. SCHNEIDER, P.E. TITLE -PRINCIPAL-IN-CHARGE, QUALITY CONTROL MANAGER RESPONSIBILITIES Mr. Schneider will continue serve as Principal-in-Charge and Quality Control Manager. Mr. Schneider has over eleven years of experience, providing quality control for both large and small scale projects. NAME -RONALD SPOHN TITLE -LANDSCAPE TECHNICIAN RESPONSIBILITIES Mr. Spohn will continue to serve as LandscapeArchitecture Technician and will provide technical support, drawings, sketches, details, and technical drawing preparation. NAME -DANIEL ANDERSON TITLE -LANDSCAPE TECHNICIAN RESPONSIBILITIES Mr. Anderson will continue to serve as LandscapeArchitecture Technician and will provide technical support, drawings, sketches, details, and technical drawing preparation. NAME -LESLIE GOLDEN, ASLA TITLE -CERTIFIED BAY FRIENDLY ADVISOR RESPONSIBILITIES Ms. Golden will serve as Siegfried's Bay Friendly Advisor for this project. She will meet with our design team to ensure our plans meet all Bay Friendly standards. NAME -ALLISON LEW CHAN TITLE -ENVIRONMENTAL ANALYST RESPONSIBILITIES Ms. Chan will continue to serve as project Environmental Analyst, directing the environmental effort. She has a strong background in assisting in the development of Environmental Impact Reports. NAME -LETTY BROWN TITLE -WILDLIFE BIOLOGIST RESPONSIBILITIES Ms. Brown will serve as archeologist and wildlife biologist and provide all necessary assessments, site visits and reviews to meet RWQCP draft MND requirements. In addition, she will ensure construction does not occur during gray fox denning season. 11 SIEGFRIED PROPOSED COST SHEET AND RATES The following pages contain Siegfried's schedule of rates and a list of our current charge rates for the final design phase, For this section, we have included a full breakdown of our fees showing the individual costs associated with each design element. This is included for the City's benefit, giving you the tools to further clarify your design needs to meet your budget requirements, if needed. 13 CITY OF PALO ALTO CONTRACT NO. C11136167 EXHIBIT “B” SCHEDULE OF PERFORMANCE CONSULTANT shall perform the Services so as to complete each milestone within the number of days/weeks specified below. The time to complete each milestone may be increased or decreased by mutual written agreement of the project managers for CONSULTANT and CITY so long as all work is completed within the term of the Agreement. CONSULTANT shall provide a detailed schedule of work consistent with the schedule below within 2 weeks of receipt of the notice to proceed. Milestones Completion (Preliminary Design Phase) No. of Days From NTP 1. Provide AutoCAD Site Plan 30 2. Advisory kick-off Meeting 50 3. Internal Meeting 100 4. Second Advisory Committee Meeting 120 5. Third Advisory Committee Meeting 175 6. Completion of Board, Commission, and Planning Department review and Draft Initial Study 355 7. Final Advisory Committee Meeting 380 Milestone Completion (Final Design Phase) No. of Months From NTP 1. Assuming Council approval, commence final design process and plan Advisory Committee, Art Commission and Plant Palette subcommittee Meetings. October 2011 2. Tree walkthrough with Advisory Committee members to discuss tree condition and those trees that will be removed from the RWQCP construction site October 2011 3. Assist in review of Canopy proposal to make October 2011 RWQCP landscaping project a demonstration site. 3. Submit final design, draft initial study and MND to Planning and begin formal review-includes Commissions and Council meetings. February 1, 2012 5. Complete formal review. June/July 2012 6. Draft and process construction contract. Summer, 2012 7. Plant/construct. Fall, 2012 8. Completion of construction. Spring, 2013 CITY OF PALO ALTO CONTRACT NO. C11136167 EXHIBT C COMPENSATION The CITY agrees to compensate the CONSULTANT for professional services performed in accordance with the terms and conditions of this Agreement, and as set forth in the budget schedule below. Compensation shall be calculated based on the hourly rate schedule attached as exhibit C-1 up to the not to exceed budget amount for each task set forth below. The compensation to be paid to CONSULTANT under this Agreement for all services described in Exhibit “A” (“Basic Services”) and reimbursable expenses shall not exceed $279,740.00. CONSULTANT agrees to complete all Basic Services, including reimbursable expenses, within this amount. In the event CITY authorizes any Additional Services, the maximum compensation shall not exceed $284,740.00. 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 of the tasks or categories listed below provided the total compensation for Basic Services, including reimbursable expenses, does not exceed $279,740.00 and the total compensation for Additional Services does not exceed $284,740.00. Original Contract Not to Exceed Amount ……………………..$ 86,990.00 Revision 1 Amount …………………………………... ……….$ 4,952.00 Amendment 1 (Revision 2) Not to Exceed Amount .…. ………$187,798.00 Revised Contract Not to Exceed Amount ……………………$279,740.00 Amendment 1 Additional Services ………………….………….$ 5,000.00 Total Contract Not to Exceed Amount ………….………….. $284,740.00 CITY OF PALO ALTO OFFICE OF THE CITY AUDITOR December 5, 2011 The Honorable City Council Palo Alto, California Finance Committee Recommendation to Accept the SAP Security Audit The City Auditor’s Office recommends acceptance of the SAP Security Audit. At its meeting on October 18, 2011, the Finance Committee approved and unanimously recommended the City Council accept the SAP Security Audit. The Finance Committee minutes are included in this packet. Respectfully submitted, Ian Hagerman Senior Performance Auditor Audit Staff: Houman Boussina, Senior Performance Auditor Mimi Nguyen, Senior Performance Auditor Davina The, Performance Audit Intern ATTACHMENTS: ·Attachment A: SAP Security Audit Report(PDF) ·Attachment B: Finance Committee Minutes Excerpt (October 18, 2011)(PDF) Department Head:Ian Hagerman, Sr.Performance Auditor Updated: 11/30/2011 10:26 AM by Deniz Tunc Page 2 OFFICE OF THE CITY AUDITOR OCTOBER 2011 SAP SECURITY AUDIT The City Should Implement Additional Measures to Effectively Secure Its SAP Enterprise Resource Planning System Attachment A Attachment A -1- Office of the City Auditor October 18, 2011 Honorable City Council Attn: Finance Committee Palo Alto, California SAP SECURITY AUDIT: The City Should Implement Additional Measures to Effectively Secure Its SAP Enterprise Resource Planning System The City Auditor’s Office (Auditor’s Office) presents its report on the security of the City’s SAP Enterprise Resource Planning system (SAP), which supports core business functions and management of information. During the audit, the City’s Administrative Services Department (ASD) was principally responsible for managing SAP. In planning the SAP audit, which was included in the City Auditor’s Fiscal Year (FY) 2011 Annual Audit Workplan, the Auditor’s Office detected a significant SAP security vulnerability resulting from an unsecured system-provided SAP user account. The unsecured user account allowed the Auditor’s Office unrestricted access to sensitive and confidential information. This initial finding prompted an audit to assess controls required to secure SAP access. The audit report consists of four main findings related to SAP security. Finding 1 discusses the security vulnerability the Auditor’s Office detected and ASD’s actions to address the vulnerability. Findings 2 and 3 discuss specific security issues related to managing and securing user accounts and access levels in SAP. Finding 4 presents our limited assessment of ASD’s management of SAP security and indicates ASD has not formally adopted and implemented all controls needed to secure SAP and comply with the Payment Card Industry Data Security Standard and other applicable security control frameworks. The four findings in the audit report are summarized below: Finding 1: ASD did not secure powerful system-provided user accounts, resulting in significant security vulnerabilities The Auditor’s Office detected a powerful “SAP*” account that was not properly secured and allowed access to sensitive and confidential information. Such access could have allowed a motivated and sufficiently capable person to destroy or modify data, expose sensitive employee and customer information, or defraud the City. This SAP* account was not properly secured for extended periods of time. However, SAP logs lacked sufficient information to definitively establish the periods SAP* was not secured and to establish individual accountability for the security vulnerability. In addition to SAP*, other standard accounts were also unsecured. ASD did not have adequate policies and procedures to secure these powerful standard accounts. ASD has taken steps to identify and secure SAP* and other standard accounts. ASD also Attachment A -2- needs to develop policies and procedures to improve the timeliness and effectiveness of its response to security incidents. Finding 2: ASD violated two critical security principles by not properly restricting access for all user accounts ASD has not abided by the principles of “least privilege” and “segregation of duties” to control access to SAP. Since 2003, SAP user administrators assigned the powerful “SAP_ALL” profile to 31 SAP user accounts, providing them unrestricted SAP access. SAP user administrators did not abide by security principles by having multiple accounts and incompatible functions in creating users, assigning ”roles” and “profiles” to users, and creating or changing profiles. We recommend ASD establish and implement policies and procedures in support of these two security principles. Finding 3: ASD has not effectively managed all SAP user accounts to ensure system security ASD has not consistently removed or disabled SAP employee user accounts in a timely manner and has not adequately secured and controlled non-employee user accounts. While ASD lacks an effective user account identity management system, improvements were made during the audit. Finding 4: The City needs to formally adopt and implement a recognized information systems control standard to ensure SAP security The City has not adopted and implemented a recognized information systems security control standard or framework needed to demonstrate control effectiveness in a consistent and repeatable manner, and it has not complied with requirements for business entities that process credit card transactions. Missing or inadequate controls include:  Security policies and procedures and assignment of responsibility for SAP security.  Security awareness and training program.  Information systems risk assessment.  Proper configuration of SAP system security settings.  Effective management of SAP audit trails (logs).  Safeguarding and controlling sensitive production data used for testing.  Ensuring the Auditor’s Office access levels in SAP is optimized. During audit fieldwork, ASD developed and began implementing procedures and processes to address some areas of concern including security of system-provided accounts and user account administration. We recommend ASD assess SAP security risks and implement needed security controls through a risk-based and comprehensive process that is informed by the Payment Card Industry Data Security Standard, National Institute of Standards and Technology Special Publication 800-53, and other applicable frameworks. Our report includes a total of 21 recommendations to improve the security of the City’s critical information systems. The audit recommendations in the report are addressed to ASD, however, the former Information Technology Division in ASD has been established as a City department Attachment A -3- with a Chief Information Officer reporting to the City Manager. The new department will be responsible for implementing these recommendations. I will present this report to the Finance Committee on October 18, 2011. Respectfully submitted, Michael Edmonds Interim City Auditor Audit Staff: Houman Boussina, Senior Performance Auditor Mimi Nguyen, Senior Performance Auditor Davina The, Performance Audit Intern Attachment A -4- Page intentionally left blank Attachment A -5- TABLE OF CONTENTS Cover Letter.................................................................................................................................1 List of Exhibits............................................................................................................................7 Glossary.......................................................................................................................................9 Introduction...............................................................................................................................13 Background.....................................................................................................................13 City of Palo Alto SAP applications.......................................................................14 Staffing and Management ...................................................................................14 Overview of Enterprise Resource Planning system risks................................................15 Guidance on information systems security .....................................................................16 Audit Objectives, Scope, and Methodology ....................................................................17 Finding 1: ASD did not secure powerful system-provided user accounts, resulting in significant security vulnerabilities..........................................................................................19 The Auditor’s Office detected SAP* was not properly secured and allowed access to sensitive and confidential information.............................................................19 The powerful standard user account SAP* was likely not secured during extended periods, causing a serious security vulnerability.............................................................20 ASD did not secure other standard user accounts .........................................................22 ASD did not have formal procedures to secure SAP* or other standard user accounts..........................................................................................................................22 ASD took steps to secure standard SAP user accounts in all SAP systems ..................23 ASD should develop policies and procedures to improve the timeliness and effectiveness of its response to security incidents ..........................................................24 Finding 2: ASD violated two critical security principles by not properly restricting access for all user accounts....................................................................................................27 31 SAP user accounts had unrestricted SAP_ALL profile access ..................................27 SAP user administration practices violated information systems security principles ......29 Finding 3: ASD has not effectively managed all SAP user accounts to ensure system security.........................................................................................................................33 ASD has not removed or disabled SAP employee user accounts in a timely manner....33 Attachment A -6- ASD has not adequately secured and controlled non-employee user accounts.............34 ASD should establish an effective user account identity management system ..............38 Finding 4: The City needs to formally adopt and implement a recognized information systems control standard to ensure SAP security ...............................................................41 ASD has not adopted or implemented a recognized information systems security control standard ..............................................................................................................41 ASD does not have a comprehensive security policy .....................................................43 ASD has not formally assigned responsibility for SAP security.......................................44 ASD does not have a formal information systems security awareness and training program ..........................................................................................................................44 ASD does not have a formal risk assessment process to effectively identify and manage information systems security and business risks ..............................................45 ASD has not properly reconfigured key SAP system security parameters .....................46 ASD has not restricted access to SAP security parameters ..........................................48 ASD has not developed policies and procedures to retain, review, and analyze SAP audit trails (logs)..............................................................................................................48 ASD uses live “production” data in the SAP quality assurance system without measures to “anonymize” or protect the data .................................................................50 Implementing the SAP system-provided tool Audit Information System (AIS) would enhance the Auditor’s Office access and the effectiveness of future security reviews ..51 Conclusion ................................................................................................................................53 Recommendations....................................................................................................................53 City Manager’s Response ........................................................................................................57 City Auditor’s Office Response to the City Manager’s Response........................................71 Attachment A -7- List of Exhibits Exhibit 1: Overview of the City of Palo Alto’s five SAP applications ...........................................14 Exhibit 2: Staff associated with management and operation of SAP..........................................15 Exhibit 3: Examples of mechanisms used by insiders to commit electronic crimes ...................31 Exhibit 4: Analysis of SAP Employee User Accounts ................................................................33 Exhibit 5: Analysis of SAP Non-Employee User Accounts .........................................................34 Exhibit 6: Comparison of seven selected SAP parameter settings with the Payment Card Industry Data Security Standard .................................................................................47 Attachment A   -8- Page intentionally left blank Attachment A   -9- Glossary (Due to the technical nature of this audit report, we have included this glossary to assist in reading and understanding the report.) Access control The process that limits and controls access to an information system to protect against unauthorized entry or use. Access privileges The extent to which an individual can access computer systems and use or modify the programs and data. SAP user administrators may customize and restrict levels of access to SAP through assignment of roles and/or profiles to user accounts, which provide access to SAP transactions, reports, and other functions and define a user’s ability to create, delete, or display information. Account Management The processes that involve:  Requesting, establishing, issuing, and closing user accounts.  Tracking users and their respective access authorizations. Accountability The security goal requiring that systems are designed and configured so that actions of a user in an information system may be traced uniquely to the user. In the event of a security incident, a properly configured system with adequate security reports should support an investigation to determine who was responsible, assess the level of exposure, and facilitate recovery and any legal action required. Anonymize To remove identifying characteristics from sensitive data in order to prevent misuse or unauthorized disclosure. Anonymized data is useful for system testing in order to simulate real conditions as closely as possible while safeguarding sensitive data. Audit Information System (AIS) A free tool delivered with SAP for use by external, internal, system, and data security auditing functions. AIS is designed to improve audit quality and facilitate the audit process. Application controls Controls that are incorporated directly into computer applications to help ensure the validity, completeness, accuracy, and confidentiality of data. Attack Attempt to gain unauthorized access to an information system’s services, resources, or information, or the attempt to compromise an information system’s integrity, availability, or confidentiality. Backdoor An undocumented way to gain access to a program, data, or an entire computer system. Although backdoors may have a business purpose, they usually constitute a security risk. Control Framework A set of fundamental controls that facilitates the discharge of business process owner responsibilities to prevent financial or information loss in an organization. Enterprise Resource Commercial software that integrates all the information flowing Attachment A   -10- Planning (ERP) system through the entity. ERP systems contain functional modules such as financial, accounting, human resources, supply chain, and customer information, which are integrated within the core system or interfaced to external systems. Fraud A type of illegal act involving the obtaining of something of value through willful misrepresentation. Generic user account An information system user account that is not assigned to an individual user. The use of generic user accounts generally conflicts with the security requirement for ensuring user actions in a computer system may be uniquely identified with an individual. Hard-coding The practice of storing information, such as a default username and password into an application’s code. SAP systems include a hard- coded user account known as “SAP*” that could pose a security risk if not properly secured. Unlike other user accounts, SAP* does not require a user master record because it is defined in the code itself and may allow an unauthorized user unrestricted system access if not properly secured. Incident An occurrence that:  Actually or potentially jeopardizes the confidentiality, integrity, or availability of an information system or the information the system processes, stores, or transmits; or  Constitutes a violation or imminent threat of violation of security policies, security procedures, or acceptable use policies. Least Privilege Principle requiring that each user be granted the most restrictive set of access privileges needed for the performance of authorized tasks. Application of this principle limits the damage that can result from accident, error, or unauthorized use of an information system. SAP administrators may customize and restrict levels of access to SAP through assignment of roles and/or profiles to user accounts, which provide access to SAP transactions, reports, and other functions and define a user’s ability to create, delete, or display information. Log A record of the events occurring within an organization’s systems and networks. National Institute of Standards and Technology Special Publication 800-53 (NIST SP 800-53) A published document that outlines specific controls to implement, based upon the risk level of the system, in order to preserve the confidentiality, integrity, and availability of the agency's data. Payment Card Industry Data Security Standard (PCI DSS) A minimum set of requirements for protecting cardholder data which may be enhanced by additional controls and practices to mitigate risks. Because the City of Palo Alto processes and stores credit card data, it is required to comply with PCI DSS to protect cardholder data. Attachment A   -11- Personally identifiable information Any information that can be used to distinguish or trace an individual’s identity, such as their name, social security number, date of birth, or biometric records, and any other information which is linked or linkable to an individual, such as medical, educational, financial, and employment information. Production environment The system environment where the entity performs its operational information processing activities. Testing and development of an information system should be done in segregated development and testing environments to prevent unauthorized changes to the production environment and to help ensure system security. Profile A component of the SAP authorization structure used to protect transactions, programs, and services in SAP systems from unauthorized access. SAP profiles contain the authorization data that determines which transactions, programs, and services a user can access after he or she has successfully logged on to the system. SAP user administrators may customize and restrict levels of access to SAP through assignment of roles and/or profiles to user accounts, which provide access to SAP transactions, reports, and other functions and define a user’s ability to create, delete, or display information. Role A component of the SAP authorization structure used to protect transactions, programs, and services in SAP systems from unauthorized access. SAP roles contain the SAP profiles defined above, along with additional components such as user menus. SAP user administrators may customize and restrict levels of access to SAP through assignment of roles and/or profiles to user accounts, which provide access to SAP transactions, reports, and other functions and define a user’s ability to create, delete, or display information. SAP Founded in 1972, the company SAP has headquarters in Walldorf, Germany and produces enterprise application software. SAP stands for "Systems, Applications, and Products in Data Processing." The company’s products include the SAP ERP Central Component, Release 6.0 application, which the City of Palo Alto has purchased and implemented along with other SAP products. SAP Library All of the online documentation for all SAP components, including guidance on SAP security. Security policy The set of management statements that documents an organization’s philosophy of protecting its computing and information assets. These statements may be enforced by an information system’s security features. Segregation of duties A basic control that prevents or detects errors and fraud by assigning responsibility for initiating transactions, recording transactions, and custody of assets to separate individuals. Because ERP systems are Attachment A   -12- highly integrated and support a broad range of entity activities, access controls (particularly least privilege) and segregation of duties controls are needed. SAP user administrators may customize and restrict levels of access to SAP through assignment of roles and/or profiles to user accounts, which provide access to SAP transactions, reports, and other functions and define a user’s ability to create, delete, or display information. Standard user accounts (also known as “special users”) User accounts that are created upon installation of SAP clients or systems. These user accounts are delivered with standard usernames and passwords that are well-known. System administrator The person responsible for administering use of a multi-user computer system, communications system, or both. System developer A person who develops and maintains system software. User Master Record (UMR) User master records define the user accounts for enabling access to SAP. The user master record contains access information, including user id, passwords, roles, and profiles, which are needed by the system to validate a user and assign access rights. Generally, only users who have a UMR can log on to the system. User (Account) Individual, or process acting on behalf of an individual, that is authorized to access an information system. The City’s SAP user accounts were classified as one of the following types:  Dialog: User type for exactly one interactive user (all logon types including internet users).  Communications: User type for dialog-free communication between systems.  System: User type for background processing and communication within a system.  Reference: User type for general, non-person related users that allows the assignment of additional identical authorizations. You cannot log on to the system with a reference user.  Service: User type that is a dialog user available to a larger, anonymous group of users. User Administrator An individual who performs the following tasks:  Maintains user master records  Assigns roles and profiles to users  Uses the SAP user information system  Views roles and profiles  Manages roles Vulnerability Weakness in an information system, system security procedures, internal controls, or implementation. Attachment A   -13- Introduction In planning the SAP audit, which was included in the City Auditor’s Fiscal Year (FY) 2011 Annual Audit Workplan, the City Auditor’s Office (Auditor’s Office) detected a significant SAP security vulnerability that allowed the Auditor’s Office unrestricted access to sensitive and confidential information. As a result, the Auditor’s Office conducted an audit to assess controls required to secure access to SAP. We conducted this performance audit in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives. Background In July 2002, the City selected and began implementing an SAP Enterprise Resource Planning (SAP ERP) application, which currently supports the City’s core business functions, including accounting, finance, purchasing, human resources, and utilities.1 The City has implemented other SAP applications and components beyond the original core application selected in 2002. According to a staff report, the City’s SAP installation and upgrade costs totaled approximately $15 million as of April 19, 2011. The report also identifies annual maintenance costs of approximately $3 million, which is comprised of staffing costs ($2.2 million), hardware and software licensing costs ($0.5 million), and external consultant costs ($0.25 million).2 The City’s SAP applications support a broad range of functions, including processing and storing financial transactions and confidential information for both City employees and customers. The City’s FY 2012 Adopted Operating Budget and staff reports illustrate the range of activity SAP supports:  $440.5 million in total citywide revenues  $460.8 million in total citywide expenditures  1,016.6 citywide positions  $130.9 million in salaries & benefits  13,000 accounts payable checks  370,000 utility bills  $220.8 million in utility charges   1 “Utilities” includes electric, gas, water, wastewater collection, and fiber optic services in the Utilities Department, and refuse, storm drain, and wastewater treatment services in the Public Works Department. 2 The Auditor’s Office has not audited these figures.    Attachment A   -14- City of Palo Alto SAP applications The City has implemented the following five SAP applications to support its business needs: 1. Enterprise Resource Planning Central Component (ECC) – The City’s core SAP application used by departments to support the City’s key business functions including accounting, finance, purchasing, human resources, and utilities. 2. Customer Relationship Management (CRM) – Supports utilities department customer service functions. 3. Business Intelligence/Business Warehouse (BI/BW) – Supports generation of utilities reports. 4. Utility Customer E-Services (UCES) – Used by City customers to view their consumption and pay bills. 5. Employee Self-Service/Manager Self-Service (ESS/MSS) – Used by City employees and managers to manage time sheets, pay stubs, and other information. Exhibit 1 represents the City’s five networked SAP applications and describes some of the specific business functions the applications support. Exhibit 1: Overview of the City of Palo Alto’s five SAP applications Source: ASD records Staffing and Management The City established an SAP Steering Committee and Program Management Office to manage SAP investment direction and provide overall guidance for SAP governance and control. These teams are comprised of management and operational staff from the Administrative Services, Utilities, and Public Works departments. Technical and operational staff consists of basis administrators, system development analysts, help desk technicians, and business analysts from the Administrative Services, Utilities and Public Works departments. Attachment A   -15- Exhibit 2 provides a generalized representation of staff associated with the management and operation of SAP during the audit. Exhibit 2 – Staff associated with management and operation of SAP Source: ASD records and City of Palo Alto Adopted Operating Budget In FY 2012, the former Information Technology Division in ASD has been established as a City department with a Chief Information Officer reporting to the City Manager. Overview of Enterprise Resource Planning (ERP) system risks3 ERP systems are highly integrated and support a broad range of entity activities, resulting in certain increased risks that should be controlled with:  System development/configuration management controls to provide reasonable assurance that the system will operate as intended.  Service continuity/contingency planning to recover critical ERP systems.  Access and other general controls to prevent unauthorized access. In addition, general information systems controls should protect the technology infrastructure that supports ERP applications. Although efficiencies may be gained with ERP systems, these systems heighten the need to control access to sensitive transactions and to ensure proper segregation of duties compared with entities having multiple applications for business processes. Entities lose the inherent segregation in integrated applications since more of the process is performed in the same application. Proper control over levels of access in SAP applications is a key overall aspect of system security. An employee with improperly restricted levels of access could potentially have inappropriate access to sensitive information, master data files, financial  3 Based on information presented in the United States Government Accountability Office Federal Information System Controls Audit Manual. Attachment A   -16- transactions, system administration functions, security functions, and other areas not related to his or her role in the organization. Guidance on information systems security Governmental and private agencies have developed and published control frameworks to provide guidance on securing information systems to preserve the confidentiality, integrity and availability of an agency’s data. We based our review on recognized security control frameworks for information systems and SAP-specific guidelines. The proper implementation of security controls is recommended to:  Demonstrate compliance with a variety of governmental, organizational, or institutional security requirements.  Facilitate the development of assessment methods and procedures that can be used to demonstrate control effectiveness in a consistent and repeatable manner, thus contributing to the organization’s confidence of ongoing compliance with its stated security requirements.  Throughout the report, we refer to the following three sources of guidance on minimum security control requirements: 1. SAP Library: The German software corporation SAP provides guidelines on use and configuration of SAP applications in an online manual known as the “SAP Library.” 2. Payment Card Industry Data Security Standard, version 2.0 (PCI DSS): The Payment Card Industry Security Standards Council promulgates PCI DSS, a baseline of technical and operational requirements, to encourage and enhance cardholder data security and facilitate the broad adoption of consistent data security measures globally. PCI DSS applies to all entities involved in payment card processing, including merchants, processors, acquirers, issuers, and service providers, as well as all other entities that store, process, or transmit cardholder data. PCI DSS comprises a minimum set of requirements for protecting cardholder data, and may be enhanced by additional controls and practices to further mitigate risks. 3. National Institute of Standards and Technology Special Publication 800-53, Revision 3 (NIST SP 800-53): In 1996 the National Technology Transfer and Advancement Act, Public Law 104-113, was passed, authorizing NIST to coordinate federal, state and local government technology standards activities with private sector technical standards activities and assessments. The control catalog in NIST SP 800-53 outlines specific controls to implement in order to preserve the confidentiality, integrity and availability of the agency's data. The guidelines were developed to help achieve more secure information systems and effective risk management within the federal government. NIST also encourages state, local, and tribal governments, as well as private sector organizations to consider using the guidelines, as appropriate. NIST SP 800-53 states the final determination of the appropriate set of security controls necessary to provide adequate security for an information system is a function of an organization’s assessment of risk, and that in many cases, additional security controls or control enhancements will be needed to address specific threats to and vulnerabilities in an information system. Attachment A   -17- Audit Objectives, Scope, and Methodology In planning the SAP audit, the Auditor’s Office detected a significant SAP security vulnerability, which allowed the Auditor’s Office unrestricted access to sensitive and confidential information. As a result, the Auditor’s Office conducted an audit to assess controls required to secure SAP access. The audit had the following objectives: 1. Determine if staff has properly secured system-provided (standard) SAP user accounts4 and timely addressed other related critical security vulnerabilities identified. 2. Determine if there has been unauthorized access to SAP through use of the standard user account “SAP*” or other standard accounts. 3. Determine if the City has an adequate security policy, procedures, and processes to ensure standard SAP user accounts and other accounts with unrestricted access are properly secured and monitored. 4. Assess the increased risk for fraud and abuse resulting from identified SAP security vulnerabilities. As described in the background section of this report, the City has implemented five SAP applications to support its business needs. SAP Enterprise Resource Planning Central Component (SAP ECC) is the core SAP application used to support the City’s key business functions including accounting, finance, purchasing, human resources, and utilities. ASD has implemented segregated “development,” “quality assurance,” and “production” systems for each of the five SAP applications in order to make and test application changes without interfering with live operational data and transactions. The scope of this audit was limited to the objectives listed above and to the City’s SAP ECC production system. This audit does not constitute a comprehensive security evaluation for the City’s SAP applications. However, the security concerns raised in this report may also be applicable to:  The City’s other SAP applications and systems.  The City’s non-SAP applications.  Components of the City’s information systems infrastructure not included in the scope of this audit. We encountered a limitation on access to an SAP Services administrator who was on extended leave during the course of the audit for reasons attributed to issues not related to the concerns raised in this report. As a result, we could not obtain further clarification on certain aspects of the security vulnerability identified in Finding 1. Audit fieldwork and testing was guided by the SAP Library in addition to minimum information systems security standards primarily stated in the following sources:  PCI DSS, version 2.0  NIST Special Publication 800-53, Revision 3 To conduct this audit, we analyzed SAP ECC security and log reports in addition to ASD technical documentation on the City’s implementation and management of its SAP   4 The term “special user” is also used in the SAP Library to refer to these accounts. Attachment A   -18- applications. We researched information systems security standards and discussed security concerns with the City’s external audit staff specializing in information systems, an independent SAP security director, and with an SAP consultant. We interviewed ASD and Human Resources Department staff. We also assessed the City’s overall SAP security policies and procedures to determine if a recognized information systems security control framework was in place. Due to limitations on our levels of independent access in SAP, we relied on ASD staff to provide requested SAP security reports and data, which we reviewed or tested to the extent possible to ensure reliability. We apprised City management and staff of security concerns during the course of the audit to ensure the City’s systems could be timely secured. We also met with the City Manager, the Interim City Attorney, and City Council members to apprise them of our concerns. Our report includes a total of 21 recommendations to improve the security of the City’s critical information systems. The audit recommendations in the report are addressed to ASD, however, the former Information Technology Division in ASD has been established as a City department with a Chief Information Officer reporting to the City Manager. The new department will be responsible for implementing these recommendations. We conducted this performance audit in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.   Attachment A   -19- Finding 1: ASD did not secure powerful system-provided user accounts, resulting in significant security vulnerabilities The Auditor’s Office detected a powerful “SAP*” account that was not properly secured and allowed access to sensitive and confidential information. Such access could have allowed a motivated and sufficiently capable person to destroy or modify data, expose sensitive employee and customer information, or defraud the City. This SAP* account was not properly secured for extended periods of time. However, SAP logs lacked sufficient information to definitively establish the periods SAP* was not secured and to establish individual accountability for the security vulnerability. In addition to SAP*, other standard accounts were also unsecured. ASD did not have adequate policies and procedures to secure these powerful standard accounts. ASD has taken steps to identify and secure SAP* and other standard accounts. ASD also needs to develop policies and procedures to improve the timeliness and effectiveness of its response to security incidents. The Auditor’s Office detected SAP* was not properly secured and allowed access to sensitive and confidential information During the installation process, SAP systems create a set of standard user accounts including “SAP*,” which should be properly secured and protected from unauthorized use. SAP* has a well-known default password and may provide unrestricted system access. Another standard user account known as “DDIC” may also provide unrestricted access and should also be properly secured. Recognized information systems security standards explicitly address securing standard user accounts by methods including, but not limited to, changing passwords. Securing these accounts should be prioritized because their usernames and passwords are well-known and could be used by unauthorized users or hackers to access SAP systems. While certain standard user accounts are required for specialized tasks such as initial system implementation, these accounts should be secured to prevent an unauthorized user from accessing the system. Such access could potentially result in the following:  Exposure and misuse of data such as personal identifying information  Sabotage and operational disruptions  Financial losses  Damage to reputation On January 6, 2011, the Auditor’s Office staff logged in to SAP using SAP* with its default password. Our initial evaluation of the security vulnerability confirmed the well- known SAP* user account with its default password grants unrestricted SAP access if not secured. Specifically, the unsecured SAP* account granted access to:  View and modify sensitive and confidential data, including City employee social security numbers, payroll records, and customer billing and credit information.  Execute high risk business transactions, such as changes to employee salaries, changes to utility rates, and changes to customer billing and credit information.  Create vendors and approve invoice payments.  Modify key system settings, including opening and closing of accounting periods and other changes to financial system settings. Attachment A   -20- On January 10, 2011, ASD detected unauthorized access with the SAP* user account from two computer terminals in the Auditor’s Office. SAP Services staff prepared an incident report dated January 11, 2011, that states the Auditor’s Office had used the SAP* account on January 6, 2011, and January 10, 2011, to access 125 SAP transactions. SAP system records show staff enabled a security parameter on January 11, 2011,5 to prevent use of the SAP* user account with its default password. The Auditor’s Office met with ASD on January 13, 2011, to discuss the security vulnerability. ASD staff stated:  The SAP* user account is usually “locked,” but an SAP Services administrator had “opened” the SAP* user account because of a technical issue encountered during the installation of an SAP support pack during the period from December 10, 2010, through December 12, 2010.  The SAP Services administrator did not secure the SAP* user account subsequent to successful installation of the support pack.  ASD did not have automated controls to detect unauthorized SAP access, but staff had contacted a consultant to implement an automated script to notify staff if SAP* was not secured. Due to the significance of the security vulnerability resulting from the unsecured SAP* user account, the Auditor’s Office immediately communicated to ASD the preliminary audit scope and objectives and commenced fieldwork to further assess the duration and potential impact of the exposure, and the overall adequacy of the City’s management of SAP access and related controls. The powerful standard user account SAP* was likely not secured during extended periods, causing a serious security vulnerability Our preliminary assessment could not validate ASD staff assertions that the SAP* user account was activated to install the SAP support pack in December 2010, or that SAP* was needed for the installation. SAP system reports suggest SAP* was likely accessible using its default password since May 23, 2010, and was likely left unsecured during other extended periods since the inception of SAP. The rationale for this conclusion is described below. SAP* is the only user account in the SAP system that does not require a “user master record” (UMR),6 but is defined in the system code itself. If the SAP* UMR is never created or is deleted and a special security parameter used to secure SAP* is disabled, the hard-coded SAP* user account can be accessed by anyone using its default and well-known password, and it will have unrestricted system access resulting in a serious security vulnerability. The SAP online manual warns the SAP* UMR should not be deleted, and that use of the hard-coded SAP* account should never be required. An SAP Services manager stated in some situations, such as during installation of certain SAP upgrades, use of SAP* may be required if indicated by SAP guidance.  5 The incident report prepared by staff states the security parameter was enabled on January 10, 2011, at 9:00 pm. 6 “User master records” define the user accounts for enabling access to SAP. The user master record (UMR) contains access information needed by the system to validate a user and assign access rights. This information includes user id, password, roles, and profiles. Generally, only users who have a UMR can log on to the system. Attachment A   -21- We were able to access SAP using the hard-coded SAP* user account and its default password because the security parameter protecting against its use was disabled and the SAP* UMR was missing. SAP Services staff initially reported the SAP* user account had been “opened” to install an SAP support pack during the period December 10, 2010, through December 12, 2010, implying the period of vulnerability was from approximately December 10, 2010, to January 11, 2011. SAP system reports did not validate ASD staff’s assertions it was “opened” in December 2010. Furthermore, an SAP system report indicated that the security parameter was disabled for over seven months from May 23, 2010, to January 11, 2011, and during at least one other extended period, from April 4, 2008, to April 18, 2008. In reviewing available SAP system log records and security reports, we concluded:  SAP* was likely accessible using the default password during the entire period from May 23, 2010, to January 11, 2011, resulting in a serious security vulnerability.  SAP* may have been accessible using the default password between April 4, 2008, and April 18, 2008.  SAP* was accessible using the default password for an unknown period(s) from January 16, 2003, to December 15, 2005. Available SAP system logs suggest the SAP* account was not accessed from August 4, 2010, until January 6, 2011, when the Auditor’s Office accessed the account. Records prior to August 4, 2010, were not available due to system configurations limiting the amount of data retained. ASD staff we interviewed stated they did not have any direct knowledge of fraud or abuse related to the security concerns addressed in this audit. SAP logs lacked sufficient information to determine exactly how long the system was unsecured and to establish individual accountability for the SAP* incident SAP creates various logs to help ensure individual accountability and to provide a means for investigating security incidents. Access to SAP logs should be properly secured and review of logs should be effectively managed to ensure system security. Although the SAP* UMR was likely missing during some or all of the periods the protective security parameter was disabled, the SAP system log used to monitor and ensure accountability for any user account changes did not include records showing deletion of the UMR at any point. Moreover, a subsequent security report generated on February 14, 2011, showed the SAP* UMR had been recreated, presumably to secure the system, but again the SAP log report did not include a record of this activity. The missing log records raised serious concerns regarding the integrity and security of the SAP system logs. In order to address concerns regarding missing SAP log records, ASD and the Auditor's Office discussed the incident with an external consultant.7 The analysis conducted by the consultant and ASD concluded there are two possible explanations for the missing SAP log records:   7 The City had an existing contract with the consultant for SAP support and maintenance services. Attachment A   -22-  Someone deleted then recreated the SAP* UMR by accessing the underlying SAP database system.  Someone deleted the SAP log records showing deletion and recreation of the SAP* UMR. Staff stated there were only two SAP Services administrators with direct access to the SAP database system. We interviewed one of the SAP Services administrators who stated he did not delete or recreate the SAP* UMR. We could not interview the other administrator because he was on extended leave for reasons attributed to issues not related to the concerns raised in this report. In either case, we concluded any activity conducted to delete the SAP* UMR or SAP log records undermined SAP security. We discussed the need to further investigate and address these concerns with the City’s ASD Director, ASD Assistant Director, and SAP Services manager. Findings 2, 3, and 4 address the need to control and limit SAP Services administrator access in SAP and other controls, such as securing and monitoring of the system logs needed to prevent or detect unauthorized activity. ASD did not secure other standard user accounts In addition to SAP*, other standard user accounts are created during installation of SAP systems, and these accounts should also be properly secured to prevent unauthorized system access. A standard SAP security report generated on January 10, 2011, identified five other standard user accounts in the SAP Enterprise Resource Planning Central Component (SAP ECC) production system, which still had their well-known default passwords, indicating they had not been properly secured since inception of the SAP system. In attempting to access these standard accounts, we found that SAP generated error messages suggesting the passwords had expired at some point in time, and in that sense, the accounts appeared secure. ASD did not have formal procedures to secure SAP* or other standard user accounts Because standard SAP user accounts may have privileged or unrestricted access and do not have staff names or identification numbers associated with them, they could be used without individual accountability to perform unauthorized activity. The SAP online manual provides specific procedures to ensure standard user accounts, including SAP* are properly secured. These procedures include:  Ensuring the SAP* UMR is present and the protective security parameter is enabled.  Changing passwords and locking standard user accounts when not in use.  Restricting access to standard user accounts so that only selected authorized staff can manage them.  Using a special SAP report to monitor the status of all standard user accounts. Attachment A   -23- ASD did not have any formal policies or procedures to authorize, monitor, or ensure accountability for use of SAP* or other standard user accounts. Moreover, ASD did not have any policies and procedures to properly secure these accounts. ASD took steps to secure standard SAP user accounts in all SAP systems As of the end of audit fieldwork, ASD implemented controls to secure standard user accounts, including an automated notification system to alert ASD if the security parameter used to secure the hard-coded SAP* user account with its default password is disabled.8 ASD conducted a comprehensive review of standard user accounts in all of the City’s SAP systems. An April 7, 2011, in-progress report provided by an SAP Services manager showed staff had identified a total of 83 standard user accounts, of which 64 percent had not been properly secured. SAP system reports dated June 1, 2011, showed a total of 107 standard user accounts, including the 83 stated above, in the City’s SAP systems and that staff had implemented controls to secure the accounts. The reports show:  The default passwords for all standard accounts have been changed.  The security parameter preventing use of the hard-coded SAP* user account was enabled in all applicable SAP systems.  Although most standard user accounts were locked, staff did not lock DDIC, because according to an SAP Services manager, it is needed to execute certain processes. DDIC may provide unrestricted access and should be properly secured. ASD implemented other key controls to secure standard user accounts including:  Policies and procedures to ensure use of standard user accounts is properly authorized and monitored, and that they are secured when not in use.  Procedures to detect unsecured standard user accounts.  An automated notification system to notify staff if the security parameter for SAP* is disabled.  Restricting access to standard user accounts so that only an authorized individual has access to manage these accounts. It was beyond the scope of this audit to assess the adequacy of the preliminary actions ASD has taken to address concerns raised in this audit.  8 The Auditor’s Office did not assess the effectiveness of this notification system or the other controls implemented to secure these accounts. Attachment A   -24- RECOMMENDATION #1: ASD should develop and implement formal policies and procedures addressing standard SAP user accounts in order to:  Secure standard user accounts and prevent unauthorized use.  Detect on an ongoing basis any unsecured standard accounts and any unauthorized use.  Ensure standard user accounts can only be managed by a designated individual(s).  Authorize use only if appropriate, and ensure there is accountability for any use.  Ensure any authorized use is monitored. RECOMMENDATION #2: ASD should further investigate the following:  Staff’s account that SAP* was left unsecured after installing an SAP support pack in December 2010.  Responsibility for the deletion and recreation of the SAP* user master record.  Responsibility for missing log records. ASD should develop policies and procedures to improve the timeliness and effectiveness of its response to security incidents The Auditor’s Office’s testing of SAP vulnerability through access to the unsecured hard- coded SAP* user account was not announced in advance, and it presented an opportunity to assess staff’s response to a simulated security incident. Policies and procedures addressing response to security incidents should ensure:  The incident is effectively contained, managed, and investigated.  The City timely and effectively identifies and corrects inadequate controls.  Accountability is established for any breach in security. The PCI DSS control framework requires organizations to have a formal incident response plan to respond effectively and immediately to a system breach. The plan should include provisions to address:  Roles and responsibilities  Incident response procedures  Business recovery and continuity procedures  Data back-up processes  Legal requirements in reporting compromises In addition, designated staff should be available to respond to alerts in a timely manner, and the incident response plan should be tested annually and revised as appropriate to ensure it is current and effective. Attachment A   -25- NIST also addresses the need for adequate incident management through implementing appropriate controls including incident response policies and procedures, training, exercises, monitoring, and reporting. ASD did not timely detect unauthorized use of the hard-coded SAP* account In testing SAP system vulnerability, the Auditor’s Office had access to the unsecured hard-coded SAP* user account from January 6, 2011, through January 10, 2011, before ASD staff detected the auditors’ activity and preliminarily secured SAP*, effective January 11, 2011. Based on our testing results, we concluded that use of the SAP* account by a motivated and sufficiently capable user during the 4-day period could have had serious consequences. An SAP Services administrator stated he detected use of the unsecured SAP* user account through a routine manual review of SAP system logs. As previously discussed, ASD subsequently implemented a notification system to notify staff if the security parameter to disable the hard-coded SAP* user account is deactivated. However, as of the end of audit fieldwork, an SAP Services manager stated review of SAP logs remains a manual process. The SAP Incident Report was not independent, contained unsupported information, and was incomplete The City did not have any policies or procedures addressing incident response and reporting. SAP Services staff identified and documented the SAP* incident in an SAP Incident Report. According to an SAP Services manager, the SAP Incident Report was jointly prepared by SAP Services staff and contained unverified information provided by the SAP Services administrator responsible for the lapse in security. We found several weaknesses in the SAP Incident Report (report):  The report contained information that could not be supported by SAP system records. In particular, the report suggested the hard-coded SAP* account was “opened” to apply a support pack in SAP over the weekend from December 10, 2010, through December 12, 2010. As previously stated, SAP system records did not show any activity using the SAP* account during this period. Rather, the records suggest the SAP* account was likely activated and left unsecured as of May 23, 2010.  The report implied the SAP* account may be used to apply support packs in the future. We could not find any valid business reason to use the hard-coded SAP* account, except for rare emergencies.  The report did not address other related security issues revealed during the audit, such as the unsecured standard SAP accounts in other SAP systems and clients.  Important report elements were not addressed. In particular, the following important sections of the template were left blank: o Evidence of approval o Affected policies or procedures o Remedial training requirements Attachment A   -26- The staff member responsible for the security incident had unrestricted access The SAP Services administrator identified as responsible for the SAP* security incident had a personal SAP user account with unrestricted system access. The City did not take steps to assess or restrict the access level of the administrator until after he had left on extended leave due to reasons attributed to issues not related to the incident. Efforts to secure SAP access were uncoordinated Staff did not have a formal process to secure the SAP system once unauthorized access using the unsecured hard-coded SAP* account was detected. Subsequent to detection of the unauthorized access, SAP Services staff disabled the lead auditor’s personal SAP user account. However, the lead auditor regained access to his personal account by simply contacting the City’s help desk staff who enabled the account. Subsequently, SAP Services staff again locked the lead auditor’s personal SAP account and help desk staff were instructed not to unlock the account. The steps taken to presumably secure the SAP system by locking the lead auditor’s personal SAP user account appeared inconsistent and uncoordinated. The City’s incident response process may not have been effective in responding to a malicious intruder because:  The majority of vulnerability testing using the hard-coded SAP* account was executed by another auditor whose personal SAP user account was not locked.  Locking the lead auditor’s personal SAP user account did not provide any additional security since the personal user account was unrelated to the unsecured hard-coded SAP* account or other unsecured standard SAP accounts.  Staff did not contact the Auditor’s Office or the assigned owners of the computers used to access SAP using the unsecured SAP* account in order to properly investigate the incident and determine if there had been unauthorized use or theft of the auditors’ computers. ASD should refer to NIST Special Publication 800-61 (Computer Security Incident Handling Guide) in developing and implementing competent and adequate incident handling policies and procedures to ensure the City is able to effectively detect, analyze, and prioritize security incidents. RECOMMENDATION #3: To ensure the City can appropriately respond to SAP security incidents, ASD should develop and implement a comprehensive incident response plan that meets PCI DSS and NIST control standards and includes provisions to address:  Incident response policies and procedures  Incident response training  Monitoring and reporting  Roles and responsibilities  Business recovery and continuity procedures  Data back-up processes  Legal requirements in reporting compromises Attachment A   -27- Finding 2: ASD violated two critical security principles by not properly restricting access for all user accounts ASD has not abided by the principles of “least privilege” and “segregation of duties” to control access to SAP. Since 2003, SAP user administrators assigned the powerful “SAP_ALL” profile to 31 SAP user accounts, providing them unrestricted SAP access. SAP user administrators did not abide by security principles by having multiple accounts and incompatible functions in creating users, assigning “roles” and “profiles” to users, and creating or changing profiles. We recommend ASD establish and implement policies and procedures in support of these two security principles. 31 SAP user accounts had unrestricted SAP_ALL profile access The Payment Card Industry Data Security Standard (PCI DSS) and the National Institute of Standards and Technology (NIST) state organizations should abide by the principles of “least privilege” and “segregation of duties.” Least privilege requires limiting user access based on job responsibilities to accomplish assigned tasks in accordance with organizational missions and business functions, while segregation of duties ensures clear separation of roles and responsibilities across the functions within an organization. These principles help reduce the risk of possible fraud and abuse, exposure of sensitive and confidential information, and data breach. SAP administrators may customize and restrict levels of access to SAP through assignment of “roles” and/or “profiles” to user accounts, which at a granular level can determine an SAP user’s level of access. In order to ensure SAP access security, policies and procedures should ensure only authorized individuals have access to the system, and that roles and profiles are managed to ensure authorized individuals have the appropriate level of system access based on the employee’s role in the organization and business needs. Although the City has a process to administer access using SAP roles, ASD did not have any policies, procedures, or practices to control access in SAP through assignment of standard profiles. In practice, ASD has assigned both roles and profiles, including the SAP_ALL profile which grants unrestricted access similar to the SAP* standard user account discussed in Finding 1. The SAP online manual states: 1. SAP_ALL should not be assigned to ANY users in the organization. 2. Only one user account should be created with the SAP_ALL profile, and the password for the user account should be kept secret (by storing it in a safe). 3. The single user account with SAP_ALL should only be used in emergencies. Although SAP guidance recommends against assigning the SAP_ALL profile to users within the organization, the City’s SAP system records show:  31 user accounts were assigned the SAP_ALL profile since 2003.  As of January 12, 2011, 12 user accounts were still assigned the SAP_ALL profile. Attachment A   -28-  8 SAP user accounts were used to grant unrestricted access to various users through the SAP_ALL profile.  The SAP_ALL profile was assigned to generic user accounts9 and other user accounts associated with the City’s external consultants or SAP service providers.10 By granting unrestricted access, ASD has violated the principles of least privilege and segregation of duties. The SAP_ALL profile inherently grants user access privileges beyond the job responsibilities to accomplish assigned tasks in accordance with organizational missions and business functions. In addition, SAP_ALL does not support clear separation of roles and responsibilities across the functions within an organization. According to the United States Government Accountability Office Federal Information System Controls Audit Manual (FISCAM), work responsibilities should be segregated so that one individual does not control all critical stages of a process. FISCAM further states effective segregation of duties starts with effective entitywide policies and procedures that are implemented at the system and application levels. If ASD grants the SAP_ALL profile, it cannot effectively abide by the principles of least privilege and segregation of duties. RECOMMENDATION #4: To mitigate risks associated with assignment of unrestricted SAP access, ASD should:  Formally adopt policies and procedures addressing SAP user access that are consistent with the principles of least privilege and segregation of duties.  For emergency purposes, ASD should consider creating a single unrestricted account assigned the SAP_ALL profile that is appropriately secured and controlled in accordance with SAP guidelines and industry standards.  Implement policies and procedures to either prohibit or control the use of all other powerful system-provided SAP profiles.  Ensure needed SAP roles and profiles are approved by management and included in the City’s role authorization procedures, and that unauthorized roles and profiles are not assigned.  Develop procedures to detect any unauthorized roles or profiles assigned to users.   9 Generic user accounts do not include identifying information associated with an individual. 10 Risks associated with non-organizational user accounts are discussed in Finding 3.  Attachment A   -29- SAP user administration practices violated information systems security principles Staff responsible for the administration of SAP user accounts should not be able to modify their own authorizations, or perform combinations of other incompatible functions that would allow them to give themselves (or a user account they created) powerful access. According to authoritative guidance on SAP security, an individual should not have authorization in SAP to perform more than one of the following functions:11  Creating and maintaining roles/profiles  Assignment of roles/profiles  Creating and maintaining user accounts If any of these functions cannot be properly segregated, there should be adequate mitigating controls, such as formal and well-documented reviews of SAP system log reports to prevent and detect any unauthorized activity resulting from the control weakness. Below are significant findings and areas of concern noted during a limited review of SAP user account management activity:  At least five user administrators performed incompatible functions in creating users and assigning profiles/roles to users. Three of the five also created or changed profiles.  The same SAP Services administrator associated with Finding 1 had two active personal12 user accounts in SAP as of January 2011, and at least a third personal user account deleted in April 2008: o All three of the user accounts had unrestricted access at various points in time through assignment of the powerful profile SAP_ALL. o The administrator created a user account and assigned the SAP_ALL profile to himself. o One user account was assigned the SAP_ALL profile for an uninterrupted period of approximately 10 months, until removed by another SAP Services administrator.  An SAP Services developer, who should not have privileged access in the SAP ECC production system, had use of three user accounts in the City’s SAP ECC production system. Information systems security control standards require separation of duties for development, testing, and production systems to prevent any unauthorized changes to production systems. We found: o Two of the developer’s accounts were assigned unrestricted SAP_ALL profile access in the production system. o The developer created a user account for himself.  11 SAP user administrators may customize and restrict levels of access to SAP through assignment of roles and/or profiles to user accounts, which at a granular level can determine an SAP user’s level of access. 12 We deemed an account to be a “personal” account if it could be clearly identified with an individual based on name or employee identification number. Attachment A   -30-  SAP Services staff stated they use powerful system-provided user accounts by resetting passwords or sharing passwords.  SAP Services staff performed incompatible duties by directly accessing Human Resources department records and entering identification information for City employees. Cybercrime reports suggest the need to restrict and control system administrator access A 2009 CERT Software Engineering Institute report on insider threats13 warns that system administrator and technical or privileged users have the technical ability, access, and oversight responsibility to commit and conceal malicious activity. The report states:  A majority of the insiders who committed sabotage, and over half of those who stole confidential or proprietary information, held technical positions.  System administrators and technical or privileged users can usually conceal their actions, since their privileged access typically provides them the ability to log in as other users, to modify system log files, or to falsify audit logs and monitoring reports. The “2010 CyberSecurity Watch Survey: Cybercrime Increasing Faster Than Some Company Defenses” report14 stated:  60% of survey respondents experienced at least one cybersecurity event, an adverse event that threatens some aspect of computer security.  Respondents experiencing a cybercrime experienced a mean monetary loss of $394,700.  Those experiencing a cybersecurity event reported 26% (on average) of events were caused by an insider (current employees or contractors). Exhibit 3 shows some of the mechanisms used by insiders in committing electronic crimes from August 2008 through July 2009.  13 The “Common Sense Guide to Prevention and Detection of Insider Threats 3rd Edition – Version 3.1” report was published by the Software Engineering Institute CERT Program at Carnegie Mellon University. 14 The survey was conducted from July 29, 2009 through August 20, 2009, with 523 responses being collected by CSO (Chief Security Officer) magazine in cooperation with the United States Secret Service, Software Engineering Institute CERT Program at Carnegie Mellon University and Deloitte. Respondents were asked to report based on cybersecurity events occurring in the past 12 months (August 2008 through July 2009).  Attachment A   -31- Exhibit 3: Examples of mechanisms used by insiders to commit electronic crimes Source: 2010 CyberSecurity Watch Survey The reports summarized above highlight the need for appropriately restricting and controlling system administrators’ access. Accordingly, ASD should take steps to ensure:  SAP administration functions are properly segregated.  System access is appropriately restricted or controlled for all technical staff.  Detective and monitoring mechanisms compensate for any control weaknesses. RECOMMENDATION #5 To ensure SAP user account administration functions are properly separated, ASD should:  Segregate responsibilities for creating and maintaining roles/profiles, assignment of roles/profiles, and creating and maintaining user accounts.  Prohibit IT staff from maintaining Human Resources Department employee records.  Assign all SAP user administrators to a designated SAP user group, preventing them from managing their own and other administrators’ accounts and access levels, and designate an individual to manage the SAP user group. Mechanism used (August 2008 through July 2009): Shared account 33% Used their own account 33% Compromised an account 28% Used authorized system administrator access 25% Remote access 25% Escalated privileges 22% Backdoors 13% Attachment A   -32- Page intentionally left blank Attachment A   -33- Finding 3: ASD has not effectively managed all SAP user accounts to ensure system security ASD has not effectively managed all SAP user accounts to ensure system security. Specifically, ASD has not consistently removed or disabled SAP employee user accounts in a timely manner and has not adequately secured and controlled non- employee user accounts. While ASD lacks an effective user account identity management system, improvements were made during the audit. ASD has not removed or disabled SAP employee user accounts in a timely manner As of January 25, 2011, an SAP system report listed a total of 1,503 user accounts including, 1,402 employee accounts15 and 101 non-employee accounts. Exhibit 4 below shows the 1,402 SAP employee user accounts:  1,364 matched Human Resources Department records of current employees.  38 did not match Human Resources Department records, and consisted of 26 separated employees, 6 on-leave employees, and 6 intern or volunteer employees. Exhibit 4: Analysis of SAP Employee User Accounts Employee Accounts 1,402 or 93% Non- Employee Accounts 101 or 7% 1,503 Total user accounts Intern/ Volunteer 6 or <1% Current Employee Accounts 1,364 or 91% On-Leave Employees 6 or <1%Separated Employees 26 or 2% 1,402 Employee user accounts (93% of total user accounts) Source: Auditor’s analysis of SAP user accounts and Human Resources Department records Recognized information systems security control frameworks require timely termination of user access:  PCI DSS states access should be immediately terminated for any separated users, and that organizations should remove/disable inactive user accounts at least every 90 days.  NIST SP 800-53 states organizations should secure information systems and information formerly controlled by a separated individual, and that timely termination of information system access is especially important if employees or contractors are terminated for cause. Of the 26 separated employee user accounts, 17 were not removed or disabled in a timely manner after the employee separated. These accounts remained enabled on   15 Interns and volunteers are included under the general category of employee user accounts. Attachment A   -34- average for 577 days after the separation date,16 and in one instance an account remained enabled for 1,727 days. As of February 15, 2011, staff had removed all but three of these user accounts. We compared Human Resources Department records of City employee separations with SAP records of user account removals. The comparison revealed lags and spikes, in SAP user account removal, suggesting the level of coordination between SAP user account management and Human Resources Department activity was not optimal, and that access to SAP for separated employees may not have been terminated in a timely manner. ASD lacks policies and procedures for ensuring separated employees’ SAP access is terminated in a timely manner and coordinated with Human Resources Department processes. RECOMMENDATION #6: Develop and implement policies and procedures to ensure SAP access for separated City employees is terminated in a timely manner and coordinated with Human Resources Department processes. ASD has not adequately secured and controlled non-employee user accounts We classified the 101 non-employee user accounts that did not reconcile to Human Resources Department records into groups. These user accounts pose unique, inherent risks varying in type and degree. Exhibit 5 shows our classification of the 101 non-employee user accounts based on identification information available in SAP. Exhibit 5: Analysis of SAP Non-Employee User Accounts Employee Accounts 1,402 or 93% Non- Employee Accounts 101 or 7% 1,503 Total user accounts CAL-Card 52 or 4% Non-Org 22 or 1% Non-Dialog 13 or <1% Other 14 or <1% 101 Non-Employee user accounts (7% of total user accounts) Source: Auditor’s analysis of SAP user accounts and Human Resources Department records. 52 “CAL-Card” user accounts PCI DSS states that generic accounts and passwords should not be used to ensure an organization can identify who is responsible for system activity. Any use of such  16 This is an average of the total number of days from employee separation date to the earlier of January 25, 2011, or the date the account was removed or disabled.   Attachment A   -35- accounts should be specifically authorized by management on an exception basis to meet business needs. We found 52 active generic17 SAP user accounts associated with the City’s Purchasing Card (CAL-Card) program. These generic accounts are “dummy accounts” used by ASD to transfer and retain records of CAL-Card transactions associated with a cardholder account that has been compromised. Upon receiving a new purchasing card, a cardholder’s transaction history up until the incident may be transferred to the generic user account. These generic user accounts could be used to perform unauthorized transactions without accountability if enabled through assignment of “roles” and/or “profiles.” Currently ASD does not have a formal process for managing these “dummy accounts.” At a minimum, the City should take precautions and lock these accounts and assign them to a restricted user group to prevent unauthorized access or use. The City did not have any policies or procedures addressing use of these accounts or controls to secure them. ASD should develop, design, and implement specific controls to mitigate risks associated with any use of these accounts. RECOMMENDATION #7: ASD should either eliminate the 52 generic CAL-Card user accounts, or develop policies and procedures to implement compensating controls to:  Ensure these accounts are secured.  Establish individual accountability for their use.  Allow use on an exception basis in meeting the City’s business needs. 22 non-organizational user accounts NIST states that vendor personnel and consultants may legitimately require privileged access to an information system; however, based on a prior assessment of risk, an organization should issue temporary access for a very limited period. NIST also provides that organizations should ensure individuals requiring access to organizational information and information systems sign appropriate access agreements, such as nondisclosure agreements, acceptable use agreements, and conflict-of-interest agreements, prior to being granted system access. We identified 22 non-organizational accounts assigned to the City’s SAP consultants (Sierra Infosys Inc. and Mindworks) and the City’s solid waste, recyclable materials, organic materials, and yard trimmings collection and processing services provider (Greenwaste Recovery, Inc.). These 22 user accounts were comprised of:  12 enabled Sierra Infosys Inc. accounts  9 enabled Greenwaste Recovery, Inc. accounts  1 disabled Mindworks account   17 Generic user accounts do not include identifying information associated with an individual. Attachment A   -36- According to an SAP Services manager, the City does not currently require non- organizational users to sign any type of access agreement or formally acknowledge the City’s applicable information systems security policies. We found the following areas of concern in reviewing these user accounts:  Greenwaste Recovery, Inc. had 9 user accounts that did not have expiration dates to control potential unauthorized access resulting from staff turnover.  The Sierra Infosys Inc. had 11 user accounts that had expiration dates of July 30, 2013, which is approximately three weeks beyond the contract expiration date. An expiration date that is that far in the future is not an adequate control.  One Sierra Infosys Inc. user had privileged access, including authorization to manage SAP user accounts. SAP records indicated the account is valid through December 31, 2011. This level of privileged access combined with an expiration date far into the future could allow the user to enable other user accounts, such as one of the City’s many generic user accounts, to conduct unauthorized activity without individual accountability. During audit fieldwork, the ASD updated the “SAP Basis Administration” manual to provide guidance addressing proper levels of access and duration of access for external consultants. A detailed review of access levels provided to non-organizational users and their activity in SAP is beyond the scope of this audit. RECOMMENDATION #8: ASD should develop formal policies and procedures that clearly classify non-organizational users and define for each class:  Authorized access levels.  Duration of access.  Controls to ensure each class abides by the City’s security policies.  Controls to monitor SAP activity and to ensure SAP access levels and duration is consistent with policies and procedures. 13 “non-dialog” accounts The NIST SP 800-53 concept of “least privilege” is defined in Finding 2 as limiting user access based on job responsibilities to accomplish assigned tasks in accordance with organizational missions and business functions. The concept of least privilege also applies to non-dialog accounts, which are generally used by administrators for a variety of technical purposes, such as background processing and communication within a system and between multiple systems. Non-dialog accounts should only have the level of access necessary to accomplish assigned tasks in accordance with organization’s mission and business functions. Of the City’s 1,503 SAP user accounts, 1,490 were “dialog” accounts, which by definition are designed for individual interactive access in SAP, and 13 were non-dialog user accounts, which are generally used by administrators for technical purposes. We found that ASD had assigned the SAP_ALL profile to 6 of the 13 non-dialog accounts, allowing unrestricted system access. As discussed in Finding 2, by assigning the standard Attachment A   -37- SAP_ALL profile, ASD violated the principles of least privilege and segregation of duties. A user account with unrestricted access could allow misuse and exposure of sensitive data including confidential City employee and customer information, sabotage and operational disruptions in SAP, financial losses, and damage to reputation. According to an SAP Services manager, removing the SAP_ALL profile assigned to non- dialog user accounts would result in disruptions in SAP. However, authoritative literature on SAP states the SAP_ALL profile should not be assigned to any user account, including non-dialog accounts. The City did not have any policies or procedures addressing non-dialog user accounts to ensure their use is properly authorized, restricted, and monitored. RECOMMENDATION #9: ASD should develop policies and procedures to address use of non-dialog user accounts. These policies and procedures should address:  Authorization to use and assignment of non-dialog accounts.  Permitted use for each account.  Individual accountability for use.  Controls to monitor use. 14 other generic accounts As previously stated, recognized information systems security control frameworks recommend against the use of generic user accounts. The remaining 14 user accounts we identified did not have adequate identifying information needed to ensure individual accountability for use, and were not documented or addressed in ASD policies and procedures. These consisted of:  9 user accounts whose function or use could not be identified.  2 user accounts associated with a non-organizational SAP services provider (these were assigned unrestricted access through assignment of the SAP_ALL profile, as discussed in Finding 2).  1 user account whose stated function is “data migration.”  1 powerful system-provided user account, which is addressed in Finding 1.  1 “template” user account. Although there may be legitimate uses for all of these user accounts, ASD should ensure they are properly documented, authorized, and associated with the individual responsible for their use. Generic user accounts could be used to perform unauthorized transactions without accountability if enabled through assignment of roles and/or profiles. At minimum the City should take precautions and lock these accounts when not specifically authorized for use, and assign them to a restricted user group to prevent unauthorized access or use. Attachment A   -38- RECOMMENDATION #10: ASD should as a rule prohibit the use of generic user accounts, in following PCI DSS and NIST control frameworks. ASD should develop policies and procedures to address the use of any generic user accounts on an exception basis to meet the City’s business needs and to ensure adequate compensating controls are implemented and include:  Formal authorization for use  Permitted levels of access  Duration of use and procedures to disable or remove  Permitted use or function  Individual accountability for use ASD should establish an effective user account identity management system In accordance with NIST and PCI DSS standards, all users, employee and non- employee, should be uniquely and readily identifiable to ensure accountability and to facilitate any investigations or audits of user activity. Additionally, SAP system records should include a predetermined minimum level of identifying information for all SAP user accounts, including name, department (or organization), and employee identification number (if applicable), to ensure user accounts can be validated through a comparison with an independent source such as Human Resources Department records. In assessing SAP user accounts, we noted a lack of consistent and reliable identifying information required to facilitate validation of SAP user accounts through a comparison with Human Resources Department employee records that are presumably independently maintained. For example, in our review of 1,402 City employee SAP user accounts, we noted only 301 included the unique employee identification number that is assigned to each employee. Therefore, we could not use the employee identification number to perform a direct comparison with Human Resources Department records. ASD’s use of a manual processes to administer, create, change, and terminate SAP user accounts is insufficient to manage user access. ASD implemented controls to facilitate reconciliation of Human Resource, Windows NT (network), and SAP user account and identification data During audit fieldwork, ASD developed a report set up to run on a weekly basis, which facilitates comparison of Human Resources Department, Windows NT (network), and SAP user account and identification data. Staff provided examples of the report that showed it will identify:  Inconsistencies in the City’s Human Resources, Network, and SAP user account identification information, including name, user id, and phone number.  SAP user accounts that do not correspond to Human Resources department records of active employees. Attachment A   -39- ASD has also identified needed improvements to user account management including:  A process to automate removal of SAP user accounts upon employee termination.  An automated process for entering and managing Human Resources Department user account identification information. Currently, SAP Services staff manually inputs user account identification information into Human Resources Department records. A detailed review of the adequacy and effectiveness of these processes and controls is beyond the scope of this audit. RECOMMENDATION #11: ASD should establish policies, procedures, and processes to ensure:  SAP user administrators are aware of the required identification information for each type of SAP user account, and SAP is configured to require, to the extent possible, input of required information.  SAP user accounts contain all required user identification information, consistent with Human Resources Department records and/or other applicable independent authorized lists for City employees.  The City is compliant with PCI DSS and NIST SP 800-53 standards in its management of SAP user accounts. Attachment A   -40- Page intentionally left blank Attachment A   -41- Finding 4: The City needs to formally adopt and implement a recognized information systems control standard to ensure SAP security The City has not adopted and implemented a recognized information systems security control standard or framework needed to demonstrate control effectiveness in a consistent and repeatable manner, and it has not complied with requirements for business entities that process credit card transactions. Missing or inadequate controls include:  Security policies and procedures and assignment of responsibility for SAP security.  Security awareness and training program.  Information systems risk assessment.  Proper configuration of SAP system security settings.  Effective management of SAP audit trails (logs).  Safeguarding and controlling sensitive production data used for testing.  Ensuring the Auditor’s Office access levels in SAP is optimized. During audit fieldwork, ASD developed and began implementing procedures and processes to address some areas of concern including security of system-provided accounts and user account administration. We recommend ASD assess SAP security risks and implement needed controls through a comprehensive process that is informed by controls stated in the Payment Card Industry Data Security Standard, National Institute of Standards and Technology’s Special Publication 800-53, and other applicable frameworks. ASD has not adopted or implemented a recognized information systems security control standard The City’s SAP system is used to store and process City staff and City resident personally identifiable information.18 Governmental and private agencies have developed and published control frameworks to provide guidance for securing information systems to preserve confidentiality, integrity and availability of an organization’s data. The City is required by the Payment Card Industry Security Standards Council (PCI SSC) and the City’s merchant bank, Wells Fargo, to comply with the Payment Card Industry Data Security Standard (PCI DSS), which is a set of 12 high level control requirements for protecting cardholder data. The PCI DSS controls mirror security best practices, and are comparable with controls stated in other recognized frameworks such as the National Institute of Standards and Technology’s Special Publication 800-53 (NIST SP 800-53). Both PCI DSS and NIST SP 800-53 frameworks provide a comprehensive set of controls to protect data in critical information systems. Effective   18 Personally identifiable information refers to any information that can be used to distinguish or trace an individual’s identity, such as their name, social security number, date of birth, or biometric records, and any other information which is linked or linkable to an individual, such as medical, educational, financial, and employment information. Attachment A   -42- implementation of these control frameworks would provide a strong foundation for information systems security, and would enhance the City’s ability to prevent the security vulnerabilities identified in Findings 1, 2, and 3. The PCI DSS requirements apply to all “system components” such as any network component, server, or application included in or connected to the cardholder data environment. In order to validate PCI DSS compliance, the City must successfully:  Complete an annual “Self-Assessment Questionnaire” (SAQ), to validate compliance with each of the PCI DSS requirements.  Complete a passing vulnerability scan with a PCI SSC “Approved Scanning Vendor” (ASV) and obtain evidence of passing scan from the ASV.  Complete the “Attestation of Compliance” (AOC) in its entirety.  Submit the SAQ, evidence of a passing scan, and the AOC, along with any other requested documentation to the “acquirer” (merchant bank). In July 2010, Wells Fargo notified the City of the requirement to validate PCI DSS compliance or to become compliant by October 1, 2010. In the event of a security breach that exposes personally identifiable information, consequences for the City may include imposed regulatory notification requirements, loss of reputation and customers, financial liabilities, and litigation. According to Wells Fargo, if cardholder data is compromised, a merchant may be subject to the following liabilities and fines associated with non-compliance:  Potential fines up to $500,000.  All fraud losses incurred from the use of the compromised account numbers.  Cost of re-issuing cards associated with the compromise.  Cost of any additional fraud prevention/detection activities required by the card associations or costs incurred by credit card issuers associated with the compromise. ASD has not adopted and implemented either the PCI DSS or NIST SP 800-53 control frameworks, and ASD does not have a coherent strategy to implement them. We also found the City’s former external auditor, Maze & Associates, had consistently recommended adoption of the mandated PCI DSS standard and the optional NIST SP 800-53 control framework. In its fiscal year 2008 report to the City, Maze & Associates recommended the City comply with PCI DSS. The City’s response to the 2008 report indicated it would comply. In a 2009 report, Maze & Associates concluded the City was not in compliance with PCI DSS and stated, “The City should make PCI DSS compliance a top priority.” Maze & Associates also highly recommended compliance with the optional NIST SP-800-53 framework. Maze & Associates reiterated its recommendation that the City adopt and implement the PCI DSS and NIST frameworks in other reports dated 2009 and 2010. ASD reports the City implemented selected controls in September 2009 to protect credit card data, however, we did not find any evidence that the City made significant progress in planning, implementing, or validating full compliance with either the PCI DSS or NIST control frameworks despite the City’s responses to the Maze & Associates reports. The need to adopt and implement a security standard is highlighted in a 2010 Maze & Associates report on the City’s information systems, which states the City had a “HIGH” external attack risk, indicating Attachment A   -43- some vulnerabilities could have been used to infiltrate or “hack” into the City’s information systems. RECOMMENDATION #12: ASD should adopt and implement PCI DSS and NIST SP 800-53 information systems security control frameworks to help ensure security of the City’s key information systems. ASD does not have a comprehensive security policy PCI DSS requires organizations maintain a formal security policy that addresses information security for all personnel, sets the security tone for the whole entity, and informs personnel (including contractors and consultants) what is expected of them. PCI DSS states the information security policy should accomplish the following:  Address all PCI DSS requirements.  Include an annual process that identifies threats and vulnerabilities, and results in a formal risk assessment.  Include an annual review and updates when the environment changes. NIST SP 800-53 recommends policies and procedures addressing key security controls including access control, security awareness and training, configuration management, risk assessment, and incident response. According to the City’s former Chief Information Officer, the City does not have a formal security policy that addresses SAP security. The City does have a formal computer use policy available on the City’s intranet, which addresses the security of the City’s information systems in a general sense. However, the policy is dated April 2005, and is not specific or adequate by itself to ensure SAP security or compliance with PCI DSS or other control standards. We did not find any security formal policies and procedures addressing areas of concern discussed in this audit, such as:  Use of system-provided (standard) user accounts  Incident response  Management of access to SAP logs and Oracle database logs  Privileged or “superuser” access  Use of system-provided SAP profiles (such as “SAP_ALL” and “SAP_NEW”)  SAP system parameters (including security parameters and log settings)  Use of unique user accounts and accountability issues  Use of “generic” or “group” accounts  Separation of duties in the context of SAP security, user account management, and SAP environments  Security awareness and training  Accountability for SAP security and consequences for any lapses in security Attachment A   -44-  Management of SAP user account identifying information  Timely review of user accounts to ensure all access is valid During audit fieldwork, the ASD began drafting procedures to address use of standard SAP user accounts. In addition to implementing controls stated in PCI DSS and NIST SP 800-53, we suggest ASD refer to the following publications in developing a comprehensive security policy:  NIST SP 800-18, Revision 1: Guide for Developing Security Plans for Federal Information Systems  SANS Institute InfoSec Reading Room: Information Security Policy - A Development Guide for Large and Small Companies RECOMMENDATION #13: ASD should develop and implement a formal and comprehensive security policy consistent with PCI DSS, NIST, the SAP Library, and other industry standards. ASD has not formally assigned responsibility for SAP security PCI DSS and NIST SP 800-53 require organizations formally assign responsibility for information security management. NIST SP 800-53 states an information security officer should have the mission and resources to coordinate, develop, implement, and maintain an organization-wide information security program. According to PCI DSS, information security management responsibilities include:  Establishing, documenting, and distributing security policies and procedures.  Monitoring and analyzing security alerts and information.  Establishing, documenting, and distributing security incident response and escalation procedures to ensure timely and effective handling of all situations.  Administering user accounts, including additions, removals, and modifications.  Monitoring and control of all access to data. Although ASD has informal processes and/or procedures that directly or indirectly address these areas, the City does not have an information security officer and the responsibility for SAP security has not been formally assigned. RECOMMENDATION #14: ASD should formally assign responsibility for SAP security. ASD does not have a formal information systems security awareness and training program PCI DSS and NIST SP 800-53 address the need for a formal security awareness program, security training, and a process to manage and monitor training records. An adequate information systems security awareness and training program should ensure: Attachment A   -45-  SAP technical staff is aware of current SAP system controls and practices required to secure the City’s information systems.  The City is able to plan, monitor, and assess the adequacy of individual and collective staff skills and competencies pertaining to SAP security administration.  City staff and any consultants provided access to SAP (and other information systems) are aware of relevant security risks and their responsibilities for complying with applicable security policies and procedures. ASD has not established a formal information security awareness and training program. Such a program would aid the City in ensuring that technical staff, as well as City staff and consultants that have access to SAP and other information systems, are aware of relevant security risks and their responsibilities for complying with applicable policies and procedures. Furthermore, ASD has not established formal development plans or maintained training records for staff responsible for administering or managing SAP system security. An SAP Services manager confirmed SAP Services administrators have not received formal training on SAP security. Moreover, staff stated there is no training budget for SAP Services staff, and that SAP-specific courses are expensive. ASD has developed an informal system to track the competency of staff, and to track internal “study” meetings designed to enhance competencies and capabilities. The SAP Services manager provided a summary on the education, training, and experience of key SAP Services staff for the purposes of this audit. There was no evidence staff attended training on information systems security or SAP security. Moreover, available City records do not show any formal training provided to two key SAP Services administrators with security roles and responsibilities. ASD should refer to guidance in NIST SP 800-50 (Building an Information Technology Security Awareness and Training Program) and NIST SP 800-16 (Information Technology Security Training Requirements: A Role and Performance Based Model) in implementing a comprehensive security awareness and training program. RECOMMENDATION #15: ASD should implement a formal security awareness and training program that meets minimum control standards stated in PCI DSS and NIST control frameworks. The program should include provisions to ensure SAP technical staff is trained on current SAP security controls and practices. ASD does not have a formal risk assessment process to effectively identify and manage information systems security and business risks PCI DSS and NIST SP 800-53 require organizations establish a formal process to effectively and routinely identify, rank, and record threats, and vulnerabilities. A formal risk assessment process is needed to help identify and assess actual and potential vulnerabilities, threat sources, and security controls planned or in place, and the likelihood and magnitude of harm from the unauthorized access, use, disclosure, disruption, modification, or destruction of the City’s information systems and the information it processes, stores, or transmits. Attachment A   -46- ASD has not developed and implemented a formal risk assessment process for SAP. The City’s SAP system is a complex and integrated information system. Without a formal risk assessment process, the City may not be able to effectively identify, assess, and manage risks associated with SAP and other integrated information systems. NIST SP 800-39 (Managing Information Security Risk), NIST SP 800-18 (Guide for Developing Security Plans for Federal Information Systems), and NIST SP 800-30 (Risk Management Guide for Information Technology Systems) provide guidance on how to implement a risk assessment process for information systems. ASD should refer to these documents in developing and implementing a formal risk assessment process for SAP and other information systems. RECOMMENDATION #16: ASD should implement a formal risk assessment process that meets minimum standards stated in PCI DSS and NIST SP 800-53 to ensure key information system threats and vulnerabilities are routinely (at least annually) and effectively identified, ranked, and addressed. ASD has not properly reconfigured key SAP system security parameters SAP supplies default settings for system parameters, which are not always consistent with the minimum level of security required by PCI DSS or suggested by other authoritative sources. PCI DSS specifies organizations should not use vendor-supplied security settings because these settings are well known and could allow malicious individuals to compromise or misuse systems. PCI DSS requires organizations develop and implement configuration standards consistent with current information systems security standards to address all known security vulnerabilities. Similarly, NIST SP 800- 53 states organizations should establish and document mandatory application configuration settings that reflect the most restrictive mode consistent with operational requirements, and that these settings are appropriately monitored and controlled. Our review of 16 SAP security parameters related to password and login controls security found:  12 of the 16 default settings did not support the minimum level of security required by PCI DSS or suggested by an authoritative ISACA (formerly the Information Systems Audit and Control Association) publication on SAP security.  ASD changed only 2 of the 16 system parameters from the SAP default settings.19 In both cases where the setting was changed, the new setting did not support the minimum level of security required by PCI DSS. We selected 7 of the 16 settings for a more detailed review. As shown in Exhibit 6, five SAP system security parameters included in our review did not support the minimum level of security required by PCI DSS.  19 The two system parameters are shown in Exhibit 6, which shows 7 of the 16 system parameter settings that should support the minimum level of security required by PCI DSS.  Attachment A   -47- Exhibit 6: Comparison of seven selected SAP parameter settings with PCI DSS SAP Parameter Description City of Palo Alto SAP Setting PCI DSS Recommended Setting Was Parameter Reconfigured? Does Setting Comply with PCI DSS? Number of times a user can enter an incorrect password before being locked out of the system 5 6 or less N Y Minimum number of digits in passwords 0 More than 0 N N Minimum number of letters in passwords 0 More than 0 N N Minimum password length 6 7 N N Number of days after which a password must be changed 180 90 or less Y N Number of records to be stored in the password history (to prevent reuse) 5 4 N Y Number of seconds a user can be idle before the user is logged off automatically 14,400 (4 hours) 900 or less (15 minutes or less) Y N Source: SAP parameter report and PCI DSS Most SAP system parameter settings in the above exhibit heighten the risk of unauthorized access to the City’s SAP system because the settings:  Permit a user to remain idle for 4 hours before being automatically logged off instead of the recommended 15 minute (or less) interval. The drastically increased interval may create an opportunity for an unauthorized user to take over and perform unauthorized activity in SAP if the authorized user walks away from their workstation. The risk is heightened considering access to SAP is provided not only to in-house staff, but also to consultants and others who access SAP remotely.  Do not require password changes until 180 days instead of the recommended 90 days. The increased interval could allow more time for a malicious individual to find weak accounts.  Do not require the use of digits and letters in passwords, and require passwords be only 6 characters (instead of the recommended 7 characters). Strong passwords are the first line of defense for information systems since a malicious individual will often first try to find accounts with weak, short, or simple to guess passwords. ASD does not have an approved policy addressing SAP system parameter settings. ASD’s policy addressing SAP system parameter settings should be consistent with a formal citywide policy on security settings for information systems. In order to meet Attachment A   -48- security standards, the City should consider using a “security configuration checklist,” which is a series of instructions or procedures for configuring information systems to meet operational requirements. RECOMMENDATION #17: ASD should develop and implement formal policies and procedures to ensure SAP security parameters are properly configured and compliant with PCI DSS, NIST SP 800-53, and other applicable industry standards. ASD has not restricted access to SAP security parameters The capability to configure SAP system parameters should be restricted to avoid unauthorized changes to critical system parameters, including security settings. NIST SP 800-53 states organizations should establish and document mandatory configuration settings and implement controls to ensure information system configuration changes are properly planned, authorized, executed, and monitored. It also states organizations should define, document, approve and enforce access restrictions associated with changes to an information system that could have significant effects on the overall security of the system. ASD does not have policies and procedures to restrict to SAP security parameters. We identified 17 SAP user accounts (9 of which were “dialog” accounts) with authorization to modify the SAP system parameters. Some of the 17 user accounts were generic and could not be associated with staff names. In addition, the user accounts that could be associated with staff names suggest that staff with different reporting lines had access to modify the SAP system parameters. RECOMMENDATION #18: ASD should ensure access to SAP system parameters is restricted to only authorized staff, and that policies and procedures incorporate change controls stated in NIST SP 800-53 to ensure all changes are properly planned, authorized, executed, and monitored. ASD has not developed policies and procedures to retain, review, and analyze SAP audit trails (logs) SAP systems provide a variety of logs for system administration, monitoring, problem solving, and auditing purposes. The logs are important for monitoring system security and to support investigations in the event of a security breach. SAP systems can be configured to determine the amount and type of log data, if any, that is retained by the system and where it is specifically stored. Formal policies and procedures should ensure SAP logs are properly configured, secured, and effectively and timely analyzed in order to:  Establish accountability for transactions processed and any important changes in SAP.  Facilitate detection and assessment of security incidents. NIST and PCI DSS security standards detail specific minimum controls required to properly manage and secure information system logs. These include: Attachment A   -49-  Policies and procedures to effectively manage system logs.  Procedures to review and analyze system logs and report any findings to designated organization officials.  Performing a risk assessment to determine what needs to be logged.  Protection of logs from unauthorized access, modification, and deletion through processes such as recording logs on “write-once” media and/or backing up logs onto a separate system or media.  Retaining logs for a specified period to provide support for after-the-fact investigations of security incidents and to meet regulatory and organizational information retention requirements.20 ASD does not have any policies and procedures addressing SAP log management. Specifically, we did not find any procedures addressing log configuration, retention, security, and roles and responsibilities for monitoring and analyzing logs. Because SAP logs were not effectively managed, we could not independently determine with certainty the duration of the security vulnerability resulting from the SAP* incident discussed in Finding 1, and individual accountability for the vulnerability. Specifically, our analysis in Finding 1 was limited because:  The SAP log of user activity contained records dating back only to August 4, 2010, and ASD did not have a process to archive logs. As a result, records were not available to support our efforts in detecting potentially unauthorized SAP access using the unsecured SAP* user account prior to August 4, 2010. Moreover, staff also reported the Oracle database system21 logging mechanism was not enabled. This further limited our ability to assess the SAP* security vulnerability identified in Finding 1 in terms of duration and accountability.  The SAP logs that should indicate key security-related events did not appear reliable or complete, restricting our ability to assess the duration of the SAP* security vulnerability and to independently determine accountability for the vulnerability. ASD has not restricted access to audit logs for SAP Services staff with system security responsibilities NIST SP 800-53 requires separation of incompatible duties. It states that system administrators responsible for user access control functions should not administer audit functions. Monitoring and overall management of the logs for security reasons should be assigned to an individual responsible for SAP security who is not responsible for day- to-day administration of SAP and user account management. Segregating the responsibility for monitoring and managing logs from duties assigned to administrators with already privileged system access would enhance security by avoiding:  Assignment of self-monitoring duties to SAP administrators and other technical staff whose activities should be subject to independent oversight.   20 PCI DSS requires maintaining logs for at least one year. 21 The underlying SAP database is an Oracle database.  Attachment A   -50-  Assignment of monitoring duties to staff who may not have adequate expertise or dedicated time to review and analyze logs and security reports.  Unauthorized modification or deletion of system logs in the event an administrator’s user account, which has access to logs, is hacked. ASD has not restricted access to audit logs for SAP Services staff with system security responsibilities. Specifically, SAP Services administrators responsible for user account management and management of access levels also perform monitoring activities using SAP logs. Our finding is consistent with a report dated June 9, 2009 from the City’s former external auditor, Maze & Associates, which states: “The system administrators of the SAP system also review the audit logs of the system. The review of the audit logs, which is a security function, should be separate from the system administration function.” RECOMMENDATION #19: ASD should develop policies and procedures and implement minimum NIST SP 800-53 and PCI DSS controls applicable to log management in order to ensure:  SAP and Oracle log data is secured using appropriate “write-once” media and/or backup procedures.  Access to SAP and Oracle logs is restricted based on the principles of least privilege and segregation of duties.  Accountability is established for monitoring SAP and Oracle logs and for reporting any incidents to the appropriate levels of management.  SAP and Oracle are properly configured to ensure logs capture appropriate information and retain the information for an appropriate duration. ASD uses live “production” data in the SAP quality assurance system without measures to “anonymize” or protect the data The SAP manual recommends implementation of three separate systems in order to make and test changes to SAP applications without interfering with live operational data. ASD records indicate that for each of the City’s five SAP systems, the City has implemented three discrete working environments: 1. Production – contains live operational data and transactions 2. Development – used mainly by developers to conduct program testing 3. Quality Assurance – used by analysts and users to conduct system and acceptance testing Recognized information systems control frameworks require safeguards to protect sensitive data22 used in testing or development of information systems:   22 Sensitive data includes information that can be used to uniquely identify, contact, or locate a single person or can be used with other sources to uniquely identify a single individual. Attachment A   -51-  NIST SP 800-122 states that while testing generally should simulate real conditions as closely as possible, any personally identifying information should be protected at the same level that it is protected in the production environment, which can add significantly to the time and expense of testing the system. NIST SP 800-122 states personally identifying information may be anonymized23 prior to use in testing or development environments to protect the information.  PCI DSS states production data containing credit card holder account numbers should not be used for testing or development because security controls are usually not as stringent in these environments. According to an SAP Services manager, all live production data is transferred to the SAP quality assurance SAP system. The manager stated the SAP quality assurance system is configured like the production system. As discussed in this report, we noted significant security vulnerabilities in the SAP Enterprise Resource Planning Central Component (SAP ECC) production system, which raised concerns regarding the use of any sensitive production data in the quality assurance system. Our concerns were further validated by a report suggesting standard user accounts in the quality assurance system were not properly secured.24 ASD does not have policies and procedures to provide safeguards in using live production data for testing purposes in the quality assurance system or to ensure transfer of production data is properly authorized. An assessment of security controls in the SAP quality assurance system was beyond the scope of this audit. ASD should refer to NIST Special Publication 800-122 (Guide to Protecting the Confidentiality of Personally Identifiable Information) in developing detailed policies and procedures to protect sensitive data in SAP. RECOMMENDATION #20: ASD should develop policies and procedures consistent with PCI DSS, NIST SP 800-53, and NIST SP 800-122 to ensure:  Any sensitive production data used in the SAP quality assurance system is anonymized or otherwise properly safeguarded through implementation of recommended controls.  Transfer of any sensitive production data is formally authorized by departments or individuals responsible for the data. Implementing the SAP system-provided tool Audit Information System (AIS) would enhance the Auditor’s Office access and the effectiveness of future security reviews The Palo Alto City Charter and the Palo Municipal Code provide the Auditor’s Office the authority to conduct audits and examinations of any City department, program, service, or activity. The purpose of these audits and examinations is to provide the City Council and City management with information and evaluations regarding the effectiveness and   23 Anonymizing information involves removal of identifying characteristics from sensitive data in order to prevent misuse or unauthorized disclosure. The anonymized information can retain its useful and realistic properties for the purpose of system testing.  24 Finding 1 provides an overview and detailed discussion of SAP standard user accounts.  Attachment A   -52- efficiency with which City resources are employed, the adequacy of the system of internal controls, and compliance with City regulations and policies and procedures. The Municipal Code also requires that the Office of the City Auditor conduct audits in accordance with Government Auditing Standards, as established by the United States Government Accountability Office. These standards require the findings and conclusions identified in performance audits be supported by sufficient and appropriate evidence. The Palo Alto Municipal Code provides that the Office of the City Auditor will have unrestricted access to obtain sufficient and appropriate evidence to conduct audits. Specifically, the Palo Alto Municipal Code states, “The city auditor will have unrestricted (emphasis added) access to all sources of information, property, and personnel relevant to the performance of a council-approved audit, unless prohibited by law.” Because SAP supports the City’s core business functions, unrestricted read-only access is essential to conducting most audits. The Auditor’s Office, however, did not have the optimum level of access in SAP to conduct this audit. For instance, we did not have independent access in SAP to key reports such as system security reports and logs needed to independently assess system security and the risk of fraud and abuse. To obtain the required information, the Auditor’s Office needed to rely on ASD to provide reports and logs. Although ASD provided most of the requested information, this process wasted the time of both ASD and audit staff. SAP offers a free auditing tool called “Audit Information System” (AIS) for external, internal, system, and data security auditing functions that is designed to improve audit quality and facilitate the audit process. AIS was delivered with the City’s SAP system, and we confirmed it is operational, however, it has not been configured or tested by staff, and the Auditor’s Office does not have access to it. AIS is also designed to be compatible with other audit tools and techniques, such as the data analytic software known as ACL, which is actively used by the Auditor’s Office staff. In reviewing guidance on AIS, we also found that it includes reports to review system security, including system logs and reports on the status of standard users including “SAP*,” which is discussed in Finding 1. Providing the Auditor’s Office with direct access to required SAP reports would have both enhanced our independence and minimized our reliance on staff. Future SAP audits and all other audits requiring access to the City’s information systems will benefit from an established and optimized level of access for the auditors. During the course of the audit, the Auditor’s Office met on several occasions with the ASD Director and staff to discuss the Auditor’s Office’s access to SAP and access to AIS. While ASD staff is not opposed to providing the Auditor’s Office with AIS, it is not high priority for implementation considering that ASD is behind in implementing other projects. RECOMMENDATION #21: To enhance the Auditor’s Office’s efficiency and independence in conducting audits, and its ability to ensure compliance with generally accepted government auditing standards, we recommend ASD implement the AIS tool and provide the Auditor’s Office with access to it. Attachment A   -53- Conclusion The City’s SAP Enterprise Resource Planning system supports its core business functions and management of information. An unsecured system-provided SAP user account with unrestricted access resulted in a significant security vulnerability, and ASD violated two critical security principles by not properly restricting access for all user accounts. Moreover, ASD has not formally adopted and implemented all controls needed to effectively manage SAP user accounts to ensure system security. The Auditor’s Office recommends formal adoption of the PCI DSS and NIST SP 800-53 security control frameworks and further security assessments of the City’s information systems using a risk-based approach. Recommendations Our report includes a total of 21 recommendations to improve the security of the City’s critical information systems. The audit recommendations in the report are addressed to ASD, however, the former Information Technology Division in ASD has been established as a City department with a Chief Information Officer reporting to the City Manager. The new department will be responsible for implementing these recommendations. RECOMMENDATION #1: ASD should develop and implement formal policies and procedures addressing standard SAP user accounts in order to:  Secure standard user accounts and prevent unauthorized use.  Detect on an ongoing basis any unsecured standard accounts and any unauthorized use.  Ensure standard user accounts can only be managed by a designated individual(s).  Authorize use only if appropriate, and ensure there is accountability for any use.  Ensure any authorized use is monitored. RECOMMENDATION #2: ASD should further investigate the following:  Staff’s account that SAP* was left unsecured after installing an SAP support pack in December 2010.  Responsibility for the deletion and recreation of the SAP* user master record.  Responsibility for missing log records. RECOMMENDATION #3: To ensure the City can appropriately respond to SAP security incidents, ASD should develop and implement a comprehensive incident response plan that meets PCI DSS and NIST control standards and includes provisions to address:  Incident response policies and procedures  Incident response training  Monitoring and reporting Attachment A   -54-  Roles and responsibilities  Business recovery and continuity procedures  Data back-up processes  Legal requirements in reporting compromises RECOMMENDATION #4: To mitigate risks associated with assignment of unrestricted SAP access, ASD should:  Formally adopt policies and procedures addressing SAP user access that are consistent with the principles of least privilege and segregation of duties.  For emergency purposes, ASD should consider creating a single unrestricted account assigned the SAP_ALL profile that is appropriately secured and controlled in accordance with SAP guidelines and industry standards.  Implement policies and procedures to either prohibit or control the use of all other powerful system-provided SAP profiles.  Ensure needed SAP roles and profiles are approved by management and included in the City’s role authorization procedures, and that unauthorized roles and profiles are not assigned.  Develop procedures to detect any unauthorized roles or profiles assigned to users. RECOMMENDATION #5 To ensure SAP user account administration functions are properly separated, ASD should:  Segregate responsibilities for creating and maintaining roles/profiles, assignment of roles/profiles, and creating and maintaining user accounts.  Prohibit IT staff from maintaining Human Resources Department employee records.  Assign all SAP user administrators to a designated SAP user group, preventing them from managing their own and other administrators’ accounts and access levels, and designate an individual to manage the SAP user group. RECOMMENDATION #6: Develop and implement policies and procedures to ensure SAP access for separated City employees is terminated in a timely manner and coordinated with Human Resources Department processes. RECOMMENDATION #7: ASD should either eliminate the 52 generic CAL-Card user accounts, or develop policies and procedures to implement compensating controls to:  Ensure these accounts are secured.  Establish individual accountability for their use.  Allow use on an exception basis in meeting the City’s business needs. RECOMMENDATION #8: ASD should develop formal policies and procedures that clearly classify non-organizational users and define for each class: Attachment A   -55-  Authorized access levels.  Duration of access.  Controls to ensure each class abides by the City’s security policies.  Controls to monitor SAP activity and to ensure SAP access levels and duration is consistent with policies and procedures. RECOMMENDATION #9: ASD should develop policies and procedures to address use of non-dialog user accounts. These policies and procedures should address:  Authorization to use and assignment of non-dialog accounts.  Permitted use for each account.  Individual accountability for use.  Controls to monitor use. RECOMMENDATION #10: ASD should as a rule prohibit the use of generic user accounts, in following PCI DSS and NIST control frameworks. ASD should develop policies and procedures to address the use of any generic user accounts on an exception basis to meet the City’s business needs and to ensure adequate compensating controls are implemented and include:  Formal authorization for use  Permitted levels of access  Duration of use and procedures to disable or remove  Permitted use or function  Individual accountability for use RECOMMENDATION #11: ASD should establish policies, procedures, and processes to ensure:  SAP user administrators are aware of the required identification information for each type of SAP user account, and SAP is configured to require, to the extent possible, input of required information.  SAP user accounts contain all required user identification information, consistent with Human Resources Department records and/or other applicable independent authorized lists for City employees.  The City is compliant with PCI DSS and NIST SP 800-53 standards in its management of SAP user accounts. RECOMMENDATION #12: ASD should adopt and implement PCI DSS and NIST SP 800-53 information systems security control frameworks to help ensure security of the City’s key information systems. RECOMMENDATION #13: ASD should develop and implement a formal and comprehensive security policy consistent with PCI DSS, NIST, the SAP Library, and other industry standards. Attachment A   -56- RECOMMENDATION #14: ASD should formally assign responsibility for SAP security. RECOMMENDATION #15: ASD should implement a formal security awareness and training program that meets minimum control standards stated in PCI DSS and NIST control frameworks. The program should include provisions to ensure SAP technical staff is trained on current SAP security controls and practices. RECOMMENDATION #16: ASD should implement a formal risk assessment process that meets minimum standards stated in PCI DSS and NIST SP 800-53 to ensure key information system threats and vulnerabilities are routinely (at least annually) and effectively identified, ranked, and addressed. RECOMMENDATION #17: ASD should develop and implement formal policies and procedures to ensure SAP security parameters are properly configured and compliant with PCI DSS, NIST SP 800-53, and other applicable industry standards. RECOMMENDATION #18: ASD should ensure access to SAP system parameters is restricted to only authorized staff, and that policies and procedures incorporate change controls stated in NIST SP 800-53 to ensure all changes are properly planned, authorized, executed, and monitored. RECOMMENDATION #19: ASD should develop policies and procedures and implement minimum NIST SP 800-53 and PCI DSS controls applicable to log management in order to ensure:  SAP and Oracle log data is secured using appropriate “write-once” media and/or backup procedures.  Access to SAP and Oracle logs is restricted based on the principles of least privilege and segregation of duties.  Accountability is established for monitoring SAP and Oracle logs and for reporting any incidents to the appropriate levels of management.  SAP and Oracle are properly configured to ensure logs capture appropriate information and retain the information for an appropriate duration. RECOMMENDATION #20: ASD should develop policies and procedures consistent with PCI DSS, NIST SP 800-53, and NIST SP 800-122 to ensure:  Any sensitive production data used in the SAP quality assurance system is anonymized or otherwise properly safeguarded through implementation of recommended controls.  Transfer of any sensitive production data is formally authorized by departments or individuals responsible for the data. RECOMMENDATION #21: To enhance the Auditor’s Office’s efficiency and independence in conducting audits, and its ability to ensure compliance with generally accepted government auditing standards, we recommend ASD implement the AIS tool and provide the Auditor’s Office with access to it. Attachment A 1of13 10/7/2011 Date: October6,2011 To: CityAuditor From: JamesKeene,CityManager Preparedby: LaloPerez,DirectorofAdm inistrativeServices(ASD) TheAdministrativeServicesDepartmentstaffacknowledges andappreciatesthedetailedworkofthe City’sAuditorOffice(Auditor’sOffice)andispleasedtorespondtothe“SAPSecurityAudit”.Listed belowafterthesummaryaretherespon sestotheauditor’srecommendations. Summary StaffacknowledgestheimportanceoftheSAPsecurityvulnerabilityincidentandhasmadeitatop prioritytorectifyandtakenactiontoaddressmanyofthefindingsintheaudit.Afterreviewingthe systemandpotentialimpacts,stafffeelscomfortablein statingtheimpactwaslimitedtoaccessof personalorsensitiveinformationbyaverylimitednumberofhighlyskilledCityemployeescommitted toSAPoperationalstandards.TheCity’snetworkaccesswasnotcompromisedandsinceanoutsider wouldhavetofirstbreachthefirewallandthenSAPsecurity,theinci dentwaslimitedtointernalusers. Furthermore, the system was setup with financial con trols that would prevent an individual from processingtransactionssuchasissuanceofchecksordispersingoffundsontheirown.Therearecheck validationsystemsinplaceaswellthatwouldpreventanunauthorizedcheckfrombeingchargedtothe City’saccount.Whileitisunacceptablethatsensitive informationwasexposed,thelimitednumberof staffwiththeabilitytoaccesstheinformationistrai nedtoaccesssensitiveinformationwhileupholding confidentialitystandards. The Information Technology (IT) Department (Formerly a Division of the Administrative Services Department)hasbeenwo rkinginrecentmonthswiththeAuditor’sOfficetoaddressinquiriesand findingsarisingfromtheauditof SAP.Significantsecuritychange stoITprocesseshave beenmadesince theinitialfindingswer ereleasedbytheCityAuditor. TheITDepartmentwascreatedintheFY2012Budgetas astandalonedepartment.Theorganizational unit was formerly housed in the Administrativ e Services Department (ASD). The City Manager establishedITasastandalonedepartmenttogivegreateremphasisandfocustotheITfunction, includingtheareaofsecurity. -57- CITY MANAGER'S RESPONSE TO THE SAP SECURITY AUDIT REPORTAttachment A 2of13 10/7/2011 DuringthelastseveralmonthsstaffhascollaboratedwiththeAuditorsOfficeindevelopingaSAP SpecialAccountMonitoringandSAPSystemMonitoringPolicyandProcedurestoaddresstheinternal securityincidentinvolvingSAP*useraccount.Asaresult,staffhassignificantlyimprovedthesecurityof theSAPsystem. Itisimportanttoemphasizethatstaffacknowledgestheimportanceofth efindingsintheaudit.Atthe sametimeitisimportanttopointoutthatthe taskofeffectivelymanagingandmitigatingvulnerability risksassociatedwithSAP*useraccountsaswell asdevelopingacomprehensiveITsecuritypolicy 1isthe responsibilityofahandfulofemployeesinchargeofthedaytodayoperationsofmaintainingthe enterprisewide SAP system comprised of six systems, as outlined in the audit finding #4, the implementationoftheinfo rmationSecuritySystemStandardwillrequiretheinvolvementoftheSAP teamaswellasthenetworkoperations,infrastructureandbusines sprocessteams.WithmanyITteams involvedthecomplexityofmiti gationscanbecomegreat. SincetheITfunctionhasbecomeitsowndepartment,thenewDepartmentHead,oncehired,willneed to undertake a comprehensive security evaluation for all technology systems and determine the appropriateresour cesneededtoaddressenterprisesecurityrequirements. Tosummarize,ofthetwentyonerecommendations,staffbelievesthatsevenhavebeencompleted, twoareworkinprogress,andtheremainingtwelvewillrequirefurtherevaluation.Inordertoaddress theremainingrecommendationsonthelistwebelievethatthesecurityrisk,staffingrequirements,and implementationcosts need to be evaluated. We are recommending that an IT security expert be retainedtoperformtheseevaluationsandprepareacostbenefitanalysistoassiststaffinmakingfuture recommendations. This analysis will be coordinated with the upcoming IT Strategic Plan recommendations,whichincl udeconductingacomprehensiveCitywide ITSecurityAudit. One of the key factors in determining future actions i s determining the risk level posed by the vulnerabilitiesinthesystem.Notallriskslistedintherecommendationsareofequalmagnitude.We havepreparedaninitialriskassessmentusingt herecommendedriskassessmentframeworkfromthe National Institute of Standards and Technology (NIST SP800 30) which evaluates individual security vulnerabilityfindingsbydeterminingbusinessimpacts 2ofthesecurityeventandlikelihoodoftheevent 1ITsecuritypolicyrelatedstandards :a.PaymentCardIndustryDataSecurity Standard(PCIDSS),b.National InstituteofStandardsandTechnology(NIST):NISTSP 80053(SecurityControl),N ISTSP80030(RiskAssessment,), NISTSP80039(Man agingSecurityRisk) 2 Rickbusinessimpactdefinition :High :highlycostlylossofmajortangibleasset sorresources;(2)maysignificantlyviolate, harm,orimpedeanorganization’smission,reputation,orinterest;or(3)mayresultinhumandeathorseriousinjury.Medium : -58- Attachment A 3of13 10/7/2011 occurring.Theresultsofourinternalrisklevelassessmentarereferencedinthefollowingresponseto eachrecommendation.Staffprovidestheriskrating asonepieceofinformationtohelpevaluatethe criticalityoftherecommendationsandactionstaken.S taffsuggeststhatanindependentsecurityaudit validatetheriskrating. RECOMMENDATION#1 ASD should develop and implement formal policies and procedures addr essing standard SAP user accountsinorderto: Securestandarduseraccountsand preventunauthorizeduse. Detectonanongoingbasisanyunsecuredstandardaccountsandanyunauthorizeduse. Ensurestandarduseraccountscanonly bemanagedbyade signatedindividual(s). Authorizeuseonlyifappropriated,andensure thereisaccountabilityforanyuse. Ensureanyauthorizeduseismonitored. Staff concurs. Status: Completed. Risk level assessment:Medium (04/2011), Low (09/2011) to be furthervalidatedbyexternalsecurityexpert Wehavebee nworkingwiththeAuditor’sOfficetodesigncont rolprocessesandprocedures.Asaresult, thefollowingchangeshavebeenimplementedandare nowincludedinSAPSpecialAccountMonitoring andSAPSystemMonitoringPolicyandProcedures SAP*Accounthasbeen lockedandauthorizationremoved Twolevelsofmonitoringandalert mechanismshavebeenestablished todetectSAP*login SAPspecialaccountsarenowgroupedandmai ntainedbyaseparateindividualsratherthanjust theBasisAdministrator SAPspecialaccountaccesslog willbereviewedondailybasis AsshownbelowtheCityhasmultiplelayersofsecurityac rossthenetworkwithtwofire walls standinginfrontoftheinternalSAPservers SAP*incidentintheContextoftheNetwork (1)mayresultinthecostlylossoftangibleassetso rresources;(2)mayviolate,harm,orimpedeanorganization’smission, reputation,orinterest;or(3)mayresultinhumaninjury.Low:(1)mayresultinthelossofsometangibleassetsorresourcesor (2)maynoticeablyaffectanorganization’smission,reputation,orinterest. -59- Attachment A 4of13 10/7/2011 SAP Router Web Dispatcher UCES Production UCES Development UCES Quality Main Firewall Second Firewall InternetInternet ECC CRM/IcWeb BIESS-portal Solution Manager City network SAP * SAP Router Web Dispatcher UCES Production UCES Development UCES Quality Main Firewall Second Firewall InternetInternet ECC CRM/IcWeb BIESS-portal Solution Manager City network SAP * RECOMMENDATION#2 ASDshouldfurtherinvestigatethefollowing: Staff’saccountthatSAP*wasleftunsecuredafterinstallinganSAPsupportpackin December2010 Responsibilityforthedeletionandrecreation oftheSAP*usermasterrecord Responsibilityformissinglogrecords Staffacknowledged.Status:aninternalreviewof allavailablesupportingmaterials,i.e.userchangelog, accesslog,securityactivitylogwascompleted.IThasbeenworkingwiththeAuditor’sOfficetoaddress the items above. Unfortunately IT was unable to contin ue further the investigation due to limited availabilityofdata 3(i.e.systemlogandsecurityactivitylogwereeithernotavailableornolonger 3SAPsystemlogisconfiguredtoretainaspecific amountofdatawhichallowsretentionofapproximately8 monthsofrollingdata. -60- Attachment A 5of13 10/7/2011 existedandtherewasnochangelogrecord),which couldbeusedtosubstantiatetheresponsibilityfor items2and3.We’vesincerefocusedoureffortson lessonslearnedandtightenedcontrolofSAP* accountmaintenancebyseparating theadministrationrights fromtheSAPBasisfunction . RECOMMENDATION#3 To ensure the City can appropriately respond to SAP security incidents, ASD should develop and implementacomprehensiveincidentresponseplanthatmeetsPCIDSSandNISTcontrolstandardsand includesprovisionstoaddress: Incidentresponsepoliciesandprocedures Incidentresponsetraining Monitoringandreporting Rolesandresponsibilities Businessreco veryandcontinuityprocedures Databackupprocesses Legalrequirementsinreportingcompromises Staffconcursandrecommendsan independentexternalsecurityexpert evaluation.Status:Open.Risk levelassessment:Medium(09/2011),tobefurthervalidatedbyexternalsecurityexpert.Targetreview date:pendingonexternalsecurityaudit.Incid entmanagementisoneofthetw entyeightITSecurity controlpoints 4.SAPProgramManagementOffice(PMO)hasimplementedan incidentmanagement procedure, including the essential elements of an incident, (i.e. date, time, report by, incident description,actiontaken,rootcauseanalysis,andmitigationplan).Staffrecommendsacomprehensive incidentmanagementreviewtobedonebyan independentexternalsecurityexpert.Targetreview date:pendingonindependentexternalsecurityaudit. RECOMMENDATION#4 Tomitigaterisksassociatedwithassign mentofunrestrictedSAPaccess,ASDshould: Formally adopt policies and procedures address ing SAP user access consistent with the principlesofleastprivilegeandsegregationo fduties.Foremergencypurposes,ASDshould 4ITSecurityControlincludesninecategories,total 28controlpoint:includingRiskManagement,Contingency Planning,ITSystemSecurity,LogicalAccessControl,DataProtection,FacilitiesSecurity,ThreatManagement,and AssetManagement -61- Attachment A 6of13 10/7/2011 consider creating a single unrestricted account assigned the SAP_ALL profile that is appropriatelysecuredandcontrolledinaccordancewith SAPguidelinesandindustrystandards Implementpoliciesandprocedurestoeitherprohibitorcontroltheuseofallotherpowerful systemprovidedSAPprofile Ensurenee dedSAProlesandprofilesareapprovedbymanagementandincludedintheCity’s roleauthorizationprocedures,andthatunauthorize drolesandprofiles arenotassigned. Developprocedurestodetectanyunauthoriz edrolesorprofilesassignedtousers Staff concurs. Status: Completed. Risk level assessment: Low (09/2011) to be further validated by externalsecurityexpert Duringtheauditperiod,staffhasupdate dtherelevantprocessesandprocedures,includingtheSAP AuthorizationManagementprocessandprocedure,SAP SpecialAccountMonitoring,andSAPSystem Monitoring Policy and Procedures to incorporate the above recommendations.Summary of the updateincludes: Rolesownershipforbusin esstransactionsareestablishedandreviewedbythebusinessrole ownertoensurethattheprinci plesofleastprivilegeandse gregationofdutiesarepracticed Asemiannualauthorizationreviewisinplacean dfindingsandimprovementsaredocumented Adds,changes,anddeletionstoSAPauthorizationrequestsaretrackedandapprovedbythe Helpdesk OtherSAPdefaultspecialaccounts arelocked andpasswordreset SAPdefaultspecialaccountsaccess logsaremonitoreddaily RECOMMENDATION#5 ToensureSAPuseraccountadministration functionsareproperlyseparated,ASDshould: Segregate responsibilities for creating and maintaining roles/profiles, assignment of roles/profiles,creatin gandmaintaininguseraccounts ,transportationofroles/profiles ProhibitITstafffrommaintainingHuman Resourcesdepartmentemployeerecords Assign all SAP user administrators to a designated SAP user group, preventing them from managingtheirown(andotheradministrators’)accountsandaccesslevels,anddesignatean individualtomanagetheSAPusergroup Staffconcursandrecommendsin dependentexternalsecurityexpertevaluation.Status:Open.Risk levelassessment:Low(09/2011)tobefurthervalidatedby independentexternalsecurityexpert. Segregationofdutiesisimportantbut difficulttoimplementwithoutadditionalresources. Wehaveimplementedamitigationcontrolin theSAPSystemMonitoringPolicyandProceduresto review all user chang e logs done by the SAP user administrator. In addition, request to transfer maintenance of Employee records back to Human Resources Department (HR) has been initiated. Targetreviewdate:6/30/2012 RECOMMENDATION#6 DevelopandimplementpoliciesandprocedurestoensureSAPaccessforseparatedCityemployeesis terminatedinati melymannerandcoordinatedwith HumanResourcesDepartmentprocesses. Staff concurs. Status: Open. Risk level assessment: Medium (09/2011) to be further validated by independentexternalsecurityexpert. -62- Attachment A 7of13 10/7/2011 SAPuseraccountwillbeterminateduponreceivingaTerminationReportfromHR.Thesecurityrisk resideslargelyontheemployeeterminationbusinessprocess,i.e.fillingoutPersonnelActionForm (PAF)bybusinessdepartmentforeachterminatedemployee.Tomitigatetherisk,we’veimplemented controlstofacilitatereconciliationbetweenHumanResource,WindowsNT(network),andSAPuser accounttoensureSAPaccessforseparated Cityemployeesismonitoredandterminated.Target reviewdate:6/30/2012 RECOMMENDATION#7 ASDshouldeithereliminatethe52genericCalcarduseraccounts,ordeveloppoliciesandproceduresto implementcompensatingcontrolsto: Ensuretheseaccountsaresecured Establishindividualaccountabilityforth eiruse Allowuseonanexceptionbasisin meetingtheCity’sbusinessneeds Staff concurs. Status: In Progress. Risk level assessment: Low (09/2011) to be further validated by independentexternalsecurityexpert. The52genericCalCarduseraccoun tsdonothaveanyroleorau thorizationassigned;therefore,the correspondingsecurityriskisrelativelylow.Theaccountsareusedtocloseoutfraudulentchargesto theCity’sCalCardsandcannotbeusedtomakepurchases.Tomitigatetherisk,wehaveimplemented acontrolwheregenericuseraccoun ts’activitywillbemonitoredandreviewedon dailybasis.Evaluation ofawebbasedsolutiontoreplacethecustomizedCalCardprogramisund erway,whichwillofferstaff bettertoolsforhandlingfraudulentcharges.Targetreviewdate:06/30/2012 RECOMMENDATION#8 ASDshoulddevelopformalpoliciesandprocedures thatclearlyclassifyno norganizationalusersand defineforeachclass: Authorizedaccesslevels Durationofaccess Controlstoensureeachclass abidesbytheCity’ssecuritypolicies ControlstomonitorSAPactivityandtoensureSAPaccesslevelsanddurationisconsistentwith policiesandp rocedures Staff concurs. Status: Completed. Risk level assessment: Low (09/2011) to be further validated by independentexternalsecurityexpert Riskofthisfindinghasbeenmitigatedthroughtheimplementati onofthefollowingcontrols: Classification of nonorganization users such as business part ner G reenwaste or support maintenancepartners SierraInforsysSAPsupportloginsarereviewedandmanagedbythesemiannualauthorization process Nonorganizational User accounts creation to be tracked by the Helpdesk and approved by businessownerswithanexpirationdate Adds,changes,anddeletionso fauthorizationsaretrackedbytheH elpdeskandapprovedbythe businessowner Nonorganiza tional user account activities are monitored and reviewed as part of the Daily SystemMonitoringprocess RECOMMENDATION#9 ASDshoulddeveloppoliciesandproce durestoaddressuseofnon dialoguseraccountsthataddress: -63- Attachment A 8of13 10/7/2011 Authorizationtouseandindividualsauthorizedandassigned. Permitteduseforeachaccount Individualaccountabilityforuse Controlstomonitoruse Staffconcurs.Status:Completed Risk levelassessment:Low(09/2011)tobefurthervalidatedby externalsecurityexpert Nondialog user accounts are broken down as follows: 7 “system” accounts, 3 “communication” accounts,2“service”accounts,and1“reference”useraccount.TheaccountsareusedbySAPfor specificpurposes.Theseaccountscan notbeusedtologontoSAP;therefore,theriskisrelativelylow. Tomitigatetherisk,nonorganizationaluseraccountactivitiesaremonitoredandreviewedaspartof theDailySystemMonitoringprocess RECOMMENDATION#10 ASDshouldasaruleprohibittheuseofgenericuseraccounts,infollowingPCIDSSandNISTcontrol frameworks.ASDshoulddeveloppoliciesandproceduresto addressuseofanygenericuseraccounts onanexceptionbasistomeettheCity’sbusinessneed sandtoensureadequatecompensatingcontrols areimplementedtoaddress: Formalauthorizationforuse Permittedlevelsofaccess Durationofuseandprocedurestotimelyinactivate Permitteduseorfunction Individualaccountability Staff acknowledged and actions have bee n taken. Status: Complete d Risk level assessment: Low (09/2011)tobefurthervalidatedbyindependentexte rnalsecurityexpert.GenericSAPuseraccounts suchas“DataMigration”weresetupduringtheBannertoSAPmigration.Theaccounthasexpired. ThereareothergenericaccountssuchasEARLYWATCHusedforSAPsupport.To mitigatetherisk, nonorganiza tional user account activities are monitored and reviewed as part of the Daily System Monitoringprocess RECOMMENDATION#11 ASDshouldestablishpoli cies,procedures,andprocessestoensure: SAPuseradministratorsareawareoftherequiredidentificationinformationforeachtypeofSAPuser account,andSAPisconfi guredtomandate,totheextentpossible,i nputofrequiredinformation.SAP useraccountscontainallrequireduse ridentificationinformation,consistentwithHumanResources Departmentrecordsand/orotherapplicableindependentauthorizedlistsforCityemployees.TheCityis compliantwithPCIDSSandNIS TSP80053standardsinitsmanagementofSAP useraccounts . Staffconcurs.Status:InProgress.Risklevelassessment:Medium(09/2011)tobefurthervalidatedby independentexternalsecurityexpert. TheSAPuseraccountinformationcombinesHRemploye emasterinformationandinformationfromthe activeDirectory(NetworkandEmailaccount).Therefore,anyattempttoaddre sstheissueonlywithSAP will be limited.We’ve documented the HR employee master, Active Directory and SAP account creation, change, and termination system processes and identified a set of improvement actions. However, implementing PCI DSS and NIST SP80053 implementation would require network team -64- Attachment A 9of13 10/7/2011 resourcesandcooperationoftheHRDepartment.Tomitigatetherisk,we’veimplementedcontrolsto facilitate reconciliation between Human Resource, Windows NT (network), and SAP user account information.Targetrevie wdate:6/30/2012 RECOMMENDATION#12 ASDshouldadoptandimplementPCIDSSandNISTSP80053informationsystemssecuritycontrol frameworkstohelpensuresecurityoftheCity’skeyinformationsystems. Staff recommends external security expert evaluation. S tatus: Open. Risk level assessment: Low (09/2011)tobefurthervalidatedby independentexternalsecurityexpert. PCIDSS 5containssixmajorcategoriesandatotalof200controlpoints.NISTSP53containsasimilar numberofcontrolpoints.ImplementingbothstandardswouldrequiresignificantITresourcesand businessresources.Staffsuggestsacomprehe nsivesecurityaudittodeterminethe risklevelandcost. RECOMMENDATION#13 ASDshoulddevelopandimplementaformalandcomprehensive securitypolicyconsistentwithPCIDSS, NIST,theSAPLibrary,andotherindustrystandards. Staffrecommendsexternalsecurityexpertevaluation.Status:Open.Risklevelassessment:Medium (09/2011)tobevalidatedbyindependentexternalsecurityexpert.Targetreviewdate:pendingon externalsecurityaudit. RECOMMENDATION#14 ASDshouldformallyassignresponsibilityforSAPsecurity. Staffconcurs,butitwillrequire additionalstaff.Status:Open.Risklevelassessment:Low(09/2011)to befurthervalidatedbyexternalsecurityexpert. SAPSecurityisonefacetintheoveralladministrationofthelandscape.SAPBasisAdminstaffinglevels arethesameasin2003whenonly1pro ductionlandscapeexisted.Thereare5now. Staffsuggestsaco mprehensivesecurityaudittodeterminethe risklevelandifaSAPseparatesecurity roleshouldbeestablished. 5PCIDSScontainssixmaincategories,twelve requirements:sixcategoriesinclude:BuildandmaintainSecure network,Protectcardholderdata,Maintainvulnerabilityprogram,Implementstrongaccesscontrol,Regularly monitorandtestnetworks,andMaintainInformationSecurityPolicy -65- Attachment A 10of13 10/7/2011 RECOMMENDATION#15 ASDshouldimplementaformalsecurityawarenessandtrainingprogramthatmeetsminimumcontrol standardsstatedinPCIDSSandNISTcontrolframeworks.Theprogramshouldincludeprovisionsto ensureSAPtechnicalstaffistrainedoncurrent SAPsecuritycontrolsandpractices. Staff recommends external security expert evaluation. Status: Open. Risk level assessment: Low (09/2011)tobefurthervalidatedbyexternalsecurityexpert. RECOMMENDATION#16 ASDshouldimplementaformalriskassessmentprocessthatmeetsminimumstandardsstatedinPCI DSSandNIST80053toensurekeyinformationsystem threatsandvulnerabilitiesareroutinely(atleast annually)andeffectivelyidentifi ed,ranked,andaddressed. Staffrecommendsexternalsecurityexpertevaluation.S tatus:Open.Risklevelassessment:Medium 09/2011)tobefurthervalidatedbyindependentexternalsecurityexpert.Targetreviewdate:pending onexternalsecurityaudit. RECOMMENDATION#17 ASDshoulddevelopandimplementformalpoliciesandproced urestoensureSAPsecurityparameters areproperlyconfiguredandcomplia ntwithPCIDSS,NISTSP80053,andotherapplicableindustry standards. Staffrecommendsexternalsecurityexpertevaluation.Status:Open.Risklevelassessment:Medium (09/2011)tobefurthervalidatedby independentexternalsecurityexpert. SAPSecurityparameterswerereviewedin2008beforeEnterpriseCentralComponent(ECC )6.0golive, currentparameterswereapprovedbyITmanagementtoalignwiththenetworksecurityparameters.In addition,securityparameterchangesoftenrequireorganizationalcooperation,i.e.PCIDSSsuggestsidle timeoutsettingis15minutes.Whenthesystemdetectsaninactivesessionlongerthan15minutes,it willforceasessionlogoff.Idletimeoutsettingmus tconsiderbusinessimpactsaswell,andmustbe aligned with network idle time out setting. Staff suggests a comprehensive independent external security audit to determine the risk level and cost. Target review date: pe nding on independent externalsecurityaudit RECOMMENDATION#18 ASDshouldensureaccesstoSAPsystemparametersisrestrictedtoonlyauthorizedstaff,andthat policiesandproceduresincorporatechange controlsstatedinNISTSP80053toensureallchangesare properlyplanned,authorized,executed,andmonitored. Staffrecommendsindepen dentexternalsecurityexpertevaluatio n.Status :Open.Risklevelassessment: Low(09/2011)tobefurther validatedbyexternalsecurityexpert RECOMMENDATION#19 ASDshoulddeveloppoliciesandproceduresandimplementminimumNISTSP80053andPCIDSS controlsapplicabletologmanagementinordertoensure: SAP and Oracle log data is secured using appr opriate “writeonly” media and/or backup procedures Access to SAP and Oracle logs is restricted based on the principles of least privilege and segregationofduties -66- Attachment A 11of13 10/7/2011 AccountabilityisestablishedformonitoringSAPandOracl elogsandforreportinganyincidents totheappropriatelevelsofmanagement SAPandOracleareproperlyconfiguredto ensurelogscaptureappropriateinformationand retaintheinformationforanappropriateduration Staff recommends external security expert evaluation. Status: Ope n. Risk level assessment: Low (09/2011)tobefurthervalidatedbyindependentexternalsecurityexpert RECOMMENDATION#20 ASDshoulddeveloppoliciesandproceduresconsistentwithPCIDSS,NISTSP80053,andNISTSP800 122toensure: AnysensitiveproductiondatausedintheSAPqualityassurancesystemisanonymizedorotherwise properly safeguarded through implementation of recommended controls. Transfer of any sensitive productiondataisformallyauthorizedbyde partmentsorindividualsresponsibleforthedata. Staffconcurs.Status:Completed.Risklevelassessment:Low(09/2011)tobefurthervalidatedby independentexternalsecurityexpert Thefollowingprotectionshavebeenimple mentedtoprotectcustomersensitivedata: Creditcardnumberisfully encryptedinthedatabase Creditcardnumbertransmissionissecured viaSecuredSocketLayer(SSL) Customeridentificationnumber,includingdriverlic ensenumber,bankaccount,socialsecurity number,etc.ismasked;onlythelast4digi tsremainunmaskedatalluserinterface(display, report,search)toalimitednumber ofauthorizedcustomerservicerepresentatives Qualityassurancesystemdataneedstoberefreshedfrom theproductionenvironmentinorder toperformapropersystemintegrationtest.Suchtransferrequestistrackedbyhelpdesk systemandmustbeapprovedbybusinessowner. RECOMMENDATION#21 ToenhancetheAudi tor’sOffice’sefficiencyandindependencein conductingaudits,anditsabilityto ensure compliance with generally acce pted government auditing stand ards, we recommend ASD implementtheAuditInformationSystemAIStooland providetheAuditor’sOfficewithaccesstoitand suggestacomprehensivesecurityaudit todeterminetheriskleve landcost. Staff concurs. Status: Open. Risk level assessment: Low (09/2011) to be further validated by independentexternalsecurityexpert. AuditInformationSystem(AIS)isnotaturnkeysolution.Projectfundingandresourcemustbeplanned inadvance.St affsuggeststheAuditor’sOfficetoin itiateAISimplementationprojectduringannualCIP planning. -67- Attachment A 1 2 o f 1 3 1 0 / 7 / 2 0 1 1 Ap p e n d i x : S A P S e c u r i t y A u d i t S e l fR i s k A s s e s s m e n t ( S e p t e m b e r , 2 0 1 1 ) Re c o m m e n d a t i o n St a f f r e s p o n s e S t a t u s T a r g e t d a t e eff e c t i v e n s s o f co n t r o l Pr o b a b i l i t y o f th r e a t o c c u r a n c e Ris k l i k e l i h o o d ra t i n g Ri s k I m p a c t R i s k l e v e l ( l i k e l i h o o d + im p a c t ) Re c o m m e n d a t i o n 1 AS D s h o u l d d e v e l o p a n d i m p l e m e n t f o r m a l p o l i c i e s a n d pr o c e d u r e s a d d r e s s i n g s t a n d a r d S A P u s e r a c c o u n t s Co n c u r s C o m p l e t e d ML L owHighLow Re c o m m e n d a t i o n 2 AS D s h o u l d f u r t h e r i n v e s t i g a t e t h e S A P * i n c i d e n t ac k n o w l e d g e d Co m p l e t e d ML L owHighLow Re c o m m e n d a t i o n 3 AS D s h o u l d d e v e l o p a n d i m p l e m e n t a c o m p r e h e n s i v e i n c i d e n t re s p o n s e St a f f r e c o m m e n d s ex t e r n a l s e c u r i t y ex p e r t e v a l u a t i o n . Op e n Ta r g e t r e v i e w da t e : p e n d i n g o n ex t e r n a l s e c u r i t y au d i t L L M e d i u m M e d i u m M e d i u m RE C O M M E N D A T I O N # 4 t o m i t i g a t e r i s k s a s s o c i a t e d w i t h as s i g n m e n t o f u n r e s t r i c t e d SA P a c c e s s , A S D s h o u l d : Co n c u r s Co m p l e t e d M L Lo w M e d i u m L o w Re c o m m e n d a t i o n 5 to e n s u r e S A P u s e r a c c o u n t a d m i n i s t r a t i o n f u n c t i o n s a r e pr o p e r l y s e p a r a t e d ( S O D ) St a f f r e c o m m e n d s ex t e r n a l s e c u r i t y ex p e r t e v a l u a t i o n . Op e n 6/ 3 0 / 2 0 1 2 L L M e d i u m L o w L o w Re c o m m e n d a t i o n 6 De v e l o p a n d i m p l e m e n t p o l i c i e s a n d p r o c e d u r e s t o e n s u r e S A P ac c e s s f o r s e p a r a t e d C i t y e m p l o y e e s i s te r m i n a t e d i n a t i m e l y ma n n e r a n d c o o r d i n a t e d w i t h H u m a n R e s o u r c e s D e p a r t m e n t pr o c e s s e s Co n c u r s Op e n 6/ 3 0 / 2 0 1 2 L L M e d i u m M e d i u m M e d i u m Re c o m m e n d a t i o n 7 AS D s h o u l d e i t h e r e l i m i n a t e t h e 5 2 g e n e r i c C a l c a r d u s e r ac c o u n t s , o r d e v e l o p p o l i c i e s a n d p r o c e d u r e s t o i m p l e m e n t co m p e n s a t i n g c o n t r o l s co n c u r s In p r o g r e s s 6/ 3 0 / 2 0 1 2 M L Lo w Lo w L o w Re c o m m e n d a t i o n 8 AS D s h o u l d d e v e l o p f o r m a l p o l i c i e s a n d p r o c e d u r e s t h a t c l e a r l y cl a s s i f y n o n - o r g a n i z a t i o n a l u s e r s co n c u r s Co m p l e t e d M L Lo w M e d i u m L o w Re c o m m e n d a t i o n 9 AS D s h o u l d d e v e l o p p o l i c i e s a n d p r o c e d u r e s t o a d d r e s s u s e o f no n - d i a l o g u s e r a c c o u n t s co n c u r s Co m p l e t e d L L M e d i u m L o w L o w Re c o m m e n d a t i o n 1 0 AS D s h o u l d a s a r u l e p r o h i b i t t h e u s e o f g e n e r i c u s e r a c c o u n t s St a f f a c k n o w l e d g e d an d a c t i o n s h a v e be e n t a k e n . Co m p l e t e d M L M e d i u m L o w L o w -6 8 - Attachment A 1 3 o f 1 3 1 0 / 7 / 2 0 1 1 Re c o m m e n d a t i o n St a f f r e s p o n s e S t a t u s T a r g e t d a t e eff e c t i v e n s s o f co n t r o l Pro b a b i l i t y o f th r e a t o c c u r a n c e Ris k l i k e l i h o o d ra t i n g Ris k I m p a c t R i s k l e v e l ( l i k e l i h o o d + im p a c t ) Re c o m m e n d a t i o n 1 1 A S D s h o u l d e s t a b l i s h p o l i c i e s , p r o c e d u r e s , a n d p r o c e s s e s t o en s u r e S A P a n d H R c o n s i s t e n c y Co n c u r s In p r o g r e s s 6/ 3 0 / 2 0 1 2 M L M e d i u m M e d i u m M e d i u m Re c o m m e n d a t i o n 1 2 AS D s h o u l d a d o p t a n d i m p l e m e n t P C I D S S a n d N I S T S P 8 0 0 - 53 St a f f r e c o m m e n d s ex t e r n a l s e c u r i t y ex p e r t e v a l u a t i o n . op e n M L Lo w M e d i u m L o w Re c o m m e n d a t i o n 1 3 AS D s h o u l d d e v e l o p a n d i m p l e m e n t a f o r m a l a n d co m p r e h e n s i v e s e c u r i t y p o l i c y c o n s i s t e n t w i t h P C I D S S , N I S T , th e S A P L i b r a r y , a n d o t h e r i n d u s t r y s t a n d a r d s St a f f r e c o m m e n d s ex t e r n a l s e c u r i t y ex p e r t e v a l u a t i o n . op e n Ta r g e t r e v i e w da t e : p e n d i n g o n ex t e r n a l s e c u r i t y au d i t L L M e d i u m M e d i u m M e d i u m Re c o m m e n d a t i o n 1 4 AS D s h o u l d f o r m a l l y a s s i g n r e s p o n s i b i l i t y f o r S A P s e c u r i t y ac k n o w l e d g e d op e n L L Lo w M e d i u m L o w Re c o m m e n d a t i o n 1 5 AS D s h o u l d i m p l e m e n t a f o r m a l s e c u r i t y a w a r e n e s s a n d tr a i n i n g p r o g r a m St a f f r e c o m m e n d s ex t e r n a l s e c u r i t y ex p e r t e v a l u a t i o n . op e n L L M e d i u m L o w L o w Re c o m m e n d a t i o n 1 6 AS D s h o u l d i m p l e m e n t a f o r m a l r i s k a s s e s s m e n t p r o c e s s t h a t m e e t s m i n i m u m s t a n d a r d s s t a t e d i n P C I D S S a n d N I S T 8 0 0 - 5 3 St a f f r e c o m m e n d s ex t e r n a l s e c u r i t y ex p e r t e v a l u a t i o n . op e n Ta r g e t r e v i e w da t e : p e n d i n g o n ex t e r n a l s e c u r i t y au d i t L L M e d i u m M e d i u m M e d i u m Re c o m m e n d a t i o n 1 7 AS D s h o u l d d e v e l o p a n d i m p l e m e n t f o r m a l p o l i c i e s a n d pr o c e d u r e s t o e n s u r e S A P s e c u r i t y p a r a m e t e r s a r e p r o p e r l y co n f i g u r e d a n d c o m p l i a n t w i t h P C I D S S , N I S T S P 8 0 0 - 5 3 St a f f r e c o m m e n d s ex t e r n a l s e c u r i t y ex p e r t e v a l u a t i o n . op e n Ta r g e t r e v i e w da t e : p e n d i n g o n ex t e r n a l s e c u r i t y au d i t L L M e d i u m M e d i u m M e d i u m Re c o m m e n d a t i o n 1 8 AS D s h o u l d e n s u r e a c c e s s t o S A P s y s t e m p a r a m e t e r s i s re s t r i c t e d t o o n l y a u t h o r i z e d s t a f f , a n d t h a t p o l i c i e s a n d pr o c e d u r e s i n c o r p o r a t e c h a n g e c o n t r o l s s t a t e d i n N I S T S P 8 0 0 - 53 t o e n s u r e a l l c h a n g e s a r e p r o p e r l y p l a n n e d , a u t h o r i z e d , ex e c u t e d , a n d m o n i t o r e d St a f f r e c o m m e n d s ex t e r n a l s e c u r i t y ex p e r t e v a l u a t i o n . op e n L L M e d i u m L o w L o w Re c o m m e n d a t i o n 1 9 AS D s h o u l d d e v e l o p p o l i c i e s a n d p r o c e d u r e s a n d i m p l e m e n t m i n i m u m N I S T S P 8 0 0 - 5 3 a n d P C I D S S c o n t r o l s a p p l i c a b l e t o lo g m a n a gem e n t St a f f r e c o m m e n d s ex t e r n a l s e c u r i t y ex p e r t e v a l u a t i o n . op e n M L Lo w M e d i u m L o w Re c o m m e n d a t i o n 2 0 AS D s h o u l d d e v e l o p p o l i c i e s a n d p r o c e d u r e s c o n s i s t e n t w i t h PC I D S S , N I S T S P 8 0 0 - 5 3 , a n d N I S T S P 8 0 0 - 1 2 2 t o e n s u r e : An y s e n s i t i v e “ p r o d u c t i o n ” d a t a u s e d i n Q A S i s c n t r o l l e d co n c u r s Co m p l e t e d M L Lo w M e d i u m L o w Re c o m m e n d a t i o n 2 1 T o e n h a n c e t h e A u d i t o r ’ s O f f i c e ’ s e f f i c i e n c y a n d i n d e p e n d e n c e in c o n d u c t i n g a u d i t s , a n d i t s a b i l i t y t o e n s u r e c o m p l i a n c e w i t h ge n e r a l l y a c c e p t e d g o v e r n m e n t a u d i t i n g s t a n d a r d s , w e re c o m m e n d A S D i m p l e m e n t t h e A I S t o o l a n d p r o v i d e t h e Au d i t o r ’ s O f f i c e w i t h a c c e s s t o i t . ac k n o w l e d g e d op e n L L M e d i u m Lo w L o w -6 9 - Attachment A - 70 - Page intentionally left blank Attachment A - 71 - CITY AUDITOR’S OFFICE RESPONSE TO THE CITY MANAGER’S RESPONSE The City Auditor’s Office (Auditor’s Office) appreciates the assistance from the Administrative Services Department (ASD) in completing this audit. During the audit, problems were not only identified but measures were taken to address certain vulnerabilities. ASD, in several instances, assisted the Auditor’s Office in identifying significant security issues which are included in the audit report. The Auditor’s Office, however, has two overarching areas of disagreement with the City Manager’s response. In our opinion, the response minimizes the seriousness of the security vulnerability identified in Finding 1, and the Auditor’s Office disagrees with the results of the risk assessment included in the City Manager’s response. The City Manager’s response states: “…staff feels comfortable in stating the impact was limited to access of personal or sensitive information by a very limited number of highly skilled City employees committed to SAP operational standards. The City’s network access was not compromised and since an outsider would have to first breach the firewall and then SAP security, the incident was limited to internal users. Furthermore, the system was setup with financial controls that would prevent an individual from processing transactions such as issuance of checks or dispersing of funds on their own. There are check validation systems in place as well that would prevent an unauthorized check from being charged to the City’s account. While it is unacceptable that sensitive information was exposed, the limited number of staff with the ability to access the information is trained to access sensitive information while upholding confidentiality standards.” In our opinion, the response attempts to minimize the seriousness of the security vulnerability identified in Finding 1. As noted in the report, SAP* has a well-known default password and may provide unrestricted system access, potentially resulting in the following:  Exposure and misuse of data such as personal identifying information  Sabotage and operational disruptions  Financial losses  Damage to reputation Even if access to SAP* was restricted to a “very limited number of highly skilled City employees,” unauthorized access to this powerful account could have serious consequences for the City. The City Manager’s response includes an “SAP Security Audit Self Risk Assessment.” Staff reports they prepared the risk assessment based on guidance provided in the NIST SP 800-30 publication. The risk assessment lists the 21 audit report recommendations as a basis for assessing and rating SAP security and “criticality” of the audit recommendations. The resulting assessment states an overall “Low” risk for 15 of the 21 recommendations, a “Medium” risk level for 6 of the 21 audit recommendations, and no “High” risk ratings associated with any of the recommendations. Attachment A - 72 - The Auditor’s Office disagrees with the results of the risk assessment presented in the response. The audit findings and recommendations are based on guidance provided in the SAP Library, PCI DSS, and NIST SP 800-53. PCI DSS compliance is required for entities processing credit card transactions and implementation of minimum security control standards stated in NIST SP 800-53 and the SAP Library is highly recommended to ensure the City effectively secures SAP. As stated in the report on page 42, the City’s former external auditor reported the City’s noncompliance with PCI DSS several times since fiscal year 2008. We consider the audit recommendations presented in the report to be high priority because they identify weaknesses in security controls that are both required through PCI DSS, but also work in aggregate to help prevent and detect, and recover from security incidents. ASD has also reduced the risk level of audit issues because it has taken corrective action on some of the recommendations. Although we commend ASD for these actions, the Auditor’s Office does not believe the risk level should be reduced until the controls are fully implemented and institutionalized. Attachment A Attachment A THIS REPORT IS INTENDED TO PROMOTE THE BEST POSSIBLE MANAGEMENT OF PUBLIC RESOURCES You are welcome to keep this copy if it is useful to you. If you no longer need this copy, please return it to: City Auditor’s Office 250 Hamilton Avenue, 7th Floor Palo Alto, CA 94301 We maintain an inventory of past audit reports, and your cooperation will help us save on extra copying costs. If you need additional copies of this report, please contact us at 650.329.2667 or city.auditor@cityofpaloalto.org. Our reports are also available on the web at: www.cityofpaloalto.org/auditor/reports.html Attachment A FINANCE COMMITTEE - EXCERPT Special Meeting October 18, 2011 Chairperson Scharff called the meeting to order in the Council Conference Room, 250 Hamilton Avenue, Palo Alto, California. Present: Scharff (Chair), Schmid, Shepherd, Yeh Absent: 4. SAP Security Audit Interim City Auditor, Mike Edmonds said the item before the Committee was the audit report on SAP Security. Staff recommendation was the review and acceptance of the report by the Finance Committee and full City Council. He introduced the auditors and acknowledged the work done by the auditors and acknowledged cooperation and work done by ASD Staff. He provided a brief overview of the audit, which was prompted because the auditors identified a security vulnerability resulting from an unsecured system-provided or “standard” SAP user account known as “SAP*,” which provided unrestricted SAP access. He stated the audit had the following objectives:  Determine if Staff has adequately secured the system.  Determine if there has been unauthorized SAP access using standard user accounts.  Determine if the City had adequate securities policies, procedures, and processes in place.  Assess the risk of fraud and abuse resulting from the vulnerabilities identified. Mr. Edmonds stated the auditors did not find any fraud or abuse, but that the audit was limited in testing in this area. He stated the audit scope and objectives were limited to the previously listed objectives and to the production environment of the City’s SAP Enterprise Resource Planning Central Component. He stated the security concerns raised may be applicable to other applications and systems. There were several key documents used in assessing the adequacy of controls: 1) SAP library which is online documentation that provides guidance on SAP security, 2) Payment Attachment B Card Industry Data Security Standard (PCI DSS), a minimum security standard applicable to entities processing credit card transactions, and 3) National Institute of Standards and Technology (NIST) Special Publication 800-53, which also provided guidance on information systems security. He provided an overview of the audit findings and stated the audit had 21 recommendations. Senior Performance Auditor, Houman Boussina informed the Committee that the auditors had researched SAP security and identified the high-risk area of standard user accounts, including SAP*. He stated SAP*, one of the most important and powerful standard user accounts, had not been secured. Staff was able to enter SAP using SAP* with the default password allowing unrestricted access to sensitive and confidential information and areas in the system that in theory would allow an intruder to execute any type of transaction. In reviewing SAP logs, security reports, and assessing the control environment, the auditors concluded SAP* was accessible using its default password during extended periods. SAP* was likely not secured during the entire period from May 23, 2010 to January 11, 2011. It was also not secured for an unknown period(s) from January 2003 to December 2005, and may also have been unsecured during a two week period in 2008. There were a number of other standard user accounts which the auditors tested and were not able to access. The system security reports indicated they had not been properly secured but rather their passwords had expired at some point which prevented the access. The auditors requested SAP Services Staff to review the other standard user accounts. SAP Services Staff subsequently identified 83 standard user accounts, 64 percent of which had not been properly secured as of April of 2011. By June of 2011 Staff provided reports to the auditors showing 107 standard user accounts throughout the various SAP systems. The auditors concluded Staff had implemented initial controls to preliminarily secure these accounts. The auditors concluded ASD did not have formal procedures or awareness to secure SAP* or other standard user accounts. The auditors assessed ASD’s incident response, to detect and understand the underlining control issues. There was a four day period between the time the auditors accessed the system using SAP* and the time Staff detected the unauthorized access. In investigating the security incident, the auditors found SAP logs were also incomplete, limited in terms of duration, and in some cases, log records were missing. The recommendations the first finding were to 1) secure the standard user accounts, 2) further investigate and establish accountability for the security vulnerability, and 3) implement improvements to the incident response process. Finding 2 discusses two critical security principles:  “Least privilege” requiring limiting user access based on job responsibilities, and that only the minimum level of access required is provided.  “Segregation of duties” to ensure clear separation of roles and responsibilities across the functions within an organization. Attachment B Mr. Boussina stated that because SAP and other Enterprise Resource Planning systems integrate data and support a wide variety of functions, the risk associated with unauthorized access is high if controls are not in place to ensure users only have the minimum level of access required. The auditors found there have been 31 SAP user accounts since 2003 that were granted unrestricted access through assignment of the “SAP_ALL” profile. The SAP Library states only one user account should have the SAP_ALL profile assigned and the user account should be secured by storing its password in a safe. SAP user administrators performed job functions that should be segregated such as creating user accounts, defining access levels, and modifying access levels. These functions should be segregated to ensure one individual does not have complete control over assigning system access. The recommendations for finding 2 were to 1) apply the security principles of least privilege and segregation of duties, 2) secure use of all powerful system-provided SAP profiles, such as SAP_ALL, 3) properly segregate SAP user account administration functions. Senior Performance Auditor, Mimi Nguyen said in finding 3 the audit focused on the general population of user accounts and found there were 1,503 user accounts which were broken out into two different categories 1) employee accounts and 2) non- employee accounts. Within the group of employee accounts the auditors found 17 user accounts that had not been timely removed or disabled after the employee had separated from the organization. The average time it took to disable or remove the accounts was 577 days with one account taking 1,727 days. Guidance suggests access to user accounts be immediately removed for separated employees. In the category of non-employee accounts, there were 52 CAL-Card user accounts, which are dummy accounts used by Staff to transfer and retain transaction history when issuing a new CAL-Card. These generic accounts do not identify individuals and therefore do not support accountability. There were 22 non-organizational user accounts which were for consultants. The concern with those accounts was some had expiration dates that were beyond the expiration date of the contract for the consultant. In addition, there were no non-disclosure or conflict of interest agreements with the consultants to ensure consultants follow the City’s security policies. There were 13 non-dialog user accounts used by technical Staff to run background processes. These accounts should be secured and controlled as other user accounts. Six of the 13 accounts had the SAP_ALL profile assigned to them. There were 14 other generic accounts without adequate indentifying information. It is recommended that each account be identifiable, traceable and tied back to a separate, independent source such as an HR database to ensure checks and balances are in place. The recommendations for finding 3 were to 1) define and manage security controls for all categories of user accounts and 2) establish an effective user account identity management system. Mr. Boussina stated finding 4 addressed the underlying control environment and was more of a general overview of the controls that needed to be in place to ensure information system security. The initial review was to determine whether the City had adopted a recognized information systems security control standard. The PCI DSS Attachment B standard is required and the auditors found implementation of PCI DSS was also recommended by the City’s former external auditor in 2008. The auditors concurred and believed adopting security standards would provide a strong foundation for information system security. The auditors found the City had not implemented and did not have a coherent strategy for implementing the standard. The auditors found the City did not have a comprehensive security policy or that responsibility for SAP security had been formally assigned. PCI DSS requires a security policy that encompasses and supports all of the various required security controls. PCI DSS has over 250 specific controls that need to be adopted and implemented. Having a security policy sets the tone for the organization and ensures there is an effective means by which to implement the standard and to communicate it to Staff. Staff found the Administrative Services Department (ASD) did not have a formal information systems security awareness and training program. The auditors reviewed training records for SAP administrators and did not find a formal training plan or training records, especially in the area of SAP security, which was the subject of the audit. Therefore, the implementation of a formal security awareness and training program was recommended. IT risks and vulnerabilities change frequently and control standards require a formal risk assessment process to identify and manage information system risks whereby Management and Staff could ensure they had reviewed all of the various risks, rated them, and have properly establish a plan to implement controls. The SAP system security parameters and settings required to control access to the system were not properly configured to meet the level of security required by PCI DSS and other control frameworks. The auditors found there were a large number of user accounts that had access to the security parameters and it was recommended that access be secured. The auditors found ASD did not have policies and procedures to retain and analyze SAP audit trails or logs, and that SAP administrators responsible for managing user accounts are also responsible for reviewing logs. ASD uses live “production” data in the SAP quality assurance system without measures to “sanitize” or protect the data. Because quality assurance systems are typically not secured to the same level as production systems, this is a security concern. Mr. Edmonds stated SAP has a free auditing tool that came with SAP called Audit Information System (AIS), which would assist the Auditor’s Office. AIS could provide a number of reports, including reports to detect unsecured standard user accounts. The Auditor’s Office has discussed AIS with ASD Staff, but it has not yet been implemented. The Auditor’s Office advocates implementing AIS. Council Member Scharff asked if the City Auditor’s Office budget or the General Fund would fund AIS. Mr. Edmonds noted at the present time he was uncertain as to the cost but believed it would be minimal, but that it would require some minimal programming. Director of Administrative Services, Lalo Perez stated the IT budget would be charged. Attachment B Council Member Scharff asked if the Auditor’s Office would be charged back for the cost. Mr. Perez clarified each department received a charge for a portion of the cost. The practice had been to accommodate the needs of the organization through that Fund and now that IT was its own department he recommended the process remain. Council Member Shepherd asked how Staff proposed putting the system back together with confidence. Mr. Perez stated the security vulnerability resulted from human error. He felt the issue stemmed from decisions he and his predecessor made with respect to cutting resources when there were five dedicated SAP positions eliminated in 2005, and that one was added back with the SAP module upgrade, but it wasn’t enough. SAP and the whole network was an important area for the organization and needed to be reviewed. He recommended the City Manager and the incoming Chief Information Officer (CIO) bring in a third party consultant for assistance. Council Member Shepherd questioned the need for an outside consultant. Mr. Perez felt based on the feedback from Council regarding the SAP system they did not desire to add resources whether it was a consultant or Staff. Because of that feedback he felt an outside review would help build a case and to support the system needs and better define the costs. Council Member Shepherd expressed concerns regarding doing business with the City if there isn’t additional security given the City processes credit card payments. She asked if the audit recommendations could not be performed or implemented without additional Staffing. Mr. Perez stated there would be an impact on resources. City Manager, James Keene informed the Committee that Staff had accomplished some of the recommendations. Retooling, reinvesting, and training needs should be communicated to the City Manager and Council, and a timeline should be brought forward to the Council for working with the audit recommendations. Council Member Shepherd asked what was meant by retooling. Manager of Information Technology, Jennifer Leu clarified there were 21 recommendations and Staff had implemented seven to date and there were two in progress. The remaining 12 involve a more comprehensive plan which was not something SAP Staff could accomplish alone. Staff was making the effort to mitigate Attachment B the risks and was pulling resources into the area where the resources would be most valuable. Council Member Shepherd asked which seven recommendations had been implemented. Mr. Perez noted the seven had been listed within Staff Report and acknowledged there was room for improvement. He agreed with the City Manager that the priority was securing the system. He felt there were sufficient financial controls in place that those would not be jeopardized and the issues involved individuals with internal access to SAP, and not the outside world. He clarified it was still not acceptable. Council Member Shepherd said any time a person was able to manipulate data within a restricted area without permission was unacceptable. Mr. Perez acknowledged a significant amount of work was needed to reach the Best Practices level and at the present time there were not ample resources to complete all the necessary steps. He stated Staff would work together to bring forward recommendations. He suggested Council might prefer someone else to validate his recommendations. Mr. Keene reiterated there were 21 recommendations, seven had been implemented, and two were in progress leaving twelve outstanding recommendations. The question was why the remaining recommendations have not been addressed or could not be met with the status quo. Mr. Perez said the personnel needed to run the system and to implement the remaining twelve recommendations were more than what was available. The IT department had two Staff members to complete all of the SAP work which required four to six. Ms. Leu referred to the NIST SP 800-53 standard and stated there were approximately 250 control points that not only involve SAP, but the entire network. The controls include firewall controls, identity management, access controls, and vulnerability checking. She stated considering the SAP team had only two Staff Members, it is beyond their capacity, and in some cases, beyond their knowledge to accomplish those tasks. It would also require the IT team collaboration and in some instances, business processes would require changing. Mr. Perez located a Computer World article regarding citing that roughly half of the respondents blamed resource constraints for security issues, and about the same number cited network complexity as the main challenge. Attachment B Chair Scharff stated those were outside invasions but the City was concerned with internal security issues. Mr. Keene understood the difference but Staff was letting the Committee know there were security vulnerabilities all over. Council Member Shepherd stated her concern was the boiler plate being able to go in and mysteriously dump logs or change data, and that we don’t understand why this is happening. Mr. Perez believed the issue was Staff had not activated or validated all of the systems that check the formal procedures and that took resources. He supported the idea that it could be done but his concern was being able to complete it prior to an external threat occurring. Mr. Keene stated the issue at hand was the need to respond to the audit recommendations in as expeditious a manner as possible. He acknowledged the importance and significance of the audit recommendations and stated there would be an investment of time, money, and resources to address the audit issues. Mr. Perez felt the SAP issue was another good reason ASD recommended IT should be a department. Council Member Shepherd agreed and noted most company’s separated out their IT departments years ago and she looked forward to seeing the prioritization of the issues. Council Member Yeh stated he felt the audit was very valuable and was glad that the issues were raised through the internal auditors and not through a reaction to an incident. He stated that after hearing the resource constraints, he thinks if an external consultant was brought in it would be important that they address the issues that were highlighted throughout the audit and to craft an implementation plan. He asked what would be envisioned in terms of planning an assessment. Mr. Keene said there needed to be more invested in IT. There had been peer reviews and consultant work completed on the assessment as part of the swat analysis on the Strategic Plan. He stated Staff would be responding to the audit, and that beyond the security issues, there were other issues and that he advocated making investments to ensure a first rate IT operation in the City. Vice Mayor Yeh clarified the reason behind his questioning was there were target review dates in response to the recommendations to be completed by June 2012. Attachment B Mr. Perez said the recommendation was based on bringing in the consultant and his uncertainty of when the Chief Information Officer (CIO) would be on-board. He acknowledged given that the CIO would be arriving shortly he felt they should be involved in the assessment of the department. Mr. Keene was confident that Staff could return in the first quarter of 2012 with the CIO and provide a more detailed assessment of the issues. Council Member Schmid said there had been four issues identified for the long-term 1) the internal Strategic Plan, 2) the external independent audit review, 3) the necessary resources, and 4) the entering CIO. He noted each item was a substantial matter and he wondered whether the City should wait for the incoming CIO. Mr. Keene was confident the new CIO would be on board prior to the end of the 2011 calendar year. By the first quarter Staff should be able to adequately provide a necessary assessment. Council Member Schmid said there was no mention of expenditures in the IT department in the update to the 2012 budget. Mr. Perez said the only item added was the increased expense for the salary of the new CIO. Council Member Schmid asked if some of the expenses were likely to show up in the 2012 budget. Mr. Keene confirmed they would. Chair Scharff was pleased to see the threat level within the audit recommendations were low. Mr. Edmonds noted there may be a disagreement with the perception of risk. His opinion was that all of the areas identified were of a high risk since the exposure was to unauthorized access. While there had been areas of improvement, he stated until the processes had been institutionalized, the risk levels should not be assessed as low. Chair Scharff asked if the City Auditor had read the City Manager’s response to the audit and whether they disagreed with it. Mr. Edmonds clarified the Auditors office disagreed with the level of risk assigned to issues the auditors identified in the audit report. Attachment B Chair Scharff said there had been seven recommendations completed and Staff was currently working on two for a total of nine. He asked if the Auditor’s office agreed not all of the issues carried the same level of risk. Mr. Edmonds said the Auditor’s office saw the recommendations as dealing with high risk areas, for example securing the standard user or default accounts was seen as a very high risk area. There may be other issues raised in the report that were of a high risk but not as high as securing those standard user accounts. Chair Scharff clarified those accounts had been secured. Mr. Edmonds acknowledged there had been several actions taken in regards to those accounts. He continued to view the security of standard user accounts as a high risk area and that they needed to be reviewed on an ongoing basis. He stated until the processes for securing the accounts are working, the Auditor’s Office could not state the risk level has been lowered. Chair Scharff asked if the Auditor’s Office felt there were recommendations that should be prioritized, which Staff had not yet addressed. Mr. Edmonds said there had been movement on issues and recommendations in findings 1, 2, and 3, which are more specific recommendations. He noted what was missing was the foundation for security, which is addressed in finding 4. He agreed with the City Manager that those issues needed to involve the new CIO to build a strategy to implement the recommendations. Chair Scharff noted finding 4 was structural and those items could not be implemented over night. He asked if there were items within the report that had not been addressed and could be taken care of quickly. Council Member Yeh stated in the City of Oakland, the auditors have read-only access to every single module in Oracle and that they could access the modules and pull out data to do preliminary analysis and other work. He was open to the AIS module being opened to the City Auditor’s Office for data access where their office could log-in to review or extract information but not change it. He stated he didn’t know if the AIS recommendation had been implemented and stated he thought it could potentially be implemented without additional cost. Mr. Perez said Staff was in favor of granting that level of access although there would be a cost and approximately 30 days of Staff time to reconfigure the AIS system to allow their office access. He stated however it was more than just turning on the module. Attachment B Mr. Edmonds announced Mr. Boussina and Ms. Nguyen would be attending a course on the subject matter shortly where one of the purposes of the class was to achieve a better understanding of what it would take to implement AIS, and they would be able to provide more information soon. Mr. Keene said it appeared the Auditor’s office was going to be involved in the process not only presently but for a period in the future not just in resolving the current audit. He felt it would be helpful to put the matter in context as it related to SAP customers and best practices. He noted there were recommendations that could be made by a vendor to shift any risk or exposure from themselves to their customer by having criteria and standards. Chair Scharff agreed there needed to be a safe and secure system although he felt there were different levels of safety and the question was whether or not the City was willing to spend an uncertain dollar amount to achieve for example a security level 9 if the level 5 was adequate. He asked what the risk of loss was or how serious were some of the issues. He explained he was not in support of hiring 4 to 6 more Staff. He asked if the Auditor’s Office could provide some indication of the level of risk versus the cost. He stated some level of risk would be acceptable in a nimble organization. He was concerned that some of this could result in a bureaucracy that would not allow the organization to function. Mr. Edmonds referred to the audit report which recommended a security policy and a risk assessment, which should help the City identify the level of security to establish and how the City would address the risks. He stated part of implementing PCI DSS would be asking these questions in order to build a system the City wants. MOTION: Vice Mayor Yeh moved, seconded by Council Member Schmid that the Finance Committee recommend the City Council 1) accept the City Auditor’s report and the 21 audit recommendations, 2) return in the first quarter of 2012 with updates on the implementation process, and an explanation of auditor’s module. MOTION PASSED: 4-0 Attachment B City of Palo Alto (ID # 2166) City Council Staff Report Report Type: Consent Calendar Meeting Date: 12/5/2011 December 05, 2011 Page 1 of 3 (ID # 2166) Summary Title: 2012 Sidewalk, Curb, and Gutter Repairs Contract Title: Approval of a Contract With Spencon Construction, Inc. in the Amount of $703,490.38 for the FY 2012 Sidewalk, Curb, and Gutter Repairs Project From:City Manager Lead Department: Public Works Recommendation Staff recommends that Council: 1.Approve and authorize the City Manager or his designee to execute the attached contract with Spencon Construction, Inc. (Attachment A) in the amount of $703,490.38 for FY 2012 Sidewalk, Curb, and Gutter Repairs Project –Capital Improvement Program; Sidewalk Repairs Project PO-89003, and Curb & Gutter Repairs Project PO-12001. 2.Authorize the City Manager or his designee to negotiate and execute one or more change orders to the contract with Spencon Construction, Inc. for related, additional but unforeseen work which may develop during the project, the total value of which shall not exceed $70,000. Discussion Project Description The work to be performed under this contract is for sidewalk, curb, gutter, and asphalt pavement repairs; and Portland cement concrete and asphalt recycling. The sidewalk, curb, and gutter repair locations are shown on the attached Location Maps and Location Lists (Attachment B). The project includes repairs of more than fifty curb and gutter locations throughout the City that have been lifted by tree roots and have ponding problems. These curb and gutter locations are not repaired in the annual street maintenance project unless the street is scheduled for new asphalt overlay, and they are not repaired in the annual sidewalk replacement project unless the gutter is physically connected to the sidewalk. The project also includes sidewalk repairs in intensive-use areas such as the University Avenue downtown area. Work in downtown and other intensive use areas will begin in January to December 05, 2011 Page 2 of 3 (ID # 2166) avoid conflicts during the Holiday season and will be stopped during lunch hours to minimize the inconvenience to restaurants, merchants and the public. This contract also includes the construction of forty-three curb ramps with detectable warning surface in compliance with the American with Disabilities Act and street names stamped on the curb ramp. A detectable warning surface is a standardized surface feature built in or applied to walking surfaces or other elements to warn visually impaired people of potential hazards in their path of travel. Detectable warning surfaces used in this project will consist of a surface of truncated domes aligned in a square grid pattern; are yellow in color at yellow crosswalks and dark grey in color at all other locations; and comply with Federal Highway Administration requirements enforcing the use of truncated domes on Federal, State and local level projects and additionally are in accordance with the 2007 Public Works Standard Drawings and Specifications. Where dark grey panels do not provide the required contrast ratio, yellow panels will be used. Bid Process On October 4, 2011, a notice inviting formal bids for the FY 2012 Sidewalk, Curb, and Gutter Repairs Project was posted at City Hall, and sent to 10 builder’s exchanges and 9 contractors. The bidding period was twenty-two days. Bids were received from 6 qualified contractors on October 25, 2011, as listed on the attached Bid Summary (Attachment C). Summary of Bid Process Bid Name/Number 2011-12 Sidewalk, Curb, & Gutter Repairs / IFB #143424 Proposed Length of Project 250 calendar days Number of Bids Mailed to Contractors 9 Number of Bids Mailed to Builder’s Exchanges 10 Total Days to Respond to Bid 22 Pre-Bid Meeting?No Number of Company Attendees at Pre-Bid Meeting NA Number of Bids Received:6 Bid Price Range From a low of $703,490.38 to a high of $1,014,445 Bids ranged from a high of $1,014,445 to a low bid of $703,490.38. The low bid is 25% below the engineer’s estimate of $880,150, while the high bid is 13% above the engineer’s estimate. It is likely that bidder speculation on the price of concrete and asphalt accounts for the wide variation of the bid prices. Staff has reviewed all bids submitted and recommends that the bid of $703,490.38 submitted by Spencon Construction, Inc. be accepted and that Spencon Construction, Inc. be declared the lowest responsible bidder. The change order amount of $70,000, which equals 10 percent of the total contract, is requested for related, additional but unforeseen work which may develop during the project. December 05, 2011 Page 3 of 3 (ID # 2166) Staff checked references supplied by the contractor for previous work performed and found no significant complaints. Staff also checked with the Contractor's State License Board and found that the contractor has an active license on file and has no outstanding complaints. Project Coordination The work included in this contract was coordinated with other capital projects at the monthly Utilities/Public Works department street work coordination meetings and by use of the GIS project coordination program. The purpose of the monthly street work coordination meeting is to coordinate the installation, replacement, and repairs of city’s subsurface infrastructure and street and sidewalk improvements with the annual street maintenance plan. The 2011-12 Sidewalk, Curb, and Gutter Repairs Project has no conflicts with the other upcoming Public Works and Utility projects. Resource Impact Funds for this project are included in the FY 2012 Capital Improvement Programs; Sidewalk Repairs Project PO-89003, and Curb & Gutter Repairs Project PO-12001. Environmental Review This 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. Attachments: ·Map-1 Attachment B (PDF) ·Map-2 Attachment B (PDF) ·C12143424_Spencon_SidewalkCurbGutter (PDF) ·Location List-1 Attachment B (DOC) ·Location List-2 Attachment B (DOC) ·Bid Summary Attachment C (XLS) Prepared By:Jim Amores, Associate Engineer Department Head:J. Michael Sartor, Interim Director City Manager Approval: James Keene, City Manager CONSTRUCTION CONTRACT Contract No. C12143424 City of Palo Alto and Spencon Construction, Inc. PROJECT: SIDEWALK, CURB AND GUTTER REPAIRS Rev. August 3, 2010 CONSTRUCTION CONTRACT TABLE OF CONTENTS SECTION 1. INCORPORATION OF RECITALS AND DEFINITIONS....................................1 1.1 Recitals................................................................................................................................1 1.2 Definitions ...........................................................................................................................1 SECTION 2. THE PROJECT ...................................................................................................1 SECTION 3. THE CONTRACT DOCUMENTS........................................................................1 LIST OF DOCUMENTS.....................................................................................................................1 3.2 ORDER OF PRECEDENCE ...............................................................................2 SECTION 4. THE WORK.........................................................................................................2 SECTION 5. PROJECT TEAM ................................................................................................2 SECTION 6. TIME OF COMPLETION.....................................................................................3 6.1 Time Is of Essence .............................................................................................................3 6.2 Commencement of Work ...................................................................................................3 6.3 Contract Time......................................................................................................................3 6.4 Liquidated Damages...........................................................................................................3 6.4.1 Entitlement...................................................................................................................3 6.4.2 Daily Amount................................................................................................................3 6.4.3 Exclusive Remedy........................................................................................................3 6.4.4 Other Remedies...........................................................................................................3 6.5 Adjustments to Contract Time ..........................................................................................3 SECTION 7. COMPENSATION TO CONTRACTOR ..............................................................2 7.1 Contract Sum ......................................................................................................................2 7.2 Full Compensation..............................................................................................................2 7.3 Compensation for Extra or Deleted Work ........................................................................2 7.3.1 Self Performed Work....................................................................................................2 7.3.2 Subcontractors.............................................................................................................2 Rev. August 3, 2010 C12143424_Spencon_SidewalkCurbGutter.DOC i SECTION 8. STANDARD OF CARE.......................................................................................2 SECTION 9. INDEMNIFICATION ............................................................................................5 9.1 Hold Harmless.....................................................................................................................5 9.2 Survival................................................................................................................................5 SECTION 10 NONDISCRIMINATION ......................................................................................5 SECTION 11. INSURANCE AND BONDS................................................................................5 SECTION 12. PROHIBITION AGAINST TRANSFERS.............................................................5 SECTION 13. NOTICES ............................................................................................................6 13.1 Method of Notice.................................................................................................................6 13.2 Notice Recipients................................................................................................................6 13.3 Change of Address.............................................................................................................6 14.1 Resolution of Contract Disputes.......................................................................................7 14.2 Resolution of Other Disputes............................................................................................7 14.2.1 Non-Contract Disputes.................................................................................................7 14.2.2 Litigation, City Election.................................................................................................7 14.3 Submission of Contract Dispute.......................................................................................7 14.3.1 By Contractor...............................................................................................................7 14.3.2 By City..........................................................................................................................8 14.4 Contract Dispute Resolution Process ..............................................................................8 14.4.1 Direct Negotiations.......................................................................................................8 14.4.2 Deferral of Contract Disputes.......................................................................................8 14.4.3 Mediation......................................................................................................................8 14.4.4 Binding Arbitration........................................................................................................9 14.5 Non-Waiver........................................................................................................................10 SECTION 15. DEFAULT..........................................................................................................10 15.1 Notice of Default ...............................................................................................................10 15.2 Opportunity to Cure Default.............................................................................................10 SECTION 16. CITY'S RIGHTS AND REMEDIES....................................................................10 16.1 Remedies Upon Default ...................................................................................................10 16.1.1 Delete Certain Services .............................................................................................11 16.1.2 Perform and Withhold ................................................................................................11 Rev. August 3, 2010 C12143424_Spencon_SidewalkCurbGutter.DOC ii 16.1.3 Suspend The Construction Contract..........................................................................11 16.1.4 Terminate the Construction Contract for Default........................................................11 16.1.5 Invoke the Performance Bond....................................................................................11 16.1.6 Additional Provisions..................................................................................................11 16.2 Delays by Sureties............................................................................................................11 16.3 Damages to City................................................................................................................12 16.3.1 For Contractor's Default.............................................................................................12 16.3.2 Compensation for Losses ..........................................................................................12 16.5 Suspension by City for Convenience .............................................................................12 16.6 Termination Without Cause.............................................................................................12 16.6.1 Compensation............................................................................................................12 16.6.2 Subcontractors...........................................................................................................13 16.7 Contractor’s Duties Upon Termination...........................................................................13 SECTION 17. CONTRACTOR'S RIGHTS AND REMEDIES ..................................................13 17.1 Contractor’s Remedies ....................................................................................................13 17.1.1 For Work Stoppage....................................................................................................13 17.1.2. For City's Non-Payment.............................................................................................13 17.2 Damages to Contractor....................................................................................................14 SECTION 18. ACCOUNTING RECORDS...............................................................................14 18.1 Financial Management and City Access.........................................................................14 18.2 Compliance with City Requests ......................................................................................14 SECTION 19. INDEPENDENT PARTIES................................................................................14 SECTION 20. NUISANCE........................................................................................................14 SECTION 21. PERMITS AND LICENSES...............................................................................14 SECTION 22. WAIVER............................................................................................................14 SECTION 23 GOVERNING LAW ...........................................................................................15 SECTION 24 COMPLETE AGREEMENT ..............................................................................15 SECTION 25 SURVIVAL OF CONTRACT.............................................................................15 SECTION 26 PREVAILING WAGES......................................................................................15 Rev. August 3, 2010 C12143424_Spencon_SidewalkCurbGutter.DOC iii Rev. August 3, 2010 C12143424_Spencon_SidewalkCurbGutter.DOC iv SECTION 27 NON APPROPRIATION ...................................................................................15 SECTION 28 GOVERNMENTAL POWERS...........................................................................15 SECTION 29 ATTORNEY FEES ............................................................................................15 SECTION 30 SEVERABILITY ................................................................................................16 CONSTRUCTION CONTRACT THIS CONSTRUCTION CONTRACT entered into on December 5, 2011 (“Execution Date”) by and between the CITY OF PALO ALTO, a California chartered municipal corporation ("City"), and SPENCON 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 corporation duly organized and in good standing in the State of California, Contractor’s License Number 820205. 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 October 3, 2011, City issued an Invitation for Bids (IFB143424) to contractors for the Sidewalk, Curb and Gutter Repairs (“Project”). In response to IFB143424, 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 Sidewalk, Curb and Gutter Repairs ("Project"). SECTION 3 THE CONTRACT DOCUMENTS. 3.1 List of Documents. The Contract Documents (sometimes collectively referred to as “Agreement” or “Bid Documents”) consist of the following documents which are on file with the Purchasing Division and are hereby incorporated by reference. 1) Change Orders 2) Field Change Orders 3) Contract 4) Project Plans and Drawings Rev. August 3, 2010 C12143424_Spencon_SidewalkCurbGutter.DOC 1 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 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. Rev. August 3, 2010 C12143424_Spencon_SidewalkCurbGutter.DOC 2 Rev. August 3, 2010 C12143424_Spencon_SidewalkCurbGutter.DOC 3 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 two hundred fifty calendar days (250) 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. 6.4.2 Daily Amount. City and Contractor have reasonably endeavored, but failed, to ascertain the actual damage that City will incur if Contractor fails to achieve Substantial Completion of the entire Work within the Contract Time. Therefore, the parties agree that in addition to all other damages to which City may be entitled other than delay damages, in the event Contractor shall fail to achieve Substantial Completion of the entire Work within the Contract Time, Contractor shall pay City as liquidated damages the amount of $500 per day for each Day occurring after the expiration of the Contract Time until Contractor achieves Substantial Completion of the entire Work. The liquidated damages amount is not a penalty but considered to be a reasonable estimate of the amount of damages City will suffer by delay in completion of the Work. 6.4.3 Exclusive Remedy. City and Contractor acknowledge and agree that this liquidated damages provision shall be City’s only remedy for delay damages caused by Contractor’s failure to achieve Substantial Completion of the entire Work within the Contract Time. 6.4.4 Other Remedies. City is entitled to any and all available legal and equitable remedies City may have where City’s Losses are caused by any reason other than Contractor’s failure to achieve Substantial Completion of the entire Work within the Contract Time. 6.5 Adjustments to Contract Time. The Contract Time may only be adjusted for time extensions approved by City and agreed to by Change Order executed by City and Contractor in accordance with the requirements of the Contract Documents. SECTION 7 COMPENSATION TO CONTRACTOR. 7.1 Contract Sum. Contractor shall be compensated for satisfactory completion of the Work in compliance with the Contract Documents the Contract Sum of Seven Hundred and Three Thousand Four Hundred and Ninety Dollars ($703,490.38). [This amount includes the Base Bid and the Add Alternates Items: 023, 024, 025 totaling $8,316.50.] 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. Rev. August 3, 2010 C12143424_Spencon_SidewalkCurbGutter.DOC 2 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. 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 Rev. August 3, 2010 C12143424_Spencon_SidewalkCurbGutter.DOC 5 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 (iv) 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 Engineering 250 Hamilton Avenue Palo Alto, CA 94301 Attn: Matt Raschke 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: Spencon Construction, Inc. P.O. Box 1220 Danville, CA 94526 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. Rev. August 3, 2010 C12143424_Spencon_SidewalkCurbGutter.DOC 6 SECTION 14 DISPUTE RESOLUTION. 14.1 Resolution of Contract Disputes. Contract Disputes shall be resolved by the parties in accordance with the provisions of this Section 14, in lieu of any and all rights under the law that either party have its rights adjudged by a trial court or jury. All Contract Disputes shall be subject to the Contract Dispute Resolution Process set forth in this Section 14, which shall be the exclusive recourse of Contractor and City for such Contract Disputes. 14.2 Resolution of Other Disputes. 14.2.1 Non-Contract Disputes. Contract Disputes shall not include any of the following: (i) Penalties or forfeitures prescribed by statute or regulation imposed by a governmental agency; (ii) Third party tort claims for personal injury, property damage or death relating to any Work performed by Contractor or its Subcontractors or Sub- subcontractors of any tier; (iii) False claims liability under California Government Code Section 12650, et. seq.; (iv) Defects in the Work first discovered by City after Final Payment by City to Contractor; (v) Stop notices; or (vi) The right of City to specific performance or injunctive relief to compel performance of any provision of the Contract Documents. 14.2.2 Litigation, City Election. Matters that do not constitute Contract Disputes shall be resolved by way of an action filed in the Superior Court of the State of California, County of Santa Clara, and shall not be subject to the Contract Dispute Resolution Process. However, the City reserves the right, in its sole and absolute discretion, to treat such disputes as Contract Disputes. Upon written notice by City of its election as provided in the preceding sentence, such dispute shall be submitted by the parties and finally decided pursuant to the Contract Dispute Resolution Process in the manner as required for Contract Disputes, including, without limitation, City’s right under Paragraph 14.4.2 to defer resolution and final determination until after Final Completion of the Work. 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 Rev. August 3, 2010 C12143424_Spencon_SidewalkCurbGutter.DOC 7 Dispute involving an adjustment of the Contract Sum must include both of the following: (a) A detailed cost breakdown and (b) Supporting cost data in such form and including such information and other supporting data as required under the Contract Documents for submission of Change Order Requests and Claims. 14.3.2 By City. City's right to commence the Contract Dispute Resolution Process shall arise at any time following City's actual discovery of the circumstances giving rise to the Contract Dispute. City asserts Contract Disputes in response to a Contract Dispute asserted by Contractor. A Statement of Contract Dispute submitted by City shall state the events or circumstances giving rise to the Contract Dispute, the dates of their occurrence and the damages or other relief claimed by City as a result of such events. 14.4 Contract Dispute Resolution Process. The parties shall utilize each of the following steps in the Contract Dispute Resolution Process in the sequence they appear below. Each party shall participate fully and in good faith in each step in the Contract Dispute Resolution Process, and good faith effort shall be a condition precedent to the right of each party to proceed to the next step in the process. 14.4.1 Direct Negotiations. Designated representatives of City and Contractor shall meet as soon as possible (but not later than ten (10) Days after receipt of the Statement of Contract Dispute) in a good faith effort to negotiate a resolution to the Contract Dispute. Each party shall be represented in such negotiations by an authorized representative with full knowledge of the details of the Claims or defenses being asserted by such party in the negotiations, and with full authority to resolve such Contract Dispute then and there, subject only to City’s obligation to obtain administrative and/or City Council approval of any agreed settlement or resolution. If the Contract Dispute involves the assertion of a right or claim by a Subcontractor or Sub-subcontractor, of any tier, against Contractor that is in turn being asserted by Contractor against City (“Pass-Through Claim”), then the Subcontractor or Sub-Subcontractor shall also have a 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. Rev. August 3, 2010 C12143424_Spencon_SidewalkCurbGutter.DOC 8 .1 Qualifications of Mediator. The parties shall endeavor to select a mediator who is a retired judge or an attorney with at least five (5) years of experience in public works construction contract law and in mediating public works construction disputes. In addition, the mediator shall have at least twenty (20) hours of formal training in mediation skills. .2 Submission to Mediation and Selection of Mediator. The party initiating mediation of a Contract Dispute shall provide written notice to the other party of its decision to mediate. In the event the parties are unable to agree upon a mediator within fifteen (15) Days after the receipt of such written notice, then the parties shall submit the matter to the American Arbitration Association (AAA) at its San Francisco Regional Office for selection of a mediator in accordance with the AAA Construction Industry Mediation Rules. .3 Mediation Process. The location of the mediation shall be at the offices of City. The costs of mediation shall be shared equally by both parties. The mediator shall provide an independent assessment on the merits of the Contract Dispute and recommendations for resolution. All discussions that occur during the mediation and all documents prepared solely for the purpose of the mediation shall be confidential and privileged pursuant to California Evidence Code Sections 1119 and 1152. 14.4.4 Binding Arbitration. If the Contract Dispute is not resolved by mediation, then any party may submit the Contract Dispute for final and binding arbitration pursuant to the provisions of California Public Contract Code Sections 10240, et seq. The award of the arbitrator therein shall be final and may be entered as a judgment by any court of competent jurisdiction. Such arbitration shall be conducted in accordance with the following: .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. Rev. August 3, 2010 C12143424_Spencon_SidewalkCurbGutter.DOC 9 .6 Limitation of Depositions. The parties may conduct discovery in accordance with the provisions of section 10240.11 of the Public Contract Code; provided, however, that depositions shall be limited to both of the following: (i) Ten (10) percipient witnesses for each party and 5 expert witnesses per party. Upon a showing of good cause, the arbitrator may increase the number of permitted depositions. An individual who is both percipient and expert shall, for purposes of applying the foregoing numerical limitation only, be deemed an expert. Expert reports shall be exchanged prior to receipt of evidence, in accordance with the direction of the arbitrator, and expert reports (including initial and rebuttal reports) not so submitted shall not be admissible as evidence. .7 Authority of the Arbitrator. The arbitrator shall have the authority to hear dispositive motions and issue interim orders and interim or executory awards. .8 Waiver of Jury Trial. Contractor and City each voluntarily waives its right to a jury trial with respect to any Contract Dispute that is subject to binding arbitration in accordance with the provisions of this Paragraph 14.4.4. Contractor shall include this provision in its contracts with its Subcontractors who provide any portion of the Work. 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: Rev. August 3, 2010 C12143424_Spencon_SidewalkCurbGutter.DOC 10 16.1.1 Delete Certain Services. City may, without terminating the Construction Contract, delete certain portions of the Work, reserving to itself all rights to Losses related thereto. 16.1.2 Perform and Withhold. City may, without terminating the Construction Contract, engage others to perform the Work or portion of the Work that has not been adequately performed by Contractor and withhold the cost thereof to City from future payments to Contractor, reserving to itself all rights to Losses related thereto. 16.1.3 Suspend The Construction Contract. City may, without terminating the Construction Contract and reserving to itself all rights to Losses related thereto, suspend all or any portion of this Construction Contract for as long a period of time as City determines, in its sole discretion, appropriate, in which event City shall have no obligation to adjust the Contract Sum or Contract Time, and shall have no liability to Contractor for damages if City directs Contractor to resume Work. 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. Rev. August 3, 2010 C12143424_Spencon_SidewalkCurbGutter.DOC 11 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. 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. Rev. August 3, 2010 C12143424_Spencon_SidewalkCurbGutter.DOC 12 .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. 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. Rev. August 3, 2010 C12143424_Spencon_SidewalkCurbGutter.DOC 13 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 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 venturers 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. Rev. August 3, 2010 C12143424_Spencon_SidewalkCurbGutter.DOC 14 Rev. August 3, 2010 C12143424_Spencon_SidewalkCurbGutter.DOC 15 SECTION 23 GOVERNING LAW. This Construction Contract shall be construed in accordance with and governed by the laws of the State of California. SECTION 24 COMPLETE AGREEMENT. This Agreement represents the entire and integrated agreement between the parties and supersedes all prior negotiations, representations, and contracts, either written or oral. This Agreement may be amended only by a written instrument, which is signed by the parties. SECTION 25 SURVIVAL OF CONTRACT. The provisions of the Construction Contract which by their nature survive termination of the Construction Contract or Final Completion, including, without limitation, all warranties, indemnities, payment obligations, and City’s right to audit Contractor’s books and records, shall remain in full force and effect after Final Completion or any termination of the Construction Contract. SECTION 26 PREVAILING WAGES. This Project is not subject to prevailing wages. The Contractor is not required to pay prevailing wages in the performance and implementation of the Project, because the City, pursuant to its authority as a chartered city, has adopted Resolution No. 5981 exempting the City from prevailing wages. The City invokes the exemption from the state prevailing wage requirement for this Project and declares that the Project is funded one hundred percent (100%) by the City of Palo Alto. Or The Contractor is required to pay general prevailing wages as defined in Subchapter 3, Title 8 of the California Code of Regulations and Section 16000 et seq. and Section 1773.1 of the California Labor Code. Pursuant to the provisions of Section 1773 of the Labor Code of the State of California, the City Council has obtained the general prevailing rate of per diem wages and the general rate for holiday and overtime work in this locality for each craft, classification, or type of worker needed to execute the contract for this Project from the Director of the Department of Industrial Relations. Copies of these rates may be obtained at cost at the Purchasing office of the City of Palo Alto. Contractor shall provide a copy of prevailing wage rates to any staff or subcontractor hired, and shall pay the adopted prevailing wage rates as a minimum. Contractor shall comply with the provisions of Sections 1775, 1776, 1777.5, 1810, and 1813 of the Labor Code. SECTION 27 NON APPROPRIATION. This Agreement is subject to the fiscal provisions of the Charter of the City of Palo Alto and the Palo Alto Municipal Code. This Agreement will terminate without any penalty (a) at the end of any fiscal year in the event that the City does not appropriate funds for the following fiscal year for this event, or (b) at any time within a fiscal year in the event that funds are only appropriated for a portion of the fiscal year and funds for this Construction Contract are no longer available. This section shall take precedence in the event of a conflict with any other covenant, term, condition, or provision of this Agreement. SECTION 28 AUTHORITY. The individuals executing this Agreement represent and warrant that they have the legal capacity and authority to do so on behalf of their respective legal entities. SECTION 29 ATTORNEY FEES. Each Party shall bear its own costs, including attorney’s fees through the completion of mediation. If the claim or dispute is not resolved through mediation and in any dispute described in Paragraph 14.2, the prevailing party in any action brought to enforce the provision of this Agreement may recover its reasonable costs and attorney’s fees expended in connection with that action. The prevailing party shall be 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 SEVERABILITY. In case a provision of this Construction Contract is held to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not be affected. IN WITNESS WHEREOF, the parties have caused this Construction Contract to be executed the date and year first above written. CITY OF PALO ALTO ____________________________ City Manager APPROVED AS TO FORM: ___________________________ Senior Asst. City Attorney APPROVED: ___________________________ Public Works Director SPENCON CONSTRUCTION, INC. By:___________________________ Name:_________________________ Title:________________________ 16 Rev. August 3, 2010 C12143424_Spencon_SidewalkCurbGutter.DOC ATTACHMENT B Public Works Department, Engineering Services FY 2012 Sidewalk, Curb, & Gutter Repairs Project SIDEWALK LOCATION LIST BASE BID 1 (Sidewalk Repair): STREET LIMITS OF WORK WORK AREA 1: Alma Street #535 to #539 sidewalk Arbutus Drive #3589 sidewalk Bryant Street #326, #2495 sidewalk, remove concrete El Camino Real #2171 at College Ave remove concrete Emerson Street #850 remove concrete Ensign Way #711 sidewalk Everett Avenue #472 to 474 remove concrete Kipling Street #431 sidewalk Fabian Way #3977; #3980; #3825; E. Meadow corner ramps; detectable warning devices Palo Alto Avenue #300 remove concrete San Antonio Road Middlefield Rd to Charleston Rd sidewalk, south side Waverley Street 500 block remove concrete Webster Street #355; #437 sidewalk University Avenue #403 on Waverley Street sidewalk AREA 2: Charleston Road Commercial St to San Antonio Rd sidewalk, east side Commercial Street Charleston Rd to Transport St sidewalk, both sides Industrial Avenue Charleston Rd to Transport St sidewalk, both sides San Antonio Road Charleston Rd to Transport St sidewalk, south side Transport Street San Antonio Rd to city limit sidewalk, both sides AREA 3: Alma Street San Antonio Ave to Adobe creek sidewalk, east side Ben Lomond Drive Scripps Ave to Scripps Ave sidewalk, both sides Briarwood Way San Antonio Ave to Ferne Ave sidewalk, both sides Byron Street San Antonio Ave to end sidewalk, both sides Calcaterra Place Mackay Drive to end sidewalk, both sides Christopher Court Dake Ave to end sidewalk, both sides Dake Avenue San Antonio Ave to Ferne Ave sidewalk, both sides Fairfield Court Mackay Drive to end sidewalk, both sides Ferne Avenue San Antonio Ave to Alma St sidewalk, both sides Hemlock Court Briarwood Way to Ponce Dr sidewalk, both sides Keats Court Middlefield Rd to end sidewalk, both sides Mackay Drive San Antonio Ave to Ferne Ave sidewalk, both sides Parkside Drive Greenmeadow Dr to Scripps Ave sidewalk, both sides San Antonio Avenue Middlefield Rd to Alma St sidewalk, north side Scripps Avenue Ferne Ave to Parkside Dr sidewalk, both sides Scripps Court Scripps Ave to end sidewalk, both sides Shasta Drive Ferne Ave to Nelson Dr sidewalk, east side AREA 4: Charleston Road Nelson Dr to Middlefield Rd sidewalk, south side Middlefield Road Charleston Rd to San Antonio Rd sidewalk, west side Nelson Drive Shasta Dr to Charleston Rd sidewalk, east side Shasta Drive Ferne Ave to Nelson Drive sidewalk, both sides DRAWING NO. 3 ATTACHMENT B Public Works Department, Engineering Services FY 2012 Sidewalk, Curb,& Gutter Repairs Project CURB & GUTTER LOCATION LIST BASE BID 2 (Curb & Gutter Repair): STREET ADDRESS ·Vertical Curb & Gutter, Type A, 36”gutter pan w/Asphalt Concrete overlay College Avenue #1531 at Columbia Street Harker Avenue #1118 Kipling Street #411; #430 Middlefield Road #1525; #1729; #1948;#1988; #1998; #2120 North California Avenue #160 to #180 Ramona Street #2230 at N. California Avenue Santa Rita #675 at Middlefield Road South Court Street #2203; #2230 Waverley Street #2150; #2170 ·Vertical Curb and Gutter, Type A (gutter pan 36”) Colorado Avenue #711 Guinda Street #1202 at Kingsley Avenue Harker Avenue #1236; #1241; #1331 to Newell Road High Street #2149; #2171; #2140 Loma Verde Avenue #726; #792; #808: #884 Middlefield Road #2850 Monroe Street #132; #163 Park Blvd #1825; #1871; corner island at Peers Park Santa Rita Avenue #160 at High Street Tasso Street #2435 Wilson Street #1230 West Bayshore Road #2464 ·Rolled Curb and Gutter, Type B (36 to 40” width) Colorado Avenue (36” wide)#455 Santa Rita Avenue (40” wide)#590; #564; #650; #655 ·Concrete Pavement w/Asphalt Concrete Overlay Emerson Street #2295; #2315 Emerson Street #2330 (ADD ALTERNATE) DRAWING NO. 4 FY 2012 SIDEWALK, CURB, AND GUTTER REPAIRS PROJECT ATTACHMENT C IFB NO. 143424 BID SUMMARY Engineer's SPENCON JJR Golden Bay Suarez & Munoz Wattis NorCal BASE BID 1:Estimate CONSTRUCTION Construction Construction Construction Construction Construction BID DESCRIPTION BID UNIT BID UNIT BID UNIT BID UNIT BID UNIT BID UNIT BID UNIT BID ITEM QTY UNIT PRICE AMOUNT PRICE AMOUNT PRICE AMOUNT PRICE AMOUNT PRICE AMOUNT PRICE AMOUNT PRICE AMOUNT 1 Remove sidewalk only 1,500 SF $3.50 $5,250 $2.00 $3,000 $3.50 $5,250 $3 $4,500 $3 $4,500 $3.10 $4,650 $3 $4,500 2 Sidewalk, 4" thick 32,500 SF $8 $260,000 $7.95 $258,375 $6.76 $219,700 $7 $227,500 $7.83 $254,475 $9.27 $301,275 $9.60 $312,000 3 Driveway, 6" thick 12,400 SF $9 $111,600 $7.95 $98,580 $8.51 $105,524 $10 $124,000 $10.50 $130,200 $10.61 $131,564 $10.95 $135,780 4 Integral sidewalk & curb & gutter 700 LF $64 $44,800 $56 $39,200 $67.05 $46,935 $69 $48,300 $70 $49,000 $78.90 $55,230 $51 $35,700 5 Integral driveway & curb & gutter 200 LF $68 $13,600 $60 $12,000 $78.69 $15,738 $75 $15,000 $100 $20,000 $85.60 $17,120 $55 $11,000 6 New Ramp w/ domes/street names 43 EA $2,000 $86,000 $1,325 $56,975 $1,413.90 $60,797.70 $1,300 $55,900 $1,000 $43,000 $2,760.00 $118,680 $1,500 $64,500 7 Domes only 40 EA $350 $14,000 $285 $11,400 $290 $11,600 $224 $8,960 $350 $14,000 $465.00 $18,600 $800 $32,000 8 Curb 460 LF $23 $10,580 $25 $11,500 $7.21 $3,316.60 $25 $11,500 $20 $9,200 $30.75 $14,145 $35 $16,100 9 Gutter 4,270 SF $9 $38,430 $8 $34,160 $8.60 $36,722 $8.50 $36,295 $12.50 $53,375 $12.10 $51,667 $7 $29,890 10 Asphalt pavement 5,300 SF $8 $42,400 $5.85 $31,005 $8.54 $45,262 $8 $42,400 $9 $47,700 $4.40 $23,320 $15 $79,500 11 Special saw cutting 5,560 LF $3 $16,680 $1.10 $6,116 $3.00 $16,680 $2.50 $13,900 $3 $16,680 $2.00 $11,120 $4 $22,240 12 Recycle concrete & asphalt 2,300 Ton $1 $2,300 $0.01 $23 $0.01 $23 $0.01 $23 $15 $34,500 $4.20 $9,660 $5 $11,500 13 Traffic control 1 LS $5,000 $5,000 $499.99 $500 $0.01 $0.01 $2,430 $2,430 $10,000 $10,000 $10,916 $10,916 $15,000 $15,000 BASE BID 1 TOTAL:$650,640 $562,833.99 $567,548.31 $590,708 $686,630 $767,947 $769,710 BASE BID 2: 14 Driveway, 6" thick 2,030 SF $10 $20,300 $7.95 $16,138.50 $8.57 $17,397.10 $10 $20,300 $11.90 $24,157 $10.60 $21,518 $10.95 $22,228.50 15 Curb 120 LF $24 $2,880 $25 $3,000 $9.21 $1,105.20 $25 $3,000 $20 $2,400 $30.75 $3,690 $35 $4,200 16 Vertical C & G w/ AC overlay 700 LF $63 $44,100 $32 $22,400 $35.11 $24,577 $49 $34,300 $45 $31,500 $49.28 $34,496 $44 $30,800 17 Vertical C & G, Type A 1,550 LF $54 $83,700 $32 $49,600 $32.42 $50,251 $41.50 $64,325 $40 $62,000 $39.28 $60,884 $40 $62,000 18 Rolled C & G, Type B 220 LF $57 $12,540 $37 $8,140 $31.38 $6,903.60 $40 $8,800 $58 $12,760 $37.50 $8,250 $39 $8,580 19 Conc. pavement w/ AC overlay 1,070 SF $17 $18,190 $12 $12,840 $12.15 $13,000.50 $11 $11,770 $18 $19,260 $16.80 $17,976 $28 $29,960 20 Asphalt pavement 3,370 SF $9 $30,330 $5.85 $19,715 $8.60 $28,982 $8 $26,960 $9 $30,330 $4.70 $15,839 $15 $50,550 21 Recycle concrete & asphalt 690 TON $1 $690 $0.01 $6.90 $0.01 $6.90 $0.01 $6.90 $15 $10,350 $4.20 $2,898 $5 $3,450 22 Traffic control 1 LS $6,000 $6,000 $499.99 $499.99 $0.01 $0.01 $2,000 $2,000 $5,000 $5,000 $5,116 $5,116 $15,000 $15,000 BASE BID 2 TOTAL:$218,730 $132,339.89 $142,223.31 $171,461.90 $197,757 $170,667 $226,768.50 ADD ALTERNATE: 23 Driveway, 6" thick 70 SF $10 $700 $7.95 $556.50 $8.57 $599.90 $10 $700 $12 $840 $10.60 $742 $10.95 $766.50 24 Curb 80 LF $24 $1,920 $25 $2,000 $9.21 $736.80 $25 $2,000 $30 $2,400 $30.75 $2,460 $35 $2,800 25 Conc. pavement w/ AC overlay 480 SF $17 $8,160 $12 $5,760 $12.15 $5,832 $11 $5,280 $25 $12,000 $16.80 $8,064 $30 $14,400 ADD ALTERNATE TOTAL:$10,780 $8,316.50 $7,168.70 $7,980 $15,240 $11,266 $17,966.50 BID GRAND TOTAL:$880,150 $703,490.38 $716,940.32 $770,149.90 $899,627 $949,880 $1,014,445 City of Palo Alto (ID # 2156) City Council Staff Report Report Type: Consent Calendar Meeting Date: 12/5/2011 December 05, 2011 Page 1 of 2 (ID # 2156) Summary Title: Contract Amendment For Addl Ash Hauling Services Title: Approve and Authorize Amendment No. 1 to Contract C10135247 with Veolia ES Technical Solutions, LLC for Additional Funding for the Second Contract Year in the Amount of $49,910 and for the Third Contract Year in the Amount of $105,500 for Provision of Services for Transportation and Disposal of Ash for the Regional Water Quality Control Plant From:City Manager Lead Department: Public Works Recommendation Staff recommends that Council direct staff to approve and authorize an amendment with Veolia ES Technical Solutions, LLC (Attachment A) for additional funding for the second contract year in the amount of $49,910 and for the third contract year in the amount of $105,500 for provision of services for transportation and disposal of ash for the Regional Water Quality Control Plant (RWQCP). Discussion On April 5, 2010, Council approved Contract C10135247 with Veolia ES Technical Solutions, LLC (Veolia) for incinerator ash hauling from the RWQCP for $144,510 in the first year, $149,823 in the second year, and $155,297 in the third year (See CMR:186:10). The contract is currently in the second year. Approval of this amendment will increase contract amounts to $199,733 in the second year and $260,797 in the third year. Since 2007, the soluble copper content in the ash has been above 25 parts per million, making it a hazardous waste pursuant to California regulations. Ongoing efforts include: (a) evaluation of the cause of the soluble copper, (b) investigation into means to reduce the level of soluble copper, and (c) monitoring of the soluble copper level in the ash. In April 2011, the soluble copper content increased to a level greater than 40 parts per million. At soluble copper levels over 40 parts per million, California regulations require the ash to be encapsulated and solidified within the hazardous waste landfill. Under the current contract, Veolia has utilized the hazardous waste landfill at Kettleman Hills, California for ash with copper levels below 40 parts per million. The Kettleman Hills facility does not have equipment to encapsulate and solidify the ash, so Veolia cannot take the ash to Kettleman Hills. Consequently, since April 2011, the ash has been December 05, 2011 Page 2 of 2 (ID # 2156) transferred to a Class 1 hazardous waste landfill in Beatty, Nevada. The additional hauling and disposal costs require an additional $49,910 for the second contract year and an additional $105,500 for the third contract year. Resource Impact Funds for the second year of the contract have been appropriated in the Wastewater Treatment Enterprise Fund operating budget. Additional funds for year three are contingent upon Council approval of the budget for FY 2012-2013. Policy Implications This recommendation does not represent any change to existing City policies. Environmental Review The recommended action is exempt from review under the California Environmental Quality Act pursuant to CEQA Guidelines Section 15301 (b), which exempts negligible expansion of an existing use including operation of publicly-owned sewerage services, structures, facilities, mechanical equipment, or topographical features. Attachments: ·C10135247 Amendment 1 Veolia ES Technical Solutions (PDF) Prepared By:James S. Allen, Manager, WQCP Department Head:J. Michael Sartor, Interim Director City Manager Approval: James Keene, City Manager ATTACHMENT A AMENDMENT NO. 1 TO CONTRACT NO. C10135247 BETWEEN THE CITY OF PALO ALTO AND VEOLIA ES TECHNICAL SOLUTIONS, LLC This Amendment No. 1 to Contract No. C10135247 ("Contract") is entered into December 12, 2011, by and between the CITY OF PALO ALTO, a charter city and a municipal corporation of the State of California ("CITY"), and VEOLIA ES TECHNICAL SOLUTIONS, LLC, a Limited Liability Corporation, located at 3797 Spinnaker Court, Fremont, CA 94538, Telephone Number: 510-652-1964 ("CONTRACTOR") . R E CIT A L S: WHEREAS, the Contract was entered into between the parties for the provision of services for transportation and disposal of ash and sludge for the Regional Water Quality Control Plant; and WHEREAS, the parties wish to amend the Contract; NOW, THEREFORE, in consideration of the covenants, terms, conditions, and provisions of this Amendment, the parties agree: SECTION 1. Section 5 is hereby amended to read as follows: "COMPENSATION FOR ORIGINAL TERM. CITY shall pay and CONTRACTOR agrees to accept a not to exceed compensation for the full performance of the Services and reimbursable expenses, if any: • A sum calculated in accordance with the fee schedule set forth in Exhibit C, not to exceed a total amount of $199,733 for the second contract year. A five percent (5%) increase will be added for the third year of this contract for Bid line items A-1 through A-4, and for Bid line items B-1 through B-4, and for new Bid line items A-8 through A-9. The not to exceed total amount of $260,797 shall apply for the third year." SECTION 2. The following exhibit to the Contract is hereby amended to read as set forth in the attachment(s) to this Amendment, which are incorporated in full by this reference: a. Exhibit "c" entitled "Schedule of Fees". II II II II 1 111108 sm 010 II SECTION 3. 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 WITNESS WHEREOF, the parties have by their duly authorized representatives e xecuted this Amendment on the date first above written. CITY OF PALO ALTO APPROVED: City Manager APPROVED AS TO FORM: Senior Asst. City Attorney Ul108smOlO 2 VEOLIA ES TECHNICAL SOLUTIONS, LLC /II} //J BY:(~~~~~I Name ~<A>V0 l .LL(p s-n;- Ti tie: \/l' (~~{.J~([)Vlj CITY OF PALO ALTO CONTRACT NO. Cl013524 7 EXHIBIT C -SCHEDULE OF FEES Exhi bit C, Schedule of Fees, Bid Schedule A, is hereby amended to read as follows: Bid Items A-8 to A-9 shall apply when the copper level in the ash requires that the material be rerouted from the Kettl eman Hills, CA l andfill to the U. S . Ecology, Inc. Beatty, NV landfill for Class 1 stabil ization of copper: Bid Schedule A· . BID APPROX. I TEM QTY. A-I 825 A-2 52 A-3 52 A-4 365 A-5 825 A-6 825 A-7 1 A-8 780 A-9 52 Bid Schedule B: BID ITEM B-1 B-2 B-3 B-4 B-5 B-6 B-7 B-8 APPROX. QTY. 128 12 12 12 128 12 6 48 UNIT Ton Load Load Days Ton Ton LS Ton Load UNIT Ton Load Load Days Ton Load Each Hour DESCRIPTION Disposal cost of ash: Transportation cost of ash: Liner installation fee for ash -per load: Bin Rental for ash: California Non-RCRA taxes for ash: (Based on the most current California BOE schedule) Local taxes for ash, as necessary, per ton (10% per ton -based on the most current King's County tax rate) Surcharges/fees for ash, lump sum (one-time fee) Disposal, 15 ton minimum Transportation DESCRIPTION Disposal cost of sludge: Transportation cost for sludqe: Liner installation fee for sludge - per load: Bin Rental: Local taxes as necessary, per ton Surcharges/fees for sludge, lump sum Roll-off bin mobilization during backup sludge hauling service: Onsite full-time truck and driver to move empty and full bins in and out of the incinerator building during backup sludge hauling Bervice: All other fees in Bid Schedule A & B shall remain unchanged. 1.10 PRICES AND ANNUAL INCREASES UNIT PRICE $ 36.00 $1,200.00 $ $ $ $ $ $ $ 45 .00 12 .50 19.98 3.00 500.00 60.00 2800.00 UNIT PRICE $ 57 .75 $ 780 .00 $ 30.00 $ 12.50 $ 0.00 $ 8.25 $ 660.00 $ 98.50 A. Standard bid of ash shall include all fees, taxes, and surcharges: 1. Disposal cost is $36 / ton 3 111108 8m OlO CITY OF PALO ALTO CONTRACT NO. ClO135247 2. Transportation cost is $1200/ load 3. Liner installation in $45 I load 4. Bin rental is $12.50 1 day [Note: no overlapping charge shall be applied on the day of bin exchange.) 5. California Non·RCRA taxes, $19.98 per tOIl based on the most cum~·nt Califomia BOB schedule 6. Local taxes, as necessary, $3 / ton, based on the most current King's County tax rate 7. Surcharges, $500 initial bin drop fee (one-time fee) B. Standard bid of sludge shall include all fees, taxes, and surcharges: 1. Disposal cost is $57.751 ton 2. Transportation cost is $780 I load 3. Liner installation is $30/ load 4. Bin rental is $12.50 1 day for each bin (as necessary during mobilization) 5. Local taxes, as necessary, is $0 per ton 6. Surcharges are $8.25 environmental fee per load 7. Roll-offbin mobilization during backup sludge hauling service, $660 I bin 8. Onsite truck and truck driver to move and empty full bins in and out of the incinerator building during backup sludge handling service, $98.50 I hour C. ADDITIONAL PRICING CONDITIONS 1. Demurrage will not be charged for pickup of waste up to and including 90 minutes of loading and unloading time. After 90 minutes, the demurrage charge of S95/hour will apply if the city causes the delay. 11. Demurrage will not be charged for delays caused by the hauler not baving proper paperwork at the time of arrival at the plant site. Hi. Unloading demurrage will not be cbarged for wastes being delivered unless the City of Palo Alto creates a condition such as an improperly identified waste or nonconforming waste. iv. A minimum volume of 10 tons (or yards, whichever is greater) will be billed for all waste received in a rolloff container, intermodal, or dump trailer delivered to hauler's waste disposal facility. v. Haulers' owned or leased roll-off containers or other equipment that are damaged by City of Palo Alto may be repaired by contractor and invoice City at a quoted hourly rate for labor and parts invoiced at no more than cost plus 30%. vi. Roll-off washout charges are to be included in the pricing. vii In the event sludge can be hauled to East Bay Municipal Utilities District, the pricing for emergency sludge disposal shall be cost plus 10%. For the base contract, the prices in Section B above shall apply. viii. In case of price increase due to new regulatory fees, waste hauler must notify the City of Palo Alto in writing before any additional fees will be allowed. D. ANNUAL INCREASES I. The price increase for the second and third 12-mont.h periods of this contract is to be determined in the Base Bid Schedules. ll. The price increase for the first optional 12 month extension of this contract is to be 5%, which shall apply to Bid line items A.I, 2,3, and 4 and B.l, 2, 3, and 4 only. iii. The price increase for the second optional 12 month extension of this contract is to be 5%, which shall apply to Bid line items A.l, 2, 3, and 4 and B.I, 2, 3, and 4 only. In the case of a price increase due to new regulatory fees, the contractor must notify the City of Palo Alto in writing before any additional fees will be allowed. 2 Rev. December 1,2009 \\CC· TERRAljarrcol\PURCIIDOCISAP Bids and ProJ>Osals\RFQ\RFQ 135247 TranspoT1ation and Disposal of Ash and Sludgc\ConlTactCl0135247 VEOLlA · FINAL031210.doc City of Palo Alto (ID # 2229) City Council Staff Report Report Type: Consent Calendar Meeting Date: 12/5/2011 December 05, 2011 Page 1 of 3 (ID # 2229) Summary Title: Lab Information Mgmt System Software Contract Title: Approval of a Contract with Promium, LLC in the Amount of $190,349 to Install Hardware and Software for a Laboratory Information Management System (LIMS) at the Regional Water Quality Control Plant From:City Manager Lead Department: Public Works Recommendation Staff recommends that Council approve and authorize the City Manager or his designee to execute the attached contract with Promium, LLC, (Attachment A) in the amount of $190,349 for installation of software and hardware for a laboratory information management system (LIMS) at the Regional Water Quality Control Plant (WQ-80021). This amount includes $180,349 for basic services and $10,000 for additional services for a total contract of $190,349. Background The Regional Water Quality Control Plant (Plant) operates a state accredited environmental laboratory to analyze wastewater, drinking water, stormwater, and biosolids samples. Before 1992, Plant laboratory staff maintained paper records of laboratory data. In 1992, the Plant implemented its first LIMS based on software provided by Borland Paradox and Quattro Pro. A LIMS includes hardware and software components that facilitate efficient daily lab activities, archival and active storage of laboratory data, reporting, and quality control of lab processes. The Plant’s LIMS has reached the end of its useful life and needs updating. As a legacy system, the existing LIMS is difficult to maintain and use. An update will enhance functionality, improve staff efficiency, and improve data reliability. The new LIMS will be provided by Promium, LLC of Bothell, Washington. The new LIMS will replace the hardware and software in use since 1992. Data records from the legacy system will be migrated over to the new system. The contract involves the development, installation, startup, and training of new hardware and software to replace the old LIMS. Support by the vendor will be provided through an annual maintenance service included in this contract; maintenance support is provided for the first three years after a go-live date. Additional services in the amount of $10,000 have been included in the contract for additional customization of the hardware, software, and LIMS’ reports. Discussion December 05, 2011 Page 2 of 3 (ID # 2229) A Request for Proposals (RFP) for the project was sent to prospective consultants and posted on the City’s web site on May 5, 2011. The following table summarizes the results of the RFP solicitation: Summary of Solicitation Process Proposal Description/Number Services for LIMS Proposed Length of Project 3 years 9 monthsNumber of Proposals Mailed 7 Total Working Days to Respond to Proposal 32 Number of Proposals Received 5 Company Name Location (City, State) Selected for Oral Interview? ChemWare Raleigh, NC Yes PerkinElmer Shelton, CT Yes Accelerated Technology West End, NC Yes Promium Bothell, WA Yes Zumatrix Falmouth, MA Yes Range of Proposal Amounts Submitted $157,688 to 212,942 An evaluation committee consisting of representatives from the Environmental Services Division of Public Works reviewed the proposals. Five firms were invited to participate in oral interviews August 10 and 11, 2011. The committee carefully reviewed each firm's qualifications and submittal in response to the criteria identified in the RFP. The committee reviewed each firm's qualifications relative to its experience developing, installing, and servicing LIMS, quality of its proposed project approach, performance on past projects, qualifications of staff to be assigned to the project, and understanding of the project goals. Promium, LLC was selected because their product had an intuitive user interface and its technology would adapt well to the Plant’s Laboratory environment. Staff also coordinated the review and selection of the product to ensure that the new software is compatible with the City’s information technology (IT) systems, including the City’s Windows 7 operating environment. Promium’s software package also had many ready to use components for wastewater treatment labs which will simplify and shorten the implementation effort. Promium also had a number of installations locally and nationally, and the references at these sites were satisfied with the company and its software. Timeline A new LIMS system is expected to take 9 months to implement. Annual maintenance will be provided for 3 years after a go-live date. Total project duration is 3 years 9 months. After contract completion, staff will maintain the Promium LIMS through an annual service agreement. Resource Impact Funds are available in Wastewater Treatment Fund Capital Improvement Program Project WQ- 80021. Environmental Review December 05, 2011 Page 3 of 3 (ID # 2229) The recommended action is exempt from review under the California Environmental Quality Act pursuant to CEQA Guidelines Section 15301 (b), which exempts negligible expansion of an existing use including operation of publicly-owned sewerage services, structures, facilities, mechanical equipment, or topographical features. Attachments: ·Contract C12141079 Promium (PDF) Prepared By:James S. Allen, Manager, WQCP Department Head:J. Michael Sartor, Interim Director City Manager Approval: James Keene, City Manager CITY OF PALO ALTO CONTRACT NO. C12141079 AGREEMENt BETWEEN THE CITY OF PALO ALTO AND :PROMIUM, LLC . FOR PROFESSIONAL SERVICES (Laboratory Information Management System) This Agreement is entered into on this 5th day of December, 2011, ("Agreement") by and between the. CITY OF PALO ALTO, a California chartered municipal corporation ("CITY"), and PROMIUM, LLC, a Limited Liability Corporation jn the State of Washington, located at 3350 Monte Villa Parkway, Suite 220, Bothell, WA 98021; 425-286-9200 x222 ("CONSULTANT"). RECITALS The following recitals are a substantive portion ofthis Agreement: A. CITY intends to receive a Laboratory Information Management System (LJMS) for the Regional Water Quality Control Plant laboratory ('~Project") and desires to engage a consultant to develop, implement, startup, and maintain new LIMS software in connectiop. with the Project ("SerVices"). B. CONSULTANT has represented that it has the necessary professional expertise, qualifications, and capability, and all required licenses and/or certifications to provide the Services. C. CITY i,n reliance on these representa~ions desires to engage CONSULTANT to provide the Services as more fully described in Exhibit "A", attached to and made a part ~fthis Agreement. NOW, THEREFORE, in consideration of the recitals, covenants, terms, and conditions, contained in this Agreement, the parties agree: AGREEMENT SECTION 1. SCOPE OF SERVICES. CONSULTANT shall perform the Services described in Exhibit "A" in accordance with the terms and conditions contained in this Agreement. The performance of all Services shall be to the reasonable satisfaction of CITY. SECTION 2. TERM. The term ·of this Agreement shall be from the date of its full execution through completion of the services in accordance with the Schedule of Performance attached as Exhibit "B" unless terminated earlier pursuant to Section 19 ofthis Agreement. \ SECTION 3. SCHEDULE OF PERFORMANCE. Time is ofthe essence in the performance of Services under this Agreement. CONSULTANT shall complete the Services within the term of this Agreement and in accordance with the schedule set forth in Exhibit "B", attached to and made a part of this Agreement. Any Services for which times for performance are not specified in this Agreement shall be comrtlenced and completed by CONSULTANT in a reasonably prompt and timely manner based upon the circumstances and direction communicated to the CONSULTANT. CITY's agreement to extend the term or the schedule for performance shall not preclude recovery of damages for delay if the extension is required due to the fault of CONSULTANT. ProfeSSional Setvices Rev. June 2, 2010 SECTION 4. NOT TO EXCEED COMPENSATION. The compensation to be paid to CONSULTANT for performance of the Services described in Exhibit "A", including both payment for professional services and reimbursable expenses, shall not exceed One Hundred Eighty Thousand Three Hundred and Forty-Nine Dollars ($180,349). In the event Additional Services are authorized, the total compensation for services and reimbursable expenses shall not exceed One Hundred Ninety Thousand Three Hundred and Forty-Nine Dollars ($190,349). The applicable rates and schedule of payment are set out in Exhibit "C-l", entitled "HOURLY RATE SCHEDULE," which is attached to and made a part of this Agreement. Additional Services, if any, shall be authorized in accordance with and subject to the provisions of Exhibit "C". CONSULTANT shall not receive any compensation for Additional Services performed without the prior written authorization of CITY. Additional Services shall mean any work that is determined by CITY to be necessary for the proper completion of the Project, but which is not included within the Scope of Services described in Ex~bit "A". SECTION 5. INVOICES. In. order to request payment, CONSULTANT shall submit monthly invoices to the CITY describing the services performed and the applicable charges (including an identification of personnel who performed the services, hours worked, hourly rates, atidreimbursable expenses), based upon the CONSULTANT's billing rates (set forth in Exhibit "C-l "). If applicable, the invoice shall also describe the'percentage of completion of-each task. The information in CONSULTANT's payment requests shall be subject to verification by CITY. CONSULTANT shall send all invoices to the City's project manager at the address specified in Section 13 below. The City will generally process and pay invoices within thirty (30) days of receipt. SECTION 6. QUALIFICATIONS/STANDARD OF CARE. All of the Services shall be performed by CONSULTANT or under CONSULTANT's supervision. CONSULTANT represents that it possesses the professional and technical personnel necessary to perform the Services required by this Agreement and that the personnel have sufficient skill and experience to perform the Services assigned to them. CONSULTANT represents that it, its employees and subconsultants, if permitted, have and shall maintain during the term of this Agreement al1licenses, permits, qualifications, insurance at'J,d ap~rovals of whatever nature that are legally required to perform the Services. All of the services to be furnished by CONSULTANT under this agreement shall meet the professional standard and quality that prevail among professionals in the same discipline and of similar knowledge and skill engaged in related work throughout California ~der the same or similar_ circumstances. SECTION 7. COMPLIANCE WITH LAWS. CONSULTANT shall keep itself informed of and in compliance with all federal, state and local laws, ordinances, regulations, and orders that may affect in any manner the Project or the performance of the Services or those engaged to perform Services under this Agreement. CONSULTANT shall procure all permits and licenses, pay all charges and fees, and give all notices required by law in the performance of the Services. 2 Professional Services Rev. June 2,2010 H:\Solicitations\RFP\RFP141 079 Implement of Laboratory Information Management Systems\Docs related to contract\Contract C12141 079 Promium.doc SECTION 8. ERRORS/OMISSIONS. CONSULTANT shall correct, at no cost to CITY, any and all errors, omissions, or ambiguities in the work product submitted to CITY, provided CITY gives notice to CONSULTANT. If CONSULTANT has prepared plans and specifications or other design documents to construct the Project, CONSULTANT shall be obligated to corr~t any and all errors, omissions or ambiguities discovered prior to and during the course of construction of the Project. This obligation shall survive termination of the Agreement. SECTION 9. COST ESTIMATES. If this Agreement pertains to the design of a public works project, CONSULTANT shall submit estimates of probable construction costs at each phase of design submittal. If the total estimated construction cost at any submittal exceeds ten percent (10%) of the CITY's stated construction budget, CONSULTANT shall make recommendations to the CITY for aligning the PROJECT design with the budget, incorporate CITY approved recommendations, and revise the design to meet the Project budget, at no"additional cost to CITY. SECTION 10. INDEPENDENT CONTRACTOR. It is understood and agreed that in perfonning the Services under this Agreement CONSULTANT, and any person employed by or contracted with CONSULTANT to furnish labor andlor materials under this Agreement, shall act as and be an independent contractor and not an agent or employee of the CITY. SECTION 11. ASSIGNMENT. The" parties agree that the expertise and experience of CONSULTANT are material considerations for this Agreement. CONSuLTANT shall not assign or transfer any interest in this Agreement nor the performance of any of CONSUL T ANT's obligations hereunder withoutthe prior written consent of the city manager. Consent to one assignment will not be deemed to be consent to any subsequent assignment. Any assignment made without the approval of the city manager will be void. . SECTION 12. SUBCONTRACTING. Notwithstanding Section 11 above, CITY agrees that subconsultants may be used to complete the Services. The subconsultants authorized by CITY to perform work on this Project are: 1. Astrix, 125 Half Mile Road, Suite 200, Red Bank, NJ, 07701 CONSULTANT shall be responsible for directing the work of any sub consultants and for any compensation due to subconsultants. CITY assumes no responsibility whatsoever concerning compensation. CONSULTANT shall be fully responsible to CITY for all acts and omissions of a subconsultant. CONSULT.ANT shall change or add sub consultants only with the prior approval of the city manager or his designee. SECTION 13. PROJECT MANAGEMENT. CONSULTANT will assign John Albert as the Project Director to have supervisory responsibility for the performance, progress, and execution of the Services and John Albert as the project manager to represent CONSULTANT during the day-to- day work on the Project. If circumstances cause the substitution of the project director, project coordinator, or any other key personnel for any reason, the appointment of a substitute project director and the assignment of any key new or replacement personnel will be subject to the prior 3 Professional Services Rev. June 2, 2010 H:\Solicitations\RFP\RFP141079 Implement of Laboratory Information Management Systems\Docs related to contract\Contract C1214\ 079 Promium:doc written approval ofthe CITY's project manager. CONSULTANT, at CITY's request, shall promptly remove personnel who CITY firids do not perform the Services in an acceptable manner, are uncooperative, or present a threat to the adequate or timely completion of the Project or a threat to the safety of persons or property. The City's project manager is David Hui, Public Works Department, Environmental Services . Division, 2501 Embarcadero Way, Palo Alto, CA 94303, Telephone: 650-617-3162. The project manager will be CONSULTANT's point of contact with respect to performance, progress and execution of the Services. The CITY may designate an alternate project manager from time to time. SECTION 14.-OWNERSHIP OF MATERIALS. Upon delivery, all work product, including without limitation, ·a11 writings, drawings, plans, reports, specifications, calculations, documents, other materials and copyright interests developed under this Agreement shall be and remain the exclusive property of CITY without restriction or limitation upon their use. CONSULTANT agrees that all copyrights which arise from creation of the work pursuant to this Agreement shall be vested' . . in CITY, and CONSULTANT waives and relinquishes all claims to copyright or other intellectual property rights in favor of the CITY. Neither CONSULTANT nor its contractors, if any, shall make any of such materials available to any individual or organization without ihe prior written approval of the City Manager or designee. CONSULTANT makes no representation of the suitability of the work product for use in or application to circumstances not contemplated by the scope of work. SECTION 15. AUDITS. CONSULTANT will permit CITY to audit, at any reasonable time during the term of this Agreement and for three (3) years thereafter, CONSULTANT's records pertaining to matters covered by this Agreement. CONSULTANT further agrees to maintain and retain such records for at least three (3) years after the expiration or earlier termination of this Agreement. SECTION 16. INDEMNITY. 16.1. To the fullest extent .permitted by law, CONSULTANT shall protect, indemnify, defend and hold harmless CITY, its Council members, officers, employees and agents (each an "fudemnified Party") from and against any and all demands, claims, or liability of any nature, including death or injury to any person, property damage or any other loss, including all costs and expenses of whatever nature including attorneys fees, experts fees, court costs 'and disbursements ("Claims") resulting from, arising out of or in any manner related to performance or nonperformance by CONSULTANT, its officers, employees, agents or contractors under this Agreement, regardless of whether or not it is caused in part by an Indemnified Party. 16.2. Notwithstanding the above, nothing in this Section 16 shall be construed to require CONSULTANT to indemnify an Indemnified Party from Claims arising from the active negligence, sole negligence or willful misconduct of an Indemnified Party. 16.3. The acceptance of CONSULTANT's services and duties by CITY shall not operate as a waiver of the right of indemnification. The provisions of this Section 16 shall survive the expiration or early termination of this Agreement. 5 Professional Services Rev. June 2, 2010 H:\Solicitations\RFP\RFPI41019 Implement of Laboratory lnformation Management Systems\Docs related to contract\Contract CI2141 019 Promium.doc SECTION 17. WAIVERS. Thewaiverbyeitherpartyofanybreachorviolationofanycovenant, . term, condition or provision of this Agreement, or of the provisions of any ordinance or law, will not be deemed to be a waiver of any other term, covenant, condition, provisions, ordinan.ce or law, or of any subsequent breach or violation of the same or of any other term, covenant, condition, provision, ordinance or law. . SECTION 18. INSURANCE. 18.1. CONSULTANT, at its sole cost and expense, shall obtain and maintain, in full force and effect during the term of this Agreement, the insurance coverage described in Exhibit "D". CO~SULTANT and its contractors, if any, shall obtain a policy endorsement naming CITY as an additional insured under any general liability or automobile policy or policies. 18.2. All insurance coverage required hereunder shall be provided throughcarriers with AM Best's Key Rating Guide ratings of A-:Vll or higher which are licensed or authorized to transact insurance business in the State of California. Any and all contractors of CONSULTANT retained to perform Services under this Agreement will obtain and maintain, in full force and effect during the term of this Agreement, identical insurance coverage, naming CITY as an additional insured under such policies as required above. .. 18.3. Certificates evidencing such insurance shall be filed with CITY concurrently with the executionofthis Agreement. The certificates will'be subject to the approval of CITY's Risk Manager and will contain an endorsement stating that the insurance is primary coverage and will not be canceled, or materially reduced in coverage or limits, by the insurer except after filing with the Purchasing Manager thirty (30) days' prior written notice of the cancellation or modification, CONSULTANT shall be responsible for ensuring that current certificates evidencing the insurance are provided to CITY's Purchasing Manager during the entire tenn of this Agreement. 18.4. The procuring of such required policy or policies of insurance will not be construed to limit CONSULTANT's liability hereunder nor to fulfill the indemnification provisions of this Agreement. .Notwithstanding the policy or policies of insurance, CONSULTANT will be obligated for the full and total amount of any damage, injury, or loss caused by or directly arising as a result of the Services performed under this Agreement, including such damage, injury, or loss arising after the Agreement is terminated or the term has expired. SECTION 19. TERMINATION OR SUSPENSION OF AGREEMENT OR SERVICES. 19.1. The City Manager may suspend the performance of the Services, in whole or in part, or terminate this Agreement, with or without cause, by giving ten (10) days prior written notice thereof to CONSULTANT. Upon receipt of such notice, CONSULTANT will immediately discontinue its performance of the Services. 19.2. CONSULTANT maytenninate this Agreement or suspend its performance of the Services by giving thirty (30) days prior written notice thereof to CITY, but only in the event of a 6 Professional Services Rev. June 2. 2010 H:\Solicitations\RFP\RFP141079 Implement of Laboratory Information Management Systems\Docs related to contracl\Contract CI2141 079 Promium.doc substantial failure of performance by CITY. 19.3. Upon such sUsp¥JlSion or termination, CONSULTANT shall deliver to the City Manager immediately any and all copies of studies, sketches, drawings, computations, and other data, whether or not completed, prepared by CONSULTANT or its contractors, if any, or given to CONSULTANT or its contractors, if any, in connection with this Agreement. Such materials will become the property of CITY. 19.4. Upon such suspension or termination by CITY, CONSULTANT will be paid for the Services rendered or materials delivered to CITY in accordance with the scope of services on or before the effective date (i.e., 10 days after giving notice) of sus pension or termination; provided, however, ifthis Agreement is suspended or terminated on account of a default by CONSULTANT, CITY Will be obligated to compensate CONSULTANT only for that portion of CONSULTANT's services which are of direct and immediate benefit to CITY as such determination may be made by the City Manager acting in the reasonable exercise ofhislher discretion. The following ~ections will survive any expiration ot termination of this Agreement: 14, 15, 16, 19.4,20, and 25. 19.5. No payment, partial payinent, acceptance, or partial acceptance by CITY will operate as a waiver ()l;l the part of CITY of any of its rights under this A~e~ment. SECTION 20. NOTICES. All notices hereunder will be given in writing and mailed, postage prepaid, by certified mail, addressed as follows: To CITY: Office of the City Clerk City of Palo Alto Post Office Box 10250 Palo Alto, CA 94303 With a copy to the Purchasing Manager To CONSULTANT: Attention of the project director at the address of CONSULTANT recited above SECTION 21. CONFLICT OF INTEREST. 21.1. In accepting this Agreement, CONSULTANT covenants that it presently has no interest, and will not acquire any interest, direct or indirect, financial or otherwise, which would conflict in any manner or degree with the performance of the Services. 21.2. CONSULTANT further covenants that, in the performance of this Agreement, it will not employ subconsultmits, contractors or persons having such an interest. CONSULTANT certifies that no person who has or will have any financial interest under this Agreement is an officer or employee of CITY ; this provision will be interpreted in accordance with the applicable provisions of the Palo Alto Municipal Code and the Government Code ofthe State of California. , Professidnal Services Rev. June 2,2010 7 H:\Solicitations\RFP\RFPI41 079 Implement of Laboratory Information Management Syslems\Docs related to contract\Contract C12141079 Promium.doc 21.3. If the Project Manager determines that CONSULTANT is a "Consultant" as that tenn is defmed by the Regulations of the Fair Political Practices Commission, CONSULTANT shall be required and agrees to file the appropriate fmancial disclosure documents required by the Palo Alto Municipal Code and the Political Reform Act. SECTION 22. NONDISCRIMINATION •. As set forth in Palo Alto Municipal Code section 2.30.510, CONSULTANT certifies that in the performance of this Agreement, it shall not discrimin;:tte in the employment of any person because of the race, skin color, g~der, age, religion, disabi1ity~ national origin, ancestry, sexual orientation, housing status, marital status, familial status, weight ~r height of such person. CONSULTANT acknowledges that it has read and understands the provisions of Section 2.30.510 of the Palo Alto Municipal Code relating to Nondiscrimination Requirements and the penalties for violation thereof, and agrees to meet all requirements of Section 2.30.510 pertaining to nondiscrimination in employment. SECTION 23. ENVIRONMENTALLY PREFERRED PURCHASING AND ZERO WASTE REQUIREMENTS. CONS.ULTANT shall comply with the City's Environmentally Preferred Purchasing policies which are available at the City's Purchasing Department, incorporated by reference and may be amended from time to time. CONSULTANT shall comp~y with waste reduction, reuse, recycling· and disposal requirements of the City's Zero Waste Program. Zero Waste best practices include first ininimizing and reducing waste; second, reusing waste and· third, recycling or composting waste. In particular, Consultant shall comply with the following zero waste requirements: . • All printed materials provided by Consultant to City generated from a personal computer and printer including but not limited to, proposals, quotes, invoices, reports, and public education materials, shall be double-sided and printed on a minimum of30% or greater post-consumer content paper, unless otherwise approved by the City's PJ,"oject Manager. Any submitted materials printed by a professional printing company shall be a minimum of30% or greater post-consumer material and . printed with vegetable based inks.. . . • Goods purchased by Consultant on behalf of the City shall be purchased in accordance with the City's Environmental Purchasing Policy including but not limited to Extended Producer Responsibil~ty requirements for products and packaging. A copy of this policy is on file at the Purchasing Office. • Re~sable/returnable pallets shall be taken back by the Consultant, at no additional cost to the City, for reuse or recycling. Consultant shall provide documentation from the facility accepting the pallets to verify that pallets are not being disposed. SECTION 24. NON-APPROPRIATION 24.1. This Agreement is subject to the fiscal provisions of the Charter of the City of Palo Alto and the Palo Alto Municipal Code. This Agreement will terminate without any penalty (a) at the end of any fiscal year in the event that funds are not appropriated for the following fiscal year, or (b) at any time within a fiscal year in the event that funds are only appropriated for a portion ofthe fiscal year and funds for this Agreement are no longer available. This section shall take precedence 8 Professional Services Rev. June 2, 2010 H:\Solicitations\RFP\RFP141 079 Implement of Laboratory Information Management Sysrems\Docs related to contract\Conlract C12141 079 Promium.doc in the event of a conflict with any other covenant, term, condition, or provision ofthis Agreement. SECTION 25. MISCELLANEOUS PROVISIONS. 25.1. This Agreement will be governed by the laws of the State of California. 25.2. In the event that an action is brought, the parties agree that trialof such action will be vested exclusively in the state courts of California in the County of Santa Clara, State of California. 25.3. The prevailing party in any action brought to enforce the provisions of this Agreement may recover its reasonable costs and attorneys' fees ~xpended in connection with that action. The prevailing party shall be entitled to recover an amount equal to the fair market value of legal services provided by attorneys employed by it 'as well as any attorneys' fees paid to third parties. 25.4. This document represents' the entire and integrated agreement between the parties and supersedes all prior negotiations, representations, and contracts, either written or oral. This document may be amended· only by a written instrument, which is signed by the p8rties. 25.5. The covenants, terms, conditions and provisions of this Agreement will apply to, and will bind, the heirs, successors, executors, administrators, assignees, and consultants of the parties. 25.6. If a court of competentjurisdiction'finds or rules thalanyprovision of this Agreement or any amendment thereto is void or unenforceable, the unaffected provisions of this Agreement and any amendments thereto will remain in full force and effect. 25.7. All exhibits referred to in this Agreement and any addenda, appendices, attachments, and schedules to this Agreement which, from time to time, may be referred to in any duly executed amendment hereto are by such reference incorporated in this Agreement and will be deemed to be a part of this Agreement. . 25.8 If, pursuant to this contract with CONSULTANT, City shares with CONSULTANT personal information as defined in California Civil Code section 1798.81.5( d) about a California resident ("Personal Information'), CONSULTANT shall maintain reasonable and appropriate security procedures to protect that Personal Information, and shall inform City immediately upon learning that there has been a breach in the security of the system or in the security of the Personal Information. CONSULTANT shall not use Personal Information for direct marketing purposes without City's express written consent. 25.9 All unchecked boxes do not apply to this agreement. 25.10 The individuals executing this Agreement represent and warrant that they have the legal capacity and authority to do so on behalf oftheir respective legal entities. 9 Professional Services Rev. June~. 2010 H:\Solicitations\RFP\RFP141079 Tmplement of Laboratory Information Management Systems\Docs related to contract\Contract C12141 079 Prorrlium.doc IN WITNESS WHEREOF, the parties hereto have by their duly authorized representatives executed this Agreement on the date first above written. CITY OF PALO ALTO PROMIUM, LLC By: .~-;,;;>' City Manager Name: S;,;:::,.f-&cu:r~~uv APPROVED AS TO FORM: Title: CEO Senior Asst. City Attorney Attachments: EXHIBIT "A": EXHIBIT "B": EXHIBIT "C": EXHmIT "C-l": EXHillIT "D": SCOPE OF WORK SCHEDULE OF PERFORMANCE COMPENSATION SCHEDULE OF RATES· INSURANCE REQUIREMENTS . 10 Professional Services Rev. June 2, 2010 H:\Solicitations\RFP\RFPI41079 Implement of Laboratory Information Management Systems\Docs Telated to contract\Contract C12141079 Promlum.doc ( . i EXHIBIT "A" SCOPE OF WORK Laboratory Information Management System 1 GENERAL INFORMATION 1.1 Background ;,' The Palo Alto Regional Water Quality Control Plant (Plant) is a publicly owned treatment works (pOTW). Palo Alto serves as owner, operator, and administrator for the Plant on behalf of Palo Alto and neighboring communities. The plant treats approximately 21 niillion gallons per day of wastewater, produces recycled water, and regulates area industries per federal pretreatment regulations. An onsite environmental laboratory (lab) provides analytical services for the Plant. The lab is accredited for reporting environmental data by the California Department of Public Health. - The lab analyzes wastewater, recycled water, sewage sludge, incinerator ash, and drinking water ~amples. The lab staffperfonns about 14,000 tests onsite,and through contract labs each year. , Samples are tested for compliance purposes according to ,regulatory requirements. Water samples , are also collected and analyzed throughout the various stages of the treatment process to give the Plant operators quick feedback on the efficiency and condition ofthe process. Lab staff also tests water samples collected by source control inspectors, who monitor wastewater at industrial facilities, and by environmental enforcement inspectors, who monitor stonnwater runoff. Drinking water samples are tested for the City of Palo Alto Utilities Department. An eight-member lab staff team works five days per week duri~g business hours and with some limited work during weekends and holidays, as necessary, to provide these services. The Lab primarily perfonns tests in the area of microbiology, toxicology, trace metal, organic, inorganic, and general chemistry. ' Currently, the Lab utilizes a custom LIMS application to manage the data and activities relating to these tests. This application is built on Paradox for DOS and Quattro Pro. See Section 2.2.2 for descriptions. Promium shall replace the aforementioned systems with expanded capabilities in bench automation, data systems interface, result validations, and approval automation~ Promium shall also perfonn data migratiori services and customization serVices, as required. Promium shall prepared and submitted in accordance with the proVisions of these contract instructions and specifications. 1.2 Deliverable Promium will implement a fully functional LIMS system meeting all specifications within nirie months after authorization to proceed. It Professional Services Rev. June 2. 2010 H:\SoJicitations\RFP\RFPI41079 Implement of Laboratory Information Management Systems\Docs related to contract\Con\ract C12141 079 Promium.doc / 2.0 SPECIFICATIONS & REQUIREMENTS 2.1 Project Specifications 2.1.1 Project Management .Promium shall manage project to provide and implement LIMS per deliverable schedule in Section 1.2., . '. l • Promium shall submit a project plan, processes for tracking project status, a change control procedure, and an initial project schedule in -a critical path format. • Promium shall·submit monthly reports. These reports are to include incremental work completed, work scheduled for the next period, and an updated project schedule. ' • Promium shall outline resource requirements from the City. • With the exception of section 2.1.9, it is expected that a fully functional LIMS meeting all requirements shall be installed and operational according to the deliverable schedule in Section 1.2 2.1.2 System Development ." ." Promium sh,all provide and/or develop a data management system ~1MS) that meets the system requirements as detailed in Section 2.0 and the functional requirements as detailed in the Exhibit A appendix,at ~he end of thi~ section. 2.1.3 System Implementation, Testing, and Validation • Promium shall be responSible for implementation and testing ofLIMS. • Promium shall propose phases for developing LIMS (e.g., each phase could relate to a functional area). • Promium shall test each phase prior to implementation at the City site and supply City with test reports. Each report will contain a list of features, in the phase, that have passed testing. Each phase will then be implemented at the City site, tested, and validated by the City QC team. • Promium shall provide a server and a backup server for production implementation. That same server shall be made available for the testing phases. 2.1.4 Migration • Promium shall perform the migration of data from existirig systems to LIMS. • Migration shall include existing data from Paradox, Quattro Pro, and miscellaneous MS Excel and MS Access files. These databases are described in section 2.2.2 and will be provided to the selected Promium. These data shall be flagged within the LIMS database as migrated data. • The migration of data from the current system.s shall not impact availability and operation of the current systems. Page 3 of30 2.1.S Final System Testing Promium shall provide a Testing Plan for final system testing. The City QC team will perform. fmal system testing and validation. 2.1.6 Training • Promium shall provide onsite training on the LIMS. Promium may elect to use the City's training center located in Palo Alto; the center includes a classroom that accommodates 12 people and a computer lab that accommodates 11 people. • Promium shall provide a training plan, which shall be subject to approval by the City, to meet the requirements of this section. Training shall consist of lectures and hands-on demonstration of the LIMS, at a minimum. • Promium shall provide training for three persons to be fully trained as System Administrators with complete understanding of all system capabilities and functionalities. Each person shall be able to manipulate the system fully. System Administrators must be· able to add/delete users and roles, specifY security levels, backup and restore data,. and make changes to the application functionality including adding/editing forms, reports, business rules, workflow, etc. If training is held off-site, costs for travel & . accommodations will be the responsibility ofPromium. . • Promium shall provide training for six persons from the Laboratory to be fully trained on the LIMS software. These two Laboratory staff members shall be regarded as ''power users" and shall be trained to add/delete users and roles, specifY security levels, create new report forms, all other features of the LIMS software. If training is held off-site, costs for travel & accommodations will be the responsibility ofPromiuin. • Promium shall provide on-site training for five guest users (Torke, North, Allen, Wetzel, Mehdi). 2.1.7 Custom Programming Customization, herein, is defined as any additional compiled codes (beyond the core product) specifically developed to meet the requirements of this contract; whereas, configuration is defined as textual settings of parameters and/or readable scripts. In the interest of protecting the City's investment in a LIM:S, the LIMS shall meet all functional requirements as specified in this contract through configuration rather than customization. However, should there be customized codes; Promium shall have one of two options as follows: • Customized codes shall be rolled up to all future versions and become part of the core product. • Customized codes not rolled up to all future versions shall be solely owned by the City. Promium shall deliver all custom developed source code and program products to the City. Customizationshall not interfere with future upgrades to the core system. Page 4 of30 2.1.8 Documentation Promium shall provide documentation relating to the new system including: • Database design -Including at a minimum: o Data Dictionary o Indexes o Views o Stored Procedures o Trigger~ o Packages • Entity -Relationship Diagrams • Application specifications -Including at a minimum: o Development Language o Development Platform o Server Requirements o Architectural Design o 3rd Party Modules (if any) • User Manual • Online Help:"" context sensitiv.e: and searchable • Administration Manual " • All programming code documented· • Documentation of calculations and fonnulas developed and used • Documentation for all external interfaces • Documentation on all conunercial-off-the-shelf applications/controlslframeworks/etc. used. • Backup & Recovery Procedures 2.1.9 Maintenance Promium shall provide a three-year maintenance plan that will include as needed on-site technical support, phone support, and email support. Promium shall provide software updates including installation and training, troubleshooting and help with any recovery operations at no additional cost to the City during the maintenance period. 2.2 System Requirements 2.2.1 Technical Requirements • LIMS client shall be a standard Windows desktop application. • LIMS Database shall be Oracle (version 109 Release 2). The City is responsible for all licensing costs for Oracle database software. • Database server shall run on a Windows server. Promium shall submit, with their proposal, minimum server reqUirements to be provided by City. Page 5 of30 • LIMS sh~l1 be compatible with cUrrent network configuration. The network eilviroriment is primarily TCPIIP. Equipment provides network core, remote access, and network LAN and WAN connectivity. • tIMS shall be compatible with purrent desktop configuration. All desktop computers will be running Windows 7. • LIMS shall support Microsoft Internet Explorer 8 and higher, if an internet browser is utilized. . • LIMS shall support Microsoft Office 2010 and higher, if using desktop applications 2.2.2 Current Software Applications LlMS shall replace the following databases and other systems used by Lab staff: 2.2.2.1 Paradox LIMS This application is a customized relational database system using Borland's Paradox for DOS version 4.5. It was created by Glenn 1. Ouchi in 1992. It currently occupies 1.14GB of space on a file server for both programs and data. The system serves 8 users and 8 workstations in the lab. There are three levels of approval (lab analyst, Senior Chemist, andLab Manager) for approving data and bench worksheets. It handles the following tasks: • Scheduling for routine process samples, • Sample Check-ins for wastewater process samples, and Watershed Protection Group compliance samples, • Data entry and test result calculations using bench worksheets forms. The bench worksheets are grouped in the following categories: Wet Chemistry (NH3, BOD, etc.), Gravimetric, Colorimetric, Metals, Organics, Bioassay, and Microbiology. • Data transfers into and out of the environniental compliance database, and into the wastewater operations database. • Data transfers with two instruments: IC}>MS, and an analytical balance. • Log In bottles and their disposal or storage after testillg. • Handle a simple email system. • Print statUs reports, and routine informational reports. • Maintain a standards preparation log. • Within the Paradox database,.sample, tests, worksheet data tables can be queried. 2.2.2.2 QuatroPro worksheets QuatroPro for DOS integrated easy with Paradox for DOS for ease of moving data to and from fish bioassay worksheets, and scheduling of routine process samples to LIMS. 2.2.2.3 Excel worksheets MS Excel worksheets are used for un-inonized ammonia calculations, median calculations, QC/QA pre.cision and accuracy charting of queried lab data, fish reference toxicity test calculations, MDL calculations, auto pipette calibrations, annual summary reports, outside contract lab result submissions, storage room and chemical inventory, and summary reports to Page 60f30 others. 2.2.2.4 Other electronic systems There are numerous Excel workbooks, Word documents, and some other Access 97 databases in use by staff that require replacement. 2.2.2.5 Manual systems Manual systems are employed for logging information, generating drafts of documents, tracking statu~, and gathering data. 2.2.3 Reliability & Availability • LIMS shall be available for use 24 hours per day, 7 days per week, and 365 days per year. • Any maintenance or backup shall not affect the availability or operation of the system. 2.2.4 Performance LIMS shall accommodate up to 8 "read-write" users and 8 "reluJ-oilly" users on the system at anyone time. LIMS instruments shall not be classified as c'read~write" users. 2.2.5 Estimated LAB Metrics Measure # #·'of Samples per month 200 # of Laboratory users 8 # of Customers 3 # of Environmental Projects 5 # of Instrument Types 7 2.2.6 User Interface Requirements • User shall see only functionality that coincides with their access rights. The user shall never get an error message that denies access to a feature after invoking it; rather, the feature will not be visible. • User shall be able to access context sensitive and searchable online help. • User shall not see modal error messages that require them to confirm to proceed except in the case of application failure. . 2.2.7 Interfaces 2,2.7.1 Environmental Compliance Data Management System (H20DMS) • H20DMS is custom pretreatment software based on MSAccess and Oracle 109. Page 7 of30 ':" •. LIM:S shall be able to accept information electronically from H20DMS necessary to log samples. • LIMS shall be able to provide sample status and location information electronically to H20DMS. • LIMS shall provide approved laboratory analysis results electronically to H20DMS data interchange tables. 2.2.7.2 SCADA VIEW SCADA View is a custom software that uses Microsoft C# programming with Oracle 109 as backend database. The new LIMS must be able to communicate to the database through Oracle Database Provider (ODP).· . 2.2.7.3 Contract Lab The Lab contracts work to private laboratories for tests not commonly performed in-house or when workload dictates. These private laboratories can provide test results in delimited ASCII or MSExcel spreadsheet. LIMS shall be able to accept these electronic formats and update its database accordingly .. 2.3 Application Requirements . 2.3.1 Functional Requirements Refer to Exhibit A appendix below for functional requirements. Promium must meet all functional requirements with High priority. Page 8 of30 EXHmIT A APPENDIX APPLICATION REQUIREMENTS TABLE Priorities The following scale prioritizes the required features. Priority Meaning High A mission-critical requirement; required for the proposed LIMS . Medium Supports necessary system operations; not required, but desirable Low A functional or qualitY enhancement APPLICATION REQUIREMENTS ID Requirement A. Sample Log-In Application shall accept samples from various methods of submittal including paper submittals (manual entry) and computerized submittal (3rd party Al . application). A2 Application shall assign all samples a unique sample identification. Application shall generate barcode labels to allow tracking and documentation of the sample location throughout its life cycle with the use ofa barcode A3 reader. A4 Application shall generate barcode labels that are user defmed. AS Application shall generate a chain-of-custody report as needed. ·1 Application shall implement configurable templates for sample log in. Templates shall includ~, but not be limited to, pre-treatment, holding time, A6 charge code, project code, and program code. Application shall allow pre-logged or auto-logged samples n,ot received to be A7 removed from the system. Application shall allow for the simultaneous login of different samples at more A8 than one workstation. A9 Application shall allow for multiple sample (batch samples) login. AIO Application shall allow storing of comments for a sample. Priority .. .. High High Low Low High High High High High High / Professional Services Rev. June 2,2010 11 H:\Solicitations\RFP\RFP 14 1079 Implement of Laboratory Information Management Systems\Docs related to contract\Contract CI2141 079 Promium.doc Application shall allow the cancellation of one or all tests on a sample or a All group of samples. High Application shall allow for the tracking of project name, client, and collection A12 data. High Application shall allow for manual or automatic assignment of priorities to A13 samples throughout the life of the sample in the system. High Application shall generate a default test parameters and methods for pre- A14 scheduled sample. High Application shall allow for the addition of analysis from an in-house method A15 list and from a vendor method list. High B. Worklisting & Schedule Bl Application shall automatically sche4ule recurring samples. High Application shall automatically generate sample preparation sheets and B2 analysis sheets directly from the sample worklist. Hilib Application shall use a user-defined sample worklist grouped by instrument, B3 analysis, project, matrix, analyst, workgroup, or date. High Application shall assign unique sample batch identification numbers to sample B4 grouI>.S for preparation and analysis sheets. High Application shall allow users to flag andlor change work priority of samples on . B5 worklists. High B6 Application shall allow users to view results online accordir!K to users' rights .. High B7 Application shall allow tracking of samples sent for sub-contract analysis. ·High Application shall allow storing comments associated with an analysis andlor B8 results. High Application shall allow users to re-order/rearrange/update work list data. (shall B9 be flexible for planning work loads). High BIO Application shall allow for workload and personnel scheduling. Medium Application shall include a sample and test scheduler with daily, weekly, Btl monthly, quarterly, semi-annually,_yearlY views. High C. Sample Tracking & Inquiry Cl Application shall allow reporting of sample status. High Professional Services Rev. June 2,2010 12 H:\Solicitations\RFP\RFPI41079 Implement of Labomtory Information Management Syslems\Docs related to contmct\Contmct C12141079 Promium.doc C2 App_lication shall have configurable status ·fields to indicate sample status. High Application shall have auto-notification to users based on a set of configurable criteria including, but not necessarily limited to, sample receipt notices, limits C3 exceedance notification, and QAlQC outlier notification. High Application shall allow users to query samples by sample 10, customer sample ID, lab section, method, days old, status, vendor lab, project, date received, date completed, collection information, specification status, analyst, batch, or C4 result. High C5 Application shall generate a chain of custody report (A6) High C6 Application shall keep trackof sample splitting. High Application shall be to locate samples at any given time -cradle to grave C7 _(archive or disposal). High D. Testing .. Application shall be set up to allow instrument data to be either manually or 01 directly uploaded from the instrument to the database. High Application shall flag test results based on user defined parameters such as 02 qualtlY control limits. High SOP's shall be available and maintainable within the application and linkable 03 to a specific analysis. Medium Application shall document sample testing or sample preparation that is 04· repeated or reworked. High Application shall allow results entry by using sample identification number, 05 preparation batch, analysis batch, or project. High Application shall provide enough fields to store all the needed data and be 06 flexible to accommodate future enhancements or data needs High 07 Application shall allow for easily adding new categories of testing as required. High Application shall be set up to interface with analytical balances to generate worklists, upload the data from the balances and perfonn the associated 09 calculations. High Application shall accept and be able to perform calculations with non-numeric 010 data such as NA, NO, <. and >. High Professional Services Rev. June 2, 2010 13 H:\Solicitations\RFP\RFP141079 Implement of Laboratory Information Management Systems\Docs related to contract\Contract C12141 079 . Promium.doc / Application shall be to perform limits calculation such as Method Detection Dll Limit(MDL}, Report Lfmit(RL) and dilution factor. High Application shall be able to calculate Data Not Quantifiable(DNQ) value and D12 allow analyst to override the value as needed. High Application shall be set up to calculate results for EPA Method 1631E from D13 instnunerit raw data (e.g. subtraction of the average blank from sam~les). High 'E.'QAlQC· El E2 E3 E4 E5 E6 E7 E8 E9 EIO Ell EI2 , " Rounding to user specified number of significant figures using EPA rounding rules shall be available. High Application shall allow all, QC samples including replicates and spikes with bench sheet to be automatically scheduled. High Application shall document bench instrument maintenance, performance, and calibI:ation records. ; High Application shall be set up to chart instrument performance record conditions for the ICPIMS mid GCIMS. High Application shall be set up to calculate 'performance based ~ acceptance concentrations as found in EPA Method 200.7. High Application shall be set up for producing fully automate~ on-demand, control charts for each method, including charting blanks, spike recovery, spike- duplicate recovery, relative percent difference between duplicates, control standard recovery, and monthly reference samples. High Application shall be able to alert analyst when result fall out of control limits. High Application shall relate all batch quality assurance and control information to sample test results, instrument, project, analyst, and date. High , Application shall have user specified limits (e.g., reporting limits and method detection limits), for everr method. High Project specific reporting limits and method detection limits shall be defmable by the user. High Application shall include a full featured statistical inodulewith a seamless interface. High Application shall allow user to define quality control precision and percent recovery for each sample. High Professional Services ' Rev. June 2,2010 M , H;\Solicitations\RFP\RFP141079 Implement ofL8boratory Information Management Systems\Docs related to contract\Contract CI2141 079 Promium.doc Application shall provide provision for recording daily QC checks (e.g., E13 analytical balances). High Application shall schedule routine quality assurance activities, (e.g., ~OP E14 review). High F. Results Validation & Approval Application shall be set up to automatically notifY specific personnel of Fl . pending approvals and completed test results. High Application shall allow lab results to be entered and stored as text values as F2 well as standard numeric concentrations (e.g., NA, ND, <1). High F3 Application shall keep an audit trail of at!y changes made to data. High. F4 Application shall provide tracking of approval status. High F5 Application shall have approvals tied to an individual's access level or role. High Application shall allow approval by instrument, project analyst, method, .. , F6 sample, batch, and date. .. High F7 Application shall alert approvers result has exceededpermit level. G. Report Generation Gl G2 G3 G4 G5 G6 G7 G8 Application shall include a report design module to allow for ad-hoc reports. High Application shall allow for all user-developed reports to be stored and accessible within the application. High Application shall include the following reports and charts configured and set up: Method count summaryr~ort by month and year for each lab group Method count summary chart by month for each lab NOUP for 12 months . Method count summary by day for each staff member Pending list or Backlog of work by method for each lab group including the number of days the work has been in the lab or contract lab Monthly Turn-around Time Charts for 12 months categorized by lab group, project, expenditure code, method, analyst, instrument and/or customer I 15 High High High High High High Professional Services Rev. June 2; 2010 H:\Solicitations\RFP\RFP141079 Implement of Laboratory lnfonnation Management Systems\Docs related to contract\Contract C12141 079 Promium.doc Monthly report for NPDES pennit formatted for entry into NPDES electronic 09 reporting system High 010 Percent of rework by method High Report of samples to be analyzed and the number of days before the sample 011 hold-time expires High 012 Exception Reports of data falling outside accepted limits High 013 Chain of Custody Reports High 014 Worklists by test and instrument I.D. High 015 Trend charts and repprts for projects Hi~ 016 Customizable data reports High A.pplication shall have the ability to export all data including quality assurance 017 and control data to spreadsheets. ( High ,. .' '. Application shall automatically notify designated users when all ,the results for ' , 018 a sample or project are ready for reporting. High 019 Application shall allow flexihili!Y to redesign existing reports. High '. , .' 020 Application shall generate histQricreports with historic data as needed. High ." H. ArChiving & Retrieval HI Application shall have an archiving system. High Archival system shall be capable of storing a minimum of 7 years worth of H2 data. High H3 Application shall be ahle to store and organize document images High 1. Instruments 11 Application shall keep records of instrument maintenance and calibration. High Application shall have hi-directional interface for the following instruments 12 and be set UP. for data transfers: High 13 GC(1) Agilent 7890A High 14 ICPIMS Perkin Elmer ELAN DRC-:e High 15 LC High , 16 HgAnalyzer High 17 Analytical Balances (2)Mettler High 18 ISE meters (pH, Ammonia, F) Thermo Orion Medium 19 Dissolved Oxygen YSI Medium no Dissolved Oxygen Hach Medium 111 Spectrophotometer High Professional Services Rev. June 2,2010 16 H:\S0Iicitations\RFP\RFP141079 Tmplement of Laboratory Information Management Systems\Docs related to bontract\Contract C12141079 Promium.doc J. Re gulatory Compliance Application shall be in full compliance with the current EPA approved Good J1 Automated Laboratory Practices (GALP); High J2 Application shall keep track permit limits (see F7) High K. Upgradeability & Expandability Future upgrades of application shall not impact any configuration or Kl customization of the system. High' L. Database " Ll Database shall be Oracle 109 Release 2 running on WindowsServer2003. High M. Security .. '- Application shall be configurable to resttict' access to features, approvals, and Ml tests based on role, group, andlor user. High Application shall include privileges for read.,only, write, execute, and system M2 administration." .' High M3 . System shall include complete documentation of security features. High N. Interface to 3rd party Software Nl Application shall have 2-way interface with any ODBC-compliant programs. High Application shall interface with Oracle Data P~ovider(ODP) compliant N2 programs. High Application shall be capable-of data exchange with Microsoft Office 2003 and N3 higher.' High Application shall be able to electronically accept sample results from contract N4 labs. These results files could in comma separated ASCII, XML, XLS. High O. Graphical User Interface ". 01 Application shall have a thin client with standard Windows look and feel. High Application shall only display relevant data to the user based on user's security 02 level and role. High 03 Application shallhave comprehensive and searchable on-line help. High Application shall allow remote locations to view sample status query, and 04 . sample results query. Medium Professional Services Rev. June 2, 2010 . 17 H:\Solicitations\RFP\RFP141 079 Implement of Laboratory Information Management Systems\Docs related to contract\Conlract C12141079 Promium,doc User-shall see only functionality that coincides willi their access rights. The user shall never get an error message that denies access to a feature after 05 invoking it; rather, the feature will not be visible or it will be disabled. User shall not see modal error messages that require them to confirm. to 06 proceed except in the case of application failure. End of Exhibit A 18 Medium Medium Professional Seivices Rev. June 2.2010 H:\Solicitations\RFP\RFP141079 Implement of laboratory Information Management Systems\Docs related to contract\Contract C12141 079 Promium.doc EXHIBIT "B" SCHEDULE OF PERFORMANCE CONSULTANT shall perfonn the Services so as to complete each milestone within the number of days/weeks specified below. The time to complete each milestone may be increased or decreased by mutual written agreement of the project managers for CONSULTANT and CITY so long as all work is completed within the term of the Agreement. CONSULTANT shall provide a detailed schedule of work consistent with the schedule below within 2 weeks of receipt ofthe notice to proceed. Milestones 1. Complete implementation, training, and go-live ofLIMS 2. Maintenance, 1 st year (starting on go-live date) 3. Maintenance, 2nd year 4. Maintenance, 3rd year 19 ,Completion No. of Months FromNTP 9 months 12 months 12 months 12 months Professional Services Rev. June 2,2010 H:\Solicitations\RFP\RFP141079 Implement of Laboratory Infonnation Management Systems\Docs related to contract\Contract C12141 079 Promium.doe . EXHIBIT "C" COMPENSATION The CITY agrees to compensate the CONSULTANT for professional services perfonned in accordance with the tenns and conditions of this Agreement, and as set forth in the budget schedule below. Compensation shall be calculated based on the hourly rate schedule attached as exhibit C":'1 up to the not to exceed budget amount for each task set forth below. , The compensation to be paid to CONSULTANT under this Agreement for all services described in Exhibit "A" (''Basic Services") and reimbursable expenses shall not exceed $180,349. CONSULTANT agrees to complete all Basic Services, including reimbursable expenses, within this amount. In the event CITY authorizes any Additional Services, the maximum compensation shall not exceed $190,349. Any work perfonned or expenses incurred for w4ich payment would result in a total exceeding the maximum amount of compensation set forth herein shall be at np,cost to the CITY. ' CONSULTANT shall perfonn the tasks and categories of work as outlined and budgeted below. The CITY's project manger may approve in writing the transfer of budget amounts between any of the tasks or categories listed below provided the total compensation for Basic Services, including reimbursable expenses, does not exceed $180,349 and "the total compensation for Additional Services does not exceed $10,000. BUDGET SCHEDULE NOT TO EXCEED AMOUNT Task 1 (project Initiation) Task 2 (Business Process and Requirements Analysis) Task 3 (System Installation) Task 4 (Training) Task 5 (LIMS Population & Configuration) Task 6 (Data Migration) Task 7 (Testing and Acceptance) Task 8 ("Go Live" and Post-Launch Support) Sub-total Basic Services Hardware, Software Licenses . Year 2 Maintenance Services Year 3 Maintenance Services Total Basic Services, Hardware, Licenses, Maintenance Additional Services (Not to Exceed) M~imum Total Compensation ADDITIONAL SERVICES $2,440 $9,200 $6,540 $8,700 $37,120 $35,050 $9,560 $3,880 $112,490 $55,587 $6,136 $6;136 $180,349 $10,000 $190,349 The CONSULTANT shall provide additional services only by advanced, written authorization from the CITY. The CONSULTANT, at the CITY's project manager's request, shall submit a detailed written proposal including a description of the scope of services, schedule, level of 16 Professional Services Rev. June,2, 2010 H:\Solicitations\RFP\RFP141079 Implement of Laboratory Infonnation Management Systems\Docs related to contract\Contract C12141 079 Promium.doc effort, and CONSULTANT's proposed maximum compensation, including reimbursable expense, for such services based on the rates set forth in Exhibit CM 1. The additional services scope, schedule and maximum compensation shall be negotiated and agreed to in writing by the CITY's Project Manager and CONSULTANT prior to commencement of the services. Payment for additional services is subject to all requirements and restrictions in this Agreement Work required because the following conditions are not satisfied or are exceeded shall be considered as additional services: Additional meetings, additional training, additional configuration of the software and hardware, customized crystal reports, and addition of optional barcode system hardware and software. . i; . Professional Services Rev. June 2, 2010 n . H:\Solicitations\RFP\RFP141079 fmplement of Laboratory lnformation Management Systems\Docs related to contract\Contract C12141 079 Promium.doc EXHmIT "C-l" HOURLYRATESCBEDULE Project ManagementlImplementationlInstallationiTraining of Element: i Custom Development on ReportslEDDs: Senior Custom Development for CLP and or higher level of reporting: Migration Specialist and SCADA Integration: 18 $1801hr $1801hr $2201hr $1551hr Professional Services Rev June 2, 2010 H:\Solicitations\RFP\RFP141079 Implement of Laboratory Information Management Systems\Docs relatl)d to contract\Contract C12141079 Promium.doc ;.' EXHIBIT "D" INSURANCE ImQUIREMENTS CONTRACTORS TO THE CITY OF PALO ALTO (CITY), AT THEIR SOLE EXPENSE, SHALL FOR THE TERM OFTHECONTRACTOBTAIN AND MAINTAIN INSURANCE IN THE AMOUNTS FOR THE COVERAGE SPECIFIED BELOW, AFFORDED BY COMPANlESWlTBAM BEST'S KEY RATING OF A-:VII, OR HIGHER, LICENSED OR AUTHORIZED TO TRANSACf INSURANCE BUSINESS IN mE STATE OF CALIFORNIA. \ AWARD IS CONTINGENT ON COMPLIANCE WITH CITY'S INSURANCE REOUIREMENTS AS SPEClFlED BELOW: . MINIMUM LIMITS REQUIRED T~PE OF COVERAGE REQUIREMENT E.ACH ~ES ~ES YES YES YES ~ES OCCURRENCE AGGREGATE WORKER'S COMPENSATION STATUTORY EMPLOYER'S LIABILITY STATUTORY BODILY INJURY $1,000,000 $1,000,000 GENERALLIABILITY,INCLUDING PERSONAL INJURY, BROAD FORM . PROPERTY DAMAGE $1,000,000 $1,000,000 PROPERTY DAMAGE BLANKET CONTRACTUAL, AND FIRE LEGAL BODILY INJURY & PROPERTY DAMAGE $1,000,000 $1,000,000 LIABILITY COMBINED. BODILY INJURY $1,000,000 $1,000,000 -EACH PERSON $1,000,000 $1,000,000 -EACH OCCURRENCE $1,000,000 $1,000,000 AUTOMOBILE LIABILITY,INCLUDING ALL OWNED, HIRED, NON-OWNED . PROPERTY DAMAGE , $1,000,000 $1,000,000 .. --BODILY INJURY AND PROPERTY $1,000,000 $1,000,000 ., DAMAGE COMBINED PROFESSIONAL LIABILITY,INCLUDING, ERRORS AND OMISSIONS, MALPRACTICE (WHEN APPLICABLE), AND NEGLIGENT PERFORMANCE . ALL DAMAGES $1000000 mE CITY OF PALO ALTO IS TO BE NAMED AS AN ADDITIONAL INSURED: CONTRACTOR, AT ITS SOLE COST AND EXPENSE, SHALLOBTAlN AND MAINTAIN, IN FULL FORCE AND EFFECTTHROUGHOUTTHEENTIRE TERM OF ANYRESULTANT AGREEMENT, THE INSURANCE COVERAGE HEREINDESCRlBED,INSURING NOT ONLY CONTRACTOR AND ITS SUBCONSULTANTS, IF ANY, BUT ALSO, WlTHTHEEXCEPTlON OF WORKERS' COMPENSATION, EMPLOYER'S LIABILITY AND PROFESSIONAL INSURANCE, NAMING AS ADDITIONAL INSUREDS CITY, ITS COUNCIL MEMBERS, OFFICERS, AGENTS, AND EMPLOYEES. I. INSURANCE COVERAGE MUST INCLUDE: A. A PROVISION FOR A WRITIEN THIRTY DAY ADVANCE NOTICE TO CITY OF CHANGE IN COVERAGE OR OF COVERAGE CANCELLATION; AND B. A CONTRACTUAL LIABILITY ENDORSEMENT PROVIDING INSURANCE COVERAGE FOR CONTRACTOR'S AGREEMENT TO INDEMNIFY CITY. C. DEDUCTffiLE AMOUNTS IN EXCESS OF $5,000 REQUIRE CITY'S PRIORAPPROV AL. II. CONTACTOR MUST SUBMIT CERTIFICATES(S) OF INSURANCE BVIDENCING REQUIRED COVERAGE. III. ENDORSEMENT PROVISIONS, WITH RESPECT TO THE INSURANCE AFFORDED TO "ADDITIONAL INSUREDS" A~ PRIMARY COVERAGE WITH RESPECT TO CLAIMS ARISING OUT OF THE OPERATIONS OF THE NAMED INSURED, INSURANCE AS AFFORDED BY THIS POLICY IS PRIMARY AND IS NOT ADDITIONAL TO OR CONTRffiUTING WITH ANY OTHER INSURANCE CARRIED BY OR FOR THE BENEFIT OF THE ADDITIONAL INSUREDS. B. CROSS LIABILITY 19 Professional Services Rev June 2, 20 10 H;\Solicitations\RFP\RFP141079Itnplement of Laboratory Information Management Systems\Docs related to contract\Contract C12141079 Promium.doc THE NAMING OF MORE 1HAN ONBPBRSON, FIRM, OR CORPORATION AS INSUREDS UNDER THE POLICY SHALL NOT, FOR THAT REASON ALONE, EXTINGUISH ANY RIGHTS OF THE INSURED AGAINST ANOTHER, BUT THIS ENDORSEMENT, AND THE NAMING OF MULTIPLE INSUREDS, SHALL NOT INCREASE THE TOTAL LIABILITY OF THE COMPANY UNDER THIS POLICY. . C. NOTICE OF CANCELLATION 1. IF THE POLICY IS CANCELED BEFORE ITS EXPIRATION DATE FOR ANYRBASON OTHER THAN THBNON-PAYMENT OF PREMIUM, THBISSUINGCOMPANY SHALL PROVIDE CITY AT LEAST A THIRTY (30) DAY WRITTEN NOTICE BEFORE THE EFFECflVE DATE OF CANCELLATION. 2. IF THE POLICY IS CANCELED BEFORE ITS EXPIRATION DATE FOR THE NON-PAYMENT OF PREMIUM, THE ISSUING COMPANY SHALL PROVIDE CITY AT LEAST A TEN (10) DAY WRITTEN NOTICE BEFORE THE EFFECTIVE DATE OF CANCELLATION. NOTICES SHALL BE MAILED TO: PURCHASING AND CONTRACT ADMINISTRATION CITY OF PALO ALTO P.O. BOX 10250 PALO ALTO. CA 94303 20 Professional Services Rev June 2, 2010 H:\Solicitations\RFP\RFP141079 Implement of Laboratory Information Management Systems\Docs related to contract\Contract C12141 079 Promium.doc City of Palo Alto (ID # 2210) City Council Staff Report Report Type: Action ItemsMeeting Date: 12/5/2011 December 05, 2011 Page 1 of 7 (ID # 2210) Council Priority: Land Use and Transportation Planning Summary Title: Response to SB375 Alternatives Title: Response to Alternative Scenarios for Sustainable Communities Strategy (SB375), Designation of Planned Development Areas, and Update of Regional Housing Needs Allocation Process (RHNA) From:City Manager Lead Department: Planning and Community Environment Recommendation Staff recommends that the City Council provide direction regarding the City’s next steps to respond to the SB375 Alternative Scenarios, including a) working with the SB375 Council Committee and the Planning and Transportation Commission to review Priority Development Area (PDA) designations for El Camino Real and for Downtown, and b) responding to the Association of Bay Area Governments regarding allocating Regional Housing Needs Allocations (RHNA) to the County for Stanford campus housing. Executive Summary Staff has provided multiple updates to the City Council regarding the status of the Sustainable Communities Strategy (SCS) and the Regional Housing Needs Assessment (RHNA). On September 12, 2011, staff briefed the Council regarding the release of Alternative Scenarios for the SCS. The scenarios assume that employment in the Bay Area will increase by approximately 995,000 jobs from 2010-2040 and that an additional 770,000 new housing units will be needed in the region within that timeframe. The Association of Bay Area Governments (ABAG) and the Metropolitan Transportation Commission (MTC), who are jointly preparing the Plan Bay Area effort, are currently evaluating three scenarios as to their potential impacts on greenhouse gases (GHG) and other factors. Community meetings are being scheduled in each county for January and cities are expected to comment on the alternatives by February 2012. A preferred alternative is expected to be drafted and released in the spring of 2012 and the Sustainable Communities Strategy for the Bay Area is to be finalized by early 2013. Staff has now met four times since August with Councilmembers Scharff, Schmid, Holman and Burt and has developed an approach that includes: 1) recommending a third party peer review of the State and regional population and employment projections; 2) reaching out to State legislators to pursue this issue at the State and regional level, 3) identifying and coordinating 9 Packet Pg. 316 December 05, 2011 Page 2 of 7 (ID # 2210) with cities who share Palo Alto’s concerns; 4) directing staff to prepare summaries of key issues for presentation to State legislators, other cities, and the regional agencies; and 5) extending outreach to the community for better understanding of the implications of these scenarios. Staff has also engaged limited consultant assistance to support coordination of these issues, particularly relative to the demographic and economic analysis. On November 21, 2011, the Council approved a letter commenting to MTC regarding the City’s concerns and objections to the proposed One Bay Area Transportation Grant funding criteria. Pending issues for consideration in the coming month include: a) whether the City should designate the El Camino Real corridor and/or Downtown as additional “priority development areas” (PDAs), allowing those areas to become eligible for future transportation grants, and b) working with Santa Clara County, Stanford University and ABAG to assure that housing to be constructed on the Stanford campus is allocated to the County’s housing target, rather than to the City’s. Staff recommends proceeding forward on both of these issues. Staff will continue to meet with the Council committee to stay abreast of issues of concern to the City of Palo Alto and to develop strategy to seek support from other local officials and State legislators to request independent peer review of the One Bay Area scenario demographic and employment projections. Background On March 14, 2011, staff updated the City Council regarding the status of the Sustainable Communities Strategy (SCS) and the Regional Housing Needs Assessment (RHNA). On May 4, 2011, staff updated the Planning and Transportation Commission regarding the SCS and the Initial Vision Scenario (IVS) proposed by the Association of Bay Area Governments (ABAG) and the Metropolitan Transportation Commission (MTC). The Initial Vision Scenario (IVS) for the Bay Area was intended to accommodate an additional 903,000 housing units and 1.2 million jobs from 2010 to 2035. The goal of the IVS, formulated by staff of ABAG and MTC, was to create development patterns and a transportation network that would result in reductions of per capita greenhouse gas (GHG) emissions by 7%by 2020 and 15% by 2035. The IVS would anticipate a total of 12,000 new households and almost 5,000 new jobs being created in Palo Alto over that time period. On May 27, 2011, staff sent a letter to the regional agencies, following review and input from the Planning and Transportation Commission, questioning the approach and outlining many concerns of the City of Palo Alto, including the need to address job growth near transit to achieve GHG emission reductions, as well as highly unrealistic housing assumptions, the lack of consideration of numerous constraints to growth, and the lack of supportive infrastructure, particularly including transit, to accommodate such extensive levels of development. On July 18, 2011, staff briefed the Council regarding the letter to the agencies and next steps, including the upcoming release of alternative scenarios by ABAG and MTC. Council asked staff to work with some Councilmembers over the Council’s August recess and to then present an approach to Council for proceeding to respond to this planning effort. The three alternative 9 Packet Pg. 317 December 05, 2011 Page 3 of 7 (ID # 2210) land use scenarios were released by ABAG and MTC on September 1st (http://www.onebayarea.org/plan_bay_area/). Community meetings are being scheduled in each county for January and cities are expected to comment on the alternatives by February 2012. A Community Meeting is scheduled for Santa Clara County at the County Government Building at 70 W. Hedding on Wednesday, January 18, 2012, at 5:30 p.m. The related Regional Housing Needs Assessment (RHNA) Methodology Committee, of which Councilmember Scharff is a member, has met several times, and the Committee’s progress is outlined below in the Discussion section. More background information is provided in the September 12, 2011 Council staff report (Attachment I). Attachment J provides a Glossary of Acronyms and Terms related to the regional planning (SB 375) process. Timeline ABAG has modified its schedule for the SCS and RHNA several times.The current schedule contemplates that the SCS Preferred Alternative will be available in March 2012 and the Sustainable Communities Strategy for the Bay Area is to be finalized by early 2013. ABAG will release its draft RHNA methodology in May 2012.ABAG will then conduct hearings in June 2012 followed by adoption of the RHNA methodology and draft allocations anticipated in July 2012, beginning a 60-day review and comment period. Discussion Alternative Land Use Scenarios The Alternative Land Use Scenarios were released by ABAG and MTC on August 26, 2011, clarified on September 1, and identify three (3) primary options: Core Concentration Growth Scenario: Concentrates housing and job growth at selected Planned Development Areas (PDAs) and Growth Opportunity Areas (GOAs) in the Inner Bay Area along the region’s core transit network. Focused Growth Scenario:Recognizes the potential of Priority Development Areas (PDAs) and Growth Opportunity Areas (GOAs) across the region with an emphasis on housing and job growth along major transit corridors. Outer Bay Area Growth Scenario: Addresses higher levels of growth in the Outer Bay Area and is closer to previous development trends than the other two scenarios. A summary of the scenarios and potential housing and employment projections are included in the September 1st memo from the agencies (Attachment H) and online at: http://www.onebayarea.org/plan_bay_area/. The objective of each of these scenarios is to accommodate population growth of approximately 770,000 persons and almost 1 million new jobs in the Bay Area by the year 2040. The tables at the back of the memo outline estimated 9 Packet Pg. 318 December 05, 2011 Page 4 of 7 (ID # 2210) increases for each jurisdiction in the Bay Area, including breaking down how much of the total growth would be located in either PDAs (California Avenue area in Palo Alto) or GOAs (El Camino Real corridor and/or Downtown in Palo Alto). There is no indication of where the agencies expect the remainder of the growth to be located. In summary, the total growth in housing and employment for the City from 2010-2040 breaks down as follows: Core Focused Outer Bay Concentration Growth Area Households 12,250 12,250 6,110 Jobs 26,630 27,820 19,360 The “Core Concentration” and “Focused Growth” scenarios vary in that more of the projected growth would occur in the PDAs and GOAs in the “Core Concentration” scenario. Staff will need to obtain and analyze data based on traffic analysis zones (TAZs) to determine where the remaining development would potentially be located. Statewide and Regional Projections Staff has met with Councilmembers Scharff, Schmid, Holman and Burt four times now, beginning in August, and the underlying assumptions for population and employment estimates have been one of the primary topics of discussion. Councilmember Schmid has reviewed and discussed demographic and economic information from several sources and has provided a summary memo (Attachment B) that outlines some of the key discrepancies between the projections and the reality represented by the 2010 Census and past trends. Additional information is attached in the September 12th staff report and in attached articles and a table further outlining these issues (Attachments C-E). Since these statewide and regional projections underlie the entire distribution of housing and population for the Sustainable Communities Strategy planning, the Councilmembers and staff expressed a strong desire to request that a peer review, perhaps by University of California or Stanford demographic and econometric analysts, be conducted to verify or dispute the estimates. Such a review, however, should be accomplished at the initiation of State and regional officials, however, rather than by local agencies. Coordination with State Legislators and Other Cities The Councilmember committee and staff are coordinating efforts through the area’s State delegation, members of the ABAG and MTC Boards, and cities (elected officials and staff) to develop support for the City’s position that a peer review be initiated on a broader (regionwide or state) level. The contacts are proceeding slowly, however, and ABAG has deferred several meetings recently that might have provided better insight into how the assumptions were prepared. At its last meeting, the Council committee assigned contact responsibilities for following up, and will use the attached Summary of Key Issues document (Attachment A) as a handout for those discussions. Staff expects to take a request to the Planning Directors of Santa 9 Packet Pg. 319 December 05, 2011 Page 5 of 7 (ID # 2210) Clara County cities in early January to support the City of Palo Alto’s efforts for an independent study, and believes that the majority of staff members in those cities concur with the request. Attachment A provides an initial summary of Sustainable Communities Strategy issues and concerns, to be distributed to legislators, other cities, and the broader community. Some of the highlighted concerns include: ·Employment projections appear to be substantially overstated and do not recognize the evolving economic model in the Bay Area, particularly in Silicon Valley; ·Housing projections are driven by unrealistic employment projections and are substantially higher than recent trends in natural increase and migration, as reflected in the 2010 Census; ·The basic goal of reducing greenhouse gas (GHG) emissions is not well served by overstating projections, which then require even more extensive resources and more dramatic land use and transportation changes than would be required with more realistic estimates; and ·Alternatives to greenhouse gas (GHG) emissions reductions should be provided to allow cities to propose ways they may otherwise accomplish similar reductions that would exceed those proposed by the Alternative Land Use Scenarios. One Bay Area Transportation Grant Proposal On November 21, 2011, the City Council approved a letter to the MTC outlining the City’s concerns and objections to the proposed One Bay Area Transportation Grant funding criteria. Of greatest concern is the potential requirement that grant funding would be allocated only to cities with “certified” housing elements, which vests considerable authority in the State’s Department of Housing and Community Development (HCD) and will make housing compliance even more problematic. The City suggested that housing element certification be one of 5 or 6 criteria, and that other criteria be more clearly defined. Another proposed provision of the program would limit grant funding so that at least 70% of the grants would be focused only on “priority development areas” (PDAs). The California Avenue area is the City’s only PDA, though the El Camino Real corridor and the Downtown area are considered “growth opportunity areas” and are targeted for considerable increases in development under the Alternative Scenarios. Designation of Additional Priority Development Areas (PDAs) ABAG staff has recently noted that identified Growth Opportunity Areas (GOAs), such as the El Camino Real corridor and the Downtown area, may be designated by cities as Priority Development Areas (PDA)s, as noted in Attachment F. These GOAs have generally been treated similar to PDAs in assigning growth potential in the Alternative Scenarios. However, under the proposed criteria for the One Bay Area Transportation Grants, most (70%) of the available transportation funding would be targeted to PDAs, but not GOAs. Thus, to assure cities are able to obtain transportation funding, ABAG has requested that staff from affected cities prepare forms for such designations by December 16, 2011. City Council would then need to consider and submit the required resolution not later than January 30, 2012. The disadvantage to the designation is some uncertainty that ABAG may suggest further intensification of those areas in 9 Packet Pg. 320 December 05, 2011 Page 6 of 7 (ID # 2210) refining the scenarios. Staff believes, however, that it is worth the effort to at least evaluate the potential for development in both areas, present that information to the SB375 Committee and the Planning and Transportation Commission, and then come forth with a specific proposal to the Committee and Council by mid or late January. Regional Housing Needs Assessment (RHNA) Methodology Committee and Spheres of Influence The RHNA Methodology Committee has met several times through September and has determined that there should be a close link between the housing criteria and the Sustainable Communities Strategy. The current methodology under review would require each city and county to provide for 1/3 of the 2035 total in each of the three 8-year planning periods during that timeframe. The RHNA Committee is not scheduled to meet again until February 2012, while the Alternative SCS Scenarios are analyzed. RHNA Sphere of Influence (Stanford Campus) In the meantime, however, ABAG has indicated that housing allocations to a city’s “sphere of influence” (SOI) would be directed to the city rather than the unincorporated county (Attachment G). This has been the policy in the past for most counties in the ABAG area, and is proposed again, with the intent of encouraging cities to annex areas outside their city limits. In the case of Palo Alto, however, most of the City’s SOI is the Stanford campus lands. In the most recent RHNA allocations for the 2007-2014 housing element timeframe, the City argued to ABAG that Stanford’s campus housing should be considered in the Santa Clara County allocation, since by agreement the City of Palo Alto cannot annex lands on the Stanford campus. The County and Stanford concurred at the time and over 600 housing units were deleted from the City’s allocation and redirected to the County. Staff expects to make a similar request to vary the ABAG process for the coming RHNA cycle and, in fact, the County staff has already acknowledged in a November 24th letter to ABAG that such a transfer should occur again. Unless Council directs otherwise, City staff will prepare a letter to ABAG making a similar request. The number of units assigned to the County will need to be determined by ABAG, but staff expects at least several hundred housing units would be transferred. Community Outreach A Community Meeting is being sponsored by ABAG and MTC on Wednesday, December 18th, at 5:30 p.m. at 70 W. Hedding Street in San Jose (County Government Center). Further community outreach should also be requested of the regional agencies to assure that all affected communities will have a common understanding of the implications of the analysis and proposed Alternative Scenarios. Staff expects to provide this report and Attachment A to neighborhood and school groups in December and January to raise the level of awareness throughout the community. Subsequent updates will also be provided to the Planning and Transportation Commission (a November 30 update was deferred due to continued postponement of ABAG meetings and deferral of a Council committee meeting). Resource Impacts Review of the Sustainable Community Strategy and Regional Housing Needs Assessment process involves considerable time of the Director of Planning and Community (estimated 20- 9 Packet Pg. 321 December 05, 2011 Page 7 of 7 (ID # 2210) 30 hours per month) and lesser time for other department staff. Staff has also retained a consultant to review and coordinate the effort, particularly with Santa Clara County cities, to address the demographic and economic assumptions of the Alternative Land Use Scenarios. Staff estimates that the cost of such assistance will not exceed $25,000, as was authorized by the Council at the September 12th meeting. The funds were absorbed within the current budget of the Department of Planning and Community Environment. Next Steps 1.Set up meetings with State legislators and interested cities to outline the need for independent analysis of the projections and econometrics underlying the Alternative Land Use Scenarios and to inform them of other critical issues. 2.Review with the SB375 Committee and the Planning and Transportation Commission potential for designating the El Camino Real corridor and/or Downtown areas as Priority Development Areas (PDAs), and then return to Council with a recommendation. 3.Prepare a letter to ABAG requesting that Stanford campus housing be allocated to Santa Clara County as part of its RHNA requirements and not be included in the City’s allocation. Staff will continue to participate in regional and countywide meetings and report back to PTC and Council. Attachments: ·a:Attachment A: SB375 Issues Summary (PDF) ·b:Attachment B: Demographic Forecasting in California (PDF) ·c:Attachment C: SCS Projections v. Census Trends (PDF) ·d:Attachment D: Silicon Valley Can No Longer Save California --Or The U_S_ Newgeography_com (PDF) ·e:Attachment E: Bureau of Labor Statistics Data 2010-2011 (PDF) ·f:Attachment F: ABAG Applications for Planned Development Area Designation (PDF) ·g:Attachment G: ABAG Memo re: Housing Allocations for Sphere of Influence (SOI)(PDF) ·h:Attachment H: Alternative Scenarios (PDF) ·i:Attachment I: September 12, 2011 City Council Staff Report (w/o Attachments)(PDF) ·j:Attachment J: SB375 Glossary (PDF) Prepared By:Curtis Williams, Director Department Head:Curtis Williams, Director City Manager Approval: ____________________________________ James Keene, City Manager 9 Packet Pg. 322 City of Palo Alto Sustainable Communities Strategy (SB 375) Key Issues for Alternative Land Use Scenarios November 28, 2011 The Sustainable Communities Strategy (SB 375) is based on the premise that greenhouse gas (GHG) emissions may be reduced significantly by land use patterns and transportation facilities and programs to reduce vehicle-miles traveled. The potential for GHG reductions relates to the extent to which land uses and transportation systems accommodate an unknown future of population increase, economic growth, market forces, and transportation funding availability and pricing approaches. As such, realistic basic demographic and growth assumptions for such a strategy are imperative to derive the appropriate strategies and to assure that cities and counties in the Bay Area region (and other regions) plan accordingly. Similarly, all alternatives to provide for GHG reduction strategies must be considered to provide the appropriate mix of programs to cost-effectively meet regional and statewide goals. To ensure these issues are adequately addressed, the City of Palo Alto believes that further independent analysis of many of the assumed demographic and economic projections and GHG benefits must be provided at the State and regional level, and the following key questions must be answered: Demographic and Economic Projections Are the assumptions for the demographic and economic projections realistic? Or are they overstated and reflective of a different time period when the economy of the region was manufacturing-heavy and migration to California and the Bay Area was rapid and substantial? 1.The State’s Department of Finance (DOF)is working with a forecast model that projected a population growth of 9.9% for 2000-2010 for the Bay Area, whereas the Census showed a growth rate of 5.4% over that period.This represents a 45% overestimation of population in the region. For the West Bay counties (San Francisco, San Mateo, and Santa Clara), the DOF projected a 10.2% growth, while actual growth was 4.3%, thus an overestimate of 58%. A similar overestimate occurred for statewide population.See the attached memo from Councilmember Schmid for further background. 2.Natural population increase (births –deaths)was 3.1 million for the past decade, the single largest factor of growth in the state. This increase is expected to fall from about 260,000 annually today to about 90,000 in 2040, due to the gradually aging population and a long- term decline in fertility rates that are now approaching a long-term replacement level. 3.Migration to the state has slowed substantially in the past decade and is not expected to rise dramatically in the future, due to factors beyond just the state or national economy. The primary contributor to in-migration in California is and will be from Mexico. However, the institutions studying migration (Dept. of Homeland Security, Pew Charitable Trust Hispanic Center, and the Mexican Migration Project at Princeton) all agree that immigration has slowed due to the economy and stricter immigration enforcement. Some of the studies, particularly from Princeton, also suggest that this is a long-term trend due to 9.a Packet Pg. 323 At t a c h m e n t : A t t a c h m e n t A : S B 3 7 5 I s s u e s S u m m a r y ( 2 2 1 0 : R e s p o n s e t o S B 3 7 5 A l t e r n a t i v e s ) SB375 Key Issues for Alternative Land Use Scenarios Page 2 2 declining fertility rates, higher educational levels, and a lesser wage disparity in Mexico than in the U.S. than in prior years. 4.The proposed Alternative Land Use Scenarios anticipate an increase of 33,000 jobs annually in the region, as compared to 10,000 jobs annually in the past two decades. The attached table compares these growth rates through 2040 to past trends and a straight-line projection of the past 20 years. This is a dramatic increase as Silicon Valley and many other technology centers continue to find ways to provide value with fewer jobs, not more (see attached article re: “Silicon Valley Can No Longer Save California –or the U.S.”). 5.Projections for the Orange County Sustainable Communities Strategy (OC SCS) estimate increased employment of 10.8% (175,000 jobs) over the 2008-2035 time period, similar to the timeframe for the Plan Bay Area (2010-2040). The Alternative Scenarios for the Bay Area, however, project a 30% increase in employment. The housing estimates for Orange County are awaiting the RHNA allocations to the Southern California Association of Governments (SCAG) and Orange County. Nevetheless, the preliminary estimates for Orange County would result in housing growth of 13.5%, again considerably less than the approximately 30% outlined in the Alternatives Scenario. An independent analysis of projects for the SCS process should evaluate all of the regional estimates to assure consistency in the approach and that the sum of the parts is aligned with projections statewide.Staff notes that the Orange County SCS will need to be integrated into the overall SCAG SCS. A more detailed summary of the Orange County estimates is attached. The City of Palo Alto suggests that experts at Stanford University, the University of California, and/or the Public Policy Institute, among others, be consulted to provide independent auditing of the projections offered to date by ABAG and MTC, as well as those in other regions statewide. Attachments Councilmember Schmid Demographics Memo, dated November 15, 2011 ABAG Growth Projections v. Census Trends Orange County Key Summary 9.a Packet Pg. 324 At t a c h m e n t : A t t a c h m e n t A : S B 3 7 5 I s s u e s S u m m a r y ( 2 2 1 0 : R e s p o n s e t o S B 3 7 5 A l t e r n a t i v e s ) SB375 Key Issues for Alternative Land Use Scenarios Page 3 3 Greenhouse Gas (GHG) Emissions Will greenhouse gas (GHG) emissions reductions be achievable under an unrealistically high population and employment scenario, given the extent of infrastructure (and land use change) necessary to support that growth? Are there viable alternatives to allow cities to propose means to achieve reductions at the local level to supplement the assumed savings for the region? 1.The Sustainable Communities Strategy is expected to provide for about 9% of the GHG reductions to satisfy statewide AB32 climate change objectives. These objectives are to be achieved by gaining a 15% per capita reduction in the Bay Area (actually yielding a slight total increase in GHG emissions). 2.Overestimating population and employment would mandate a level of infrastructure (particularly for transportation), new programs, and land use change that may not be warranted and almost certainly won’t be affordable. 3.Many cities have adopted or are considering climate change, land use, and transportation programs to reduce GHG emissions. Examples of efforts that relate to SB375 objectives include: compact development policies and plans, protected open space buffers, bicycle and pedestrian programs and facilities to decrease vehicle ridership, and promotion of electric vehicle infrastructure and programs. Could the SCS allow cities to provide programs and facilities that may more effectively (less costly) achieve the needed GHG reductions? 9.a Packet Pg. 325 At t a c h m e n t : A t t a c h m e n t A : S B 3 7 5 I s s u e s S u m m a r y ( 2 2 1 0 : R e s p o n s e t o S B 3 7 5 A l t e r n a t i v e s ) 1 California Demographic Forecasts: Why are the numbers over- estimated? Prepared by City of Palo Alto November 15, 2011 Actual California Population growth Over the last decade, the state of California added 3.4 million people, to reach a total of 37.3 million. This was an increase of 10% over the decade. This growth rate follows the gradual slowing that started after 1990, down dramatically from the very high rates of the post-World War II era. Note that the Department of Finance’s (DOF) 2007 projections reflect a very high growth perspective. The DOF numbers are currently used as the population forecasts for all state and local projects—they are not scheduled to be revised until 2013. Table 1. California’s population growth over the last five decades (average growth from census to census) Census Dept of Finance Projections (2007) 1960s 29.2 1970s 18.5 1980s 25.7 1990s 13.8 2000s 10.0 14.8 2010s 12.8 2020s 11.6 2030s 10.2 Source: US Census Bureau actual Census numbers; California Department of Finance 2007 Projections. 9.b Packet Pg. 326 At t a c h m e n t : A t t a c h m e n t B : D e m o g r a p h i c F o r e c a s t i n g i n C a l i f o r n i a ( 2 2 1 0 : R e s p o n s e t o S B 3 7 5 A l t e r n a t i v e s ) 2 Recent State forecasts have been consistently over-estimated Even after the sharp decline in growth during the 1990s, forecasters consistently tended to be overly optimistic about population growth rates through the 2000s. In 2005, the Public Policy Institute of California issued a report (“California 2025: Taking on the Future”) that included the population projections of all the key demographic forecasters. The consensus forecast from this group was some 40% higher than the actual outcome for the state: Table 2. California Population Forecasts for 2010 made before 2005 (Percentage growth expected from 2000-2010) California Dept of Finance 15.2 USC Population Dynamics 11.6 UC Berkeley (Lee, Miller)13.9* Public Policy Institute of CA 15.2* CCSCE 17.2 UCLA Anderson Forecasting 16.6 Average of six 2005 forecasts 15.0 *=center point of band Source: Public Policy Institute of California, “California 2025: Taking on the Future”, 2005, Page 29. The consensus forecast was some 50% above the actual numbers. The only forecaster who produced a number below the actual 10% growth was the UC Berkeley group who stated that there was a 5% chance that the growth rate would be lower than 7.1%. The 2005 PPIC Report stated that “Recent trends make population projections for California especially difficult…For these reasons, planners should consider alternative population scenarios … as useful alternatives for planners.” (PPIC, 2005, pages 27- 28) Even as late as the end of 2009, on the eve of the decennial census, estimates by the California Dept. of Finance (the organization responsible for the numbers that are used for all state allocation formulas) remained strikingly high at 14.1% which was 1.5 million or 44.7% above the above the contemporaneous and more accurate Census Bureau’s Current Population Estimates. 9.b Packet Pg. 327 At t a c h m e n t : A t t a c h m e n t B : D e m o g r a p h i c F o r e c a s t i n g i n C a l i f o r n i a ( 2 2 1 0 : R e s p o n s e t o S B 3 7 5 A l t e r n a t i v e s ) 3 Critical Components of Change and the Future The Census data provide a nice detailed perspective on the actual components of change during the decade. While the 3.1 million people added through natural increase (births minus deaths) were the largest single growth factor, the 2 million net gain from foreign immigration was important in overcoming a net outflow of 1.6 million from native born emigration, primarily to other states. Table 3. Components of Population Change in California, 2000-2010 (millions of people) Births +5.45 Deaths -2.35 Net Domestic migration -1.63 Foreign immigration +2.58 Foreign emigration -0.59 Military, etc -0.07 TOTAL +3.38 Source: USC, Population Dynamics Research Group, “What the Census would show”, February 2011. The challenge for projecting change in the future is the dramatic shifts in some of these base categories. With the aging population, we know that, even with slight increases in longevity, the aging population in California will raise the annual number of deaths in California from 271K in 2011 to 462K in 2039, while the number of births will rise slightly from 532K in 2011 to 551 in 2039. The natural increase will fall from some 260K today to 90K in 2040. Thus, over time any increase in California’s population will increasingly rely on migration. Since net domestic migration has averaged a net outflow of some 160K per year since the early 1990s, any growth in population will be increasingly dependent on foreign migration. (Source: USC, Population Dynamics Groups, April 2011). There is little reason to see a major shift in domestic migration with California’s high cost and high unemployment rate. That leaves foreign migration as the critical component source of long-term population growth. The most dynamic source for California’s growth has been immigration from Mexico, both legal and illegal. All observers (The Dept of Homeland Security, the Pew Charitable Trust Hispanic Center, and the Mexican Migration Project at Princeton) agree that net immigration from Mexico has been down dramatically in recent years with the stricter enforcement of border crossing and the prolonged recession in the US. Pew estimates that the illegal immigrant population in the US fell by some 7% between 2007 and 2010. The important debate about the future is whether this is a business cycle phenomenon or part of a longer term trend. The group that has the best data source and takes the longer term look is the Mexican Migration Project at Princeton. For decades they have been tracking migration patterns from Mexico and doing annual surveys of thousands of families from migration centers in Mexico. They found that the percent of first time immigrants from the Mexican communities of highest immigration fell from 1.2% of adults in 2000 to 0.6% in 2005 to zero in 2010. They identify that the changes are due to Mexican demographic and 9.b Packet Pg. 328 At t a c h m e n t : A t t a c h m e n t B : D e m o g r a p h i c F o r e c a s t i n g i n C a l i f o r n i a ( 2 2 1 0 : R e s p o n s e t o S B 3 7 5 A l t e r n a t i v e s ) 4 economic factors as much as from U.S. conditions. They identified five internal factors of change in Mexico: ·Fertility rates are falling dramatically from 6.8 births per women in 1970 to 2.8 in 1995 to 2 in 2010 (replacement level). ·The number of young people entering the labor market has fallen from one million a year in the 1990s to 700K today and demographic factors will bring that down to about 300K in 2030, not enough to meet local job needs. ·The rate of college attendance and college completion has doubled over the last decade, raising the career path of an increasing share of young workers. ·The wage disparity between Mexico and the U.S. is narrowing sharply with average wage gaps falling from 10:1 in the 1960s to some 3.7:1 in the early 2000s. ·The cost of migration has risen dramatically for illegal entrants, further narrowing the earnings gap. All of these factors point to the need, at the least, of looking at alternative scenarios of population growth in California that are more sensitive to possible underlying changes in migration patterns. 9.b Packet Pg. 329 At t a c h m e n t : A t t a c h m e n t B : D e m o g r a p h i c F o r e c a s t i n g i n C a l i f o r n i a ( 2 2 1 0 : R e s p o n s e t o S B 3 7 5 A l t e r n a t i v e s ) 5 Sources of Demographic projections about California US Bureau of the Census (responsible for the decennial census and does updated estimates each year of state populations—has been much closer to actual numbers than the Cal Dept. of Finance) California Department of Finance (responsible for state population estimates between the Census years—forecasts used as key source for state government planning). Statewide estimates for 2010 (made in 2009) were 41% higher than the 2010 Census numbers for the state, 83% over for the nine Bay Area counties and 137% higher for the three West Bay counties. Ronald Lee, UC Berkeley, Center for Economics and Demographics of Aging, “Special Report: The Growth & Aging of California’s Population”, 2003 (an important report that identified the detailed assumptions that went into the Department of Finance’s long-term projections). Hans Johnson, Public Policy Institute of California, “California 2025: Taking on the Future”, Chapter 2 ‘California’s Population in 2025’ (a report that gathered projections from eight academic and government sources). Johnson concluded that “population projections for California are especially difficult…In addition to overweighting contemporary trends, forecasters are notoriously bad at predicting fundamental demographic shifts... For these reasons, planners should consider alternative population scenarios.” Pages 27-28. John Pitkin &Dowell Myers, USC Population Dynamics Research Group, “The 2010 Census Benchmark for California’s Growing and Changing Population”, February 2011; “Projections of the Population of California by Nativity and Year of Entry to the U.S.”, April 2, 2011. (Pitkin and Myers had the lowest of the forecasts in the 2005 study—though still overestimating growth by 16%. They are working with the California Department of Finance on components for a new longer-term forecast; they are still assuming a net immigration number of 160,000 holding steady in the future.) Steve Levy, Center for the Continuing Study of the California Economy UCLA Anderson Forecasting Project Greg Schmid October 2011 9.b Packet Pg. 330 At t a c h m e n t : A t t a c h m e n t B : D e m o g r a p h i c F o r e c a s t i n g i n C a l i f o r n i a ( 2 2 1 0 : R e s p o n s e t o S B 3 7 5 A l t e r n a t i v e s ) 5 4 3 2 0 1960 1970 1980 1990 2010 2035 2040 million jobs Department of FinanceHistorical Trends 3,071,300 3,271,300 4,266,000 4,734,300 Initia l V i s i o n S c e n a r i o : +48,8 0 0 jobs p e r a n n u m Scenar i o 2 : +33,20 0 jobs p e r a n n u m Job growth average over last 20 years: +10,000 jobs per annum ABAG estimates that the region lost 200,000 jobs over the last few years, which is equivalent to the entire job growth over the last 20 years 1,271,300 Job growth average from 1960 to 1990: +60,000 jobs per annum Job growth average from 1960 to 2010: +40,000 jobs per annum 4,493,300 3,571,300 Continuing existing t r e n d s : +10,000 jobs per annum 9.c Packet Pg. 331 At t a c h m e n t : A t t a c h m e n t C : S C S P r o j e c t i o n s v . C e n s u s T r e n d s ( 2 2 1 0 : R e s p o n s e t o S B 3 7 5 A l t e r n a t i v e s ) October 17, 2011 Last Update: 10/15/2011 Blog Contact Contributors : About the Site News from Other Sites Search HOME ECONOMICS POLITICS URBAN ISSUES SMALL CITIES DEMOGRAPHICS SUBURBS CENSUS 2010 2011 BEST CITIES RANKING SILICON VALLEY CAN NO LONGER SAVE CALIFORNIA -- OR THE U.S. by Joel Kotkin 10/12/2011 Even before Steve Jobs crashed the scene in late 1970s, California’s technology industry had already outpaced the entire world, creating the greatest collection of information companies anywhere. It was in this fertile suburban soil that Apple — and so many other innovative companies — took root. Now this soil is showing signs of exhaustion, with Jobs’ death symbolizing the end of the state’s high-tech heroic age. “Steve’s passing really makes you think how much the Valley has changed,” says Leslie Parks, former head of economic development for the city of San Jose, Silicon Valley’s largest city. “The Apple II was produced here and depended on what was unique here. In those days, we were the technology food chain from conception to product. Now we only dominate the top of the chain.” Silicon Valley’s job creation numbers are dismal. In 1999 the San Jose-Sunnyvale-Santa Clara area had over 1 million jobs; by 2010 that number shrank by nearly 150,000. Although since 2007 and early 2010 the number of information jobs has increased substantially — up roughly 5000 to a total of 46,000 — the industrial sector, which still employs almost four times as many people as IT, lost around 12,000. Overall the region’s unemployment stands at 10%, well above the national average of 9.1%. This is partly because Apple, Intel and Hewlett-Packard have shifted their production — which offered jobs to many lower- and medium-skilled Californians — to other states or overseas. With its focus just at the highest end, the Valley no longer represents the economically diverse region of the 1970s and 1980s. Indeed, it increasingly resembles Wall Street — with a few highly skilled employees and well-placed investors making out swimmingly. “Silicon Valley has become hyper-efficient; the region doesn’t create jobs anymore,” says Tamara Carleton, a locally based fellow at the Foundation for Enterprise Development. “In terms of revenue per employee, Facebook’s ratio is unprecedented. Even Apple hasn’t grown significantly this last decade, despite the successful launch of many products and services. While commendable, greater efficiency doesn’t put more jobs in the California economy.” This “hyper-efficiency” can be seen in the real state of the valley’s industrial/flex space market. The overall industrial vacancy rate remains 14%, two points higher than in 2009. Areas close to Stanford, such as Palo Alto and Mountain View, have done well, but others on the periphery, such as Gilroy, Milpitas and Fremont, and even parts of San Jose have vacancies reaching over 20%. California’s other high-tech centers, with the possible exception of San Diego, are doing worse. The state has been losing high-tech employment over the past decade, while such employment has surged not only in China and Korea, but also in competitor states such as Texas, Virginia, Washington and Utah. According to the annual Cyberstates study, California lost more high-tech jobs — about 18,000 — last year than any other state. California’s political leaders, particularly Democrats, still genuflect toward the Valley for economic salvation and job growth. But social media has not proved a jobs-creating dynamo, and it’s clear SUBSCRIBE TO NG ARTICLES Subscribe to Articles feed Or, get articles by email: NewGeography.com is a joint venture of Joel Kotkin and Praxis Strategy Group FEATURED CONTENT View all subjects ADVERTISEMENT Enter your email address Go! 9.d Packet Pg. 332 At t a c h m e n t : A t t a c h m e n t D : S i l i c o n V a l l e y C a n N o L o n g e r S a v e C a l i f o r n i a - - O r T h e U _ S _ N e w g e o g r a p h y _ c o m ( 2 2 1 0 : R e s p o n s e t o S B 3 7 5 that the highly subsidized, venture backed “green economy” has floundered miserably and faces a less than rosy future. You can feel pride, as an American and Californian, in the legacy of the likes of Steve Jobs but also believe our future cannot be salvaged by high-tech alone. Many of the country’s greatest assets, for example, are physical; in California these include the best climate for any advanced region in the world, fertile soil, a prime location on the Pacific Rim and potentially huge fossil fuel energy reserves, which give it enormous competitive advantages. The green theocracy now in control of Sacramento, however, has little interest in these aspects of California. It may prove difficult, if not impossible, to modernize the ports of Los Angeles and Long Beach, prolific sources of good-paying white and blue collar jobs. These ports will soon face increased competition for Asian trade from Gulf and south Atlantic locales eagerly waiting for the 2014 widening of the Panama Canal. Administration officials such as Energy Secretary Steven Chu also slate the state’s agriculture for demise by climate change. But just in case he’s wrong, we should note that California’s agriculture — despite green attempts to cut off its water supply — accounts for 40% of state exports. It generates $12.7 billion annually in overseas sales and employs over 400,000 people directly and many thousands more in marketing, processing and warehousing. Similarly, California boasts some of the nation’s richest deposits of oil and gas, not only on its sensitive and politically nettlesome coast but along the coastal plains and in the Central Valley. The most recent estimates of the state’s reserves, according to the Energy Information Agency, include nearly 3 billion cubic feet of natural gas and more than three billion barrels of oil, roughly the same as Alaska and more than booming North Dakotas. Geologists and wildcatters, usually ahead of the game, believe we have touched only a small part of the state’s energy potential. Some discuss new oil shale discoveries, particularly in the Monterey region, that could dwarf even the massive Bakken find in North Dakota. “If you were in Texas,” quipped economist Bill Watkins to an audience in the hard-hit central California town of Santa Maria, a predominately Latino town north of Santa Barbara, “you’d be rich.” A judicious and carefully planned expansion of these resources, particularly in the less populated interior areas, could provide tens of thousands of high-paying jobs. It would also funnel desperately needed revenue to the state. At the same time, such development could forestall much higher energy costs, one of the things driving manufacturers in the state to move elsewhere. California is unlikely to take advantage of its physical bounty; its leadership seems to lack enthusiasm for any industrial expansion outside of the “green” economy. Industrial parks across the state are emptying, more houses go into foreclosure and local governments wither on the vine. Unless California begins to take its own economy seriously, it will continue to devolve from the aspirational place that produced not only Steve Jobs but scores of entrepreneurs in everything from movies and oil to agriculture and aerospace. The Valley itself will likely do fine. Steve Jobs helped cement the position of Santa Clara Valley as the epicenter of the high-tech world. But this accomplishment does relatively little for the rest of California. What we will miss will not only be Steve Jobs’ creative contributions, but how clearly his opportunistic, entrepreneurial spirit has ebbed away from the Golden State. This piece originally appeared at Forbes.com. Joel Kotkin is executive editor of NewGeography.com and is a distinguished presidential fellow in urban futures at Chapman University, and an adjunct fellow of the Legatum Institute in London. He is author of The City: A Global History. His newest book is The Next Hundred Million: America in 2050, released in February, 2010. Shanghai photo by flickr user acaben RECENT BLOG POSTS How Cities Grow: Dispersion, not Densification Manhattan Moment: Two distinct groups make up 'Occupy' protesters The Chicago Machine’s Favorite After School Charity Housing Bottom? Not Yet. 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Buy your copy today: Amazon B&N Books-a-Million Powell's Advertise here 9.d Packet Pg. 334 At t a c h m e n t : A t t a c h m e n t D : S i l i c o n V a l l e y C a n N o L o n g e r S a v e C a l i f o r n i a - - O r T h e U _ S _ N e w g e o g r a p h y _ c o m ( 2 2 1 0 : R e s p o n s e t o S B 3 7 5 The White City The Best Cities for Jobs 2011 Obama's Off-target Class War Root Causes of the Financial Crisis: A Primer The Evolving Urban Form: Los Angeles more MORE FROM THIS AUTHOR The Future Of America's Working Class The Golden State Is Crumbling Minority America The Not-So-Lucky Country The New World Order RECOMMENDED BOOKS The Next Hundred Million: America in 2050 By Joel Kotkin - Available Now The City: A Global History by Joel Kotkin Why is construction so backward? Co-authored by Ian Abley Millennial Momentum: How a New Generation Is Remaking America by Morley Winograd and Michael D. Hais War on the Dream: How Anti-Sprawl Policy Threatens the Quality of Life by Wendell Cox Remembering the Twentieth Century Limited by Matthew Stevenson An April Across America By Matthew Stevenson BLOGROLL AND PARTNER SITES Burgh Diaspora Center for Economic Research and Forecasting China Urban Development Blog Chris Bradford - Austin Contrarian Demographia Design New Haven Houston Strategies LA Observed Labor Lou Siegel NDN New America Foundation: Economic Growth Newsalert Politico Top Stories Second Shelters Technology and the City The Bus Bench The Cost of Energy The Electoral Map The Rural Blog The Urbanophile 9.d Packet Pg. 335 At t a c h m e n t : A t t a c h m e n t D : S i l i c o n V a l l e y C a n N o L o n g e r S a v e C a l i f o r n i a - - O r T h e U _ S _ N e w g e o g r a p h y _ c o m ( 2 2 1 0 : R e s p o n s e t o S B 3 7 5 The Washington Note Patrick.net - Housing Crash Joel Kotkin Praxis Strategy Group more USER LOGIN Username: * Password: * Create new account Request new password Log in © 2011 New Geography BLOGS : CONTRIBUTORS : CONTACT : Stay up to date: RSS FEED Website design and development by: 9.d Packet Pg. 336 At t a c h m e n t : A t t a c h m e n t D : S i l i c o n V a l l e y C a n N o L o n g e r S a v e C a l i f o r n i a - - O r T h e U _ S _ N e w g e o g r a p h y _ c o m ( 2 2 1 0 : R e s p o n s e t o S B 3 7 5 Data extracted on: November 14, 2011 (10:21:12 PM) Local Area Unemployment Statistics A to Z Index | FAQs | About BLS | Contact Us Subscribe to E-mail Updates What's New | Release Calendar | Site Map Search BLS.gov Databases, Tables & Calculators by Subject FONT SIZE: Change Output Options:From: 2001 To: 2011 include graphs Series Id: LASST06000003 Seasonally Adjusted Area: California Area Type: Statewide State/Region/Division: California Home Subject Areas Databases & Tools Publications Economic Releases Beta Download: Year Period labor force employment unemployment unemployment rate 2001 Jan 17064935 16259369 805566 4.7 2001 Feb 17098323 16282609 815714 4.8 2001 Mar 17112290 16282230 830060 4.9 2001 Apr 17106936 16260518 846418 4.9 2001 May 17091933 16225982 865951 5.1 2001 Jun 17079133 16188996 890137 5.2 2001 Jul 17079991 16159350 920641 5.4 2001 Aug 17095502 16137458 958044 5.6 2001 Sep 17123897 16124758 999139 5.8 2001 Oct 17160184 16120839 1039345 6.1 2001 Nov 17196995 16122667 1074328 6.2 2001 Dec 17229217 16127240 1101977 6.4 2002 Jan 17254267 16131779 1122488 6.5 2002 Feb 17268275 16131808 1136467 6.6 2002 Mar 17268276 16121777 1146499 6.6 2002 Apr 17256523 16103201 1153322 6.7 2002 May 17238799 16081190 1157609 6.7 2002 Jun 17223607 16065143 1158464 6.7 2002 Jul 17218410 16060411 1157999 6.7 2002 Aug 17225377 16066519 1158858 6.7 2002 Sep 17244071 16081116 1162955 6.7 2002 Oct 17266542 16096536 1170006 6.8 2002 Nov 17288100 16110834 1177266 6.8 2002 Dec 17304130 16122076 1182054 6.8 2003 Jan 17315792 16130492 1185300 6.8 2003 Feb 17323528 16135644 1187884 6.9 2003 Mar 17324032 16132504 1191528 6.9 2003 Apr 17312041 16115720 1196321 6.9 2003 May 17287722 16086034 1201688 7.0 2003 Jun 17260926 16055591 1205335 7.0 2003 Jul 17241998 16038009 1203989 7.0 2003 Aug 17237301 16040636 1196665 6.9 2003 Sep 17248865 16065345 1183520 6.9 2003 Oct 17273399 16105384 1168015 6.8 2003 Nov 17303871 16150178 1153693 6.7 2003 Dec 17330901 16188538 1142363 6.6 2004 Jan 17348252 16213823 1134429 6.5 2004 Feb 17354669 16225582 1129087 6.5 2004 Mar 17354156 16228394 1125762 6.5 2004 Apr 17348588 16227454 1121134 6.5 2004 May 17340789 16228312 1112477 6.4 2004 Jun 17336224 16237712 1098512 6.3 2004 Jul 17341618 16259878 1081740 6.2 2004 Aug 17358575 16293254 1065321 6.1 2004 Sep 17384216 16332639 1051577 6.0 2004 Oct 17411726 16370818 1040908 6.0 2004 Nov 17435099 16404295 1030804 5.9 2004 Dec 17453567 16432990 1020577 5.8 2005 Jan 17467741 16459050 1008691 5.8 2005 Feb 17478629 16483881 994748 5.7 2005 Mar 17486953 16507241 979712 5.6 2005 Apr 17495465 16529698 965767 5.5 2005 May 17506691 16552653 954038 5.4 2005 Jun 17522025 16576721 945304 5.4 2005 Jul 17543034 16602429 940605 5.4 2005 Aug 17568333 16630031 938302 5.3 2005 Sep 17594733 16658741 935992 5.3 2005 Oct 17616387 16686389 929998 5.3 2005 Nov 17630197 16710754 919443 5.2 2005 Dec 17635330 16729894 905436 5.1 2006 Jan 17607060 16719361 887699 5.0 2006 Feb 17609316 16734299 875017 5.0 2006 Mar 17614991 16746591 868400 4.9 2006 Apr 17622567 16754007 868560 4.9 2006 May 17630412 16758874 871538 4.9 2006 Jun 17639900 16767236 872664 4.9 2006 Jul 17656698 16787638 869060 4.9 2006 Aug 17685904 16823086 862818 4.9 2006 Sep 17727967 16869723 858244 4.8 2006 Oct 17776543 16919664 856879 4.8 2006 Nov 17822414 16962684 859730 4.8 2006 Dec 17856306 16990145 866161 4.9 2007 Jan 17874097 16999177 874920 4.9 2007 Feb 17879382 16994294 885088 5.0 2007 Mar 17875802 16979943 895859 5.0 2007 Apr 17870836 16962380 908456 5.1 2007 May 17869805 16945376 924429 5.2 2007 Jun 17877004 16934655 942349 5.3 2007 Jul 17895096 16934211 960885 5.4 2007 Aug 17925032 16944839 980193 5.5 2007 Sep 17963888 16965042 998846 5.6 2007 Oct 18004960 16987589 1017371 5.7 2007 Nov 18040287 17006407 1033880 5.7 2007 Dec 18067411 17018904 1048507 5.8 2008 Jan 18087203 17023322 1063881 5.9 2008 Feb 18103355 17019868 1083487 6.0 2008 Mar 18119632 17007397 1112235 6.1 2008 Apr 18138572 16985444 1153128 6.4 2008 May 18160098 16954683 1205415 6.6 2008 Jun 18184134 16920841 1263293 6.9 2008 Jul 18207818 16887607 1320211 7.3 2008 Aug 18229322 16855280 1374042 7.5 2008 Sep 18249419 16818737 1430682 7.8 2008 Oct 18268117 16769288 1498829 8.2 2008 Nov 18282138 16701979 1580159 8.6 2008 Dec 18289584 16617660 1671924 9.1 2009 Jan 18289719 16524413 1765306 9.7 2009 Feb 18285118 16432137 1852981 10.1 2009 Mar 18276636 16347558 1929078 10.6 2009 Apr 18264205 16272519 1991686 10.9 2009 May 18246234 16201665 2044569 11.2 2009 Jun 18224228 16134515 2089713 11.5 2009 Jul 18198678 16071960 2126718 11.7 2009 Aug 18171005 16016808 2154197 11.9 2009 Sep 18146637 15973597 2173040 12.0 2009 Oct 18131304 15943343 2187961 12.1 2009 Nov 18131271 15927437 2203834 12.2 2009 Dec 18148896 15925699 2223197 12.2 2010 Jan 18177493 15937026 2240467 12.3 2010 Feb 18204387 15953351 2251036 12.4 2010 Mar 18217386 15962815 2254571 12.4 2010 Apr 18213712 15960004 2253708 12.4 2010 May 18196017 15945103 2250914 12.4 2010 Jun 18172933 15923431 2249502 12.4 2010 Jul 18153683 15901275 2252408 12.4 2010 Aug 18145939 15887775 2258164 12.4 2010 Sep 18145754 15882094 2263660 12.5 2010 Oct 18147297 15880021 2267276 12.5 2010 Nov 18147813 15877776 2270037 12.5 2010 Dec 18150832 15878285 2272547 12.5 2011 Jan 18150676 15904603 2246073 12.4 2011 Feb 18116716 15916202 2200514 12.1 2011 Mar 18078299 15902305 2175994 12.0 2011 Apr 18080009 15938786 2141223 11.8 2011 May 18063056 15947351 2115705 11.7 2011 Jun 18042724 15910004 2132720 11.8 2011 Jul 18014109 15847565 2166544 12.0 2011 Aug 18005884 15830729 2175155 12.1 2011 Sep 18067809(P) 15915991(P) 2151818(P) 11.9(P) P : Preliminary. TOOLS Areas at a Glance Industries at a Glance Economic Releases Databases & Tables Maps CALCULATORS Inflation Location Quotient Injury And Illness HELP Help & Tutorials FAQs Glossary About BLS Contact Us INFO What's New http://data.bls.gov/jobs/ Find It! DOL Join our Mailing Lists Linking & Copyright Info RESOURCES Inspector General (OIG) Budget and Performance No Fear Act USA.gov Benefits.gov Disability.gov Freedom of Information Act | Privacy & Security Statement | Disclaimers | Customer Survey | Important Web Site Notices U.S. Bureau of Labor Statistics | Postal Square Building, 2 Massachusetts Avenue, NE Washington, DC 20212-0001 http://data.bls.gov/home.htm | Telephone: 1-202-691-5200 | TDD: 1-800-877-8339 | Contact Us FOCUS Priority Development Area Application Materials FOCUS applications for Priority Development Area designation are accepted on a rolling basis. Local governments in the nine county San Francisco Bay Area are invited to apply for regional designation of an area within their community as a Priority Development Area. These areas help inform regional and state agencies where incentives and assistance are needed to support local efforts that encourage infill development near transit. Many local governments are already participating and have been eligible to apply for a variety of capital funds and planning grants for the Priority Development Areas within their jurisdiction. Applying to Become a PDA Applications for Priority Development Area designation will be reviewed and evaluated, and areas that meet the designation criteria will be recommended for regional adoption as designated Planned or Potential Priority Development Areas. In general, these categories relate to readiness for funding: a Planned area would be eligible for capital infrastructure funds, planning grants, and technical assistance while a Potential area would be eligible for planning grants and technical assistance, but not capital infrastructure funds. Click here to learn more about the application review process. Formalizing Growth Opportunity Areas as PDAs Growth Opportunity Areas were submitted by local government staff for consideration in the Initial Vision Scenario. In 2012, a Preferred Scenario will be identified and will serve as the basis for a draft Sustainable Communities Strategy (SCS). In addition, regional agencies are proposing financial incentives for Priority Development Areas through the OneBayArea Grant program. To be incorporated into the SCS and eligible for future funding, Growth Opportunity Areas will need to be formalized as Priority Development Areas. See below for PDA application materials. Key upcoming dates for submitting a PDA application in time for consideration in the SCS and OneBayArea grant program are as follows: December 16, 2011: Jurisdictions submit completed PDA applications January 2012: Staff review of applications received January 30, 2012: Deadline for submitting local resolutions in support of PDA Application February 1, 2012: Staff PDA recommendations presented to ABAG Regional Planning Committee with Planned/Potential status March 15, 2012: Staff PDA recommendations presented to ABAG Executive Board for final adoption with Planned/Potential status This timeline, along with the addition of new Place Types and criteria for PDA designation, were approved by the ABAG Executive Board at its September 2011 meeting. For more information, see the Application Guidelines for PDA Designation, below. Changing the Status of an Existing PDA A Potential PDA can move to Planned status once a plan has been completed for the area. Anything less than adoption by the City Council or Board of Supervisors (“accepting” the plan, moving forward on implementation without adoption, etc.) is not sufficient to meet this requirement. To complete the status change, applicants should submit a copy of the adopted plan and the adopting resolution to the FOCUS Staff for your jurisdiction. Applicants will also be asked to complete the PDA Assessment survey. Click here for more details about the review process for revision requests. Revisions to an Existing PDA To revise an existing PDA, local governments should contact the FOCUS Staff for their jurisdiction. Local staff will be asked to submit an updated application (map, narrative, jobs and housing numbers, etc.) to provide accurate and up-to-date information about the revised area. If the revision is to a Potential PDA, then the applicant should submit an updated infrastructure budget. If the revision is to a Planned PDA, then the applicant should submit an updated PDA Assessment Survey. A new resolution is not required. Application Materials - Click on each item to download Application Guidelines for Priority Development Area Designation The application guidelines include a program overview, eligibility for applicants and areas, designation criteria definitions, application review process, timeline for priority development area designation, application form and submission instructions, and contact information. Application for Priority Development Area Designation The application has six parts. Some information can be filled in directly in the Microsoft Word document, while some information will need to be provided as a separate attachment. Station Area Planning Manual for Part 1(e) of the Application Use the Station Area Planning Manual as a guide to identify a Place Type that most closely aligns with the vision for the area being submitted. Infrastructure Budget for Part 6 of the Application This Microsoft Excel spreadsheet is provided for applicants to enter information about the infrastructure improvements needed and funding sources available to realize the vision for the priority area. PDA Assessment Survey This Microsoft Excel spreadsheet is provided for applicants to enter detailed information about the priority area. Applicants for new PDAs will be asked to complete this spreadsheet if FOCUS Staff decides to recommend adoption as a Planned PDA after review of the application. This should be also completed by applicants requesting changes to an existing Planned PDA or moving from a Potential PDA to Planned status. Sample Local Government Resolution This sample local government resolution is provided as a template for requesting support from the applicant's council or board of supervisors for participation in the FOCUS program through PDA designation. Application Submission Instructions 1. Fill out the Application in the Microsoft Word Document and compile the documents requested in the application form for each area. 2. Submit an electronic version of the application form and associated documents requested in the application for each area to FOCUS@abag.ca.gov. 3. Mail one hard copy of the application and attachments for each area to the following mailing address: Association of Bay Area Governments P.O. Box 2050 Oakland, CA 94604-2050 Attn: Jackie Reinhart Physical address: Association of Bay Area Governments 101 Eighth Street Oakland, CA 94607-4756 Attn: Jackie Reinhart Contact Information For questions regarding the application, please contact Jackie Reinhart, ABAG Regional Planner at JackieR@abag.ca.gov or 510-464-7994. However, prior to submitting an application, you are encouraged to contact the FOCUS Staff for your jurisdiction and discuss the goals for the proposed area. From: Greg Scharff [gregscharff@aol.com] Sent: Tuesday, November 22, 2011 12:10 PM To: Williams, Curtis Subject: Fwd: [Housing Methodology Committee] Opportunity for input on RHNA Sphere of Influence (SOI) rules Please let me know what type of input we should give Sent from my iPhone Begin forwarded message: From: Gillian Adams <notifications@bayarea.basecamphq.com> Date: November 22, 2011 11:44:00 AM PST To: Greg Scharff <gregscharff@aol.com> Subject: [Housing Methodology Committee] Opportunity for input on RHNA Sphere of Influence (SOI) rules Reply-To: Housing Methodology Committee <U755245D085C5P54639417- reply@bayarea.basecamphq.com> Reply ABOVE THIS LINE to add a comment to this message Project:Housing Methodology Committee Company:ABAG Gillian Adams posted a new message: Opportunity for input on RHNA Sphere of Influence (SOI) rules The methodology for the Regional Housing Need Allocation (RHNA) must include rules for allocating the housing need for a jurisdiction’s SOI if there is projected growth in the area, and most SOI areas within the Bay Area are anticipated to experience growth. For the 2014-2022 RHNA, staff is proposing to use the same approach regarding SOI that was includ in the 2007-2014 RHNA, unless ABAG receives a resolution from a county and all the cities in that county requesting a change. The deadline for requesting this change is December 31, 2011. The proposed SOI rules are: 1. In Napa, San Mateo, Santa Clara, Solano, and Sonoma counties, the allocation of housing nee generated by the unincorporated SOI was assigned to the cities. 2. In Alameda and Contra Costa counties, the allocation of housing need generated by the unincorporated SOI was assigned to the county. 3. In Marin County, 50 percent of the allocation of housing need generated by the unincorporated SOI was assigned to the city; and 50 percent was assigned to the county. More details about RHNA, Spheres of Influence, and the process for requesting a change are include in the attached letter. RHNA_SOI_112111.pdf 85 KB This message was sent to Albert Lopez, Alex Amoroso, Andrew Michael, Andrew Smith, Barbara Kondylis, Ben Tripousis, Bena Chang, Bill Shoe, Bonne Gaebler, Catherine Lyons, Christy Riviere, Cindy Yee, Danielle Schmitz, Danielle Sinclair-Schmitz, David Early, David Lim, David Vintze, Diane Dillon, Doug Shoemaker, Duane Bay, Evelyn Stivers, Gayle Uilkema, Gillian Adams, Greg 9.g Packet Pg. 337 At t a c h m e n t : A t t a c h m e n t G : A B A G M e m o r e : H o u s i n g A l l o c a t i o n s f o r S p h e r e o f I n f l u e n c e ( S O I ) ( 2 2 1 0 : R e s p o n s e t o S B 3 7 5 A l t e r n a t i v e s ) Scharff, Hillary Gitelman, Jake Mackenzie, Jean Hasser, Jeff Levin, Joe LeClair, Julie Pierce, Kara Douglas, Katie Lamont, Kearstin Dischinger, Laura Kuhn, Laurel Prevetti, Leigha Schmidt, Linda Jackson, Lindy Lowe, Margaret Gordon, Matt Walsh, Maureen Rioridan, Mike Kasperzak, Pat Eklund, Patrick Lynch, Paul Campos, Pete Parkinson, Rebecca Kaplan, Rick Tooker, Ross Mirkarim Sam Tepperman-Gelfant, Sarah Dennis, Sarah Karlinsky, Sasha Hauswald, Scott Haggerty, Scott Zengel, Sharifa Wilson, Shiloh Ballard, Stacey Laumann, Stephanie Reyes, Steve Piasecki, Steve Ross, Susan Adams, Tina Wehrmeister, Val Menotti, Vernon Smith, Vu-Bang Nguyen, and Wayne Chen. Stop receiving emails when comments are posted to this message. Prefer plain text emails? Delivered by Basecamp 9.g Packet Pg. 338 At t a c h m e n t : A t t a c h m e n t G : A B A G M e m o r e : H o u s i n g A l l o c a t i o n s f o r S p h e r e o f I n f l u e n c e ( S O I ) ( 2 2 1 0 : R e s p o n s e t o S B 3 7 5 A l t e r n a t i v e s )   Sustainable Communities Strategy ALTERNATIVE LAND USE SCENARIOS Core Concentration, Focused Growth, and Outer Bay Area Growth REVISED: September 1, 2011 In July, ABAG’s Executive Board and the Metropolitan Transportation Commission approved a framework for Five Alternative Scenarios, which will be used to inform the development of the Preferred Scenario of the Sustainable Communities Strategy (SCS). Scenario 1 and 2 are based on unconstrained growth, assume very strong employment growth, and unprecedented funding to support housing affordability. Scenario 1, the Initial Vision Scenario was released in March 2011. Scenario 2, Core Concentration Unconstrained will be developed to provide a more concentrated development pattern along transit corridors. These two scenarios are essential to identify the challenges and policies for an ideal sustainable development path. This report presents the land use patterns for scenarios 3, 4, and 5 based on an assessment of economic growth, financial feasibility, and reasonable planning strategies. They provide a range of housing and employment distribution patterns across places and cities that support equitable and sustainable development. The three scenarios are as follows:  Core Concentration Growth Scenario: Concentrates housing and job growth at selected Priority Development Areas in the Inner Bay Area along the region’s core transit network.  Focused Growth Scenario: Recognizes the potential of Priority Development Areas and Growth Opportunity Areas across the region with an emphasis on housing and job growth along major transit corridors.  Outer Bay Area Growth Scenario: Addresses higher levels of growth in the Outer Bay Area and is closer to previous development trends than the other two scenarios. These three scenarios assume a strong economy supported by the appropriate affordable housing production. They also assume targeted local and regional strategies and additional funding to support sustainable and equitable growth. They are designed primarily around Priority Development Areas and Growth Opportunity Areas, as places for growth identified by local jurisdictions. (PDAs will refer to both areas in this report) The level of PDA growth is defined based on the Place Type established by the local jurisdiction (i.e., regional center, transit neighborhood, rural town), which provides a regional language to recognize the character, scale, density and expected growth for the wide range of places in the Bay Area. Beyond the PDAs, household growth is distributed based on employment, transit access, household formation, and housing production. Employment distribution is based upon the existing employment pattern, reversing the previous dispersal trends throughout the region. Alternative Land Use Scenarios September 1, 2011 1 9.h Packet Pg. 339 At t a c h m e n t : A t t a c h m e n t H : A l t e r n a t i v e S c e n a r i o s ( 2 2 1 0 : R e s p o n s e t o S B 3 7 5 A l t e r n a t i v e s ) Regional dialogue on land use scenarios The purpose of the land use alternative scenarios is to expand the regional dialogue on the type of development, planning strategies, and investments to define the SCS. We are seeking input from local jurisdictions, community organizations, business organizations, and general public on the following themes: Distribution of growth  Shifting from previous trends of dispersed growth, do these three land use scenarios provide an appropriate spectrum for sustainable and equitable development trends? Is growth concentrated at the appropriate places? Development of vital and healthy places  Are housing and jobs converging at the appropriate places? Can this convergence support greater access to jobs and housing, particularly for the low and moderate income populations?  What elements of the scenarios would support the development of complete communities?  Do the scenarios address the local expectations and necessary adjustments for regional equity and sustainability? Planning strategies and investments  How can local jurisdictions, community organizations, and business organizations converge into a coherent regional strategy?  What policies and investments should be prioritized to support the SCS? This report includes five sections and two appendices. The first section is a brief summary of the input received from local jurisdictions and stakeholders on local development and equity. The second section is an overview of regional employment and household growth between 2010 and 2040. The third section describes employment trends and distribution, including some details of the recent regional employment analysis undertaken by ABAG and MTC to inform the land use patterns. The fourth section provides an overview of the housing distribution, which relies on the housing analysis presented in previous reports. The fifth section covers the next steps towards the development of the Preferred Scenario. The appendices include, first, details on the methodology for growth distribution; and, second, tables of growth by PDA and local jurisdiction. Scenarios maps are compiled in a separate packet. 1. INPUT ON SCS SCENARIOS The development of the SCS Core, Focused, and Outer Bay Area Growth Scenarios are informed by a wealth of input we received on the Initial Vision Scenario (IVS) from local elected officials, planning directors, and Congestion Management Agencies (CMAs) as well as from the Regional Advisory Working Group, Equity Group, and stakeholders groups. County-level Basecamp sites have been well noticed and public workshops were held throughout our nine-county region. As indicated in previous reports, land use decisions are a local responsibility governed by local jurisdictions. The land use scenarios presented here are based upon local input and strong Alternative Land Use Scenarios September 1, 2011 2 9.h Packet Pg. 340 At t a c h m e n t : A t t a c h m e n t H : A l t e r n a t i v e S c e n a r i o s ( 2 2 1 0 : R e s p o n s e t o S B 3 7 5 A l t e r n a t i v e s ) coordination among local and regional agencies. Regional agencies have incorporated local input into three coherent land use development patterns. Input on local development The input received reflects the unique characteristics of the region’s communities. Some communities described the level of housing growth depicted in the IVS as too high, while other jurisdictions responded that IVS housing growth levels would be appropriate if funding for redevelopment, public schools, transit and other community infrastructure were available. Still, a number of common themes have emerged.  Addressing the Bay Area economic challenges: The Bay Area’s first Sustainable Communities Strategy should advance a vibrant economy and strong growth for the region. Employment growth should be aligned with existing and planned transit. Employment totals are too high given past performance and the depth of the recession.  Sustainable and equitable housing production: Growth levels in the Initial Vision Scenario are not feasible given current market constraints and funding availability. Infill development challenges require capital investments and supportive policies. The SCS should reward communities that advance sustainable growth at transit nodes.  Transit service: Cuts in transit service will impede sustainable growth. Transit-served, infill areas that have not been nominated by local communities as PDAs should take on comparable levels of growth.  Coordination of regional efforts: Loss of redevelopment agencies will limit infill development. The SCS should provide CEQA benefits for projects in PDAs. Air District and BCDC requirements should be aligned with the SCS. Input on equity Regional agency staff has worked with the Regional Equity Working Group and MTC’s Policy Advisory Council to develop inputs to the Alternative Scenarios that will increase access to opportunities and an improved quality of life for residents from all income categories in communities throughout the region. Social equity as well as economic growth and environmental sustainability are promoted through the emphasis on encouraging growth in complete communities served by transit. In addition, each of the alternative scenarios will also distribute growth in a way that ensures each jurisdiction is planning to accommodate a minimum percent of its expected household growth. Factors related to transit service, employment, and net low- income commuters to a jurisdiction will also inform the alternative scenario housing distributions. 2. REGIONAL EMPLOYMENT AND HOUSEHOLD GROWTH 2010 – 2040 The recent national economic recession triggered a major employment decline. Recent data and research indicates that the nation is facing a slower recovery than expected over the next few years, which will in turn impact the recovery of the Bay Area. Beyond this short term recovery, the rates of employment growth for the Bay Area and California have become closer to or lower than the national rates since the 1980s. They were higher than the nation from the 1960s to the 1980s, but as the region and the state matured in its economic composition, growth rates became closer to the national average. Alternative Land Use Scenarios September 1, 2011 3 9.h Packet Pg. 341 At t a c h m e n t : A t t a c h m e n t H : A l t e r n a t i v e S c e n a r i o s ( 2 2 1 0 : R e s p o n s e t o S B 3 7 5 A l t e r n a t i v e s ) Due to lowered forecasts of national economic and job growth, along with dramatic decreases in state and national immigration levels (even prior to the recession), the Bay Area job forecast for 2040 would be revised downward by an estimated 100,000 jobs than the forecast employment for the Initial Vision Scenario. The total jobs for 2040 would drop by another 200,000 jobs by switching to a forecast where the Bay Area maintains its current share of national employment. Even under those considerations, the SCS can reasonably assume a healthy economy for the Bay Area by 2040. High expectations are based on the strength of our knowledge-based economy, the development of new high technology sectors as well as the diverse economy to support these leading sectors. In addition, the Bay Area has a highly qualified labor force when compared to other regions and a high quality of life based on access to urban amenities, natural resources, and a Mediterranean climate. The region also provides businesses with a wealth of research and development resources and a strong network of international exchange. Given these resources, regional and economic experts working with ABAG and MTC suggest the Bay Area could add almost a million jobs up to 4.26 million jobs by 2040. This is an average of 33,000 per year over the next 30 years, which assumes a healthy and strong economy. This is more than three times the 10,000 average annual job growth of the previous two decades. It is close to the 40,000 average annual job growth of the last 50 years when the region experienced the development of the high technology industry and the finance sector. This employment growth will be supported by strong housing production of about 770,000 units by 2040. This would represent an annual production of 27,000 units per year. The slow recovery of job growth and housing prices are expected to limit housing production in the near- term. This period should be addressed independently from the housing production of the later years. Assuming a suppressed housing production rate of 15,000 units from 2010-2015, this level of growth would increase to almost 30,000 units per year over the 2015-2040 timeframe. In comparison, historical rates were 20,000 per year from 1990-2010 and 36,000 averaging 1970, 1975, 1980, and 1985 rates, periods of much greenfield housing production. The expected growth of 770,000 housing units by 2040 in the scenarios under discussion is lower than the equivalent one million units in Initial Vision Scenario. The former is the expected housing production while the latter reflects the housing need. The expected housing production addresses lower 2010 household and population counts (Census 2010), lower employment growth than previous forecasts, and reasonable assumptions on market trends, local and regional policies, and infrastructure. This level of housing reflects a reasonable job to household ratio for the Bay Area and would consider a reasonable pace of recovery of the housing market. For these scenarios we are assuming a job to household ratio of 1.3 by 2040. This ratio is based on the regional average over the past six decades and is also similar to the present-day ratio. It could be expected that demographic shifts would lower this ratio over the next fifteen years as the baby boomer generation retires, but that it would rise again in the later years of the planning horizon. Alternative Land Use Scenarios September 1, 2011 4 9.h Packet Pg. 342 At t a c h m e n t : A t t a c h m e n t H : A l t e r n a t i v e S c e n a r i o s ( 2 2 1 0 : R e s p o n s e t o S B 3 7 5 A l t e r n a t i v e s ) Regional Growth: Households, Population, Employed Residents, Jobs, 2010 - 2040 Core, Focused, and Outer Bay Area Growth Scenarios Initial Vision Scenario 2010 2040 Growth 2010-40 Growth 2010-40 Households 2,608,000 3,378,000 770,000 1,031,000 Population 7,151,000 9,236,000 2,085,000 2,432,000 Employed residents 3,153,000 3,974,000 821,000 1,338,000 Jobs 3,271,000 4,266,000 995,000 1,463,000 These scenario land development patterns will be supported by transportation scenarios that will vary the level of funding for “fix-it-first” maintenance, transit capacity improvements, roadway improvements, and bike/pedestrian funding. 3. REGIONAL EMPLOYMENT DISTRIBUTION The region is experiencing a transformation in its economic activities and in its population composition, both of which have major land use implications. The very strong growth of knowledge-based activities at the intersection with urban amenities brings new strength to employment centers. These economic trends are parallel to some key emerging demographic changes: young professionals’ preferences for vital urban places instead of office parks, an increase in the ethnic diversity of the labor force and residents, and a major wave of retirement and increase in the senior population. Providing that the region can develop and implement a solid SCS, these changes provide an opportunity to strengthen the economic health, social equity, and sustainability of the Bay Area. SCS tasks to support a healthy economy include:  Provide the appropriate transit, affordable housing, and urban amenities to support the new wave of industries at urban locations and densified office parks.  Support a diverse economy through public investments that support strategic sectors, and the retention and expansion of affordable housing close to major employment centers.  Regain the economic vitality of regional centers, which lost employment over the past decades. Support increased densities and a mix of uses at suburban office parks, which have been major employment growth areas.  Concentrate urban amenities and affordable housing in downtown areas and along transit corridors across the region.  Maintain and increase the viability and productivity of industrial lands and agricultural resource areas. For the purpose of the SCS Alternative Scenarios we have revised the total employment growth by 2040, the growth by industry, and the distribution by PDA and city. The rationale for this healthy economic growth in relation to population and housing growth will be discussed in a Alternative Land Use Scenarios September 1, 2011 5 9.h Packet Pg. 343 At t a c h m e n t : A t t a c h m e n t H : A l t e r n a t i v e S c e n a r i o s ( 2 2 1 0 : R e s p o n s e t o S B 3 7 5 A l t e r n a t i v e s ) separate memo. This report primarily focuses on growth by industry and distribution patterns based on the employment analysis developed by ABAG and MTC in collaboration with Strategic Economics. Changes in the regional industrial composition Starting in the 1970s the region experienced major employment growth in San Francisco’s financial district and the emergence of Silicon Valley as the global center of high technology. In contrast to many other metropolitan regions for subsequent decades, the Bay Area’s economic sectors developed through very distinct specialized clusters. In the years following the turn of the millennium the region has a more mature economic base with an economic sector composition that is closer to the national average. Professional and business services and information jobs have become the major leading sectors in the regional economy. Over the last decades they have experienced sharp growth but they have also been the most impacted during periods of economic decline. These regional leading sectors have increased the demand for highly educated labor and provided high wage jobs. Educational and health services have displayed steady growth, but a more moderate level than professional services. These sectors have surpassed manufacturing, government administration, and retail employment. Over the next 30 years, educational and health services sectors are expected to continue their rate of growth. Professional and business services are expected to generate more than one third of the total regional growth by 2040. Since the 1980s, these growing sectors have more than compensated the loss in manufacturing and finance jobs. During this period, much of the region’s traditional manufacturing employment has relocated to low cost labor regions in Asia and Latin America. More recently despite steady growth in professional and business service jobs related to emerging technology industries, high tech manufacturing has also relocated out of Silicon Valley to lower cost locations. Changes in technology have also reduced labor requirements and increased productivity for the remaining manufacturing businesses. On the opposite spectrum of the economic sector location patterns, while the region continues to be an important financial center, finance employment jobs have been eliminated or relocated out of the Bay Area. The decline of these two sectors has resulted in a loss of middle-income jobs for the region. Looking forward to 2040, manufacturing and finance are not expected to significantly expand. However, they will remain essential and stable sectors in the regional economy and are expected to retain approximately the same employment size over the next 30 years. The Bay Area is a major international destination for business and leisure travel. Leisure, hospitality and retail are growing employment sectors. In particular, leisure and hospitality employment has grown at a faster pace than retail, following the pattern of professional and business services. Both industry groups are expected to retain a steady growth over the next 30 years. Alternative Land Use Scenarios September 1, 2011 6 9.h Packet Pg. 344 At t a c h m e n t : A t t a c h m e n t H : A l t e r n a t i v e S c e n a r i o s ( 2 2 1 0 : R e s p o n s e t o S B 3 7 5 A l t e r n a t i v e s ) Changes in the regional spatial patterns Over the past decades the Bay Area experienced a decline of employment at its major regional economic centers while suburban employment centers and office parks emerged and grew throughout the region. These spatial patterns were conditioned by the decline of the finance sector in San Francisco, the growth of the high technology sectors in Silicon Valley, the formation of the Tri-Valley business cluster supported by labor from lower housing cost communities in the eastern part of the Bay Area and the central valley, and the strengthening of medium size downtowns such as Walnut Creek, Santa Rosa and Berkeley. The growth of professional services in close proximity to urban amenities, point toward a new wave of growth that could be accommodated at major economic centers and a demand for urban amenities, mixed-uses and higher densities at suburban employment locations. Analysis of employment and demographic trends indicates that the SCS can serve to support these emerging trends by increasing access to transit, affordable housing, and urban amenities at employment centers. The SCS would recognize the economic function of each place in the region and the potential they offer for the growth of selected industry groups, jobs and businesses. This recognition is also informed by the community choices on the function and qualities of their places. Some of the expected trends are described below.  Renewed regional centers Regional centers have reduced their office jobs as a share of the region from 49 percent in 1990 to 41 percent in 2010. Downtown San Francisco and Downtown Oakland also reduced their absolute employment levels. Downtown San Jose had a small increase. In the SCS Scenarios we expect a reversal of this trend. This is based on the rate and scale of growth of professional services urban entertainment, which brings a new economic vitality to the regional centers. Similar to the growth of the financial district in the 1970s, the Bay Area is attracting new businesses and workers that want to locate in close proximity to related firms, services and amenities. The new wave of businesses and young professionals’ demand for building space prioritizes flexibility to adjust spaces to multiple functions and requires less office space per worker relative to the early growth of traditional downtown office space. The growth of health and educational services would also support the growth of regional centers.  Office parks: Office parks have been a dominant building pattern in the two suburban areas that experienced major growth in the Bay Area over the past several decades: Silicon Valley and the Tri-Valley. In the SCS Alternative Scenarios office park employment will continue to grow but at a slower pace than in recent decades. The emerging private shuttle services run by businesses, particularly in San Mateo and Santa Clara County are expected to grow and improve transit access while lessening, but not fully mitigating increased freeway traffic congestion related to employment growth. Growth in office park employment is limited in part by the capacity of the region’s congested freeway network. Office parks in the Tri-Valley area would house more workers within their own jurisdictions, but will continue to draw from lower cost labor in the Central Valley. Some office parks would be transformed with additional office buildings and a mix of uses including housing. Alternative Land Use Scenarios September 1, 2011 7 9.h Packet Pg. 345 At t a c h m e n t : A t t a c h m e n t H : A l t e r n a t i v e S c e n a r i o s ( 2 2 1 0 : R e s p o n s e t o S B 3 7 5 A l t e r n a t i v e s )  Downtown areas and transit corridors The increasing need and desire for local services in close proximity to residential locations has led to a clustering of services along corridors and in small downtown areas over the past decades. The increasing size of the region’s senior population will likely reinforce this trend over the next decades. The SCS Alternative Scenarios assume an increase in local serving jobs in Priority Development Areas proportional to housing growth in PDAs.  Industrial land The decline of the manufacturing and wholesale employment due to business relocation and changes in technology has resulted in a major contraction of those businesses in industrial areas. In many areas this has not resulted in vacant industrial land, but a different mix of businesses that are necessary to support the local and regional economies. In addition to basic services such as refuse collection or supply distribution, industrial lands are now occupied by a wide range of businesses from food processing to green industry manufacturing, and auto repair to high tech product development drawing employment from many sectors into traditional industrial lands. The SCS Alternative Scenarios assume limited but stable job growth in manufacturing, given retention of industrial land at core locations and an expanding array of production, distribution and repair activities.  Agricultural land The Bay Area has a wealth of agricultural land unparalleled among our nation’s largest metropolitan regions that provides high quality agricultural products including diverse high- value crop production and its world-renowned wine industry. For the most part the region’s remaining farmland is policy-protected from urban expansion. All of the counties outside of San Francisco have a growth management framework (e.g. urban growth boundaries, agricultural zoning, etc.) in place. The SCS Alternative Scenarios assume the retention of most agricultural land with some increase in productivity yielding modest employment growth. Core Concentration, Focused Growth, and Outer Bay Area Growth Scenarios Given the expected levels of regional growth, changes in the economic sector composition, and changes in the spatial patterns of employment location, the three alternative scenarios provide alternative land use development patterns based on various degrees of employment concentration. All scenarios assume nearly one million additional jobs in the region through 2040. They also assume the same growth rates by industry. The three scenarios assume slowing or reversal in the declining share of employment in Priority Development Areas experienced in previous decades. The three scenarios also assume some growth in local serving jobs proportional to the housing growth by PDAs. The three employment scenarios are CONCEPTUAL scenarios to understand and assess distinct land use patterns in relation to housing and transit. Starting from the current distribution of employment and growth trends over previous decades, the scenarios add three factors: the concentration of jobs in PDAs, the concentration of knowledge-based jobs (Information, Finance, Professional & Business Services), and the link of local serving jobs (primarily Retail, some Health, Educational, and Recreational Services) to housing growth. They do not yet include input from local jurisdictions or analysis of land constraints, industrial cluster support, or Alternative Land Use Scenarios September 1, 2011 8 9.h Packet Pg. 346 At t a c h m e n t : A t t a c h m e n t H : A l t e r n a t i v e S c e n a r i o s ( 2 2 1 0 : R e s p o n s e t o S B 3 7 5 A l t e r n a t i v e s ) public and private investments. This input and analysis will be essential to develop the employment distribution for the Preferred Scenario. Overview of job growth by scenario Core Concentration Focused Growth Outer Bay Area Land use trends Higher growth in major employment centers close to transit Higher concentration of employment in PDAs than 2010 Continued trends of more growth in Outer Bay Area and more growth outside of PDAs PDA job growth Small increase of PDAs share of regional jobs over Focused Growth Scenario Small increase of PDAs share of regional jobs over 2010 Decline of PDAs share of regional jobs over 2010 Knowledge- based jobs Additional 15% in inner bay PDAs Additional 10% across all PDAs Decline in share of PDAs following previous trends Local serving jobs Follows housing growth, more jobs in inner bay area PDAs Follows housing growth, distributed across all PDAs and jurisdictions Follows housing growth, more jobs in outer bay area Core Concentration Growth Scenario: This scenario assumes that the concentration of employment in PDAs across most economic sectors will remain as in 2010. Knowledge-based jobs will be more concentrated in regional centers, city centers, urban neighborhoods, and mixed-use neighborhoods in the Inner Bay Area places where jobs are concentrated today. Local serving jobs will follow housing in PDAs, which will be more concentrated in the Inner Bay Area. Focused Growth Scenario: This scenario assumes that the concentration of employment in PDAs across most economic sectors will remain as in 2010. Knowledge-based and local serving jobs will be more concentrated in PDAs by 2040 than in 2010. Outer Bay Area Growth Scenario: This scenario follows the growth trends from the previous 30 years but with lower rates of job dispersal. Regional Centers and large City Centers grow but slower than other Place Types, while Suburban Centers and office parks outside of PDAs continue to grow at higher rates than the regional average. Employment by economic sector The employment growth by economic sector is based on the forecast prepared by Caltrans and adjusted to the total regional growth established by ABAG and MTC. While the same level of growth by industry is assumed in the three scenarios, the distribution by city and PDA varies across scenarios. Alternative Land Use Scenarios September 1, 2011 9 9.h Packet Pg. 347 At t a c h m e n t : A t t a c h m e n t H : A l t e r n a t i v e S c e n a r i o s ( 2 2 1 0 : R e s p o n s e t o S B 3 7 5 A l t e r n a t i v e s ) Employment growth by economic sector 2010 - 2040 Jobs 2010 Jobs 2040 Job growth 2010 – 2040 Annual Growth Rate 2010- 2040 Total Jobs 3,270,906 4,265,736 994,831 1.01% Agriculture and Natural Resources 22,142 22,286 144 0.02% Manufacturing Wholesale and Transportation 543,974 659,580 115,606 0.71% Retail 325,168 402,036 76,868 0.79% Professional and Business Services / Finance 774,502 1,153,879 379,378 1.63% Health, Education, Recreation Services 853,755 1,106,095 252,340 0.99% Other: Information, Government, Construction 751,365 921,860 170,495 0.76% Distribution of Employment The employment distribution for 2010 is based on NETS data (See appenedix for description of data sources). This data provides employment information by location of a business establishment. This is a high level of geographical resolution, which allows us to capture the employment by PDA more accurately than previous zip code data. In 2010, it was estimated that PDAs encompassed an estimated 1,586,000 or 48 percent of jobs regionwide. This is 5 percent lower than the PDA share in 1990 according to ABAG analysis of the NETS data. The three scenarios assume different shares of jobs in PDAs as indicated below. Following previous trends but at a slower pace, the Outer Bay Area Scenario assumes a lower PDA share of total jobs in 2040 than in 2010. The Focused Growth and Core Concentration Growth Scenarios both assume a higher concentration of jobs in PDAs in 2040 than in 2010. Alternative Land Use Scenarios September 1, 2011 10 9.h Packet Pg. 348 At t a c h m e n t : A t t a c h m e n t H : A l t e r n a t i v e S c e n a r i o s ( 2 2 1 0 : R e s p o n s e t o S B 3 7 5 A l t e r n a t i v e s ) Job Share in PDAs by Scenario: Past and Future Trends 1990 – 2010 – 2040 Core Concentration Focused Growth Outer Bay Area PDA Job Share 1990 53% 53% 53% PDA Job Share 2010 48% 48% 48% PDA Job Share 2040 51% 50% 48% PDA Job Growth Share 2010-2040 58 % 55 % 47 % Within PDAs, the distribution of jobs varies according to sector and Place Type. The Outer Bay Area Scenario retains a similar distribution in 2010 and 2040 except for the local serving jobs, which shifts according to housing growth. The Focused Growth Scenario increases knowledge- based jobs across all PDAs. The Core Concentration Growth Scenario increases knowledge- based jobs in regional centers, city centers, urban neighborhoods, and mixed-use corridors in the inner Bay Area. Share of Regional Job Growth in PDA by Industry Group by Scenario 2010 – 2040 Core Concentration Focused Growth Outer Bay Area Total region 58% 55% 47% Agriculture and Natural Resources 27% 27% 27% Manufacturing Wholesale and Transportation 43% 43% 39% Retail 61% 58% 55% Professional services/Finance 65% 60% 45% Health, Education, Recreation Services 48% 48% 47% Other: Information, Government, Construction 67% 63% 51% Alternative Land Use Scenarios September 1, 2011 11 9.h Packet Pg. 349 At t a c h m e n t : A t t a c h m e n t H : A l t e r n a t i v e S c e n a r i o s ( 2 2 1 0 : R e s p o n s e t o S B 3 7 5 A l t e r n a t i v e s ) Share of Regional Job Growth in PDA by Place Type by Scenario 2010 – 2040 Core Concentration Focused Growth Outer Bay Area Total PDA/GOA Jobs 58.3% 55.3% 46.9% Inner Bay Regional Center 21.4% 19.0% 12.5% City Center 4.4% 3.9% 4.0% Suburban Center 1.0% 1.1% 1.0% Transit Town Center 2.6% 2.7% 2.9% Urban Neighborhood 5.1% 4.6% 3.5% Transit Neighborhood 2.3% 2.5% 1.8% Mixed-Use Corridor 13.3% 12.1% 11.1% Employment Center 1.4% 1.5% 1.2% Outer Bay Regional Center 0.0% 0.0% 0.0% City Center 0.7% 0.8% 0.8% Suburban Center 2.0% 2.2% 2.5% Transit Town Center 1.7% 1.9% 1.8% Transit Neighborhood 0.8% 0.9% 1.3% Mixed-Use Corridor 1.4% 1.6% 1.9% Employment Center 0.2% 0.2% 0.3% Rural Town Center 0.1% 0.2% 0.1% Rural Mixed-Use Corridor 0.0% 0.0% 0.0% Alternative Land Use Scenarios September 1, 2011 12 9.h Packet Pg. 350 At t a c h m e n t : A t t a c h m e n t H : A l t e r n a t i v e S c e n a r i o s ( 2 2 1 0 : R e s p o n s e t o S B 3 7 5 A l t e r n a t i v e s ) Share of Regional Professional and Business Services / Finance Job Growth in PDA by Place Type by Scenario 2010 – 2040 Core Concentration Focused Growth Outer Bay Area Total PDA/GOA Jobs 65.1% 60.0% 45.4% Inner Bay Regional Center 29.5% 25.3% 12.8% City Center 4.7% 4.0% 5.1% Suburban Center 0.7% 0.9% 1.4% Transit Town Center 2.0% 2.4% 2.9% Urban Neighborhood 4.7% 4.0% 2.8% Transit Neighborhood 1.9% 2.3% 0.7% Mixed-Use Corridor 14.3% 12.3% 11.5% Employment Center 1.2% 1.5% 0.9% Outer Bay Regional Center 0.0% 0.0% 0.0% City Center 0.7% 0.8% 0.9% Suburban Center 1.9% 2.2% 1.9% Transit Town Center 1.5% 1.8% 1.1% Transit Neighborhood 0.6% 0.7% 1.4% Mixed-Use Corridor 1.1% 1.4% 1.5% Employment Center 0.2% 0.3% 0.4% Rural Town Center 0.1% 0.2% 0.2% Rural Mixed-Use Corridor 0.0% 0.0% 0.0% Alternative Land Use Scenarios September 1, 2011 13 9.h Packet Pg. 351 At t a c h m e n t : A t t a c h m e n t H : A l t e r n a t i v e S c e n a r i o s ( 2 2 1 0 : R e s p o n s e t o S B 3 7 5 A l t e r n a t i v e s ) Share of Regional Retail Job Growth in PDA by Place Type by Scenario 2010 – 2040 Core Concentration Focused Growth Outer Bay Area Total PDA/GOA Jobs 61.3% 57.9% 55.0% Inner Bay Regional Center 10.2% 9.2% 9.5% City Center 4.7% 4.4% 4.2% Suburban Center 3.2% 3.0% 3.2% Transit Town Center 5.3% 4.8% 3.6% Urban Neighborhood 5.1% 4.4% 3.6% Transit Neighborhood 4.5% 4.0% 3.3% Mixed-Use Corridor 16.2% 14.7% 12.1% Employment Center 0.6% 0.6% 0.6% Outer Bay Regional Center 0.2% 0.2% 0.2% City Center 0.9% 1.2% 1.2% Suburban Center 4.1% 4.3% 6.3% Transit Town Center 2.2% 2.2% 1.9% Transit Neighborhood 1.7% 1.9% 2.0% Mixed-Use Corridor 2.3% 2.7% 2.8% Employment Center 0.1% 0.1% 0.1% Rural Town Center 0.1% 0.1% 0.1% Rural Mixed-Use Corridor 0.0% 0.0% 0.1% Job Growth by County and PDA by Scenario 2010 – 2040 PDA Jobs County Jobs Core Concen- tration Focused Growth Outer Bay Area Core Concen- tration Focused Growth Outer Bay Area Alameda 106,300 104,000 93,500 203,800 203,700 216,300 Contra Costa 38,000 41,300 46,500 96,400 104,900 126,300 Marin 6,000 6,800 7,900 31,700 34,600 35,900 Napa 300 300 300 14,600 15,600 22,000 San Francisco 206,500 178,000 127,000 206,900 179,100 127,000 San Mateo 41,900 40,300 35,200 99,600 104,000 112,700 Santa Clara 159,300 154,000 129,300 254,200 257,400 247,400 Solano 6,600 7,300 7,500 42,000 46,200 50,200 Sonoma 15,600 17,600 19,700 45,500 49,200 57,100 TOTAL 580,400 549,700 467,000 994,800 994,800 994,800 Alternative Land Use Scenarios September 1, 2011 14 9.h Packet Pg. 352 At t a c h m e n t : A t t a c h m e n t H : A l t e r n a t i v e S c e n a r i o s ( 2 2 1 0 : R e s p o n s e t o S B 3 7 5 A l t e r n a t i v e s ) 4. REGIONAL HOUSING DISTRIBUTION The three scenarios, Core Concentration, Focused Growth and Outer Bay Area Growth, address the distribution of 771,000 households by 2040 through alternative land use patterns. Each of these scenarios relates to the employment growth and the three distribution patterns described in the previous section. Levels of household growth are specifically linked to the concentration of knowledge–based and local serving jobs. The three scenarios support healthy economic growth by 2040. Shifting from the dominant development trend of single-family homes in greenfield areas over the last three decades, the three scenarios assume a higher concentration of households within multi-family housing at transit nodes and corridors with appropriate services and stores. Most of the growth is expected to be accommodated through 3 to 6 story wood-frame buildings, with the exception of major downtown areas where steel-frame buildings of more than 10 stories would be constructed. The scenarios vary in the overall share of households in PDAs as well as by Place Type and city. The distribution of household growth is based on local input and regional criteria established through the densities and scale of Place Types, transit service, employment, and net low-income commuters. In addition, in the three scenarios each city is expected to reach a minimum household growth equivalent to 40 percent of its household formation. This last factor comes from the Regional Housing Need Allocation methodology for 2014-2022, which identifies the housing needs by city to be addressed through local plans and zoning controls. Local plans and their proposed housing growth are an important component in the distribution of household growth. Local input on household growth from each jurisdiction was utilized in at least one of the three scenarios. The PDAs and the growth factors directly addressed equity in the SCS. This final approach to the alternative scenarios is the result of in-depth interactions with equity groups. PDAs cover a wide range of neighborhoods with diverse income levels, infrastructure needs, and transit service. Regional staff worked closely with local jurisdictions to identify neighborhoods appropriate for PDA designation that need public investment for current and future populations as well as areas that are ready to accommodate additional housing. Two growth factors are directly linked to equity. The low-income net in-commuters’ factor recognizes the potential of cities with high employment and limited affordable housing to accommodate future household growth. Similarly, the minimum growth floor of 40 percent of jurisdictions’ household formation level allows cities with good services to accommodate a portion of their own population growth. In order to appropriately address equity in the SCS, ABAG and MTC will conduct a thorough assessment of regional income levels and distribution. This report only includes some minor revisions to the income distribution factors used in Projections 2009. Current regional economic changes in the type of businesses, jobs, and labor indicate some regional income polarization. This task requires detailed attention and will be a priority over the next several weeks in preparation for the draft Preferred Scenario. Alternative Land Use Scenarios September 1, 2011 15 9.h Packet Pg. 353 At t a c h m e n t : A t t a c h m e n t H : A l t e r n a t i v e S c e n a r i o s ( 2 2 1 0 : R e s p o n s e t o S B 3 7 5 A l t e r n a t i v e s ) Overview of household growth by scenario Core Concentration Focused Growth Outer Bay Area Land use trends More growth in PDAs, particularly in Inner Bay Area’s major employment centers and transit nodes Growth throughout regional transit corridors and job centers Less growth in PDAs, more growth in Outer Bay Area along transit corridors. Growth factors Transit service Employment Net low-income commuters Minimum level of growth 40% of the expected household formation rate for each jurisdiction PDA household growth Based on Focused Growth Scenario, increase household growth by 20% in Inner Bay Area, plus or minus housing value factor Growth within PDAs based on minimum level of growth by Place Type. Based on Focused Growth Scenario, increase household growth by 5 to 30% in Outer Bay Area depending on job growth Core Concentration Growth Scenario: This scenario assumes a concentration of households in PDAs and jurisdictions in the Inner Bay Area to take advantage of the core transit network. Focused Growth Scenario: This scenario assumes focused household growth in PDAs throughout the region’s transit corridors. Outer Bay Area Growth Scenario: Closer to recent development trends than the other two scenarios, this scenario assumes more growth of households in the Outer Bay Area in relation to the employment growth by jurisdiction. The three scenarios vary in their share of PDA household growth from 67 to 79 percent of all regional growth. PDAs currently account for 24 percent of all households in the region. The PDA share of households increases to between 34 and 37 percent of all households in the three scenarios. Alternative Land Use Scenarios September 1, 2011 16 9.h Packet Pg. 354 At t a c h m e n t : A t t a c h m e n t H : A l t e r n a t i v e S c e n a r i o s ( 2 2 1 0 : R e s p o n s e t o S B 3 7 5 A l t e r n a t i v e s ) Households in PDAs by Scenario: Current and Future Trends 2010 – 2040 Core Concentration Focused Growth Outer Bay Area PDA households 2010 634,730 634,730 634,730 PDA households 2040 1,239,900 1,187,740 1,154,970 PDA households growth 2010-2040 605,170 553,010 520,270 PDA share of total households 2040 37% 35% 34% PDA household growth share 2010-2040 79% 72% 67% In the Core Concentration Growth Scenario, Inner Bay Area jurisdictions for the most part experience a greater concentration of growth within their PDAs than in the Focused Growth Scenario, whereas in the Outer Bay Area Scenario growth is less concentrated in the PDAs. In each of the scenarios, the 40 percent housing growth threshold has a considerable affect on some of the smaller residential communities throughout the region. The concentration of households varies by Place Type. In each scenario, the greatest share of regional growth is within the Mixed-Use Corridors, followed by Regional Centers. The Core Concentration Growth Scenario brings a higher concentration of households at Regional Centers, City Centers, Urban Neighborhoods, and Mixed-Use Corridors. This includes downtown areas in Oakland, San Francisco and San Jose and the San Pablo, Mission, and El Camino transit corridors. The Transit Town Centers and Transit Neighborhoods also play an important role in the Core Concentration Growth Scenario, as many of the PDAs along the core transit network in the Inner Bay Area have these Place Types. In the Focused Growth and Outer Bay Area scenarios, growth is more evenly distributed across all Place Types. The Outer Bay Area Growth Scenario shows higher growth in suburban centers such as the Dublin, Livermore, and San Ramon PDAs Alternative Land Use Scenarios September 1, 2011 17 9.h Packet Pg. 355 At t a c h m e n t : A t t a c h m e n t H : A l t e r n a t i v e S c e n a r i o s ( 2 2 1 0 : R e s p o n s e t o S B 3 7 5 A l t e r n a t i v e s ) Share of Regional Household Growth in PDA by Place Type by Scenario 2010 – 2040 Core Concentration Focused Growth Outer Bay Area Total PDA/GOA Share of Households 37% 35% 34% Regional Center 12.6% 11.2% 10.3% City Center 8.4% 8.3% 7.7% Suburban Center 8.3% 8.3% 8.5% Urban Neighborhood 7.3% 6.1% 5.1% Transit Town Center 11.2% 9.9% 9.8% Transit Neighborhood 10.2% 9.3% 9.2% Mixed-Use Corridor 20.2% 18.3% 16.6% Employment Center 0.1% 0.0% 0.1% Rural Town Center 0.1% 0.1% 0.1% Rural Mixed-Use Corridor 0.2% 0.2% 0.2% The distribution of growth by county varies according to their transit access and the relationship of the county to the Inner and Outer Bay Area. Alameda, San Francisco, San Mateo, and Santa Clara, counties have high levels of existing transit service and are primarily within the Inner Bay Area. As a result these counties have more growth in the Core Concentration Growth Scenario. North Bay Counties—Marin, Napa, Solano and Sonoma— and much of Contra Costa County are identified as part of the Outer Bay Area and many of their cities have limited transit access. Thus they display higher growth in the Outer Bay Area Growth Scenario. Household Growth by County and PDA by Scenario 2010 – 2040 PDA Households County Households Core Concen- tration Focused Growth Outer Bay Area Core Concen- tration Focused Growth Outer Bay Area Alameda 132,610 121,050 111,740 167,750 172,990 164,300 Contra Costa 66,790 67,510 72,650 96,880 110,930 136,550 Marin 4,100 6,380 6,690 10,100 11,260 13,250 Napa 1,660 1,660 1,740 5,520 6,290 7,170 San Francisco 105,110 85,940 71,900 110,640 90,470 76,430 San Mateo 54,820 44,130 40,810 72,110 68,570 61,700 Santa Clara 205,960 182,220 167,280 245,990 242,060 227,120 Solano 15,440 16,390 17,230 28,740 30,860 38,690 Sonoma 18,680 27,730 30,230 33,080 37,380 45,620 TOTAL 605,170 553,010 520,270 770,810 770,810 770,830 Alternative Land Use Scenarios September 1, 2011 18 9.h Packet Pg. 356 At t a c h m e n t : A t t a c h m e n t H : A l t e r n a t i v e S c e n a r i o s ( 2 2 1 0 : R e s p o n s e t o S B 3 7 5 A l t e r n a t i v e s ) 5. NEXT STEPS The three land use scenarios presented in this report provide the preliminary analysis for the development of the SCS Preferred Scenario. The following additional tasks are pending to inform the Preferred Scenario and will be developed this fall 2011. 1. Land use analysis o Further analysis of regional employment and population growth o Further analysis of income forecast and distribution 2. Policy Development to support the Preferred Scenario o Housing production o Infill development investments o Transit access o Complete Communities 3. Transportation network analysis 4. Performance targets results for the three Alternative Land Use Scenarios 5. Gather input from local jurisdictions and stakeholders to inform development of the Preferred Scenario Alternative Land Use Scenarios September 1, 2011 19 9.h Packet Pg. 357 At t a c h m e n t : A t t a c h m e n t H : A l t e r n a t i v e S c e n a r i o s ( 2 2 1 0 : R e s p o n s e t o S B 3 7 5 A l t e r n a t i v e s ) APPENDIX I 1. EMPLOYMENT DISTRIBUTION DATA AND METHODOLOGY Data Sources California Department of Transportation Sector Forecast (Caltrans) Caltrans uses an econometric model to project employment by industry out to 2040 for each county in California. The agency’s model uses variables and assumptions taken from the UCLA Anderson Forecast and historic employment data from EDD. The most recent projections were released in March 2010. In comparison, the most recent EDD and BLS projections available date from 2008 and 2009. A complete description of the 2010 Caltrans projection methodology and data out to 2035 (2040 data was provided upon request) is available at: http://www.dot.ca.gov/hq/tpp/offices/ote/socio_economic.html. Walls & Associates / Dun and Bradstreet (NETS) Walls & Associates converts Dun and Bradstreet archival establishment data into a time-series database of establishment information called the National Establishment Times-Series (NETS) Database. ABAG has analyzed the NETS data to provide information on the spatial distribution of jobs at the jurisdiction and PDA level by employment sector, as well as changes in spatial distribution at these geographies from 1989-2009. More information on the NETS data is available at: http://www.youreconomy.org/nets/?region=Walls Methodology 2010 Employment Current employment is based on total jobs established for the Current Regional Plans and Initial Vision Scenario and the Caltrans breakdown by employment sector for the region for 2010. NETS 2009 data is used to distribute jobs by geography for each sector. Scenario Employment Distribution The Caltrans forecast – scaled to match the regional constrained employment total established for the three alternative scenarios – was used for the regional growth by employment sector for all three scenarios. Each scenario follows two basic steps for then distributing employment growth by geography for each sector. 1. As a baseline, Focused Growth and Core Concnetration Growth Scenarios maintain 2010 employment distribution by Place Type and county into the future and Outer Bay Area Growth Scenarios slows down the 1989-2009 trends in distribution of jobs by Place Type and county. 2. A portion of local-serving jobs and knowledge-based jobs are then distributed to follow the investments and growth pattern for each scenario. Alternative Land Use Scenarios September 1, 2011 20 9.h Packet Pg. 358 At t a c h m e n t : A t t a c h m e n t H : A l t e r n a t i v e S c e n a r i o s ( 2 2 1 0 : R e s p o n s e t o S B 3 7 5 A l t e r n a t i v e s ) Core Concentration Growth Scenario The Core Concentration Growth Scenario starts with a baseline of maintaining 2010 employment distribution by sector by geography. 50% of new Retail jobs and 10% of new Health, Educational, and Recreational Services jobs were then allocated by PDA and by jurisdiction in conjunction with the housing growth distribution, reflecting a share of local-serving jobs that follows the housing growth in the Core Concentration scenario. An additional 15% of new Information, Professional & Business Services, and Government jobs were located in Inner Bay PDA locations that were Regional Center, Mixed-Use Corridor, City Center, and Urban Neighborhood Place Types. This reflects a further concentration in these sectors into the transit- served locations where they are already concentrated, corresponding to a stronger agglomeration of the knowledge-based and other vertical-office-user jobs into these core areas. These additional office jobs were also allocated to the corresponding jurisdiction. Focused Growth Scenario The Focused Growth Scenario also starts with a baseline of maintaining 2010 employment distribution by sector by geography. 50% of new Retail jobs and 10% of new Health, Educational, and Recreational Services jobs were again allocated by PDA and by jurisdiction in conjunction with the housing growth distribution in the Focused Growth Scenario. The Focused Growth Scenario also includes an additional 10% of new Information, Professional & Business Services, and Government jobs locating in PDA locations, reflecting a further consolidation of office uses in PDAs. These additional office jobs were distributed to PDAs throughout the region in proportion to their existing share of these sectors. Outer Bay Area Growth Scenario The Outer Bay Area Growth Scenario starts with a baseline that slows the 1989-2009 trend in job distribution by PDA Place Type (for the PDA distribution) and by County (for the jurisdiction distribution). In general this exhibits higher growth in the outer bay counties and slower growth in PDAs overall and a shift in share from inner bay PDAs to outer bay PDAs. As in the other two scenarios, 50% of new Retail jobs and 10% of new Health, Education, and Recreation jobs were allocated by PDA and by jurisdiction to match the housing growth distribution in the Outer Bay Area Growth Scenario. In this scenario, no additional office jobs were added to PDA locations. However, for the counties with both inner and outer bay designations (Alameda, Contra Costa, and Santa Clara counties), a share of Professional & Business Services jobs were reallocated from the inner bay to outer bay jurisdictions to reflect the trend in greater dispersal of jobs within these counties. Alternative Land Use Scenarios September 1, 2011 21 9.h Packet Pg. 359 At t a c h m e n t : A t t a c h m e n t H : A l t e r n a t i v e S c e n a r i o s ( 2 2 1 0 : R e s p o n s e t o S B 3 7 5 A l t e r n a t i v e s ) 2. HOUSING DISTRIBUTION METHODOLOGY AND DATA Data Sources U. S. Census Bureau – 2010 Census U. S. Census Bureau – Longitudinal Employment and Household Dynamics (LEHD) MTC Transit Coverage and Frequency by City Methodology Scenario Housing Distribution Each scenario was developed based on the three key components. 1. Growth in Priority Development Areas: PDAs define a sustainable and equitable development framework for the SCS. Local and regional efforts support the development of PDAs as complete communities with the appropriate level of services and urban amenities for the current and future residents and workers. The minimum level of growth for each Place Type and local input were used as a basis for the level of growth in the PDAs. 2. Growth by local jurisdiction: At the city level, jurisdictions’ housing levels were based on Projections 2009, with adjustments based on the 2010 Census and local feedback. Household growth by city was determined based on job concentration, transit service, and existing population and jobs. In addition, a factor based on low-wage commuters was applied to the distribution of housing in order to improve access to employment centers served by transit for low-wage workers. 3. Growth pattern informed by the Regional Housing Need Allocation (RHNA): The scenarios utilized the proposed RHNA approach1 for setting a minimum level of growth in the jurisdictions to ensure each jurisdiction is doing a reasonable amount of fair share housing to meet the region’s housing need. A minimum housing growth threshold for each jurisdiction was set at 40 percent of its household formation growth. The scenarios assume that RHNA, as a short term housing strategy through local general plans, will shape the long term development pattern through a minimum housing floor (jurisdictions would accommodate at least 40 percent of their future household formation). The income distribution component of the proposed RHNA methodology, which is intended to address housing affordability (whereby jurisdictions would move towards the regional distribution of income groups), was not applied for the scenarios. Analysis of regional income levels and distribution is pending. 1 The Regional Housing Needs Allocation (RHNA) is a state mandated process for determining how many housing units, including affordable units, each community must plan to accommodate. See http://www.onebayarea.org/plan_bay_area/housing.htm for more information on RHNA. Alternative Land Use Scenarios September 1, 2011 22 9.h Packet Pg. 360 At t a c h m e n t : A t t a c h m e n t H : A l t e r n a t i v e S c e n a r i o s ( 2 2 1 0 : R e s p o n s e t o S B 3 7 5 A l t e r n a t i v e s ) Transit and Employment Criteria for Housing Distribution TRANSIT TYPE EXISTING JOB CENTER (10,000+ JOBS) FOCUSED GROWTH 2035 HOUSING BART, Muni Metro, VTA Light Rail Yes Increase to low-range Place Type density plus 25% BART, Muni Metro, VTA Light Rail No Increase to low-range Place Type density plus 20% Caltrain Yes Increase to low-range Place Type density plus 25% Caltrain No Increase to low-range Place Type density plus 20% ACE, Capitol Corridor, SMART, eBART, Dumbarton Rail Yes Increase to low-range Place Type density plus 10% ACE, Capitol Corridor, SMART, eBART, Dumbarton Rail No Increase to low-range Place Type density plus 5% BRT Corridors: El Camino Real, San Pablo Avenue, E.14th Street/Mission Bvd Yes Increase to low-range Place Type density plus 5% BRT Corridors: El Camino Real, San Pablo Avenue, E.14th Street/Mission Bvd No Increase to low-range Place Type density PDAs not on major corridors Yes Increase to low-range Place Type density plus 10% PDAs not on major corridors No Increase to min Place Type density minus 10% Focused Growth Scenario For the Focused Growth Scenario, the level of growth in a PDA was taken as the higher of: a. the planned level of growth in the PDA, based on jurisdictional feedback on the Initial Vision Scenario, and b. the minimum level of growth based on the PDA's Place Type. The minimum level of growth for a PDA was calculated by multiplying the minimum density for the PDA's Place Type by the redevelopable acreage in the PDA, which was assumed to be 10% of net acreage. The minimum density for each PDA was scaled up or down based on transit tiers and whether the PDA is an existing job center containing 10,000+ jobs. The table below shows the distribution rules for each transit tier/job center combination. If the planned level of growth Alternative Land Use Scenarios September 1, 2011 23 9.h Packet Pg. 361 At t a c h m e n t : A t t a c h m e n t H : A l t e r n a t i v e S c e n a r i o s ( 2 2 1 0 : R e s p o n s e t o S B 3 7 5 A l t e r n a t i v e s ) in a PDA was lower than the minimum calculated for its Place Type, the growth for that PDA was increased to the calculated minimum. At the city level, the share of growth within each jurisdictions’ PDAs was capped at 95 percent of the jurisdiction’s total growth. Core Concentration Growth Scenario For the Core Concentration Growth Scenario, growth was shifted to PDAs in the Inner Bay Area. First, housing growth was increased by 20 percent above Focused Growth Scenario levels for these PDAs. Next, housing levels were adjusted up or down based on a housing value factor for each jurisdiction. The housing value adjustment ranged from +15 to -15 percent, based on median home value. ABAG reduced growth in Outer Bay Area PDAs to the desired levels stated by local jurisdictions in their Initial Vision Scenario feedback. At the city level, housing growth within the Outer Bay Area jurisdictions was reduced to account for the re-distribution of housing to Inner Bay Area PDAs. Housing levels in Inner Bay Area jurisdictions were kept at their Focused Growth Scenario levels or were increased slightly to account for an increase in their PDAs’ housing levels, with the share of growth within each jurisdictions’ PDAs capped at 95 percent of the jurisdiction’s total growth. Outer Bay Area Growth Scenario To create the Outer Bay Area Growth Scenario, ABAG first estimated the potential job increase to each jurisdiction. ABAG continued the region’s trend in recent decades of jobs shifting from inner to outer counties and from PDAs to outer areas. Within Alameda, Santa Clara and Contra Costa Counties, a share of professional and business growth was also shifted from the Inner Bay Area to Outer Bay Area jurisdictions. ABAG increased housing growth in those Outer Bay Area jurisdictions that saw significant job growth. Outer Bay Area jurisdictions that had more than 3,000 new jobs received a 30% increase in housing growth in their PDAs over the Focused Growth Scenario, those that grew by 1,000 to 3,000 jobs received a 10% increase in their PDAs, and those that grew by less than 1,000 jobs received a 5% increase. ABAG reduced growth in Inner Bay Area PDAs to the desired levels stated by local jurisdictions in their Initial Vision Scenario feedback. However, since the City and County of San Francisco did not request a reduction from the Initial Vision Scenario, ABAG reduced each San Francisco PDA's housing growth by 20%. At the city level, Inner Bay Area jurisdictions’ housing units were reduced to desired levels. These housing units were re-distributed to the Outer Bay Area jurisdictions based on each jurisdiction’s share of regional growth. Outer Bay Area jurisdiction growth levels may also have increased to account for an increase in units within their PDAs. The share of jurisdictional growth in PDAs within the Outer Bay Area jurisdictions was capped at 85 percent. Alternative Land Use Scenarios September 1, 2011 24 9.h Packet Pg. 362 At t a c h m e n t : A t t a c h m e n t H : A l t e r n a t i v e S c e n a r i o s ( 2 2 1 0 : R e s p o n s e t o S B 3 7 5 A l t e r n a t i v e s ) Alternative Land Use Scenarios September 1, 2011 25 Transportation Assumptions The following transportation network assumptions, based in part on local jurisdictional feedback on the Initial Vision Scenario, were used to develop the three scenarios: Core Concentration Focused Growth Outer Bay Area Bus service  Increased frequency and capacity within Inner Bay and along main corridors  Bus Rapid Transit service on El Camino Real and E.14th Street/ Mission Blvd.  Increased frequency and capacity within Inner Bay and along main corridors  Bus Rapid Transit service on El Camino Real, San Pablo Ave, and E.14th Street/ Mission Blvd.  Increased frequency and capacity along main corridors and improved local bus service. Rail  Increased frequency and capacity along core network  Expansion of commuter rail systems in Inner Bay  Increased frequency and capacity along core network  Expansion of commuter rail systems  Expansion of commuter rail systems in Outer Bay Commute patterns  Increase transit trips within and between West Bay and East Bay.  Reduce number of auto trips  Increase transit trips within and between West Bay and East Bay.  Reduce number of auto trips  Reduce length of auto trips 9.h Packet Pg. 363 At t a c h m e n t : A t t a c h m e n t H : A l t e r n a t i v e S c e n a r i o s ( 2 2 1 0 : R e s p o n s e t o S B 3 7 5 A l t e r n a t i v e s ) APPENDIX II: TABLES  Employment Growth by PDA and Jurisdiction  Household Growth by PDA and Jurisdiction 26 9.h Packet Pg. 364 At t a c h m e n t : A t t a c h m e n t H : A l t e r n a t i v e S c e n a r i o s ( 2 2 1 0 : R e s p o n s e t o S B 3 7 5 A l t e r n a t i v e s ) Employment Growth by PDA and Jurisdiction KEY Jurisdiction (Bold Italic) Priority Development Area Growth Opportunity Area (italics) Alameda County 2010 Core-Constrained Focused Outer Bay Area Jursidiction or Area Name Place Type Total Jobs 2010-2040 Job Growth 2010-2040 Job Growth 2010-2040 Job Growth Alameda 26,480 7,570 8,220 7,870 Naval Air Station Transit Town Center 1,310 770 770 830 Northern Waterfront Transit Neighborhood 1,290 460 470 260 Albany 5,070 1,410 1,350 1,000 San Pablo Avenue & Solano Avenue Mixed-Use Corridor 2,880 920 830 560 Berkeley 73,780 22,300 22,100 21,430 Adeline Street Mixed-Use Corridor 940 310 280 250 Downtown City Center 14,220 6,750 5,970 6,240 San Pablo Avenue Mixed-Use Corridor 2,430 730 690 670 South Shattuck Mixed-Use Corridor 1,000 280 250 160 Telegraph Avenue Mixed-Use Corridor 1,700 570 530 500 University Avenue Mixed-Use Corridor 1,680 520 480 450 Dublin 17,490 4,950 5,520 9,890 Downtown Specific Plan Area Suburban Center 4,620 1,030 1,130 1,400 Town Center Suburban Center 320 220 220 270 Transit Center Suburban Center 0 160 170 200 Emeryville 16,350 6,010 5,660 5,290 Mixed-Use Core City Center 11,490 4,630 4,190 4,650 Fremont 89,280 26,360 26,320 27,770 Centerville Transit Neighborhood 2,980 1,140 1,230 670 City Center City Center 16,300 7,070 6,330 6,630 Irvington District Transit Town Center 2,670 890 930 1,020 Ardenwood Business Park Employment Center 1,970 610 680 530 Fremont Boulevard & Warm Springs Boulevard Corridor Mixed-Use Corridor 9,710 3,350 3,050 2,910 Fremont Boulevard Decoto Road Crossing Mixed-Use Corridor 270 90 90 80 South Fremont/Warm Springs Suburban Center 7,940 1,990 2,060 1,940 Hayward 63,960 16,050 16,650 17,440 Downtown City Center 6,200 1,950 1,790 1,820 South Hayward BART Mixed-Use Corridor 330 140 140 120 South Hayward BART Urban Neighborhood 480 320 300 280 The Cannery Transit Neighborhood 1,190 360 400 320 Carlos Bee Quarry Mixed-Use Corridor 0404040 Mission Corridor Mixed-Use Corridor 1,450 470 440 410 Livermore 47,200 13,540 15,090 20,130 Downtown Suburban Center 2,870 910 960 1,180 Vasco Road TOD Suburban Center 5,910 1,220 1,410 1,790 Newark 16,820 4,170 4,440 4,420 Dumbarton Transit Oriented Development Transit Town Center 1,200 370 370 380 Old Town Mixed Use Area Transit Neighborhood 180 70 70 50 Cedar Boulevard Transit Transit Neighborhood 170 100 90 70 Civic Center Re-Use Transit Transit Neighborhood 510 150 160 200 Oakland 196,600 64,390 58,930 57,160 Coliseum BART Station Area Transit Town Center 5,450 1,520 1,610 1,680 Downtown & Jack London Square Regional Center 92,180 34,070 35,210 26,080 Eastmont Town Center Urban Neighborhood 3,570 1,270 1,130 790 Fruitvale & Dimond Areas Urban Neighborhood 8,490 2,920 2,690 2,190 MacArthur Transit Village Urban Neighborhood 10,460 3,270 3,110 2,570 Transit Oriented Development Corridors Mixed-Use Corridor 33,650 12,620 11,540 10,960 West Oakland Transit Town Center 7,570 2,370 2,390 2,660 Piedmont 2,100 610 690 330 Pleasanton 52,510 14,580 16,150 21,510 Hacienda Suburban Center 9,870 3,720 4,290 4,400 San Leandro 39,350 10,750 10,800 11,300 Bay Fair BART Transit Village Transit Town Center 1,470 340 360 350 Downtown Transit Oriented Development City Center 7,910 3,220 2,890 2,960 East 14th Street Mixed-Use Corridor 7,500 2,660 2,390 2,300 Union City 19,260 4,650 4,790 4,620 Intermodal Station District City Center 340 160 150 160 Mission Boulevard Mixed-Use Corridor 20 20 20 20 Old Alvarado Mixed-Use Corridor 470 210 190 180 Alameda County Unincorporated 23,480 6,420 6,960 6,170 Castro Valley BART Transit Neighborhood 2,030 530 560 330 East 14th Street and Mission Boulevard Mixed Use Corridor Mixed-Use Corridor 2,390 770 710 670 9/1/2011 27 9.h Packet Pg. 365 At t a c h m e n t : A t t a c h m e n t H : A l t e r n a t i v e S c e n a r i o s ( 2 2 1 0 : R e s p o n s e t o S B 3 7 5 A l t e r n a t i v e s ) Employment Growth by PDA and Jurisdiction Contra Costa County 2010 Core-Constrained Focused Outer Bay Area Jursidiction or Area Name Place Type Total Jobs 2010-2040 Job Growth 2010-2040 Job Growth 2010-2040 Job Growth Antioch 19,910 5,140 5,560 6,900 Hillcrest eBART Station Suburban Center 20 150 170 170 Rivertown Waterfront Transit Town Center 3,910 1,060 1,190 1,200 Brentwood 8,370 2,470 2,750 3,480 Clayton 2,280 610 670 1,000 Concord 50,570 13,890 15,070 18,900 Community Reuse Area Regional Center 170 220 230 300 Community Reuse Area Transit Neighborhood 0 550 600 710 Downtown BART Station Planning Area City Center 6,910 2,160 2,400 2,550 North Concord BART Adjacent Employment Center Employment Center 5,940 1,590 1,770 2,680 West Downtown Planning Area Mixed-Use Corridor 3,300 1,010 1,140 1,380 Danville 12,750 3,490 3,780 4,850 El Cerrito 6,550 1,880 1,870 1,680 San Pablo Avenue Corridor Mixed-Use Corridor 3,480 920 850 680 Hercules 4,390 1,400 1,500 1,970 Central Hercules Transit Neighborhood 900 400 450 590 Waterfront District Transit Town Center 1,280 400 430 450 Lafayette 10,330 2,990 3,280 4,200 Downtown Transit Town Center 6,180 1,770 1,930 1,740 Martinez 32,020 6,960 7,860 8,860 Downtown Transit Neighborhood 6,820 1,660 1,910 2,730 Moraga 4,180 1,270 1,380 1,890 Moraga Center Transit Town Center 1,200 460 520 400 Oakley 3,760 1,130 1,210 2,110 Downtown Transit Town Center 580 210 230 210 Employment Area Suburban Center 730 220 230 270 Potential Planning Area Transit Neighborhood 300 180 190 250 Orinda 5,200 1,560 1,730 2,350 Downtown Transit Town Center 2,750 840 950 790 Pinole 6,600 1,740 1,870 2,490 Appian Way Corridor Suburban Center 2,460 660 690 840 Old Town Transit Town Center 1,410 360 390 400 Pittsburg 16,710 4,510 4,820 5,960 Downtown Transit Neighborhood 1,560 620 650 1,010 Pittsburg/Bay Point BART Station Transit Town Center 150 200 220 200 Railroad Avenue eBART Station Transit Town Center 6,500 1,670 1,820 1,860 Pleasant Hill 19,490 6,080 6,760 8,440 Buskirk Avenue Corridor Mixed-Use Corridor 3,510 1,170 1,360 1,680 Diablo Valley College Transit Neighborhood 2,950 1,610 1,910 3,550 Richmond 34,290 10,130 10,220 8,720 Central Richmond City Center 6,250 2,540 2,310 2,280 South Richmond Transit Neighborhood 6,600 1,880 2,060 1,420 23rd Street Mixed-Use Corridor 320 140 140 130 San Pablo Avenue Corridor Mixed-Use Corridor 1,910 900 810 780 San Pablo 8,000 2,050 2,150 2,700 San Ramon 42,110 10,930 12,130 14,820 City Center Suburban Center 11,290 1,980 2,190 2,830 North Camino Ramon Transit Town Center 10,720 3,490 3,870 3,670 Walnut Creek 50,600 13,690 15,290 18,610 West Downtown Suburban Center 7,410 2,670 3,060 3,050 Contra Costa County Unincorporated 14,740 4,500 4,930 6,380 Contra Costa Centre Mixed-Use Corridor 3,470 890 1,050 1,200 Downtown El Sobrante Mixed-Use Corridor 970 280 290 370 North Richmond Transit Neighborhood 1,850 520 540 760 Pittsburg/Bay Point BART Station Transit Neighborhood 400 340 360 420 West Contra Costa Transportation Advisory Committee: San Pablo Avenue Corridor Mixed-Use Corridor 9,490 2,660 2,770 3,320 9/1/2011 28 9.h Packet Pg. 366 At t a c h m e n t : A t t a c h m e n t H : A l t e r n a t i v e S c e n a r i o s ( 2 2 1 0 : R e s p o n s e t o S B 3 7 5 A l t e r n a t i v e s ) Employment Growth by PDA and Jurisdiction Marin County 2010 Core-Constrained Focused Outer Bay Area Jursidiction or Area Name Place Type Total Jobs 2010-2040 Job Growth 2010-2040 Job Growth 2010-2040 Job Growth Belvedere 460 130 140 150 Corte Madera 6,840 1,760 1,880 2,000 Fairfax 2,430 650 700 760 Larkspur 8,250 2,270 2,460 2,590 Mill Valley 6,330 1,900 2,080 2,180 Novato 22,600 5,820 6,370 6,640 Ross 510 150 160 160 San Anselmo 4,160 1,210 1,320 1,380 San Rafael 42,000 11,040 12,030 12,310 Civic Center/North Rafael Town Center Transit Town Center 5,800 1,730 1,940 1,770 Downtown City Center 8,830 2,590 2,930 3,060 Sausalito 7,460 2,520 2,820 2,860 Tiburon 2,960 930 1,030 1,090 Marin County Unincorporated 10,860 3,320 3,620 3,740 Urbanized 101 Corridor Transit Neighborhood 2,630 820 1,010 1,560 San Quentin Transit Neighborhood 3,100 870 940 1,520 Napa County 2010 Core-Constrained Focused Outer Bay Area Jursidiction or Area Name Place Type Total Jobs 2010-2040 Job Growth 2010-2040 Job Growth 2010-2040 Job Growth American Canyon 2,480 610 630 920 Highway 29 Corridor Mixed-Use Corridor 1,040 280 290 340 Calistoga 2,300 570 600 790 Napa 28,740 7,270 7,730 10,950 St. Helena 4,390 970 1,040 1,570 Yountville 1,440 400 430 610 Napa County Unincorporated 22,390 4,830 5,170 7,130 San Francisco County 2010 Core-Constrained Focused Outer Bay Area Jursidiction or Area Name Place Type Total Jobs 2010-2040 Job Growth 2010-2040 Job Growth 2010-2040 Job Growth San Francisco 550,340 206,920 179,140 126,990 19th Avenue Transit Town Center 10,490 2,850 2,880 3,350 Balboa Park Transit Neighborhood 2,540 810 870 910 Bayview/Hunters Point Shipyard/Candlestick Point Urban Neighborhood 20,270 7,970 7,170 5,900 Downtown-Van Ness-Geary Regional Center 300,220 114,920 94,080 57,350 Eastern Neighborhoods Urban Neighborhood 60,230 22,950 20,680 16,040 Market & Octavia Urban Neighborhood 29,780 8,760 7,900 4,810 Mission Bay Urban Neighborhood 2,900 1,380 1,230 980 Mission-San Jose Corridor Mixed-Use Corridor 12,030 4,740 4,300 4,050 Port of San Francisco Mixed-Use Corridor 5,280 2,010 1,850 1,710 San Francisco/San Mateo Bi-County Area (with City of BrisbaTransit Neighborhood 1,830 1,230 1,240 460 Transbay Terminal Regional Center 7,680 4,480 3,870 2,340 Treasure Island Transit Town Center 250 650 570 450 Citywide 96,840 33,720 31,390 28,630 9/1/2011 29 9.h Packet Pg. 367 At t a c h m e n t : A t t a c h m e n t H : A l t e r n a t i v e S c e n a r i o s ( 2 2 1 0 : R e s p o n s e t o S B 3 7 5 A l t e r n a t i v e s ) Employment Growth by PDA and Jurisdiction San Mateo County 2010 Core-Constrained Focused Outer Bay Area Jursidiction or Area Name Place Type Total Jobs 2010-2040 Job Growth 2010-2040 Job Growth 2010-2040 Job Growth Atherton 2,280 710 780 780 Belmont 7,400 2,520 2,470 2,560 Brisbane 6,270 1,780 1,910 2,160 San Francisco/San Mateo Bi-County Area (with San FranciscoSuburban Center 440 190 190 110 Burlingame 25,880 7,440 8,060 8,610 Burlingame El Camino Real Transit Town Center 10,520 2,940 3,090 3,330 Colma 2,540 510 490 430 Daly City 19,370 5,840 5,930 5,810 Bayshore Transit Town Center 980 430 440 450 Mission Boulevard Mixed-Use Corridor 3,520 1,110 1,030 980 Citywide 12,670 3,430 3,730 3,410 East Palo Alto 2,670 880 920 920 Ravenswood Transit Town Center 900 290 310 300 Woodland/Willow Neighborhood Urban Neighborhood 170 130 100 110 Foster City 13,380 3,900 4,360 4,730 Half Moon Bay 4,940 1,260 1,370 1,410 Hillsborough 2,110 660 740 740 Menlo Park 41,320 11,090 12,080 12,370 El Camino Real Corridor and Downtown Transit Town Center 5,200 1,520 1,650 1,780 Millbrae 6,910 2,140 2,000 1,990 Transit Station Area Mixed-Use Corridor 1,280 450 410 390 Pacifica 5,690 1,550 1,680 1,680 Portola Valley 1,780 500 560 580 Redwood City 58,370 17,820 18,250 21,190 Downtown City Center 7,920 3,100 2,740 2,640 Broadway Mixed-Use Corridor 5,010 1,490 1,380 1,170 Middlefield Mixed-Use Corridor 2,380 830 760 700 Mixed Use Waterfront Mixed-Use Corridor 610 360 320 300 Veterans Corridor Mixed-Use Corridor 3,880 1,220 1,120 1,010 San Bruno 12,110 3,960 3,720 3,850 Transit Corridors Mixed-Use Corridor 6,390 2,170 1,990 1,700 San Carlos 16,050 4,990 4,890 5,170 Railroad Corridor Transit Town Center 1,820 420 450 470 San Mateo 50,640 16,320 17,210 18,580 Downtown City Center 3,900 1,420 1,310 1,520 El Camino Real Mixed-Use Corridor 2,110 580 540 450 Rail Corridor Transit Neighborhood 8,780 2,060 2,210 1,280 South San Francisco 38,490 11,410 12,030 13,490 Downtown Transit Town Center 2,200 880 900 930 Lindenville Transit Neighborhood Transit Neighborhood 2,530 1,180 1,330 310 Woodside 2,630 570 640 660 San Mateo County Unincorporated 11,110 3,810 3,950 4,970 City County Association of Governments of San Mateo Count Mixed-Use Corridor 68,720 22,870 21,200 18,430 9/1/2011 30 9.h Packet Pg. 368 At t a c h m e n t : A t t a c h m e n t H : A l t e r n a t i v e S c e n a r i o s ( 2 2 1 0 : R e s p o n s e t o S B 3 7 5 A l t e r n a t i v e s ) Employment Growth by PDA and Jurisdiction Santa Clara County 2010 Core-Constrained Focused Outer Bay Area Jursidiction or Area Name Place Type Total Jobs 2010-2040 Job Growth 2010-2040 Job Growth 2010-2040 Job Growth Campbell 23,950 6,300 6,700 6,590 Central Redevelopment Area Transit Neighborhood 5,850 1,640 1,820 1,380 Winchester Boulevard Master Plan Transit Neighborhood 1,110 280 310 200 Cupertino 20,990 6,660 6,630 6,360 Gilroy 17,730 4,200 4,490 8,420 Downtown Transit Town Center 2,030 640 700 660 Los Altos 13,290 4,870 4,810 4,810 El Camino Real Corridor Mixed-Use Corridor 2,710 1,200 1,080 1,020 Los Altos Hills 2,960 1,140 1,220 1,400 Los Gatos 18,900 5,250 5,570 5,370 Milpitas 38,820 10,610 11,360 10,720 Transit Area Suburban Center 3,760 1,790 1,920 2,370 Hammond Transit Neighborhood Transit Neighborhood 710 160 160 40 McCandless Transit Neighborhood Transit Neighborhood 920 400 460 150 McCarthy Ranch Employment Center Employment Center 1,440 340 370 270 Midtown Mixed-Use Corridor Mixed-Use Corridor 720 310 290 270 Serra Center Mixed-Use Corridor Mixed-Use Corridor 570 130 130 120 Tasman Employment Center Employment Center 7,560 1,740 1,870 1,050 Town Center Mixed-Use Corridor Mixed-Use Corridor 530 170 160 150 Yosemite Employment Center Employment Center 7,000 1,730 1,890 1,340 Monte Sereno 530 200 220 220 Morgan Hill 16,370 4,090 4,450 7,160 Downtown Transit Town Center 1,370 480 530 530 Mountain View 45,690 14,180 15,280 14,630 Whisman Station Transit Neighborhood 710 310 340 310 Downtown Transit Town Center 5,810 2,170 2,470 2,670 East Whisman Employment Center 4,220 1,670 1,920 1,670 El Camino Real Corridor Mixed-Use Corridor 3,950 1,460 1,330 1,240 Moffett Field/NASA Ames Suburban Center 410 270 260 360 North Bayshore Suburban Center 6,420 2,080 2,270 230 San Antonio Center Transit Town Center 2,530 850 890 880 Palo Alto 75,380 26,630 27,820 19,360 California Avenue Transit Neighborhood 2,770 1,260 1,390 680 El Camino Real Corridor Mixed-Use Corridor 10,230 5,990 5,190 4,990 University Avenue/Downtown Transit Town Center 12,830 4,080 4,530 4,840 San Jose 363,730 116,760 112,610 109,040 Berryessa Station Transit Neighborhood 5,910 1,530 1,630 1,060 Communications Hill Transit Town Center 3,440 1,010 1,050 1,060 Cottle Transit Village Suburban Center 2,110 610 610 820 Downtown "Frame"City Center 25,780 10,390 9,420 9,560 East Santa Clara/Alum Rock Corridor Mixed-Use Corridor 10,970 2,910 3,250 3,930 Greater Downtown Regional Center 27,820 21,250 23,630 13,650 North San Jose Regional Center 78,840 37,840 31,970 24,660 West San Carlos and Southwest Expressway Corridors Mixed-Use Corridor 8,260 3,860 3,250 3,390 Bascom TOD Corridor Mixed-Use Corridor 1,220 480 450 390 Bascom Urban Village Mixed-Use Corridor 1,830 710 640 590 Blossom Hill/Snell Urban Village Mixed-Use Corridor 910 350 330 300 Camden Urban Village Mixed-Use Corridor 5,120 1,500 1,480 1,420 Capitol Corridor Urban Villages Mixed-Use Corridor 2,600 1,170 1,120 1,000 Capitol/Tully/King Urban Villages Suburban Center 3,150 1,240 1,400 1,890 Oakridge/Almaden Plaza Urban Village Suburban Center 4,860 1,380 1,400 1,650 Saratoga TOD Corridor Mixed-Use Corridor 3,700 1,490 1,360 1,290 Stevens Creek TOD Corridor Mixed-Use Corridor 4,550 1,500 1,410 1,280 Westgate/El Paseo Urban Village Suburban Center 3,010 800 840 1,030 Winchester Boulevard TOD Corridor Mixed-Use Corridor 4,350 2,000 1,800 1,680 Santa Clara 96,340 30,080 31,370 29,820 Central Expressway Focus Area City Center 2,550 1,030 930 950 El Camino Real Focus Area Mixed-Use Corridor 4,060 1,150 1,080 1,020 Great America Parkway Focus Area Urban Neighborhood 2,030 1,300 1,150 880 Lawrence Station Focus Area Transit Neighborhood 3,200 1,260 1,300 520 Santa Clara Station Focus Area City Center 3,430 1,040 960 830 Tasman East Focus Area Transit Neighborhood 560 310 320 180 Saratoga 9,850 3,580 3,920 3,890 9/1/2011 31 9.h Packet Pg. 369 At t a c h m e n t : A t t a c h m e n t H : A l t e r n a t i v e S c e n a r i o s ( 2 2 1 0 : R e s p o n s e t o S B 3 7 5 A l t e r n a t i v e s ) Employment Growth by PDA and Jurisdiction Santa Clara County (continued) 2010 Core-Constrained Focused Outer Bay Area Jursidiction or Area Name Place Type Total Jobs 2010-2040 Job Growth 2010-2040 Job Growth 2010-2040 Job Growth Sunnyvale 63,860 18,270 19,330 17,930 Downtown & Caltrain Station Transit Town Center 3,310 1,550 1,380 1,320 El Camino Real Corridor Mixed-Use Corridor 9,910 2,680 2,870 2,790 Lawrence Station Transit Village Transit Neighborhood 3,800 1,410 1,540 1,700 East Sunnyvale ITR Mixed-Use Corridor 2,510 760 710 690 Moffett Park Employment Center 9,610 2,550 2,870 2,310 Peery Park Employment Center 5,180 1,510 1,680 1,250 Reamwood Light Rail Station Employment Center 960 230 250 190 Tasman Station ITR Mixed-Use Corridor 1,290 510 470 440 Santa Clara County Unincorporated 3,510 1,360 1,640 1,720 Valley Transportation Authority: Cores, Corridors, and StationMixed-Use Corridor 172,750 77,640 74,000 60,440 Solano County 2010 Core-Constrained Focused Outer Bay Area Jursidiction or Area Name Place Type Total Jobs 2010-2040 Job Growth 2010-2040 Job Growth 2010-2040 Job Growth Benicia 14,160 3,630 3,950 4,990 Downtown Transit Neighborhood 2,570 720 800 900 Northern Gateway Employment Center 1,830 490 540 600 Dixon 4,490 1,070 1,160 1,310 Fairfield 82,840 18,060 20,310 21,420 Downtown South (Jefferson Street)Suburban Center 4,100 1,270 1,450 1,410 Fairfield-Vacaville Train Station Transit Town Center 330 460 470 490 North Texas Street Core Mixed-Use Corridor 1,410 440 450 530 West Texas Street Gateway Mixed-Use Corridor 1,640 490 530 640 Rio Vista 2,010 470 540 610 Suisun City 3,510 1,010 1,110 1,280 Downtown & Waterfront Transit Town Center 1,670 500 560 520 Vacaville 32,290 7,600 8,230 8,740 Allison Area Suburban Center 1,040 150 180 240 Downtown Transit Town Center 2,860 700 750 880 Vallejo 34,790 8,810 9,530 10,190 Waterfront & Downtown Suburban Center 4,660 1,350 1,540 1,340 Solano County Unincorporated 5,840 1,320 1,420 1,640 Sonoma County 2010 Core-Constrained Focused Outer Bay Area Jursidiction or Area Name Place Type Total Jobs 2010-2040 Job Growth 2010-2040 Job Growth 2010-2040 Job Growth Cloverdale 1,840 470 510 560 Downtown/SMART Transit Area Transit Town Center 980 300 330 330 Cotati 3,170 680 710 830 Downtown and Cotati Depot Transit Town Center 560 170 180 -190 Healdsburg 6,330 1,660 1,790 2,070 Petaluma 27,880 7,920 8,660 10,300 Central, Turning Basin/Lower Reach Suburban Center 2,710 750 810 970 Rohnert Park 12,600 3,200 3,400 3,770 Sonoma Mountain Village Suburban Center 130 160 170 160 Santa Rosa 70,670 18,160 19,640 22,740 Downtown Station Area City Center 8,390 2,370 3,160 3,390 Mendocino Avenue/Santa Rosa Avenue Corridor Mixed-Use Corridor 27,500 7,070 8,050 9,700 Sebastopol Road Corridor Mixed-Use Corridor 7,990 2,270 2,680 3,070 North Santa Rosa Station Suburban Center 6,150 1,830 2,000 2,280 Sebastopol 4,980 1,270 1,340 1,470 Nexus Area Transit Town Center 3,830 1,000 1,090 1,130 Sonoma 6,090 1,590 1,700 1,880 Windsor 5,630 1,410 1,530 1,920 Redevelopment Area Suburban Center 1,180 450 500 530 Sonoma County Unincorporated 38,430 9,180 9,950 11,530 8th Street East Industrial Area Employment Center 660 150 160 220 Airport/Larkfield Urban Service Area Suburban Center 5,480 1,440 1,580 1,030 Penngrove Urban Service Area Rural Town Center 320 120 120 170 The Springs Rural Mixed-Use Corridor 3,220 1,020 1,090 1,260 9/1/2011 32 9.h Packet Pg. 370 At t a c h m e n t : A t t a c h m e n t H : A l t e r n a t i v e S c e n a r i o s ( 2 2 1 0 : R e s p o n s e t o S B 3 7 5 A l t e r n a t i v e s ) Household Growth by PDA and Jurisdiction KEY Jurisdiction (Bold Italic) Priority Development Area Growth Opportunity Area (italics) Alameda County Core-Constrained Focused Outer Bay Area Jursidiction or Area Name Place Type 2010 Total Households 2010-2040 HH Growth 2010-2040 HH Growth 2010-2040 HH Growth Alameda 30,120 6,800 5,810 5,720 Naval Air Station Transit Town Center 1,090 5,250 4,420 4,420 Northern Waterfront Transit Neighborhood 390 1,210 1,010 1,010 Albany 7,400 960 960 960 San Pablo Avenue & Solano Avenue Mixed-Use Corridor 1,600 820 700 700 Berkeley 46,030 8,370 8,370 8,370 Adeline Street Mixed-Use Corridor 620 310 260 260 Downtown City Center 2,570 4,900 3,980 3,980 San Pablo Avenue Mixed-Use Corridor 1,440 1,150 960 960 South Shattuck Mixed-Use Corridor 310 130 110 110 Telegraph Avenue Mixed-Use Corridor 990 510 430 430 University Avenue Mixed-Use Corridor 1,560 710 580 580 Dublin 14,910 10,900 13,810 15,780 Downtown Specific Plan Area Suburban Center 790 470 1,030 1,330 Town Center Suburban Center 3,750 2,150 2,150 2,710 Transit Center Suburban Center 620 2,580 2,580 3,350 Emeryville 5,690 5,660 5,230 5,240 Mixed-Use Core City Center 3,530 5,370 5,010 5,010 Fremont 71,000 19,090 17,380 15,500 Centerville Transit Neighborhood 5,570 1,880 1,600 1,030 City Center City Center 6,870 6,580 5,540 2,490 Irvington District Transit Town Center 4,390 2,380 2,020 2,020 Ardenwood Business Park Employment Center 0000 Fremont Boulevard & Warm Springs Boulevard Corridor Mixed-Use Corridor 8,540 2,640 2,230 2,180 Fremont Boulevard Decoto Road Crossing Mixed-Use Corridor 650 510 430 430 South Fremont/Warm Springs Suburban Center 20 4,140 3,460 3,000 Hayward 45,370 15,480 15,480 15,480 Downtown City Center 2,540 3,390 3,070 3,070 South Hayward BART Mixed-Use Corridor 170 1,300 1,170 1,170 South Hayward BART Urban Neighborhood 1,660 2,670 2,420 2,420 The Cannery Transit Neighborhood 410 830 750 750 Carlos Bee Quarry Mixed-Use Corridor 30 610 550 550 Mission Corridor Mixed-Use Corridor 910 2,410 2,200 2,200 Livermore 29,130 9,120 11,210 12,550 Downtown Suburban Center 920 2,860 2,860 3,700 Vasco Road TOD Suburban Center 330 670 2,500 3,250 Newark 12,970 5,800 5,800 5,800 Dumbarton Transit Oriented Development Transit Town Center 140 2,800 2,430 2,430 Old Town Mixed Use Area Transit Neighborhood 580 440 380 380 Cedar Boulevard Transit Transit Neighborhood 0 980 850 850 Civic Center Re-Use Transit Transit Neighborhood 200 400 340 340 Oakland 153,790 58,720 57,720 46,210 Coliseum BART Station Area Transit Town Center 3,440 2,510 2,250 2,130 Downtown & Jack London Square Regional Center 10,630 10,650 9,490 9,490 Eastmont Town Center Urban Neighborhood 5,960 2,460 2,250 1,100 Fruitvale & Dimond Areas Urban Neighborhood 12,840 7,080 6,350 4,930 MacArthur Transit Village Urban Neighborhood 8,030 4,140 3,710 3,370 Transit Oriented Development Corridors Mixed-Use Corridor 60,970 22,640 20,470 14,620 West Oakland Transit Town Center 9,030 6,300 5,720 5,720 Piedmont 3,800 630 630 630 Pleasanton 25,250 6,300 7,380 8,340 Hacienda Suburban Center 1,270 2,820 3,120 4,050 San Leandro 30,720 7,120 7,120 7,120 Bay Fair BART Transit Village Transit Town Center 630 820 730 730 Downtown Transit Oriented Development City Center 3,930 3,930 3,490 3,490 East 14th Street Mixed-Use Corridor 4,490 1,510 1,370 1,370 Union City 20,430 4,550 4,550 4,160 Intermodal Station District City Center 1,030 880 750 650 Mission Boulevard Mixed-Use Corridor 0 180 150 150 Old Alvarado Mixed-Use Corridor 290 180 160 160 Alameda County Unincorporated 48,520 8,270 11,540 12,440 Castro Valley BART Transit Neighborhood 1,400 570 500 160 East 14th Street and Mission Boulevard Mixed Use Corridor Mixed-Use Corridor 6,740 2,060 1,820 1,790 9/1/2011 33 9.h Packet Pg. 371 At t a c h m e n t : A t t a c h m e n t H : A l t e r n a t i v e S c e n a r i o s ( 2 2 1 0 : R e s p o n s e t o S B 3 7 5 A l t e r n a t i v e s ) Household Growth by PDA and Jurisdiction Contra Costa County Core-Constrained Focused Outer Bay Area Jursidiction or Area Name Place Type 2010 Total Households 2010-2040 HH Growth 2010-2040 HH Growth 2010-2040 HH Growth Antioch 32,250 6,350 6,890 9,740 Hillcrest eBART Station Suburban Center 150 2,430 2,430 2,680 Rivertown Waterfront Transit Town Center 1,430 2,060 2,060 2,250 Brentwood 16,490 6,500 8,160 9,620 Clayton 4,010 530 530 530 Concord 44,280 16,740 17,280 24,620 Community Reuse Area Regional Center 70 2,890 2,890 3,730 Community Reuse Area Transit Neighborhood 0 9,030 9,030 11,740 Downtown BART Station Planning Area City Center 2,080 3,910 3,910 5,030 North Concord BART Adjacent Employment Center Employment Center 10000 West Downtown Planning Area Mixed-Use Corridor 0 600 600 770 Danville 15,420 2,630 2,880 3,100 El Cerrito 10,140 2,130 1,840 1,840 San Pablo Avenue Corridor Mixed-Use Corridor 1,200 1,680 1,460 1,460 Hercules 8,120 4,650 4,650 4,880 Central Hercules Transit Neighborhood 400 2,570 2,570 2,700 Waterfront District Transit Town Center 640 1,090 1,090 1,150 Lafayette 9,220 1,500 1,650 1,780 Downtown Transit Town Center 1,890 810 810 850 Martinez 14,290 2,300 2,550 2,760 Downtown Transit Neighborhood 750 1,310 1,310 1,370 Moraga 5,570 1,010 1,100 1,190 Moraga Center Transit Town Center 430 630 630 660 Oakley 10,730 3,750 3,870 11,980 Downtown Transit Town Center 520 1,290 1,290 1,360 Employment Area Suburban Center 560 980 980 1,030 Potential Planning Area Transit Neighborhood 980 1,400 1,400 1,470 Orinda 6,550 940 980 1,010 Downtown Transit Town Center 330 370 370 390 Pinole 6,780 2,130 2,630 3,760 Appian Way Corridor Suburban Center 510 630 630 700 Old Town Transit Town Center 680 230 390 430 Pittsburg 19,530 9,340 10,200 10,850 Downtown Transit Neighborhood 1,600 2,180 2,180 2,270 Pittsburg/Bay Point BART Station Transit Town Center 0 2,430 2,430 2,560 Railroad Avenue eBART Station Transit Town Center 3,600 3,370 3,370 3,530 Pleasant Hill 13,710 4,490 5,770 6,900 Buskirk Avenue Corridor Mixed-Use Corridor 1,670 170 700 760 Diablo Valley College Transit Neighborhood 730 320 320 350 Richmond 36,090 12,250 12,250 12,140 Central Richmond City Center 4,700 4,050 3,780 880 South Richmond Transit Neighborhood 3,250 2,310 2,150 1,690 23rd Street Mixed-Use Corridor 640 970 900 900 San Pablo Avenue Corridor Mixed-Use Corridor 1,710 1,620 1,510 1,510 San Pablo 8,760 2,350 2,350 1,860 San Ramon 25,280 4,190 8,090 9,080 City Center Suburban Center 480 630 1,410 1,830 North Camino Ramon Transit Town Center 40 2,400 2,400 3,090 Walnut Creek 30,440 3,760 7,330 8,460 West Downtown Suburban Center 1,270 1,960 1,960 2,480 Contra Costa County Unincorporated 57,710 9,320 9,920 10,450 Contra Costa Centre Mixed-Use Corridor 1,780 450 450 470 Downtown El Sobrante Mixed-Use Corridor 1,670 560 560 580 North Richmond Transit Neighborhood 1,030 2,460 2,460 2,570 Pittsburg/Bay Point BART Station Transit Neighborhood 1,020 3,940 3,940 4,130 West Contra Costa Transportation Advisory Committee: San Pablo Avenue Corridor Mixed-Use Corridor 5,950 3,070 3,180 3,320 9/1/2011 34 9.h Packet Pg. 372 At t a c h m e n t : A t t a c h m e n t H : A l t e r n a t i v e S c e n a r i o s ( 2 2 1 0 : R e s p o n s e t o S B 3 7 5 A l t e r n a t i v e s ) Household Growth by PDA and Jurisdiction Marin County Core-Constrained Focused Outer Bay Area Jursidiction or Area Name Place Type 2010 Total Households 2010-2040 HH Growth 2010-2040 HH Growth 2010-2040 HH Growth Belvedere 930 60 60 60 Corte Madera 3,790 370 560 640 Fairfax 3,380 240 240 240 Larkspur 5,910 530 530 610 Mill Valley 6,080 500 500 500 Novato 20,280 1,570 1,600 1,610 Ross 800 70 70 70 San Anselmo 5,240 410 410 410 San Rafael 22,760 2,500 2,790 4,000 Civic Center/North Rafael Town Center Transit Town Center 1,900 820 820 860 Downtown City Center 2,420 1,170 1,840 1,930 Sausalito 4,110 260 280 300 Tiburon 3,730 300 300 300 Marin County Unincorporated 26,190 3,290 3,920 4,510 Urbanized 101 Corridor Transit Neighborhood 4,290 580 2,190 2,290 San Quentin Transit Neighborhood 110 1,530 1,530 1,610 Napa County Core-Constrained Focused Outer Bay Area Jursidiction or Area Name Place Type 2010 Total Households 2010-2040 HH Growth 2010-2040 HH Growth 2010-2040 HH Growth American Canyon 5,660 1,690 1,750 2,010 Highway 29 Corridor Mixed-Use Corridor 400 1,660 1,660 1,740 Calistoga 2,020 120 120 130 Napa 28,170 2,660 3,160 3,600 St. Helena 2,400 120 120 120 Yountville 1,050 100 150 170 Napa County Unincorporated 9,580 830 990 1,140 San Francisco County Core-Constrained Focused Outer Bay Area Jursidiction or Area Name Place Type 2010 Total Households 2010-2040 HH Growth 2010-2040 HH Growth 2010-2040 HH Growth San Francisco 345,810 110,640 90,470 76,430 19th Avenue Transit Town Center 4,790 3,080 2,490 2,490 Balboa Park Transit Neighborhood 1,190 2,350 1,870 1,500 Bayview/Hunters Point Shipyard/Candlestick Point Urban Neighborhood 10,470 15,000 12,030 9,790 Downtown-Van Ness-Geary Regional Center 89,850 32,810 27,770 23,950 Eastern Neighborhoods Urban Neighborhood 31,650 8,720 7,230 6,110 Market & Octavia Urban Neighborhood 11,130 7,650 6,150 5,010 Mission Bay Urban Neighborhood 3,200 3,280 2,630 2,140 Mission-San Jose Corridor Mixed-Use Corridor 29,360 6,220 5,120 4,290 Port of San Francisco Mixed-Use Corridor 110 2,900 2,300 1,840 San Francisco/San Mateo Bi-County Area (with City of BrisbaTransit Neighborhood 1,510 8,370 6,630 5,320 Transbay Terminal Regional Center 190 5,500 4,410 3,580 Treasure Island Transit Town Center 590 9,240 7,320 5,880 Citywide 161,770 5,520 4,520 4,530 9/1/2011 35 9.h Packet Pg. 373 At t a c h m e n t : A t t a c h m e n t H : A l t e r n a t i v e S c e n a r i o s ( 2 2 1 0 : R e s p o n s e t o S B 3 7 5 A l t e r n a t i v e s ) Household Growth by PDA and Jurisdiction San Mateo County Core-Constrained Focused Outer Bay Area Jursidiction or Area Name Place Type 2010 Total Households 2010-2040 HH Growth 2010-2040 HH Growth 2010-2040 HH Growth Atherton 2,330 400 400 400 Belmont 10,580 1,390 1,390 1,390 Brisbane 1,820 1,580 1,580 300 San Francisco/San Mateo Bi-County Area (with San FranciscoSuburban Center 0 1,420 1,160 20 Burlingame 12,360 3,930 3,930 3,930 Burlingame El Camino Real Transit Town Center 7,170 3,540 2,630 2,630 Colma 560 610 520 210 Daly City 31,090 7,470 7,470 5,700 Bayshore Transit Town Center 1,550 2,420 2,060 2,060 Mission Boulevard Mixed-Use Corridor 2,070 1,360 1,180 1,180 Citywide 27,470 3,690 4,230 2,460 East Palo Alto 6,940 3,050 3,050 3,050 Ravenswood Transit Town Center 970 1,070 930 930 Woodland/Willow Neighborhood Urban Neighborhood 1,290 1,230 1,110 1,110 Foster City 12,020 1,670 1,670 1,670 Half Moon Bay 4,150 700 700 700 Hillsborough 3,690 820 820 600 Menlo Park 12,350 3,050 3,050 2,450 El Camino Real Corridor and Downtown Transit Town Center 1,010 1,030 770 770 Millbrae 7,990 2,890 2,180 2,180 Transit Station Area Mixed-Use Corridor 270 1,960 1,460 1,460 Pacifica 13,970 1,110 1,110 1,110 Portola Valley 1,750 240 240 240 Redwood City 27,960 10,510 9,070 8,280 Downtown City Center 990 5,320 4,150 4,150 Broadway Mixed-Use Corridor 1,710 770 600 380 Middlefield Mixed-Use Corridor 2,170 640 500 410 Mixed Use Waterfront Mixed-Use Corridor 210 1,350 1,050 1,050 Veterans Corridor Mixed-Use Corridor 150 990 770 770 San Bruno 14,700 4,670 4,670 4,220 Transit Corridors Mixed-Use Corridor 4,140 3,330 2,800 2,800 San Carlos 11,520 2,400 2,400 2,340 Railroad Corridor Transit Town Center 440 0 0 0 San Mateo 38,230 11,810 11,810 10,130 Downtown City Center 500 650 520 520 El Camino Real Mixed-Use Corridor 840 1,210 970 970 Rail Corridor Transit Neighborhood 140 6,580 5,310 5,310 South San Francisco 20,940 7,610 6,300 7,430 Downtown Transit Town Center 1,510 3,640 3,030 3,030 Lindenville Transit Neighborhood Transit Neighborhood 0 860 710 710 Woodside 1,980 310 310 310 San Mateo County Unincorporated 20,910 5,910 5,910 5,090 City County Association of Governments of San Mateo Count Mixed-Use Corridor 38,460 15,470 12,420 10,560 9/1/2011 36 9.h Packet Pg. 374 At t a c h m e n t : A t t a c h m e n t H : A l t e r n a t i v e S c e n a r i o s ( 2 2 1 0 : R e s p o n s e t o S B 3 7 5 A l t e r n a t i v e s ) Household Growth by PDA and Jurisdiction Santa Clara County Core-Constrained Focused Outer Bay Area Jursidiction or Area Name Place Type 2010 Total Households 2010-2040 HH Growth 2010-2040 HH Growth 2010-2040 HH Growth Campbell 16,160 2,940 2,940 2,880 Central Redevelopment Area Transit Neighborhood 1,140 1,430 1,180 1,180 Winchester Boulevard Master Plan Transit Neighborhood 580 160 130 130 Cupertino 20,180 3,960 3,960 3,960 Gilroy 14,180 5,710 6,440 7,090 Downtown Transit Town Center 880 1,600 1,600 2,060 Los Altos 10,750 2,160 2,160 2,160 El Camino Real Corridor Mixed-Use Corridor 610 470 350 350 Los Altos Hills 2,830 730 730 730 Los Gatos 12,360 2,330 2,330 2,330 Milpitas 19,180 12,810 12,810 12,810 Transit Area Suburban Center 750 8,140 6,910 6,910 Hammond Transit Neighborhood Transit Neighborhood 300 690 580 580 McCandless Transit Neighborhood Transit Neighborhood 0 410 340 340 McCarthy Ranch Employment Center Employment Center 0000 Midtown Mixed-Use Corridor Mixed-Use Corridor 340 770 660 660 Serra Center Mixed-Use Corridor Mixed-Use Corridor 210 40 40 10 Tasman Employment Center Employment Center 0000 Town Center Mixed-Use Corridor Mixed-Use Corridor 0 860 730 730 Yosemite Employment Center Employment Center 30000 Monte Sereno 1,210 300 300 300 Morgan Hill 12,330 3,820 4,150 8,760 Downtown Transit Town Center 510 1,200 1,200 1,550 Mountain View 31,960 15,120 12,460 11,020 Whisman Station Transit Neighborhood 650 1,200 950 950 Downtown Transit Town Center 1,170 1,200 960 960 East Whisman Employment Center 250 290 230 230 El Camino Real Corridor Mixed-Use Corridor 3,330 2,690 2,170 2,170 Moffett Field/NASA Ames Suburban Center 180 2,770 2,210 1,940 North Bayshore Suburban Center 350 2,640 2,110 1,330 San Antonio Center Transit Town Center 1,480 3,580 2,870 2,870 Palo Alto 26,490 12,250 12,250 6,110 California Avenue Transit Neighborhood 750 2,360 1,720 800 El Camino Real Corridor Mixed-Use Corridor 4,090 5,380 3,930 1,570 University Avenue/Downtown Transit Town Center 1,820 3,590 2,630 1,250 San Jose 301,370 133,030 130,890 116,500 Berryessa Station Transit Neighborhood 1,850 5,540 5,100 4,640 Communications Hill Transit Town Center 6,540 3,670 3,390 2,780 Cottle Transit Village Suburban Center 0 3,390 3,120 2,840 Downtown "Frame"City Center 16,980 12,660 11,710 10,720 East Santa Clara/Alum Rock Corridor Mixed-Use Corridor 6,750 4,850 4,480 4,100 Greater Downtown Regional Center 3,670 8,320 7,720 7,100 North San Jose Regional Center 10,420 37,200 34,260 31,220 West San Carlos and Southwest Expressway Corridors Mixed-Use Corridor 4,730 15,820 15,040 14,230 Bascom TOD Corridor Mixed-Use Corridor 260 1,630 1,500 1,360 Bascom Urban Village Mixed-Use Corridor 1,810 990 910 840 Blossom Hill/Snell Urban Village Mixed-Use Corridor 700 1,280 1,180 1,070 Camden Urban Village Mixed-Use Corridor 920 1,150 1,060 960 Capitol Corridor Urban Villages Mixed-Use Corridor 4,210 7,270 6,700 6,110 Capitol/Tully/King Urban Villages Suburban Center 1,410 2,610 2,400 2,190 Oakridge/Almaden Plaza Urban Village Suburban Center 2,650 8,760 8,070 7,360 Saratoga TOD Corridor Mixed-Use Corridor 2,710 1,310 1,200 1,100 Stevens Creek TOD Corridor Mixed-Use Corridor 2,210 4,580 4,230 3,850 Westgate/El Paseo Urban Village Suburban Center 1,010 2,920 2,690 2,450 Winchester Boulevard TOD Corridor Mixed-Use Corridor 4,150 2,430 2,250 2,060 Santa Clara 43,020 24,260 21,130 20,350 Central Expressway Focus Area City Center 0 4,640 3,880 3,880 El Camino Real Focus Area Mixed-Use Corridor 1,650 1,300 1,110 1,110 Great America Parkway Focus Area Urban Neighborhood 0 3,940 3,300 3,300 Lawrence Station Focus Area Transit Neighborhood 0 7,190 6,020 6,020 Santa Clara Station Focus Area City Center 450 3,890 3,260 3,260 Tasman East Focus Area Transit Neighborhood 0 2,090 1,750 1,750 Saratoga 10,730 2,250 2,250 2,250 9/1/2011 37 9.h Packet Pg. 375 At t a c h m e n t : A t t a c h m e n t H : A l t e r n a t i v e S c e n a r i o s ( 2 2 1 0 : R e s p o n s e t o S B 3 7 5 A l t e r n a t i v e s ) Household Growth by PDA and Jurisdiction Santa Clara County (continued) Core-Constrained Focused Outer Bay Area Jursidiction or Area Name Place Type 2010 Total Households 2010-2040 HH Growth 2010-2040 HH Growth 2010-2040 HH Growth Sunnyvale 53,380 16,780 16,780 16,780 Downtown & Caltrain Station Transit Town Center 1,730 1,840 1,510 1,510 El Camino Real Corridor Mixed-Use Corridor 10,350 5,310 4,400 4,400 Lawrence Station Transit Village Transit Neighborhood 1,560 2,900 2,380 2,380 East Sunnyvale ITR Mixed-Use Corridor 0 3,340 2,730 2,730 Moffett Park Employment Center 20000 Peery Park Employment Center 110 10 10 10 Reamwood Light Rail Station Employment Center 0000 Tasman Station ITR Mixed-Use Corridor 850 1,660 1,350 1,350 Santa Clara County Unincorporated 28,080 7,540 10,480 13,090 Valley Transportation Authority: Cores, Corridors, and StationMixed-Use Corridor 68,650 43,880 42,860 38,920 Solano County Core-Constrained Focused Outer Bay Area Jursidiction or Area Name Place Type 2010 Total Households 2010-2040 HH Growth 2010-2040 HH Growth 2010-2040 HH Growth Benicia 10,690 1,190 1,190 1,440 Downtown Transit Neighborhood 530 1,010 1,010 1,100 Northern Gateway Employment Center 0 120 120 140 Dixon 5,860 1,390 1,680 1,940 Fairfield 34,480 11,960 12,520 14,420 Downtown South (Jefferson Street)Suburban Center 600 380 910 950 Fairfield-Vacaville Train Station Transit Town Center 90 6,510 6,510 6,820 North Texas Street Core Mixed-Use Corridor 1,600 1,880 1,880 1,970 West Texas Street Gateway Mixed-Use Corridor 1,020 2,590 2,590 2,720 Rio Vista 3,450 1,420 1,900 2,330 Suisun City 8,920 1,360 1,430 1,500 Downtown & Waterfront Transit Town Center 1,090 1,190 1,190 1,240 Vacaville 31,090 4,940 5,320 9,950 Allison Area Suburban Center 550 140 570 590 Downtown Transit Town Center 220 750 750 780 Vallejo 40,560 5,490 5,640 5,780 Waterfront & Downtown Suburban Center 980 870 870 910 Solano County Unincorporated 6,710 990 1,180 1,340 Sonoma County Core-Constrained Focused Outer Bay Area Jursidiction or Area Name Place Type 2010 Total Households 2010-2040 HH Growth 2010-2040 HH Growth 2010-2040 HH Growth Cloverdale 3,180 960 1,040 1,090 Downtown/SMART Transit Area Transit Town Center 1,040 810 900 940 Cotati 2,980 460 470 540 Downtown and Cotati Depot Transit Town Center 830 450 450 470 Healdsburg 4,380 860 980 1,080 Petaluma 21,740 2,800 2,800 2,800 Central, Turning Basin/Lower Reach Suburban Center 750 1,610 1,610 1,760 Rohnert Park 15,810 2,870 3,210 3,490 Sonoma Mountain Village Suburban Center 200 2,140 2,140 2,350 Santa Rosa 63,590 15,170 18,150 22,620 Downtown Station Area City Center 2,080 1,220 6,860 7,540 Mendocino Avenue/Santa Rosa Avenue Corridor Mixed-Use Corridor 6,910 1,590 4,280 4,670 Sebastopol Road Corridor Mixed-Use Corridor 2,750 3,250 3,250 3,560 North Santa Rosa Station Suburban Center 3,940 3,350 3,350 3,660 Sebastopol 3,280 480 520 600 Nexus Area Transit Town Center 1,150 200 500 520 Sonoma 4,960 520 520 520 Windsor 8,970 1,330 1,360 3,930 Redevelopment Area Suburban Center 2,040 1,290 1,290 1,350 Sonoma County Unincorporated 56,950 7,640 8,330 8,940 8th Street East Industrial Area Employment Center 80 20 20 20 Airport/Larkfield Urban Service Area Suburban Center 2,850 1,110 1,250 1,380 Penngrove Urban Service Area Rural Town Center 630 670 670 730 The Springs Rural Mixed-Use Corridor 6,580 1,680 1,680 1,810 9/1/2011 38 9.h Packet Pg. 376 At t a c h m e n t : A t t a c h m e n t H : A l t e r n a t i v e S c e n a r i o s ( 2 2 1 0 : R e s p o n s e t o S B 3 7 5 A l t e r n a t i v e s ) City of Palo Alto (ID # 1985) City Council Staff Report Report Type: Action ItemsMeeting Date: 9/12/2011 September 12, 2011 Page 1 of 8 (ID # 1985) Council Priority: Land Use and Transportation Planning Summary Title: Response to SCS (SB375) Alternatives Title: Council Direction in Response to Sustainable Communities Strategy (SB375) Alternative Scenarios and Update of Regional Housing Needs Assessement (RHNA) Process From:City Manager Lead Department: Planning and Community Environment Recommendation Staff recommends that the City Council provide direction regarding the City’s next steps to respond to the SB375 Alternative Scenarios, including authorizing the City Manager to retain consultant assistance to coordinate review of demographic and economic projections. Executive Summary On March 14, 2011, staff updated the City Council regarding the status of the Sustainable Communities Strategy (SCS) and the Regional Housing Needs Assessment (RHNA). On May 4, 2011, staff updated the Planning and Transportation Commission regarding the SCS and the Initial Vision Scenario (IVS) proposed by the Association of Bay Area Governments (ABAG) and the Metropolitan Transportation Commission (MTC). The Initial Vision Scenario (IVS) for the Bay Area was intended to accommodate an additional 903,000 housing units and 1.2 million jobs from 2010 to 2035. The goal of the IVS, formulated by staff of ABAG and MTC, was to create development patterns and a transportation network that would result in reductions of per capita greenhouse gas (GHG) emissions by 7% by 2020 and 15% by 2035. The IVS would anticipate a total of 12,000 new households and almost 5,000 new jobs being created in Palo Alto over that time period. On May 27, 2011, staff sent a letter to the regional agencies, following review and input from the Planning and Transportation Commission, questioning the approach and outlining many concerns of the City of Palo Alto, including the need to address job growth near transit to achieve GHG emission reductions, as well as highly unrealistic housing assumptions, the lack of consideration of numerous constraints to growth, and the lack of supportive infrastructure, particularly including transit, to accommodate such extensive levels of development. On July 18, 2011, staff briefed the Council regarding the letter to the agencies and next steps, 9.i Packet Pg. 377 At t a c h m e n t : A t t a c h m e n t I : S e p t e m b e r 1 2 , 2 0 1 1 C i t y C o u n c i l S t a f f R e p o r t ( w / o A t t a c h m e n t s ) ( 2 2 1 0 : R e s p o n s e t o S B 3 7 5 A l t e r n a t i v e s ) September 12, 2011 Page 2 of 8 (ID # 1985) including the upcoming release of alternative scenarios by ABAG and MTC.Council asked staff to work with some Councilmembers over the Council’s August recess and present an approach to Council for proceeding to respond to this planning effort. The three alternative land use scenarios were released by ABAG and MTC on August 26, 2011. A preferred alternative is expected to be drafted and released in early 2012 and the Sustainable Communities Strategy for the Bay Area region is to be finalized by early 2013. Staff met with Councilmembers Scharff, Schmid, Holman and Burt twice in August and has developed an approach that includes: 1) recommending a third party peer review of the State and regional population and employment projections; 2) reaching out to State legislators to pursue this issue at the State and regional level, 3) identifying and coordinating with cities who share Palo Alto’s concerns; 4) directing staff to prepare summaries of key issues for presentation to State legislators, other cities, and the regional agencies; and 5) extending outreach to the community for better understanding of the implications of these scenarios. Staff has also requested that Council authorize the City Manager to engage consultant assistance to support coordination, particularly relative to the demographic and economic analysis. Background On March 14, 2011, staff updated the City Council regarding the status of the Sustainable Communities Strategy (SCS) and the Regional Housing Needs Assessment (RHNA). On May 4, 2011, staff updated the Planning and Transportation Commission regarding the SCS and the Initial Vision Scenario (IVS) proposed by the Association of Bay Area Governments (ABAG) and the Metropolitan Transportation Commission (MTC). The Initial Vision Scenario (IVS) for the Bay Area was intended to accommodate an additional 903,000 housing units and 1.2 million jobs from 2010 to 2035. The goal of the IVS, formulated by staff of ABAG and MTC, was to create development patterns and a transportation network that would result in reductions of per capita greenhouse gas (GHG) emissions by 7% by 2020 and 15% by 2035. The IVS would anticipate a total of 12,000 new households and almost 5,000 new jobs being created in Palo Alto over that time period. On May 27, 2011, staff sent a letter to the regional agencies, following review and input from the Planning and Transportation Commission, questioning the approach and outlining many concerns of the City of Palo Alto, including the need to address job growth near transit to achieve GHG emission reductions, as well as highly unrealistic housing assumptions, the lack of consideration of numerous constraints to growth, and the lack of supportive infrastructure, particularly including transit, to accommodate such extensive levels of development. On July 18, 2011, staff briefed the Council regarding the letter to the agencies and next steps, including the upcoming release of alternative scenarios by ABAG and MTC. Council asked staff to work with some Councilmembers over the Council’s August recess and to then present an approach to Council for proceeding to respond to this planning effort. The three alternative land use scenarios were released by ABAG and MTC on August 26th. (Attachment D). A preferred alternative is expected to be drafted and released in early 2012 and the Sustainable 9.i Packet Pg. 378 At t a c h m e n t : A t t a c h m e n t I : S e p t e m b e r 1 2 , 2 0 1 1 C i t y C o u n c i l S t a f f R e p o r t ( w / o A t t a c h m e n t s ) ( 2 2 1 0 : R e s p o n s e t o S B 3 7 5 A l t e r n a t i v e s ) September 12, 2011 Page 3 of 8 (ID # 1985) Communities Strategy for the Bay Area region is to be finalized by early 2013. The related Regional Housing Needs Assessment (RHNA) Methodology Committee, of which Councilmember Scharff is a member, has met several times, and the Committee’s progress is outlined below in the Discussion section. More background information is provided in the July 18, 2011 Council staff report (Attachment G). Attachment H provides a Glossary of Acronyms and Terms related to the regional planning (SB 375) process. Discussion Alternative Land Use Scenarios The Alternative Land Use Scenarios were released by ABAG and MTC on August 26, 2011, and identify three (3) primary options: Core Concentration Growth Scenario: Concentrates housing and job growth at selected Planned Development Areas (PDAs) and Growth Opportunity Areas (GOAs) in the Inner Bay Area along the region’s core transit network. Focused Growth Scenario:Recognizes the potential of Priority Development Areas (PDAs) and Growth Opportunity Areas (GOAs) across the region with an emphasis on housing and job growth along major transit corridors. Outer Bay Area Growth Scenario: Addresses higher levels of growth in the Outer Bay Area and is closer to previous development trends than the other two scenarios. A summary of the scenarios and potential housing and employment projections are included in the August 26th memo from the agencies (Attachment E) and online at: http://www.onebayarea.org/plan_bay_area/. The objective of each of these scenarios is to accommodate population growth of approximately 770,000 persons and almost 1 million new jobs in the Bay Area by the year 2040. (Note that this 30-year planning horizon is considerably longer than ABAG’s normal 5-7 year planning period.) This is a reduction from the Initial Vision Scenario’s estimated increases of 900,000 persons and 1.2 million jobs. The tables at the back of the memo outline estimated increases for each jurisdiction in the Bay Area, including breaking down how much of the total growth would be located in either PDAs (California Avenue area in Palo Alto) or GOAs (El Camino Real corridor and/or Downtown in Palo Alto). There is no indication of where the agencies expect the remainder of the growth to be located. In summary, the total growth in housing and employment for the City from 2010-2040 breaks down as follows: Core Focused Outer Bay Concentration Growth Area Households 12,250 12,250 6,110 9.i Packet Pg. 379 At t a c h m e n t : A t t a c h m e n t I : S e p t e m b e r 1 2 , 2 0 1 1 C i t y C o u n c i l S t a f f R e p o r t ( w / o A t t a c h m e n t s ) ( 2 2 1 0 : R e s p o n s e t o S B 3 7 5 A l t e r n a t i v e s ) September 12, 2011 Page 4 of 8 (ID # 1985) Jobs 26,630 27,820 19,360 The “Core Concentration” and “Focused Growth” scenarios vary in that more of the projected growth would occur in the PDAs and GOAs in the “Core Concentration” scenario. Staff will need to obtain and analyze data based on traffic analysis zones (TAZs) to determine where the remaining development would potentially be located. Statewide and Regional Projections Staff met with Councilmembers Scharff, Schmid, Holman and Burt twice in August, and one of the primary topics of discussion was the underlying assumptions for population and employment estimates not only for Palo Alto but, more significantly, for the region and the State as a whole. Councilmember Schmid provided two memos (Attachment B) that outline some of the key discrepancies between the projections and the reality represented by the 2010 Census and past trends. In particular, the growth of 995,000 jobs in the next 30 years represents an average of 33,000 new jobs per year, whereas the average has been 10,000 jobs annually the past two decades. While higher job growth occurred in the 60’s and 70’s in the Bay Area, the estimate appears to ignore the basic nature of the technology industry, which is the driver of the Bay Area economic engine, where enhanced value is not equivalent to increased jobs. The projected housing growth in the region amounts to an average of 27,000 new units per year for 30 years and is derived from a 1.3 job to household ratio applied to the jobs projection. Housing growth from 1990-2010, however, was about 20,000 units per year, and considerably less in recent years. The OneBayArea effort assumes that housing production will make up for the loss of production in those years and will more closely approximate production in the 70’s and 80’s, when much “greenfield” development occurred, which would now be contrary to the goals of SB375. Similarly, these projections run counter to recent Census trends and population studies for the State. Those analyses (see Councilmember Schmid’s e-mails) indicate that natural population increase in the state is minimal, with a gradually aging population and a long-term decline in fertility rates. The other component of population increase is migration, the increase of which appears to have declined substantially in the past decade. Since these statewide and regional projections underlie the entire distribution of housing and population for the Sustainable Communities Strategy planning, the Councilmembers and staff expressed a strong desire to request that a peer review, perhaps by University of California or Stanford demographic and econometric analysts, be conducted to verify or dispute the estimates. Such a review, however, should be accomplished at the initiation of State and regional officials, however,rather than by local agencies. Coordination with State Legislators 9.i Packet Pg. 380 At t a c h m e n t : A t t a c h m e n t I : S e p t e m b e r 1 2 , 2 0 1 1 C i t y C o u n c i l S t a f f R e p o r t ( w / o A t t a c h m e n t s ) ( 2 2 1 0 : R e s p o n s e t o S B 3 7 5 A l t e r n a t i v e s ) September 12, 2011 Page 5 of 8 (ID # 1985) The Councilmember subgroup also expressed interest in coordinating efforts through the area’s State delegation, including Assembly members Rich Gordon and Jerry Hill, and Senator Joe Simitian. Assemblyman Gordon is meeting with the City Council on September 12th to discuss issues of common concern, and staff has prepared Attachment A to distribute ahead of the meeting to outline some of the key issues Council may want to convey. The Councilmember subgroup suggested requesting that these legislators carry this issue back to the State and regional agencies to authorize an independent review of the assumptions for the projections, as well as other issues of concern. Coordination with Other Cities Staff and the Councilmember subgroup also discussed contacting other cities that may have similar concerns as Palo Alto’s, to encourage further support with State legislators and a stronger voice at ABAG and MTC as the alternatives move forward. Staff will reach out to others as regional and countywide meetings proceed in the coming week and may have more information to report at the Council meeting. Staff believes that Mountain View, Campbell, Milpitas, and even San Jose have voiced some of the same objections to the growth estimates as Palo Alto. Preliminary Action Plan Staff, after meeting twice with the Councilmember subgroup, has developed an approach to addressing the Sustainable Community Strategy Alternative Scenarios that includes: 1)recommending an independent third party review of the State and regional population and employment projections; 2)reaching out to State legislators to pursue these issues at the State and regional level; 3)identifying and coordinating with cities who share Palo Alto’s concerns; 4)directing staff to prepare summaries of key issues for presentation to State legislators, other cities, and the regional agencies; and 5)extending outreach to the community for better understanding of the implications of these scenarios. Attachment A provides a draft of an initial summary of Sustainable Communities Strategy issues and concerns, to be distributed to legislators, other cities, and the broader community. Some of the highlighted concerns would include: ·Employment projections appear to be substantially overstated and do not recognize the evolving economic model in the Bay Area, particularly in Silicon Valley; ·Housing projections are driven by unrealistic employment projections and are substantially higher than recent trends in natural increase and migration, as reflected in the 2010 Census; ·The basic goal of reducing greenhouse gas (GHG) emissions is not well served by overstating projections, which then require even more extensive resources and more dramatic land use and transportation changes than would be required with more realistic estimates; and 9.i Packet Pg. 381 At t a c h m e n t : A t t a c h m e n t I : S e p t e m b e r 1 2 , 2 0 1 1 C i t y C o u n c i l S t a f f R e p o r t ( w / o A t t a c h m e n t s ) ( 2 2 1 0 : R e s p o n s e t o S B 3 7 5 A l t e r n a t i v e s ) September 12, 2011 Page 6 of 8 (ID # 1985) ·Alternatives to greenhouse gas (GHG) emissions reductions should be provided to allow cities to propose ways they may otherwise accomplish similar reductions that would exceed those proposed by the Alternative Land Use Scenarios; and The summary is a “generic” discussion of a few key issues for conversation with legislators, other cities, or the public. It is hoped that a more detailed demographic and econometric analysis would occur at a regional or statewide level. Staff expects to also quickly develop a summary for issues specific to Palo Alto, such as the limited availability and cost of land, a variety of constraints to housing expansion, and the city’s growth rate relative to others in the county and region. Community Outreach Staff suggests that the Council direct staff to provide this information to the Planning and Transportation Commission, neighborhood and other community groups, and other cities. Further community outreach should also be requested of the regional agencies, to assure that all affected communities may have a common understanding of the implications of the analysis and proposed Alternative Scenarios. Regional Housing Needs Assessment (RHNA) Methodology Committee The RHNA Methodology Committee has met several times through July and has determined that there should be a close link between the housing criteria and the Sustainable Communities Strategy. The current methodology under review would require each city and county to provide for 1/3 of the 2035 total in each of the three 8-year planning periods during that timeframe. The two primary topics of discussion have been: 1.How to split the total allocations between PDAs/Growth Opportunity Areas and other areas within cities or counties. The methodology generally assumes that 70% of the housing is provided in the PDAs and growth opportunity areas, and then the remaining 30% is to be allocated based on overall housing growth projections for each city or county;and 2.Whether to provide for “equity” factors that would affect the remaining 30% of the RHNA. Factors that are under consideration include: a city’s performance meeting prior RHNA affordable housing goals, transit accessibility, and/or some other “quality of life” factors (though school performance seems to be off the table). The latest memo from ABAG (Attachment C) on the subject provides for each community to accommodate a “minimum housing floor” (e.g., 40% of housing projections) as a proxy for the “equity” issues. The 40% threshold is not a problem for Palo Alto but generally affects smaller communities like Woodside or Los Altos Hills. The Committee’s next meeting is on September 8th (after the distribution of this report) so Councilmember Scharff can report the latest at the Council meeting. Due to the desire to tie the RHNA more closely to the SCS, the timeframe for the Committee’s work has been extended to October or November. 9.i Packet Pg. 382 At t a c h m e n t : A t t a c h m e n t I : S e p t e m b e r 1 2 , 2 0 1 1 C i t y C o u n c i l S t a f f R e p o r t ( w / o A t t a c h m e n t s ) ( 2 2 1 0 : R e s p o n s e t o S B 3 7 5 A l t e r n a t i v e s ) September 12, 2011 Page 7 of 8 (ID # 1985) Resource Impacts Review of the Sustainable Community Strategy and Regional Housing Needs Assessment process involves considerable time of the Director of Planning and Community (estimated 20- 40 hours per month) and lesser time for other department staff. There are, however, no direct costs associated with the staff review. As part of this report, staff has suggested retaining a consultant to review and coordinate the effort to address the demographic and economic assumptions of the Alternative Land Use Scenarios. Staff estimates that the cost of such assistance would not exceed $25,000 and could be absorbed within the current budget of the Department of Planning and Community Environment. Next Steps 1.Set up meetings with State legislators and interested cities to outline the need for independent analysis of the projections and econometrics underlying the Alternative Land Use Scenarios and to inform them of other critical issues. 2.Retain consultant assistance to outline parameters for studying the projections and econometrics of the regional agencies and to coordinate work with the other cities. 3.Refer the issue to the Planning and Transportation Commission for review and to provide outreach to the community. Staff will continue to participate in regional and countywide meetings and report back to PTC and Council. Attachments: ·Attachment A: SB375 Issues Summary_09.12.11 (DOC) ·Attachment B1: Schmid_Projections (PDF) ·Attachment B2: Schmid_Subregional (PDF) ·Attachment C: July 25, 2011 Minimum Housing Floor Analysis Memo from ABAG (PDF) ·Attachment D: August 26, 2011 OneBayArea Report: "Alternative Land Use Scenarios" (PDF) ·Attachment E: May 27, 2011 City Staff Response to ABAG re: Initial Vision Scenario (PDF) ·Attachment F: August 15, 2011 ABAG Response to City of Palo Alto Letter (PDF) ·Attachment G: July 18, 2011 Council Staff Report re: Response to Initial Vision Scenario w/o Attachments (PDF) ·Attachment H: SB375 Glossary (PDF) Prepared By:Curtis Williams, Director 9.i Packet Pg. 383 At t a c h m e n t : A t t a c h m e n t I : S e p t e m b e r 1 2 , 2 0 1 1 C i t y C o u n c i l S t a f f R e p o r t ( w / o A t t a c h m e n t s ) ( 2 2 1 0 : R e s p o n s e t o S B 3 7 5 A l t e r n a t i v e s ) September 12, 2011 Page 8 of 8 (ID # 1985) Department Head:Curtis Williams, Director City Manager Approval: James Keene, City Manager 9.i Packet Pg. 384 At t a c h m e n t : A t t a c h m e n t I : S e p t e m b e r 1 2 , 2 0 1 1 C i t y C o u n c i l S t a f f R e p o r t ( w / o A t t a c h m e n t s ) ( 2 2 1 0 : R e s p o n s e t o S B 3 7 5 A l t e r n a t i v e s ) SUSTAINABLE COMMUNITIES STRATEGY (SB375) GLOSSARY OF TERMS AND ACRONYMS AB 32 Assembly Bill 32: The California Global Warming Solutions Act of 2006; state legislation requiring a statewide reduction in greenhouse gas emissions to 1990 levels or lower by the year 2020. ABAG Association of Bay Area Governments: A voluntary association of counties and cities in the nine-county San Francisco Bay Area. ABAG provides demographic, financial, administrative, training and conference services to local governments and businesses. A member sits on MTC. ABAG Regional Planning Committee This committee studies and submits matters to the ABAG Executive Board regarding: Plan Bay Area; environmental management, housing, and infrastructure planning; special plans and reports from planning task forces or other regional agencies; comprehensive planning policies and procedures; and such other matters as may be assigned by the Executive Board. Members include a minimum of 18 elected officials, including at least one supervisor from each member county and a city representative from each county, as well as not less than 10 citizens representing business, minority, economic development, recreation/open space, environment, public interest, housing, special districts and labor interests. BAAQMD Bay Area Air Quality Management District (Also known as the Air District, since the acronym seems to take longer to say than the full name): Regulates industry and employers to keep air pollution in check and sponsors programs to clean the air. The Air District also works with MTC, ABAG and BCDC on issues that affect transportation, land use and air quality. Bay Area Partnership Often referred to simply as “The Partnership,” this is a confederation of the top staff of various transportation agencies in the region, including MTC, public transit operators, county congestion management agencies (CMAs), city and county public works departments, ports, Caltrans and the U.S. Department of Transportation (DOT) as well as environmental protection agencies. The Partnership works by consensus to improve the overall efficiency and operation of the Bay Area’s transportation network, including developing strategies for financing transportation improvements. Bay Plan The San Francisco Bay Plan guides policies for future uses of the Bay and its shoreline. The first San Francisco Bay Plan was completed and adopted by the San Francisco Bay Conservation and Development Commission in 1968, and it is periodically updated. The two main objectives are: 1) Protect the Bay as a great natural resource for the benefit of present and future generations, and 2) Develop the Bay and its shoreline to their highest potential with a minimum of Bay filling. BCDC will be releasing a revised recommendation on amendments to the Bay Plan to 9.j Packet Pg. 385 At t a c h m e n t : A t t a c h m e n t J : S B 3 7 5 G l o s s a r y ( 2 2 1 0 : R e s p o n s e t o S B 3 7 5 A l t e r n a t i v e s ) Sustainable Communities: Glossary    Page  2  prepare for inevitable sea-level rise and storm surges affecting areas on and near the Bay shoreline due to climate change. BCDC San Francisco Bay Conservation and Development Commission: A state-established agency with jurisdiction over dredging and filling of San Francisco Bay and limited jurisdiction over development within 100 feet of the Bay. Call for Projects Regional agencies use this procedure to solicit competing bids from counties, cities, transit agencies, community-based organizations and other stakeholders for projects to be funded as part of long-range plans, such as Transportation 2035 or Plan Bay Area. Caltrans California Department of Transportation: The state agency that maintains and operates California’s highway system. Capital Funds Moneys to cover one-time costs for construction of new projects — such as roads, bridges, bicycle/pedestrian paths, transit lines and transit facilities — to expand the capacity of the transportation system, or to cover the purchase of buses and rail cars. CEQA California Environmental Quality Act: This statute requires state and local agencies to identify the significant environmental impacts of their actions and to avoid or mitigate those impacts, if feasible. CEQA Guidelines The Air District’s CEQA Guidelines are developed to assist local jurisdictions and lead agencies in complying with the requirements of CEQA regarding potentially adverse impacts to air quality. The primary purpose is to provide a means to identify proposed local plans and development projects that may have a significant adverse effect on air quality and public health. The Air District’s CEQA Guidelines, updated in June 2010, recommend air quality significance thresholds, analytical methodologies and mitigation measures for local agencies to use when preparing air quality impact analyses under CEQA. The updated CEQA Guidelines seek to better protect the health and well-being of Bay Area residents by addressing new health protective air quality standards, exposure to toxic air contaminants, and adverse effects from global climate change. Clean Air Plan At a public hearing on September 15, 2010, the Air District Board of Directors adopted the final Bay Area 2010 Clean Air Plan (CAP), and certified the Final Environmental Impact Report on the CAP. The 2010 CAP serves to update the Bay Area ozone plan in compliance with the requirements of the Chapter 10 of the California Health & Safety Code. In addition, the 2010 9.j Packet Pg. 386 At t a c h m e n t : A t t a c h m e n t J : S B 3 7 5 G l o s s a r y ( 2 2 1 0 : R e s p o n s e t o S B 3 7 5 A l t e r n a t i v e s ) Sustainable Communities: Glossary    Page  3  CAP provides an integrated, multi-pollutant strategy to improve air quality, protect public health, and protect the climate. Climate Change Climate change refers to changes in the Earth’s weather patterns, including the rise in the Earth’s average temperature due to an increase in heat-trapping or “greenhouse gases” (GHGs) in the atmosphere. Climate scientists agree that climate change is a man-made problem caused by the burning of fossil fuels like petroleum and coal. Transportation accounts for about 40 percent of the Bay Area’s GHG emissions. Climate change is expected to significantly affect the Bay Area’s public health, air quality and transportation infrastructure through sea level rise and extreme weather. CMAs Congestion Management Agencies: Countywide agencies responsible for preparing and implementing a county’s Congestion Management Program. CMAs came into existence as a result of state legislation and voter approval of Proposition 111 in 1990. Subsequent legislation made them optional. Most Bay Area counties still have them. Many CMAs double as a county’s sales tax authority. CO2 Carbon dioxide: A gas that is emitted naturally through the carbon cycle or through human activities. The largest source of CO2 globally is the combustion of fossil fuels (such as coal, oil and gas) in power plants, automobiles, industrial facilities and other sources. In the Bay Area, the single largest source of CO2 emissions, some 41 percent, comes from transportation sources. Committed Revenues Funds that are directed to a specific entity or for a specific purpose as mandated by statute or by the administering agency. Conformity A process in which transportation plans and spending programs are reviewed to ensure they are consistent with federal clean air requirements; transportation projects collectively must not worsen air quality. Congestion Pricing A policy designed to allocate roadway space more efficiently by charging drivers a fee that varies with the level of traffic on a congested roadway. (See also Value Pricing.) CTC California Transportation Commission: A state-level commission, consisting of nine members appointed by the governor, which establishes priorities and allocates funds for highway, passenger rail and transit investments throughout California. The CTC adopts the State Transportation Improvement Program, or STIP, and implements state transportation policy. Detailed Scenarios Following development of the Initial Vision Scenario, detailed scenarios that account for 9.j Packet Pg. 387 At t a c h m e n t : A t t a c h m e n t J : S B 3 7 5 G l o s s a r y ( 2 2 1 0 : R e s p o n s e t o S B 3 7 5 A l t e r n a t i v e s ) Sustainable Communities: Glossary    Page  4  available revenues will be developed, analyzed and discussed as part of the Plan Bay Area process. (See also Initial Vision Scenario and Preferred Scenario.) EIR Environmental Impact Report: State law requires that an EIR shall be prepared if there is substantial evidence that a project may have a significant effect on the environment. A draft EIR shall be included as part of the review and approval process whenever a public hearing is held on the project. Following adoption of a final EIR by the lead agency makes a decision whether to proceed with the project. Environmental Justice This term stems from a Presidential Executive Order to promote equity for disadvantaged communities and promote the inclusion of racial and ethnic populations and low-income communities in decision-making. Local and regional transportation agencies must ensure that services and benefits, as well as burdens, are fairly distributed to avoid discrimination. Equity Analysis Consistent with federal requirements for environmental justice, MTC and ABAG will conduct an equity analysis covering Plan Bay Area to determine how the benefits and burdens of the plan’s investment strategy affect minority and low-income communities. Equity Working Group This Equity Working Group was set up to advise MTC and ABAG staff in developing of an equity analysis related to low income and minority communities of concern for Plan Bay Area. It consists of representatives from MTC’s Policy Advisory Council (PAC) and the Regional Advisory Working Group (RAWG) The group is identifying some of the key issues and challenges for the region to grow equitably to help meet the sustainability goals as Plan Bay Area is developed. (See also Equity Analysis.) Executive Working Group The Executive Working Group — including city managers, congestion management agency directors, regional agency executives, transit officials and others — was formed to provide a forum for input on technical and policy issues surrounding development of Plan Bay Area. The Executive Working Group met on June 7, 2010. Additional meeting times/locations as well as meeting materials will be posted on the OneBayArea website. FHWA Federal Highway Administration: U.S. Department of Transportation agency responsible for administering the federal highway aid program to individual states, and helping to plan, develop and coordinate construction of federally funded highway projects. FHWA also governs the safety of hazardous cargo on the nation’s highways. Financial Constraint A federal requirement that long-range transportation plans include only projects that have a reasonable expectation of being funded, based upon anticipated revenues. In other words, long- range transportation plans cannot be pie-in-the-sky wish lists of projects. They must reflect 9.j Packet Pg. 388 At t a c h m e n t : A t t a c h m e n t J : S B 3 7 5 G l o s s a r y ( 2 2 1 0 : R e s p o n s e t o S B 3 7 5 A l t e r n a t i v e s ) Sustainable Communities: Glossary    Page  5  realistic assumptions about revenues that will likely be available during the 25 years covered in the plan. Flexible Funding Unlike funding that flows only to highways or only to transit by a rigid formula, this is money that can be invested in a range of transportation projects. Examples of flexible funding categories include the Surface Transportation Program (STP) and the Congestion Mitigation and Air Quality Improvement (CMAQ) program. FOCUS A regional planning initiative spearheaded by ABAG in cooperation with MTC, and in coordination with the Air District and BCDC. FOCUS seeks to protect open space and natural resources while encouraging infill development in existing communities (See also PCA and PDA). FPI Freeway Performance Initiative: MTC’s effort to improve the operations, safety and management of the Bay Area’s freeway network via deploying system management strategies, completing the HOV lane system, addressing regional freight issues and closing key freeway infrastructure gaps. FTA Federal Transit Administration: U.S. Department of Transportation agency that provides financial and planning assistance to help plan, build and operate rail, bus and paratransit systems. The agency also assists in the development of local and regional traffic reduction programs. Global Warming See Climate Change. Greenhouse Gases Any of the gases – including carbon dioxide, methane and ozone – whose absorption of solar radiation is responsible for the greenhouse effect, in which the atmosphere allows incoming sunlight to pass through but absorbs heat radiated back from the earth’s surface. Greenhouse gases act like a heat-trapping blanket in the atmosphere, causing climate change. HOV Lane High-Occupancy-Vehicle Lane: The technical term for a carpool lane, commuter lane or diamond lane. Initial Vision Scenario As part of Plan Bay Area, the Initial Vision Scenario articulates the Bay Area’s vision of future land uses and assesses its performance relative to statutory greenhouse gas and housing targets as well as other voluntary performance targets. The Initial Vision Scenario serves as a starting point for the development, analysis and discussion of detailed scenario alternatives that will lead to a preferred scenario by early 2012. Another reason the Initial Vision Scenario is just a starting point is because it is unconstrained by available revenues. (See also Detailed Scenarios and Preferred Scenario.) 9.j Packet Pg. 389 At t a c h m e n t : A t t a c h m e n t J : S B 3 7 5 G l o s s a r y ( 2 2 1 0 : R e s p o n s e t o S B 3 7 5 A l t e r n a t i v e s ) Sustainable Communities: Glossary    Page  6  JPC Joint Policy Committee: This consortium coordinates the regional planning efforts of ABAG, the Air District, BCDC and MTC. Land Use Model Used by researchers and planners to identify expected population, jobs and housing growth and to understand the interactions between land use, transportation, and the economy. Models help planners analyze and test various spatial distributions of jobs, population and land uses and describe to policy-makers and the public about the relationship between land use and transportation. MPO Metropolitan Planning Organization: A federally required planning body responsible for the transportation planning and project selection in its region; the governor designates an MPO in every urbanized area with a population of over 50,000. MTC is the Bay Area’s MPO. MTC Metropolitan Transportation Commission: The transportation planning, financing and coordinating agency for the nine counties of the San Francisco Bay Area. One Bay Area One Bay Area is a new initiative meant to coordinate efforts of the Bay Area’s regional government agencies — the Association of Bay Area Governments (ABAG), the Bay Area Air Quality Management District (BAAQMD), the Bay Conservation and Development Commission (BCDC) and the Metropolitan Transportation Commission (MTC) — in partnership with the region’s 101 towns and cities to create a more sustainable future. One major effort now underway is the development of Plan Bay Area, the region’s long-range plan for sustainable land use, transportation and housing. Paratransit Door-to-door bus, van and taxi services used to transport elderly and disabled riders. Paratransit is sometimes referred to as dial-a-ride service, since trips are made according to demand instead of along a fixed route or according to a fixed schedule. PM Particulate Matter: A mixture of tiny solid and liquid particles – such as those from dust, dirt, soot or smoke – that are found in the air. When inhaled, these particles can settle deep in the lungs and cause serious health problems. PCA Priority Conservation Area: Regionally significant open spaces for which there exists a broad consensus for long-term protection and for which public funds may be invested to promote their protection. These areas must be identified through the FOCUS program. PDA Priority Development Area: Locations within existing communities that present infill 9.j Packet Pg. 390 At t a c h m e n t : A t t a c h m e n t J : S B 3 7 5 G l o s s a r y ( 2 2 1 0 : R e s p o n s e t o S B 3 7 5 A l t e r n a t i v e s ) Sustainable Communities: Glossary    Page  7  development opportunities, and are easily accessible to transit, jobs, shopping and services. Local jurisdictions identified these locations voluntarily through the FOCUS program. Performance Measures Indicators of how well the transportation system or specific transportation projects will improve transportation conditions. Place Types A place type groups neighborhoods or centers with similar sustainability characteristics and physical and social qualities, such as the scale of housing buildings, frequency and type of transit, quality of the streets, concentration of jobs, and range of services. For Plan Bay Area, Place Types are a tool of local-regional exchange to identify places and policies for sustainable development. Bay Area jurisdictions can select a place type to indicate their desired level of growth in the Sustainable Communities Strategy. Plan Bay Area Plan Bay Area is one of our region’s most comprehensive planning efforts to date. It is a joint effort led by ABAG and MTC in partnership with BAAQMD and BCDC. All four agencies are collaborating at an unprecedented level to produce a more integrated land use-transportation plan. Planning Directors Forums These are regularly scheduled meetings of local planning directors and staff in each county. Local and countywide issues of concern are discussed, and the forums act as a platform for information sharing. Other participants include congestion management agencies (CMAs) and staff from local community and economic development and public works departments. Potential New Revenues Funds that may be available for transportation investment in the future if proposed new revenue sources are approved. These potential revenues are not included in the financially constrained portion of long-term transportation plans and Plan Bay Area. Preferred Scenario Consideration of the detailed scenario alternatives will lead to a preferred scenario by early 2012. (See also Detailed Scenarios and Initial Vision Scenario.) Program (1) verb, to assign funds to a project that has been approved by MTC, the state or another agency, and (2) noun, a system of funding for implementing transportation projects or policies. Resolution 3434 MTC adopted Resolution 3434 in December 2001 to establish clear priorities for the investment of transit expansion funds over the next decade. It focused on identifying high-priority rail and express/rapid bus improvements to serve the Bay Area’s most congested corridors. 9.j Packet Pg. 391 At t a c h m e n t : A t t a c h m e n t J : S B 3 7 5 G l o s s a r y ( 2 2 1 0 : R e s p o n s e t o S B 3 7 5 A l t e r n a t i v e s ) Sustainable Communities: Glossary    Page  8  RAWG Regional Advisory Working Group: An advisory group set up to advise staff of ABAG, MTC, BAAQMD and BCDC on development of Plan Bay Area. Its membership includes staff representatives of local jurisdictions (CMAs, planning directors, transit operators, public works agencies) as well as representatives from the business, housing, environmental and social-justice communities. RHNA Regional Housing Need Assessment: The Regional Housing Need Assessment process is a state mandate regarding planning for housing in California. ABAG is responsible for allocating this state-determined regional housing need among all of the Bay Area’s nine counties and 101 cities. Factors used by ABAG in its allocation process include projected household growth, existing employment and projected employment growth, and projected household and employment growth near transit. RTIP Regional Transportation Improvement Program: A listing of highway, local road, transit and bicycle projects that the region hopes to fund; compiled by MTC every two years from priority lists submitted by local jurisdictions. The California Transportation Commission (CTC) must either approve or reject the RTIP in its entirety. Once the CTC approves an RTIP, it is combined with those from other regions to comprise 75 percent of the funds in the State Transportation Improvement Program or STIP. (Also see “STIP.”) RTP Regional Transportation Plan: A master plan to guide the region’s transportation investments for a 25-year period. Updated every three years, it is based on projections of growth in population and jobs and the ensuing travel demand. Required by state and federal law, it includes programs to better maintain, operate and expand transportation. The Bay Area’s most recent update of its long-range transportation plan, is known as Transportation 2035. The next RTP will be included as part of Plan Bay Area. Sales Tax Authority An agency that administers a voter-approved county transportation sales tax program; in most Bay Area counties, the congestion management agency (CMA) also serves as the sales tax authority. SB 375 Senate Bill 375 (Steinberg): SB 375 became law in 2008. It includes two main statutory requirements and a host of voluntary measures. It is designed to complement AB 32, which requires the state to reduce its GHG emissions to 1990 levels by 2020. The first requirement is to reduce per-capita carbon dioxide (CO2) emissions from cars and light duty trucks, primarily by building more compact communities with better access to mass transit and other amenities, so people have more transportation choices and do not have to drive as much. The second requirement is to house 100 percent of the region’s projected 25-year population growth, regardless of income level. 9.j Packet Pg. 392 At t a c h m e n t : A t t a c h m e n t J : S B 3 7 5 G l o s s a r y ( 2 2 1 0 : R e s p o n s e t o S B 3 7 5 A l t e r n a t i v e s ) Sustainable Communities: Glossary    Page  9  Smart Growth A set of policies and programs designed to protect, preserve and economically stimulate established communities, while protecting valuable natural and cultural resources and limiting sprawl. STIP State Transportation Improvement Program: What the California Transportation Commission (CTC) ends up with after combining various RTIPs, as well as a list of specific projects proposed by Caltrans. Covering a five-year span and updated every two years, the STIP determines when and if transportation projects will be funded by the state. Projects included in the STIP must be consistent with the long-range transportation plan. Sustainability Sustainability means doing things and using resources in ways that protect them so they will be available for current and future generations. The “Three E” goals of sustainability are Economy, Environment and Equity. Sustainability is all about helping support a prosperous and globally competitive economy, providing for a healthy and safe environment, and producing equitable opportunities for all Bay Area residents. Sustainable Communities Strategy The Sustainable Communities Strategy (SCS) is an integrated land use and transportation plan that all metropolitan regions in California must complete under Senate Bill 375. In the San Francisco Bay Area this integration includes ABAG’s Projections and Regional Housing Needs Allocation (RHNA) and MTC’s Regional Transportation Plan (RTP). Title VI Refers to Title VI of the Federal Civil Rights Act of 1964, and requires that transportation planning and programming be nondiscriminatory on the basis of race, color and national origin. Integral to Title VI is the concept of environmental justice. TLC Transportation for Livable Communities: Program created by MTC in 1998 to fund small-scale, community- and transit-oriented projects that improve neighborhood vitality. TOD Transit-Oriented Development: A type of development that links land use and transit facilities to support the transit system and help reduce sprawl, traffic congestion and air pollution. It includes housing, along with complementary public uses (jobs, retail and services), located at a strategic point along a regional transit system, such as a rail hub. TOD Policy To promote cost-effective transit, ease regional housing shortages, create vibrant communities and preserve open space, MTC adopted a Transit-Oriented Development (TOD) Policy in 2005 that applies to transit extension projects in the Bay Area. Research shows that residents living within half a mile of transit are much more likely to use it, and that large job centers within a quarter mile of transit draw more workers on transit. 9.j Packet Pg. 393 At t a c h m e n t : A t t a c h m e n t J : S B 3 7 5 G l o s s a r y ( 2 2 1 0 : R e s p o n s e t o S B 3 7 5 A l t e r n a t i v e s ) Sustainable Communities: Glossary    Page  10  Travel Model Used by researchers and planners for simulating current travel conditions and for forecasting future travel patterns and conditions. Models help planners and policy-makers analyze the effectiveness and efficiency of alternative transportation investments in terms of performance, such as mobility, accessibility, environmental and equity impacts. Value Pricing The concept of assessing higher prices for using certain transportation facilities during the most congested times of the day, in the same way that airlines offer off-peak discounts and hotel rooms cost more during prime tourist seasons. Also known as congestion pricing and peak- period pricing, examples of this concept include higher bridge tolls during peak periods or charging single-occupant vehicles that want to use carpool lanes. (See also Congestion Pricing.) VMT One vehicle (whether a car carrying one passenger or a bus carrying 30 people) traveling one mile constitutes a vehicle mile. VMT is one measure of the use of Bay Area freeways and roads.   9.j Packet Pg. 394 At t a c h m e n t : A t t a c h m e n t J : S B 3 7 5 G l o s s a r y ( 2 2 1 0 : R e s p o n s e t o S B 3 7 5 A l t e r n a t i v e s ) City of Palo Alto (ID # 2364) City Council Staff Report Report Type: Action ItemsMeeting Date: 12/5/2011 December 05, 2011 Page 1 of 4 (ID # 2364) Summary Title: BAO for DC Blueprint Title: Adoption of a Budget Amendment Ordinance Amending the Fiscal Year 2012 to Provide Additional Appropriations of $1,520,426 to Fund the Implementation of the Blueprint Process Plan for the Development Center From:City Manager Lead Department: City Manager Executive Summary As approved by Council on September 6, 2011, staff is prepared to implement the Development Center Blueprint project aimed at improving customer service and inter -departmental efficiency. The attached Budget Amendment Ordinance formalizes the Council prior action to provide necessary staffing, technology and workspace improvements to support this effort. Council continued this item from the Consent calendar at the November 14, 2011 Council meeting. Staff has provided specific responses to Council questions and comments (Attachment A). Recommendation Staff recommends Council adoption of an ordinance of the Council of the City of Palo Alto amending the budget for the fiscal year 2012 to provide additional appropriations of $1,520,426 to fund the implementation of the Blueprint process plan for the development center. Discussion On September 6, 2011 Council approved the staff recommendations to implement the Development Center “Blueprint” projec t to streamline and modernize the City of Palo Alto’s permit process, focusing on improving the customer satisfaction and inter -departmental efficiency. As directed by Council on September 6, 2011, Staff is focusing on the implementation and transition to the coordinated permit system design, restructuring of the organization, technology upgrades and performance measurements. The following actions are funded through the adoption of the BAO: a.Staff additions have been identified adding 1.0 FTE Development Services Official; adding 1.0 FTE Permit Center Manager; adding 1.0 FTE Plans Examiner; adding 3.0 December 05, 2011 Page 2 of 4 (ID # 2364) FTE Project Coordinator positions; b.Development Center rent increase and recruitment costs; c.Reconfigurations of work space, additional computer workstation s, new carpeting, and furniture upgrades to accommodate staff from various departments, providing customer service; d.Technology projects and enhancements have been identified for Fiscal Year 2012 to streamline processes, support successful implementation, and increase efficiency. Resource Impact The attached Budget Amendment Ordinance (Attachment B) addresses changes to expense and revenue budgets for implementation of the Development Center Blueprint Process. The difference in the General Fund between cha nges in expense of $1,520,426 and revenue of $1,516,000 results in a transfer from the General Fund Budget Stabilization Reserve of $4,426. The General Fund Budget Stabilization Reserve is therefore reduced from $30,039,797 to $30,035,371, representing 20.52 percent of total Fiscal Year 2012 expenses. This nominal amount will be addressed during the upcoming fee study to determine if fees should be adjusted to fully cover costs. The Budget Amendment Ordinance increases expense appropriations to the General Fund budget by $1,520,426. Of this amount, $398,087 is ongoing and will be included in future year budgets to cover new salary and benefits costs ($349,107) as well as increased rent costs for Development Center space, effective February 1, 2012 ($48,980). The remainder of the expense increase, $1,122,339, is one -time non-salary costs to cover: recruitment ($25,000); carpeting, office furniture, and microfiche ($161,739); and information technology costs ($935,600). Similar to other Internal Service Fun ds, citywide techology costs are budgeted to the Technology Fund. These costs are then allocated to the departments. Information technology costs for the Development Center Blueprint Process will be allocated from the Technology Fund to the following General Fund Departments: Planning and Community Environment ($625,878); Public Works ($247,427); and Fire ($62,295). In Fiscal Year 2013, additional one -time information technology costs of $802,401 are expected and will be requested in the Fiscal Year 2013 proposed budget. Technology costs may be adjusted mid -year as a Capital Improvement Project. Future year budget requests may include allocations for ongoing maintenance and support costs of equipment and software purchased under this Budget Amendment Ordinance. Both Fiscal Year 2012 and Fiscal Year 2013 ongoing and one -time costs are expected to be covered by increased, ongoing fee revenue of $1,516,000 in each year. Increases to the revenue budget are based on a four year trend analysis adjusted to reflec t current and expected future performance. The impact of one time projects that may be driving revenue were taken into account as well as the expected impacts of pending projects. Depending upon the level of December 05, 2011 Page 3 of 4 (ID # 2364) volatility experienced, revenue and expense bud gets should be carefully monitored and may need to be adjusted in future years. Revenue Source FY2012 BAO Change FY2013 Estimate of Impact Zoning and Plan Check Fees $908,500 $908,500 Construction and Building Fees $574,000 $574,000 Street open, encroachment, misc. fees $33,500 $33,500 Total Revenue Increases $1,516,000 $1,516,000 GF Expense Increase Salaries and benefits $349,107*$544,399 Rent increase $48,980*$122,541 Recruitment $25,000 $0 Furniture, carpeting, office equip.$161,739 $0 Technology enhancements $935,600*$802,401 Total Expense Increases $1,520,426 $1,469,341 Net BSR Impact ($4,426)$46,659 Notes: ·* Prorated for Fiscal Year 2012 ·FY2013 salary and benefit rates were calculated at FY2012 levels The details of the above figures are presented in Exhibit A to the Budget Amendment Ordinance. Staff is also aware of the possibility of limited space available on the 2 nd floor above the Development Center which may open the possibility of consolidating r elated staff in closer proximity to the DC. If this possibility develops, staff will bring back a draft sub lease agreement for Council approval and the consideration of the appropriate Budget Amendment Ordinance. Staff will also evaluate the permit fee structure if additional rental costs are related to improved service at the Development Center. Policy Implications Staff is proceeding with Council’s previous direction of September 6, 2011; (please reference Attachment 2) December 05, 2011 Page 4 of 4 (ID # 2364) Environmental Review This is not a project subject to review under the California Environmental Quality Action (CEQA). Attachments: ·Attachment A: Staff Responses to Council Questions for DC BAO (DOC) ·Attachment B -BAO -FY 2012 Development Center (DOC) ·Attachment C: BAO Exhibit A (XLS) ·Attachment D: Excerpt Minutes September 6, 2011 Council Meeting (PDF) ·Attachment E: Staff Report 2021 Development Center Blueprint (PDF) Prepared By:Katie Whitley, Administrative Assistant Department Head:James Keene, City Manager City Manager Approval: James Keene, City Manager Background The Budget Amendment Ordinance was continued from the Council’s November 14, 2011 to address Council Members’ questions which are provided below: Council Member Holman Questions 1.What are the benchmarks to determine success of the implementati on of the program? Response: As stated in the September 6 th CMR, “baseline” data will be collected for projects that have occurred over the past 12 months prior to the Blueprint implementation occurs.Staff will gather both internal metrics such as permit turn around times and feedback from Development Center users via surveys.The compiled data will service as the baseline for system performance and will be compared to results as implementation occurs and for future years. 2.At what stages will there be check-ins with the CC on improvement? Response: As stated during the September 6 th City Council meeting, we anticipate a minimum of two check -ins initially to inform Council of the implementation status and progress.Depending on City Council schedules, we expect a check -in during January 2012 and then again in June/July 2012. Staff is planning on regular check ins with Council thereafter. 3. On what basis will progress/improvements be based? For instance, applicant, public, staff. Response: Blueprint is an improvement “project” with specific recommendations outlined in the September 6 th CMR.As a project, our focus will be to accomplish a significant portion of these specific actions over the next 12 months.Progress on each recommendation will be prov ided during the two status reports in early and mid-year 2012. Additionally, the quality of the improvements will be based on the Development Center’s users including both applicants and other stakeholders such as adjacent property owners experience with the services.Staff will continually evaluate whether we are meeting the users’ expectations (Desired Outcomes). Moreover, staff anticipates consulting with the Development Customer Advisory Group (DCAG) and resident focus groups to measure progress an d the quality of the improvements. 4. At this point, the expenses for the project are in the range of $3M plus (including an upcoming $800,000) in expenses plus approx $500,000 is staffing. •What other expenses can be anticipated at this time? Response: This BAO represents the core of the staff, management and technology changes necessary to implement the Development Center Blueprint program Attachment A approved by Council in September. Coupled with the consulting services previously approved by Council, these reso urces will enable the completion of the Blue print over the next 12 months. A space limitation at the Development Center prevents some key staff from located in close proximity at 285 Hamilton. Staff is aware that limited sub-leasable space is available on the 2nd floor of 285 Hamilton. If this space will work to house additional DC related personnel, staff will bring a draft sub -lease for subsequent consideration. Staff will continue to monitor the resources assigned to the Development Center as well as the fee revenue to ensure a balance between services provided (including the possibility of consolidating the services at the DC) and revenues collected. ·Why cannot the evaluation of fee structure changes be considered in conjunction with these expenses? Response: Staff monitors Development fees on a regular basis to ensure that the services provided are off set by fee revenue to ensure that the DC is 100% cost recovery. Typically, DC fees are adjusted with the annual budget adoption. As shown on Attachm ent 3 of the November 14, 2011 CMR, the proposed staff and technology costs are slightly under projected fee revenue for the upcoming year. Because many of the costs are one time investments in technology, the current fee revenue should balance staff cost over time. •How will considered fee increases be in comparison to other communities' fee structure? Response: While staff has not performed a comparative fee analysis with other jurisdictions, the feedback we received from DC users is that fees are in a lignment with other local cities. •Understanding the permit activity has increased in recent time, what was the activity during the recent recession and how will revenues track if we experience a double dip? Response: The City currently uses contract an d hourly staff to provide resources in lieu of full -time positions, enabling us to accommodate peak workloads without hiring new permanent staff. The five new positions at the Development Center will replace four existing contract/hourly positions (some pa rt-time), with the only exception being the Development Services Director. Staffing will still, however, retain one contract receptionist, two contract plan check engineers, and three contract building inspectors to meet the current accelerated demands for permits. In addition, the City makes extensive use of outside plan check services, firms that provide plan check review to applicants to expedite the process. These services now account for approximately 15% of the plan check workload covering more than 5 0% of project valuation. These contract/hourly and outside plan check services provide the City with substantial flexibility to address fluctuations in the level of permit activity. 5. Given the expense for IT improvement, what will be incorporated in th ese enhancements: tracking, record keeping, and broader access to permit activity, for instance? Response: Several technology projects were outlined in the September 6 th CMR to be tools to implement the Blueprint goals of an integrated and seamless process ing system, including: a.Walk-In Queuing Prototype : Walk-in customers at the DC will be greeted and immediately placed in a queuing system that notifies the appropriate staff to the front counter. b.Accela Reporting: This will allow staff to extract very speci fic information from the permitting database and produce reports such as performance measurements, permit activity volume by type and staff workload capacity. These reports would be available to the public through the Development Center website and regular email newsletters. c.Accela Citizen Access: A web based portal for user access to submit applications, pay fees, obtain permit status, attach files, and view drawing comments among other on-line enhancements. d.Web Self Service and Publication sites: Currently there is not a self-service model that enables the user to access routine information such as property data. This project would enable better direct access by the user and reducing staffing impacts. e.Geographic Information System (GIS) Interface to Acc ela: Provides improved access to the City’s GIS data by both the user and staff which should reduce staff impacts by eliminating redundancy between the two systems. f.Mobile Applications to Inspectors: Field Inspectors currently do not have remote access to permit data and must rely on phone contact with DC staff to resolve issues in the field. This will eliminate the delay in response time for projects under construction. g.Online Plan Review System : This allows for paperless submittal and review of certain plans. h.Document Management System : Currently there is a backlog of electronically archiving approved plans and project data. Staff and customers need the ability to access this information electronically. Catching up on the backlog should reduce staff time researching and retrieving paper records. Council Member Schmid Questions 1.The Budgets given for the current proposal (Packet page 132) and for the last discussion (Packet page 151) are dramatically different in both revenue expectations ($450K) and expenditures ($900K). It might be helpful to share your assumptions on these numbers with the Council and the public. Response: Staff believes that the permit workload has increased significantly from last year and will be sustained, such that any significant decrease in workload is not foreseeable in the coming two years. In particular, virtually all indicators, including walk-in traffic, permit revenue, number of permits, and number of plan checks, are up from 15-40% from the same 10 -month time period from 20 10.In addition, staff continues to see, review and discuss a number of major development projects that are likely to be submitted for building review and permit in the latter half of this fiscal year (Jan -June 2012) or the first half of the 2012 fiscal year, including (but not limited to): a. Major remodeling and renovation at Edgewood Plaza, as well as construction of 10 new homes b. Construction of 37 new homes at Alma Plaza c. Construction of 45 new homes at 200 San Antonio d.Substantial remodel and in many cases rebuilding of the old Roche space (1 million square feet)by VMWare, plus a new parking garage e.Construction of a new Hilton Homewood hotel and 24 new homes at the Palo Alto Bowl/Motel 6 site f.Construction of a new Hilton Gardens Hotel on South El Camino Real g.Construction of a new Executive Briefing Center at Hewlett -Packard headquarters h.Construction of a new Employee Center building at Varian headquarters i.Construction of a new building at the Lockheed site in the Research Park j.Substantial remodel of the Hoover Pavilion as part of the Stanford University Medical Center Project k.Extensive rebuilding and remodeling at Stanford Shopping Center, including reductions in some building sizes and construction of new buildings 2.You state that performance measurements are important but the listing of such outcome measures on Packet Pages 143 -144 seem to indicate that the 'customer' is the 'applicant'. In the minutes of the Council discussion (Packet page 127) staff mentioned clearly that the 'neighbors' and the 'community -at-large' are key customers. How will this be noted in the Customer's Desired Outcomes section? Response: The Desired Outcomes are a broad set of expectations for success for anyone participating or interacting with the development services system.The “customer” includes the applicant, affected citizens -at-large, community-at-large. The Blueprint Desired Outcomes included several key areas that support all customers by: 1.Providing more comprehensive and reliab le information to anyone requesting it.Currently, we have numerous walk -in or phone requests for information from citizens about regulations and requirements or activity occurring in their neighborhood.Any citizen will be able to get the improved information, whether an applicant or not. 2.The assignment of a project manager will provide a primary point -of-contact for everyone participating in the system.The project manager’s role will be to help coordinate departmental responses, assist the applicant with processing, and provide a conduit for citizen inquiries. All stakeholders will have equal access to the project manager. 3.Access to improved publications, research information, and project status will benefit everyone participating in the process. T echnology will be designed to be intuitive and allow users to access self help areas both at the Development Center and via the Internet to keep up with development activity. ATTACHMENT B Page 1 of 4 ORDINANCE NO. XXXX ORDINANCE OF THE COUNCIL OF THE CITY OF PALO ALTO AMENDING THE BUDGET FOR THE FISCAL YEAR 2012 TO PROVIDE ADDITIONAL APPROPRIATIONS OF $1,520,426 TO FUND THE IMPLEMENTATION OF THE BLUEPRINT PROCESS PLAN FOR THE DEVELOPMENT CENTER The City Council of the City of Palo Alto does ordain as follows: SECTION 1. The City 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 20, 2011 did adopt a budget for Fiscal Year 2012; and B. In July 2010, the City Manager launched the Blueprint Process for a New Development Center to redesign the customer experience at the Development Center to improve customer satisfaction and expedite service delivery; and C. City Council approved Staff Report 2021 on September 6, 2011 authorizing the plan to implement the Blueprint Process and directed staff to return with a Budget Amendment Ordinance; and D. Revenues from development activity have been steadily increasing beyond budgeted levels as service demand has escalated, providing revenues that will cover the majority of costs incurred for improvements (see Exhibit A);and E. As a result of the Blueprint Process, the following staff changes have been identified requiring a budget increase of $349,107, which is the balance after the following actions: (1.) adding 1.0 FTE Development Services Official; and (2.) adding 1.0 FTE Permit Center Manager; and (3.) adding 1.0 FTE Plans Examiner; and (4.) adding 3.0 FTE Project Coordinator positions;and ATTACHMENT B Page 2 of 4 (5.) reducing $121,579 temporary position salaries; and (6.) reducing $139,884 Plans Check Engineer salary; and F. Rent increases of $48,980 and recruitment costs of $25,000 have been identified; and G.Reconfigurations of work space, additional computer workstations, new carpeting, and furniture upgrades requiring a budget of $159,639 have been identified to improve the customer experience, and $2,100 to purchase a computer and printer for microfiche records; and H. $935,600 in technology projects and enhancements have been identified for Fiscal Year 2012 to streamline processes, support successful implementation, and increase efficiency, with costs and implementation spanning two fiscal years; and I. The budget of the Tech Fund is increased $935,600 to address these needs, with costs fully reimbursed by allocations from the Planning and Community Environment Department, Public Works Department, and Fire Department, resulting in a zero (0) net impact to the Technology Fund: (1.)The appropriation for the Planning and Community Environment Department will increase by $625,878 to cover this allocation, for a total increased department appropriation of $1,210,704; and (2.)The appropriation for the Public Works Department will be adjusted accordingly, increasing $247,427; and (3.)The appropriation for the Fire Department will increase $62,295; and J.Based on current projections, Development Center revenue budgets will be correspondingly increased and are expected to nearly cover these costs by the end of Fiscal Year 2012; and K. Revenue budgets are increasing by $1,256,400 for Planning and Community Environment, $153,400 for Fire, and $106,200 for Public Works, for a total of $1,516,000, offsetting the majority of increasing expense budgets; and L. City Council authorization is needed to amend the Fiscal Year 2012 budget to make an additional appropriation of ATTACHMENT B Page 3 of 4 $1,520,426 (One Million Five Hundred Twenty Thousand Four Hundred Twenty-Six Dollars) for the implementation of the Development Center Blueprint Process. SECTION 2.The sum of One Million Two Hundred Ten Thousand Seven Hundred Four dollars ($1,210,704)is hereby appropriated to the Planning and Community Environment Department’s Fiscal Year 2012 budget for Development Center activities; and SECTION 3.The sum of Two Hundred Forty-Seven Thousand Four Hundred Twenty-Seven dollars ($247,427) is hereby appropriated to the Public Works Department; and SECTION 4.The sum of Sixty-Two Thousand Two Hundred Ninety-Five dollars ($62,295) is hereby appropriated to the Fire Department; and SECTION 5.The sum of Nine Hundred Thirty-Five Thousand Six Hundred dollars ($935,600) is hereby appropriated to the Information Technology Fund, which will be reimbursed through allocations from the above departments, resulting in no impact to net assets; and SECTION 6. As a result of these increases, the General Fund Budget Stabilization Reserve is reduced by $4,426, for a balance of $30,035,371 or 20.52% of the Adopted Operating Budget. SECTION 7. As specified in Section 2.28.080(a)of the Palo Alto Municipal Code, a two-thirds vote of the City Council is required to adopt this ordinance. SECTION 8. The Council of the City of Palo Alto hereby finds that this is not a project under the California Environmental Quality Act and, therefore, no environmental impact assessment is necessary. SECTION 9. As provided in Section 2.04.330 of the Palo Alto Municipal Code, this Ordinance shall become effective upon adoption. INTRODUCED: PASSED: AYES: ATTACHMENT B Page 4 of 4 NOES: ABSENT: ABSTENTIONS: ATTEST: ____________________________ ____________________________ City Clerk Mayor APPROVED AS TO FORM:APPROVED: ____________________________ ____________________________ Sr. Asst. City Attorney City Manager ____________________________ Director of Admin. Services BAO Exhibit A EXPENSES Ongoing One-Time Comments FY2011 DC Budget 5,767,078$ Not budgeted specifically to Development Center FY2012 budget additions 152,789$ 442,333$ Added during budget process. Total DC expected expense pre-BAO: $6,390,711 Development Services Offical salary and benefits 148,644$ Full annual position cost = $221,856 Permit Center Manager salary and benefits 115,345$ Full annual position cost = $172,157 Plans Examiner salary and benefits 94,749$ Full annual position cost = $141,417 Three (3) Project Coordinators salaries and benefits 251,831$ Full annual cost = $125,289 per position, or $375,867 for all three positions. Total new Sal and Benefits 610,570$ Freed Up Funds, prorated (139,884)$ Leave vacant Plan Check Engineer unfilled (69,600)$ Eliminate temp DC Manager position (51,979)$ Eliminate three (3) temp Project Manager positions Reduction totals (261,463)$ Net Salary changes 349,107$ Non-Salary Additions Recruitment 25,000$ Development Services Official Carpeting for DC 40,000$ Areas not previously recarpeted. Moving costs for carpeting 4,000$ Modular furniture and associated needs 101,126$ 18 Workstations, cable, 3 computers, 3 large screen monitors, 3 printers. Contingency, 10%14,513$ For carpeting, moving, and furniture estimates Technology Enhancement projects plus 10% contingency. 935,600$ Projects span two fiscal years. FY2013 costs estimated at $802.401. Total FY2012 cost of $935,600 is allocated as follows: $625,878 Planning and Community Environment $247,427 Public Works $62,295 Fire Department Computer for new microfiche $ 1,500 To "drive" new microfiche unit 11x17 capable laser printer for microfiche $ 600 For printing plans from microfiche Potential DC rent increase 48,980$ Effective February, prorated for fiscal year impact Total Non-salary changes 48,980$ 1,122,339$ Total Expenditure changes 398,087$ 1,122,339$ $1,520,426 $7,882,626TOTAL FY2012 DEVELOPMENT CENTER EXPENSE Development Center Enhancement Impacts for FY2012 BAO New Staff Salary and Benefits estimate, prorated for remainder of FY BAO Exhibit A REVENUES FY2012 Budgeted revenues 6,362,200$ Revenue Increases Based on four year trend analysis Zoning and Plan Checking 908,500$ Construction and Building 574,000$ Street open and encroachment and misc.33,500$ Total Revenue Changes 1,516,000$ $1,516,000 TOTAL FY2012 DEVELOPMENT CENTER REVENUE $7,878,200 NET IMPACT EXPECTED (4,426)$ Expense minus revenue 1 9/06/2011 ATTACHMENT D Special Meeting September 6, 2011 The City Council o f the City of Palo Alto met on this date in the Council Chambers at 6:05 P.M. Present: Burt, Espinosa, Holman, Klein, Price, Scharff, Schmid, Shepherd Absent: Yeh CLOSED SESSION City Manager, James Keene stated th ere was an expectation the Closed Sessions would be longer than the scheduled allotted time. He recommended the labor portions of the Closed Sessi ons be continued to the end of t he Council meeting. Mayor Espinosa confirmed t he Council would adjourn to the Closed Session for an hour and if there were items th at needed to be continued they would be continued to the end of the Council meeting. Council Member Schmid stated the agen da read the Clo sed Sessions were from 6:00 p.m. to 7:30 p.m. Assistant City Clerk, Beth Minor stated the agenda had no specific start time for the regular meeting to begin. Tony Spitaleri recommende d the pr oposal of Agenda Item No. 1 be supported by the Council. He stated their support would provide an opportunity for the involved groups t o create a modification to the Bindi ng Arbitration provision that everyone could be in support of. 1. CONFERENCE WITH CITY ATTORNEY -- EXISTING LITIGATION Subject: International Association of Fire Fighters, Local 1319 v. City of Palo Alto, Public Employee Relations Board Case No. SF-CE-869-M 2 09/06/2011 Authority: Government Code Section 54956.9(a) CONFERENCE WITH LABOR NEGOTIATORS City Designated R epresentatives: City Manager and his designees pursuant to Meri t System Rules and Regulations (James Keene, Pamela Antil, De nnis Burns, Lalo Pe rez, Joe Saccio, Sandra Bla nch, Marcie Scott, Darrell Murray) Employee Organization: Palo Alto Police Manager’s Association (PAPMA) Authority: Government Code Section 54957.6(a) CONFERENCE WITH REAL PROPERTY NEGOTIATOR Authority: Government Code Section 54956.8 Property: 2785 Park Blvd., Assessors Parcel No. 147-08-052 Negotiating Party: Essex Park Boulevard, LLC City Negotiators: James Keene, Steve Emslie, Lalo Perez Subject of Potential Negotiations: Price and Terms of Payment CONFERENCE WITH REAL PROPERTY NEGOTIATOR Authority: Government Code Section 54956.8 Property: 2747 Park Blvd., Assessors Parcel No. 132-31-071 Negotiating Party: Brown Fairchild-Park Investment Company, L.P. City Negotiators: James Keene, Steve Emslie, Lalo Perez Subject of Potential Negotiations: Price and Terms of Payment The City Council r econvened from th e Closed Sessions at 7:44 P.M. and Mayor Espinosa advised no reportab le action. He also advised that the Closed Sessions regarding labor negotiations and existing litigation would be heard at the end of the meeting. SPECIAL ORDERS OF THE DAY 2. Selection of Candidates to be in terviewed for the Library Advisory Commission for One Unexpired Term Ending on January 31, 2014. MOTION: Council Member Shepherd moved, seconded by Mayor Espinosa to interview all ca ndidates for the Library Advisory Commission for one unexpired term ending on January 31, 2014. MOTION PASSED: 8-0 Yeh absent Council Member Klein asked about Nancy Clark’s application as it appeared to be from the Storm Drain Oversight Committee. 3 09/06/2011 Assistant City Clerk, Beth Mi nor explained that it was an older application and that Ms. Clark was indeed applying for th e Library Oversight Commission. CITY MANAGER COMMENTS City Manager, James Keene spoke rega rding; 1) the Annual Moonlight Walk to be held Septe mber 9 th, 2) the art project on King Plaza by Mildred Howard, and 3) the Childr en’s Theatre sold 27,000 tickets in the 2011 season and the 2012 season was now open. Assistant City Manager, Pamela Antil stated on September 11, 2011 the City would be hosting a tribute to those who lost their lives during the 9-11 attacks at Newell and Embarcadero. Mr. Keene stated that Airport Day woul d be held on the morning of the 10 th and the Quakeville Emergency exercise was scheduled for the evening of the 10th through the morning of the 11th. APPROVAL OF MINUTES MOTION: Council Member Shepherd moved, seconded by Mayor Espinosa to approve the minutes of June 20 and 27, 2011, and July 11 and 18, 2011. INCORPORATED INTO THE MOTION WITH THE CONSENT OF THE MAKER AND SECONDER to include the following correction to the minutes of July 11, 2011, page 24, third para graph, end of the second sentence; “...same resources or revenues to use UUT.”, change to “…..same resources or revenues as in the past.” MOTION PASSED: 8-0 Yeh absent ORAL COMMUNICATIONS Ronna Devincenci spoke regarding the need for walkable corri dors in the California Avenue district. She note d the current situation in the area wa s dangerous and t he reduction of lanes of traffic flow was the best way to reduce the dangers to pedestrians. Matthew Fremont spoke regarding the sale of 1,800 acres in East Palo Alto . The developer interested in purchasing the property was attempting to build 100 units per acre which would more th an double the density and disrupt the views of Menlo Park and the Crescent Park area of Palo Alto. 4 09/06/2011 CONSENT CALENDAR MOTION: Council Member Shepherd moved, seconded by Council Memb er Klein to approve Agenda Item Nos. 3-7. 3. Authorize the Ma yor to Sign a Co mment Letter to the Peni nsula Corridor Joint Powers Board (PCJPB) Regarding Caltrain Electrification Final Environmental Impact Report (EIR). 4. Resolution 9198 entitled “Resolution of the Council of the City of Palo Alto Authorizing the City Manager or his Designee to Execute a Title 16 Grant Funding Agreement with the Bureau of Reclamation for Planning and Environmental Studies for the Pr oposed Recycled Water Project to Serve the Stanford Research Park.” 5. Ordinance 5126 entitled “Ordinance of the Council of the City of Palo Alto Dissolving the Palo Alto Redevelopment Agency.” (First Reading July 25, 2011 - Passed 8-0 Schmid absent) 6. Approval of Contract Amendment No. 18 Extending the Term of the Rail Shuttle Bus Administration Agreement With the Peninsula Corridor Joint Powers Board Through 6/30/2012 and Increasing the Cumulative Expenditure Limit by $50,000 for a Total of $2,825,264. 7. Ordinance 5127 entitled “Ordinance of the Council of the City of Palo Alto for a Zone Change of a 1,565 Square Foot Parcel From PF (Public Facility) to ROLM ( Research Office Limited Manufacturing) at 200 San Antonio Avenue.” (First Reading August 1, 2011 - Passed 7-0 Price, Scharff absent) MOTION PASSED: 8-0 Yeh absent ACTION ITEMS 8. Consideration of Development Cent er Blueprint Recommendations and Actions. Deputy City Manager, Steve Emslie summarized the Staff recommendations for the Development Center (DC) improv ements. He stated there were five personnel additions; a management position, a Development Center Official, and three project managers. He gave a brief presentation on the processes and the different types of projects that went through the Development Center for approval. 5 09/06/2011 John Barton, DC Customer Advisory Grou p Chair stated in order to have a smooth implementation it was impera tive to have the top level of management in the DC to maintain the flow of work and progress. He stated until the Department Heads agree with and participate in the changes there would be friction in the pr ocess. He stated the greatest concern for the project to be implemented was the funding of the five new positions, if there was no funding then the plan did not exist. He made note that no matter the timeframe to receive a building permit the City received the same amount of funds, the possibility of receiving more funds to the City was dependant on a fully functioning and smooth running Development Center. The potential for cost recover was very high with the addition of the requested positions. George Arimes stated every community had development processes and decisions on how to improve their communities; the difference with Palo Alto was the partnership approach. There was a very important partnership between the Staff performing the wo rk, the customers who understood the problems, and the support of the Department Directors. Director of Planning & Community Environment, Curtis Willia ms spoke regarding the updated technology an d the importance of the customer finding the software easy to use. He stated the technology being reviewed for self-help, online permitting, and for web information was being designe d to meet each step of the process and for quick updates. The second question was how much Sta ff time would be dedi cated to updating the information. He noted the new process was for the data to be updated as the applications were submitted t hereby becoming part of the standard process moving forward. The third question was, w ould there be paper back-up of the information. He noted there would be paper back-up for a period of tim e; following the Records Retent ion Schedule. The fourth question was would technology reduce the volume of the Development Center visits by increasing the counter permits in a ll departments. He noted the system would reduce the current scenario of having multiple Development Cente r visits for single over the counter type applications. The fifth que stion was once the Develop ment Center was fully automated would there be a reduction in Staff. He noted Staffing would not be reduced bas ed on t he online capabilities; the primary benefit to the online services wou ld be the reduction of wait time for the custom ers. The sixth question was how woul d cross training be addressed with ot her departments. He noted the three project manager positions were being trained to perform cross departmental activities so that they may communi cate between departments and resolve issues that arose between them. Th e seventh q uestion was how the new process would minimize the code interp retation inconsistency. He noted the new process would not modify any code s; the Development Services Official 6 09/06/2011 would be responsi ble for ensuring co nsistency with interpretations in applications and the codes. Judith Wasserman spoke on the downturn of the Pal o Alto de velopment process from the late 1960’s to date. She noted her personal experiences with the Development Cente r from th en to now and mentioned she was a participant in the pilot program. She stated the process was in need of change for the better and the program being proposed was a successful one. Council Member Price asked for a n explanation as to why some of t he efficiencies could not be implemented mo re easily without adding additional management positions to the process. City Manager, James Keene s tated there were times when it was clear why management was needed a nd he felt this was one of those examples. H e clarified there was only the addition of one management position; the senior management position of the Development Center Official or Director. There was currently a contracted employee who was ref erenced as the Permit Manager in charge of interacting wi th the customers a nd maintaining the consistent flow of the DC. He stated the key p osition was the Development Director who had the ability to convene Department Directors if need be to resolve matters. He reviewed custom er satisfaction surveys from 2008 through to 2010 and noted the satisfacti on ratings were low and he felt the process being undertaken would greatly improve those ratings. Council Member Scharff stated during his campaign for the City C ouncil the most frequent complaint he heard wa s regarding the Development Center. He agreed t he efforts being ma de by the Staff to correct the custome r satisfaction issues were well thought out. MOTION: Council Member Scharff moved, seconded by Counc il Member Shepherd to approve the actions discusse d in the Staff Report and to direct Staff to return to Council with appropriate budget amendments to implement the recommended Development Center Blueprint project to streamline and modernize the City of Palo Alto’s perm it process, focusing on improving the customer satisfaction and regulatory efficiency. Council Member Scharff thanked Mr. Bart on for the efforts he had put forth and stated his appreciation for brin ging the community into the change process. Council Member Shepherd stated she wa s happy to second the Motion and owed her change of heart to the Staffs hard work in making every effort to clear up errors and answer questions from Council. She understood Palo Alto 7 09/06/2011 was a complex City but she felt it was a small community and fixing such an important part of its function was critical. She stated during the presentation there was a concept about wanting to know how the community felt during the process; she stated there needed to be quantitative analysis results that could be measured. S he asked if t he Staff was keeping track of repeat applicants at the Development Center . She would like to see the applicant needing to return less times for the same project. Mr. Emslie stated Staff acce pted that direction as an assignment and would report back to the Council with the results. Council Member Burt stated concern that there appeared to not be benchmarking to other cities. He noted he had not seen ample material that the additional Staffing was essential. He stated there was currently a backlog of permits but no mention of what would be necessary to alleviate the backlog. He clarified additional Staffing would eliminate the backlog, but unless there was a continued growth there was no need for additional Staffing for maintenance. Mr. Emslie stated the custo mer foot traffic had increased drama tically and the wait times bei ng experienced wa s a direct result of not having the adequate Staffing. Council Member Burt stated Mr. Barton had alluded to a ba cklog of permits, was there not a backlog to speak of. Mr. Emslie stated yes, there was a ba cklog although it could be managed. The City continued to contract servic es like plan checks, and much of the backlog was handled by various contra cted services. He noted once th e backlog was completed the contract s with those services would be eliminated. Council Member Burt asked for clarif ication between the Per mit Center Manager and the Development Services Of ficial and what their different job functions would be. Mr. Keene stated the Development Center Services Director was of Department Head authority in a peer to peer relationship with the number of Directors who own a piece of the Development Center. They had the capacity to assist i n ensuring the sy stems in place rema ined functional. He stated the Permit Center Manager acted in t he capacity of a floor manager , assisting in pushing through the workflow and being very customer focused. 8 09/06/2011 Council Member Burt asked whether o ne of them was not necessarily a new position. Mr. Keene stated that was correct, the Permit Center Manager was currently a non-permanent Staff position filled by a contracted employee. Council Member Burt stated the Deve lopment Services Center Director’s function was being in charge of the entire center and having the authority to cause other departments to get aligned wit h the ne eds of the centers’ customers. He asked how much of an issue organization was for the City and how much of the i ssues were caused because other departments were not on board. Mr. Keene stated in concept the Depart ment Director’s were on board with the program. He stated the transition into the routine problem solving, operational aspect of the Developmen t Center where there were complex permitting processes occurring on a daily basis could be a break down. Mr. Williams stated there had been an effort over the past few years bringing the plan checkers and inspectors together to work more efficiently. He noted the process was not complete as of yet and that was why the role of the Project Managers were so important; they were intended to assist the customer from the application submittal to the close out of the inspection. Council Member Burt clarified the increa se in customer satisfa ction from 2009 to 2010 was because of the joining of the inspectors an d the pla n checkers and some alterations within the Development Center. Mr. Williams stated that wa s correct, and he noted the re had been a pilot program using the Project Manager approach with more than a couple dozen projects that had great success. Council Member Burt stated his unders tanding of the Development Center was it was a revenue neutral function. He stated with the increased volume of projects there w as a surplus bei ng generated; the proposal was to both complete reforms and additional reso urces to improve the performance of the department. He asked if Staff was clear that the customers were comfortable with maintaining the current fee structure if in exchange they received better services in coordination, efficiencies, and reduced cycle time. Mr. Barton stated the answer was a n absolute yes. Time was unbelievably important and the quicker the permit and inspection process was the less cost there was to the customer. 9 09/06/2011 Council Member Burt stated within th e costs of permitting, a prior survey was done on where Palo Alto was with regard to solar permitting versus surrounding communities. H e stated he had not seen any information of utilizing the poss ible surplus to become more aligned with other communities on reduced fees and a re duced complexity to the p ermitting system which in turn would be a reduced cost to the customer. Building Official, Larry Perlin stated in the 2011 Fee Schedule there was a reduction in the Photo Voltaic permitti ng fees, both on the residential and commercial sides as well as the elec tric vehicle charge stations. He confirmed Palo Alto fees were now at average with the other cities surveyed. Council Member Burt stated he wishe d to see Palo Alto rise above average. He asked whether the fees for Thermal Solar were reduced as well. Mr. Perlin stated he believed the fees for the solar hot water were not adjusted although they were not at a high rate. Council Member Burt stated there were issues and complaints from citizens on the complexity with solar permitting. Mr. Keene stated with the Council priori ty on sustainability he felt it wa s appropriate to commit to looking at the key areas of indicators as to what the City was doing to achieve the object ives of the Council. He stated on a side note, at the end of the redesign process for the Development Center he wanted to be able to report to Council on where the center was in terms of satisfaction. MOTION: Council Member Klein moved, seconded by Mayor Espinosa to call the question. MOTION FAILED: 5-3 Burt, Holman, Schmid no, Yeh absent Council Member Holman asked for clar ification on the term “desired outcome”. Mr. Keene stated the majority of the discretionary authority resided in the decisions made by the Council, the role s of the Planning & Transportation Commission, and the Architectural Review Board may have on projects. He stated most of what occurred at the Development Center was administrative and was driven by the guidelines estab lished in the Municipal Co de. He felt the desired outcome was what was owed to the community to be able to tell them what they could expect with respect to time and money then. 10 09/06/2011 Council Member Holman stated if the goal looking forward was to achieve specific desired outcomes then there n eeded to be a definition for the basis of the outcomes. Mr. Barton stated if Council were to re view Attachment 2 of the Staff Report there were two versions of desired outcomes, one from the Citizens Advisory Group and one from the Staff Action Team. Council Member Holman stated she ha d reviewed Attachment 2 and the question remained what the definition of “desired outcome” was. She had concerns that by correct ing some complaints ther e were new issues being created. She felt there were three dr ivers that were of importance; 1) consistency and fairness, 2) timeliness , and 3) decisions rooted in local and state regulations. She did not see any reference s to the necessa ry qualifications for the new Staffing being requested. Mr. Keene stated Staff was seeking Co uncil approval for the funding on a conceptual basis at this time. He cl arified once the f unding was secure d there would be a job description and a qualifications list created and brought forth to the Council for review and approval. Council Member Holman asked how c ustomer satisfaction was determined. She noted the references in the Sta ff Report focused on achi eving the applicants’ outcomes. She stated there was an entirely separate customer base that were not applicants that de served to be treated with r espect and fairness. She asked what access the public had of the application information. Mr. Keene stated Staff was differentiati ng between the entitlement process, which was ultimately a legislative action by the Counc il, and tr ansactions taking place to carry out entitlements that had essentially been granted. Mr. Williams stated the focus was not a discretionary permit type of review; what had been explained to the citizens that had concerns with t he discretionary permit process was the St aff level prob lems needed to be resolved prior to moving forward with those types of concerns. Council Member Holman stated she was aware that there we re a high number of discretionary projects that were not seen by Council or the P&TC. She stated concern with add ing five additional positions with the economy being in flux. She did not see who was responsible for maintaining the new software or computer syste ms or keeping them up to date. She stated she was not comfortable with the way the process was currently taking shape but was certain her concerns could be alleviated with work. 11 09/06/2011 Council Member Schmid stated his interest in tracking the increases of fee s in order to be more self su fficient. He asked for clarification on who the customer was; the documentation refe rred to them as the applicant, he felt any rebuilding or development effected the neighbors and their cooperation with the process and satisfaction needed to be considered. Mr. Williams stated there had been a lo t of discussion on who the customer was and the redesign of the Develo pment Center was inclusive of th e neighbors as part of the customer ba se. The information would be readily available and accessible to them if th ey had questions or concerns about what was happening in their perspective neighborhoods. Mr. Keene clarified there had been nothing in his directive to Staff regarding discounting the neighbors or community outside of the applicant. He stated the idea of the redesign was to be accountable to the community at-large. Mayor Espinosa stated he and Mr. Keene had been meeting with businesses throughout the year and they were told by the few who had been involved in the pilot program that the changes i n the Development Center processed had improved immensely and they felt comfortable participating in it. MOTION PASSED: 7-1 Holman no, Yeh absent 9. Council Direction to Voting Delega te Mayor Espinosa for 2011 League Conference Regarding City’s Position on Proposed Six Resolutions. Assistant to the City Manager, She ila Tucker stated there were six Resolutions to be considered by the League of California Cities (League). One of the Resolutions woul d go directly to their annua l business meeting and the remaining five would be hear d at various policy committees which meant they were subject to change with the Committee’s recommendations. City Manager, James Keene stated in the Staff Report there was identified coordination with departments throughout the City but that did not mean to imply they were th e advocates or sponsors of the recommendations in the Resolutions. Council Member Holman asked whethe r the Resolutions could be heard individually or needed to be heard as a whole. Mayor Espinosa stated in 2010 the Reso lutions were heard individually but there was no precedence to the say th ey had to be heard in a specific manner. 12 09/06/2011 Council Member Holman stated Resoluti on number five was to replace the death penalty with life in prison wi thout the possibility of parole. She discussed the numerous articles which explained the costs associ ated with the death penalty. Staff had no recommendati on for this Resolution; they stated it did not impact Palo Alto. Palo Alto was impacted since the monie s used to s upport the death penalty p rogram came from the Ge neral Fund budgets; therefore, those funds were not spent on local parks, schools, or infrastructure. MOTION: Council Member Holman moved, seconded by Council Member Shepherd to support the Resolution regarding Replacement of the Death Penalty with the Sentence of Life Im prisonment Without the Possibility of Parole. Council Member Shepherd stated the administrative costs for the death penalty and other programs had a severe trickle effect for cities in the State. She felt the City should be standing with the League in support of th e Resolution. Council Member Klein stated he opposed the Motion; he felt it was not in the Palo Alto jurisdiction. He stated there was language in the Resolution that he did not agree with. Council Member Burt stated the Resoluti ons from the League although with collective influence from the cities may actually have a meaningful impact on the political outcome. He felt Palo Alto should not take a stance on issues outside of their purview. However, posi tions by the League on State issues which impacted the cities would be appropriate to participate in. He suggested additional language to the Motion if it was accepted by the Maker and Seconder; to instruct the City Delegate to propose language modifications that included the deletion of the following words in the fourth line of the first RESOLVED, “to work in prison and pay restitution to the victims’ families”. Council Member Holman stated the language change was accepted. INCORPORATED INTO THE MOTION WITH CONSENT OF THE MAKER AND SECONDER to instruct the City Delegate to propose langua ge modification that includes the deletion of the f ollowing words in the fourth line of the first RESOLVED, “to work in prison and pay restitution to the victims’ families”, and even if the wo rding is not accept ed, the City Council still supports the Resolution. 13 09/06/2011 Council Member Burt stated his Am endment would be to present the amended wording but the Council w ould continue to support the position even if the change was not adopted. Council Member Holman stated she agreed. Council Member Shepherd stated her agreement. MOTION PASSED: 6-2 Espinosa, Klein no, Yeh absent Council Member Klein stated he was troubled with Resolution number 6. He stated there were 490 other cities that had been in compliance with State laws so to honor the City of Bell for co mplying after their illegal activities did not seem right. MOTION: Counc il Member Klein moved, seconded by Council Member Scharff to oppose the Resolution Honoring the City of Bell. Council Member Scharff stated the Resolution was offensive to a degree and the language within the document did not seem realistic. MOTION PASSED: 8-0 Yeh absent Council Member Scharff stated given the fi nancial state of so many cities he felt it was difficult to ima gine the six Resolutions being presente d were at the forefront of the issues needing to be res olved. He asked how the Resolutions were brought forward and whether Palo Alto took an active role in participating in the process. Mr. Keene stated the concepts worked th eir way from cities to the League through a line of collective processes before being sent through different Policy Committees. He noted that process was not the onl y one the League used to take positions on items. Council Member Scharff stated he opposed Resolution number 2 an d supported the Staff recommendation fo r the Tort Reform. He stated the Resolution in practicality would do the opposite of what it reported to accomplish. He stated Tort Reform could be a positive process to assist cities against frivolous lawsuits but the pre sented Resolution did not qualify as such a process. MOTION: Council Member Scharff moved, seconded by Counc il Member Schmid to oppose the Resolution relating to Tort Reform. 14 09/06/2011 MOTION PASSED: 8-0, Yeh absent Council Member Burt proposed taking a position in support of R esolution number 4; the seg regation of children under the age of 18 from adults in prisons. MOTION: Council Member Burt moved, seconded b y Council Member Shepherd to support the Re solution Supporting the Prison Rape Eliminatio n Act of 2003. Council Member Burt stated on the br oader aspect of whether the City should take a position on thi s type of issue; the matter was regarding teen aged youth and although Project Safety Net did not focus on incarceration, it was a factor for every community. MOTION PASSED: 7-1 Klein no, Yeh absent Council Member Klein stated none of the Resolutions were the position of the League; they were put forth by various members or divisions of the League. MOTION: Council Member Shepherd moved, seconded by Council Memb er Klein to support the remaining two Resolutions: 1) Alternative Methods of Public Notice requirements, and 2) Ra ising Awareness and Safety Concerns to Support Bullied Children. MOTION PASSED: 8-1, Yeh absent Mayor Espinosa stated later in the ev ening when the meet ing adjourned it will be adjourned in honor of William Clark. He asked Council Me mber Klein to say a few words regarding Mr. Clark. Council Member Klein stated Dr. Bill Clark was on the City Council from 1967 to 1973. They met in 1970 while he serve d as a Planning Commissioner. He noted there was not usually a lot of interaction betwee n the Co uncil and Commissioners, but Bill gave positive constructive criticism and as a Commissioner he was grateful to rece ive it. His manner of se rving on the City Council was very open minded an d Palo Alto was well served by his presence. COUNCIL MEMBER QUESTIONS, COMMENTS, AND ANNOUNCEMENTS Council Member Shepherd thanked the IT Department for the upgrade to the City email system, and the upgrades to the Council Chambers audio/vide o system. 15 09/06/2011 Council Member Burt reported on attending the San Francisquito Creek Joint Powers Authority retreat which focuse d on s everal issues including; the purpose of the or ganization, future of Stanford University’s role in the organization, how the agency will move forward absent Federal funding. Council Member Schmid spoke regarding the Lytton Garden Senio r Housing recent purchase of Webster House Senior Housing. The City Council convened into the Closed Session at 10:17 P.M. 9a. (Former No. 1) CONFERENCE WITH LABOR NEGOTIATORS City Designated R epresentatives: City Manager and his designees pursuant to Meri t System Rules and Regulations (James Keene, Pamela Antil, De nnis Burns, Lalo Pe rez, Joe Saccio, Sandra Bla nch, Marcie Scott, Darrell Murray) Employee Organization: Palo Alto Police Manager’s Association (PAPMA) Authority: Government Code Section 54957.6(a) CONFERENCE WITH CITY ATTORNEY -- EXISTING LITIGATION Subject: International Association of Fire Fighters, Local 1319 v. City of Palo Alto, Public Employee Relations Board Case No. SF-CE-869-M Authority: Government Code Section 54956.9(a) The City Council r econvened from the Closed Session at 11:44 P.M. and Mayor Espinosa advised no reportable action. ADJOURNMENT: The meeting was adjourned at 11:45 P.M. in memory o f William Clark who passed away on July 30, 2011. City of Palo Alto (ID # 2021) City Council Staff Report Report Type: Action ItemsMeeting Date: 9/6/2011 September 06, 2011 Page 1 of 8 (ID # 2021) Summary Title: Development Center Blueprint Title: Consideration of Development Center Blueprint Recommendations and Actions From:City Manager Lead Department: City Manager Recommendation Staff recommends that Council approve the actions discussed in this report, and direct staff to return to Council with appropriate budget amendments to implement the recommended Development Center Blueprint” project to streamline and modernize the City of Palo Alto’s permit process, focusing on improving the customer satisfaction and regulatory efficiency. Background In July 2010, the City Manager launched the comprehensive “Blueprint” for a new customer Satisfaction, minimize the wait times for services and complaints about the process. The City Manager established the following objectives to address the service issues identified at the Development Center (DC): 1.Improving organizational efficiency of the D C and associated processes to minimize unnecessary costs and delays to customers. Clearly identify the po int person accountable for vastly improved customer service and communication between departments. 2.Maintaining or enhancing community sustainability and economic development goals and objectives through DC activities. Streamline the process without comp romising the key regulatory goals and objectives. The report outlines a number of specific measures to implement these goals through a redesigned process that ensures greater accountability at each step. Discussion The City Manager’s key objectives for th e project intiatives are: creating a better customer service culture where there is predictability, clear standards, and a performance measurement program in place to evaluate service delivery and assess actions. The report outlines a number of specific m easures to implement these goals through a redesigned process that ensures greater accountability at each step. The City Manager’s Office is overseeing the project, which is managed day to day by an in - September 06, 2011 Page 2 of 8 (ID # 2021) house manager from the Development Center. In additio n, staff is using a consultant with extensive experience nationally with the development and permitting processes, which provides the opportunity to implement ideas and strategies already proven successful in other communities. At the core of the project,however, have been three focus groups summarized below: ·Development Center Customer Advisory Group (DCCAG)–customers have adopted their desired outcomes and expectation for success as developed by staff (Desired Outcomes see Attachment). ·Staff Steering Committee (SSC)–department heads are ensuring we have the right staff involved and they get the resources needed to make this happen. ·Staff Action Team (SAT)–staff has been designing the new integrated processing system. Additional staff teams will be used to address implementation tasks, such as creation of the DC self-help center and online information tools, technology enhancements, customer publications, and detailed procedures. Accomplishments 1. Development Center Technology Projects:Staff has been working with the Information Technology Department (ITD) and have identified the following key projects as priorities for implementation. These include: ·Walk-In Queuing Prototype: Walk -in customers at the DC will be greeted and immediately placed in a queing system that notifies the appropriate staff to the front counter. ·Accela Reporting: This will allow staff to extract very specific information from the permitting database and produce reports such as performance measurements, permit activity volume by type and staff workload capacity. ·Accela Citizen Access: A web based portal for customer access to submit pre - applications, pay fees, obtain permit status, attach files, view drawing comments among other on-line enhancements. ·Web Self Service a nd Publication sites: Currently there is not a self -service model that enables the customer to access routine information such as property data. This project would enable better direct access by the customer and reducing staffing impacts. ·Geographic Informaton System (GIS) Interace to Accela: Provides improved access to the City’s GIS data by both the customer and staff which should reduce staff impacts by eliminating redundancy between the two systems. ·Mobile Applications to Inspectors: Field Inspector s currently do not have remote access to permit data and must rely on phone contact with DC staff to resolve issues in the field. This will eliminate the delay in response time to customers. ·Online Plan Review System: This allows for paperless submittal and review of certain plans. September 06, 2011 Page 3 of 8 (ID # 2021) ·Document Management System: Currently there is a backlog of electronically archiving approved plans and project data. Staff and customers need the ability to access this information electronically. Catching up on the bac klog should reduce staff time researching and retrieving paper records. ITD has identified that they anticipate outsourcing project management for these projects to an independent third party to implement the information technology requirements associated with these projects. These projects are anticipated to be completed in 2012. ITD staff are in the process of further defining the budget costs. 2. Improvement: New Processing System Design: The Development Center Blueprint team has focused on des igning and testing a new processing system aimed at being seamless and integrated from the customer’s perspective. The key service improvements reflect the following objectives: ·Instill a partnership culture where the customer and staff proactively work t ogether to find solutions to project issues while meeting the regulations. A formal issue resolution process has been created. ·Focus on understanding and addressing the customer’s service request rather than referring them to a “department” ·Ensure that a “customer sits in one chair ” philosophy is adopted, thereby eliminating the practice of routing customers from place to place. We bring the staff and needed information to the customer. ·Adopt a “project-oriented” approach with an assigned primary point -of-contact versus a permit-oriented mindset where a customer has to coordinate multiple approvals or permits on their own. ·Continue to refine the integrated design and prepare needed procedures, technology enhancements for tracking and online services, cus tomer publications, and training to ensure a smooth transition from the current process. ·Work with the customer advisory group to identify and bring forward any code or regulatory changes deemed necessary to further simplify processing and remove unnecessary roadblocks. A summary of initial customer discussions is included in the Attachment. 3. Improvement: Accountability for Development Center Day-to-Day Operations: An interim organizational structure (Attachment) has been created to manage the day -to-day operations of the Development Center (DC) and ensure that services are provided in an efficient manner. Several actions have been taken prior to implementation, including: September 06, 2011 Page 4 of 8 (ID # 2021) ·An interim Development Services Official has been appointed to provide managemen t and leadership of the DC including all departments. The Development Services Official is tasked with ensuring there is City department accountability for appropriate staff assignments and capacity in the DC, meeting performance expectations, and issue resolution on projects. ·An interim Permit Center Manager has been appointed and reports to the Development Services Official to manage service quality, implement recent improvements, and prepare for upcoming organizational and process changes. ·Pilot project managers and other key customer interface staff have been assigned to work at the Development Center. ·All department staff members interacting with customers are being physically located at the DC. ·The Permit Center Manager has been collecting and report ing performance statistics, including customer volumes, wait times, and staff workload (for excerpt of statistics see Attachment). This information is used to determine the appropriate type and number of staff needed to serve customers in the most efficient manner. 4. Improvement: Project Management Approach: Project management has been implemented to provide a central point of contact and in house advocate for all customer projects. The Blueprint Piloting Program has been comprehensive and has inclu ded testing a variety of project types including, simple over -the-counter permits, routine residential projects, and complex commercial projects with previous discretionary actions. In addition, the Permit Center Manager has been refining new processes, measuring staff capacity, evaluating technology & publications, identifying training needs and conducting surveys for “real time” customer feedback. The following actions will be taken to ensure the project management approach will be sustained: ·Continue to work with Human Resources staff to develop a classification structure for multi-level project management capacity. ·Prepare training for project managers and staff team members to effectively implement this approach. ·Phase in all customer and project types as the appropriate staffing capacity is added. 5. Improvement: Comprehensive Performance Measurement Program: From the beginning of the Blueprint project, the customer’s “Desired Outcomes” were established to be the foundation of the overall “lit mus test” for what excellent customer service and satisfaction will look like and how it would be measured. Staff created key performance measures which can be found in Attachment 2 to this report and are generally intended to provide feedback in the following areas: September 06, 2011 Page 5 of 8 (ID # 2021) ·Satisfaction-Based Measures –Get feedback on the perceived level of satisfaction with services. Surveys will be used to determine how customers “feel” about the service they have received from the City. ·Internal Efficiency & Timeliness Measu res –Calculate workload volumes, overall project timelines, and all process component timelines and efficiencies of both the staff and the customer’s representatives. Attachment 4 includes a summary of Performance Measurement Program objectives and how each stage of the project process will be measured for both the satisfaction -based and internal types of measures. The following staff actions are in progress to ensure the timely collection of performance data measure the effectiveness of program improvements: ·Immediately survey recent customers to establish a customer satisfaction baseline to gauge effectiveness of the improvements during implementation. ·Survey the last 4 -5 months of pilot customers to serve as an initial gauge of satisfaction with the new process. ·Collect baseline data for internal efficiency and timeline measures. ·Develop format of and issue ongoing regular measurement reports. 6. Improvement: Development Center Funding: Customer volume and workloads continue to dominate staff resources. Development fees are charged to offset the City’s cost to provide the service. Moreover, state law prohibits fees charged at levels which exceed the cost of services provided. Since development fees are deposited in the General Fund, regular accoun ting and reporting has been established to ensure that fees are commensurate with the City’s costs. The following actions are underway to insure appropriate fees have been established: ·A regular cost-of-service analysis will be prepared to establish fees at the actual cost of providing services, including direct salary expense, departmental overhead and citywide overhead expenses. ·Based upon the analysis, determine and request appropriate staff capacities to support workloads for typical customer projects and development-related information inquiries. 7. Improvement: Development Center Space Enhancements: Over the past several months, the DC customer space has been updated with new paint and carpet, furniture and work stations, and additional counter, c onference room, and self -help computers. These changes were necessary to address the influx of foot traffic at the Development Center (DC) and to provide a better customer experience while at the DC. The following actions are underway to complete the DC infrastructure necessary to implement the recommended staffing changes: ·Pursue additional modular furniture reworks to best utilize the DC space for staff capacity and to create a more “team” atmosphere for department representatives to coordinate development related reviews and processing. September 06, 2011 Page 6 of 8 (ID # 2021) ·Transfer paper and microfiche records to electronic images to maximize space for staff and a customer self-help center. Recommendations Development Services Official:Staff recommends a new management position be cr eated under the general direction of the City Manager. The Development Services Official would be responsible for managing, planning, directing, supervising and coordinating the activities of the Development Center. The position would oversee the performance of administrative approvals, permitting and inspecting all development -related projects for compliance with building and development codes and to maintain or enhance community sustainability and economic development goals. The Development Services Of ficial will, acting under the auspices of the City Manager, have the authority to cross departmental lines to assure accountability and a coordinated project response. Permit Center Manager: Staff recommends a second management position to coordinate the workflow and service delivery systems at the Development Center (DC). The Permit Center Manager provides day-to-day management, control, and administration of the DC operations. The Permit Center Manager is responsible for direct supervision of and w orkload assignment to customer interface staff, including the project managers, and provides leadership and direction to other departmental staff assigned to the DC to support operations. The Manager implements policies and processes to ensure efficient a nd effective processing of development activities and an excellent customer service culture. The Manager will specifically continue to implement the development review system performance improvements embodied in the Blueprint system operational design and other related work elements. Project Managers:Staff recommends adding three Project Managers assigned to coordinate all Development Center administrative approvals for a customer’s project, based upon the level of complexity. Staff anticipates these positions will be assigned to SEIU. P&CE planners will manage and coordinate any required discretionary actions and hand -off to the Permit Center Manager for assignment to a Project Manager after the entitlement process is completed. Some projects may require project management assignments during the entitlement process. Three levels of project managers are proposed to address the variety of project complexity, including: ·Project Manager Level 1 : Perform initial customer discovery and routing; respond to general information requests for frequently asked questions and prepackaged materials; and issue simple permits (e.g. residents and homeowners) ·Project Manager Level 2: Respond to complex information requests; process counter - based projects (e.g. -simple residential); and facilitate the issue resolution process for related activities. ·Project Manager Level 3 : Perform complex project management for administrative submittal-based projects (e.g. -complex residential and commercial, including September 06, 2011 Page 7 of 8 (ID # 2021) associated building permits, utility connections, and public infrastructure approvals); and facilitates the issue resolution process for related activities. Resource Impacts To gauge the resource impacts of the changes proposed in this report, both revenues and cos ts are considered. Revenues at the Development Center have been increasing over the last few years. Revenues appear to be continuing their increase. Still, it is very early in the fiscal year and difficult to project the actual revenue for FY2012. Costs are also difficult to project at this time. Because three of the six proposed positions are not part of the city’s current organizational structure, salary range surveys still need to be completed. For the purposes of this section, estimates are based on t he averages of salary levels for similar existing positions. Actual costs may vary. Rough estimates were also used for other costs, such as furniture and associated needs. Technology enhancement costs are unknown at this time and are not included in the resource impact analysis. Because of the current level of uncertainty, a range has been provided in calculating the resource impact. In FY2012, the Development Center portion of the Planning and Community Environment (PCE) revenue budget was increased by $1,633,000 to reflect rising revenues. Actual FY2011 revenues from the Development Center, including PCE, Public Works, and Fire activities, were $7,129,885. Although not quantified, there were some impacts from Stanford’s planned expansion to Development Center revenues in FY2011. Stanford will continue to have an impact in FY2012. Actual FY2011 expenses for the Development Center were $5,795,589. During the FY2012 budget process, PCE’s expense budget for the Development Center was increased by $499,584, mostly for one -time contractor costs. Additionally, an Administrative Associate II was transferred to the Development Center, adding another $95,538 of staff resources. Rough cost estimates for the changes proposed in this document, with the exception of technology enhancement costs, range from $600,000 to $800,000. These budget increases, added to FY2011 actual expenses yield a total projected expense of $7,000,000 to $7,500,000. Projected Development Center revenue for FY2012 is in the range of $7,000 ,000 to $8,000,000. As stated above, although this is a rough estimate, it is based on the evaluation of the last three year’s performance and trending. Estimated impact is detailed in Attachment. Environmental Review No environmental review is require d. The improvements relate to the development review September 06, 2011 Page 8 of 8 (ID # 2021) process and do not result in any physical alterations to the environment. Attachments: ·Attachment 1: Development Center Organizational Chart (PDF) ·Attachment 2: Customer's Desired Outcomes (DOC) ·Attachment 3: Customer Additional Recommendations for Improvements (DOC) ·Attachment 4: Summary of DC Walk-In Performance Statistics (DOC) ·Attachment 5: Perfomance Measurement Program Overview (DOC) ·Attachment 6: Development Center CMR Resource Impact (XLS) Prepared By:Steve Emslie, Deputy City Manager Department Head:James Keene, City Manager City Manager Approval: James Keene, City Manager Attachment 2: Customer’s Desired Outcomes (Listing initially drafted by the Staff Action Team and adopted by the Development Center Customer Advisory Group (DCCAG) on 12/1/2010. The Desired Outcomes form a collective set of “guideposts” for the Development Center performance improvement and the Blueprint system operational design. The development services system provides successful service when………………………….………… Theme 1: Interpretation and Application of City Goals and Policies 1.City policies, codes and standards are up-to-date, consistent, and user-friendly to assist in project formulation/application, review and decision-making. Staff continually evaluates the regulations and elevates refinements to solve inconsistencies and conflicts. 2.There is consistency in the application and interpretation of regulations and procedures between departments and individual staff members. 3.There is clarity on what is required by City policies and codes versus what are additional recommendations. Customers have the discretion to choose whether to incorporate recommendations. Theme 2: Communication of Regulations, Requirements, and Process 1.The process, required approvals and applicable regulations (“roadmap”) are communicated clearly, consistently and in a timely manner. Customers, with staff guidance, can submit complete and accurate applications and responses. 2.Comprehensive and reliable information is available when doing research, including the opportunity to ask “what if” questions about parcels or potential project scenarios. 3.Information materials, project status, comments, clearances, and outstanding reviews are easily accessible online to everyone participating in the process. The technology is user-friendly to promote customer self access. Information is updated regularly to ensure the latest information is available. Theme 3: Partnership Culture & Responsiveness 1.There is a professional attitude and commitment to customer service. There is a “partnership” culture between staff members and between staff and applicants to work towards an approved project that can be constructed in a cooperative manner. 2.Customers have a primary point-of-contact and consistent staff members on their project that have the responsibility to facilitate the process, interpret or apply regulations and make timely recommendations or decisions. All team members should be able to assist on project processing and coordination. 3.There is sufficient resources and number of trained, knowledgeable staff to accomplish the desired outcomes. If the demand (workload) requires it, then resources should match the service need. Theme 4: Predictability & Efficiency of Process and Results 1.There are consistent, standard operating procedures for customers to follow. The process is understandable and works for all customers. 2.Customers are given realistic timelines they can count on and the point-of-contact monitors the schedule to ensure that it is met. 3.A performance measurement program is established and reviewed regularly to gauge efficiency, productivity and customer satisfaction. 4.Individual staff members ensure review comments are thorough and tailored to the customer’s project and reference specific code and regulation provisions. Staff identifies and resolves interdepartmental conflicts or redundancies prior to sending review comments to the applicant. 5.The appropriate technology tools are utilized to simplify and improve efficiency of the submittal, review, approval, and construction inspection process. Theme 5: Accountability for Quality and Consistency of Decision-Making 1.There is a consistent, clearly defined process to resolve project issues. The point- of-contact is responsible for initiating and closing the issue resolution process. 2.Managers should delegate the resolution authority to the appropriate staff level and staff takes responsibility to solve issues at the earliest time possible. 3.All participants, including the applicant, follow-through with commitments and agreements to meet expectations and timelines. Participants do what they say they will do or communicate what has changed. Attachment 3: Customer Additional Recommendations for Improvements The following comments were collected from Development Customer Advisory Group (DCAG) members during their July and August 2011 meetings. These initial brainstormed recommendations are intended to supplement the Blueprint effort. 1.Trees are not more important than taxpayers a.customers should only have one reasonable tree related interaction b.ordinance needs editing eliminating redwoods as protected 2.The Green Building program has five (5) differing protocols. Simplify process of ‘green building’ standards to one (1) system.It may be most appropriate to use CalGreen as the standard. 3.The requirements in the inspector’s manual should only match the adopted building code. The “book” should be edited to indicate optional best practices with the code being default. 4.When outside plan check, engineering and consultants are utilized, (from the ‘City List’), why does it take so long for inside re-check? 5.Coordinate requirements and process between Building and Utilities on simple matters such as tankless water heaters, backflow devices and electrical service upgrades. 6.Specify what “best building practices (BBP)”are and what is the building code?If we are expected to build to BBP then the outside plan checkers, architects, engineers and consultants need to know also.(See #3) 7.Review complex submittal-based (Type C&D processes) requirements based on what is happening to: closing landfills, closing recycling centers, one stream disposal, etc. out in the real world. 8.Develop matrix check list for most of the common applications to incorporate the various possibilities of requirements for load sheets, electric, gas, and wastewater. Simplify content and eliminate duplication. Clarify terminology for layperson/residents. 9.Have easy criteria available to illustrate when a structural engineer will be needed. 10.Coordinate the application of ‘job copy’ of the plans and field inspections, and ‘BBP’. Ensure that plans are sufficient to construct the project without reinterpretation by inspector. Have the project manager follow the project through final inspection to facilitate issues and close-out projects. 11.Service for layperson/residents is unpredictable. Retain an ombudsman to address both planning and enforcement matters. 12.Layperson/residents who approach the front desk at the Development Center are not receiving a consistent level of service. Assign staff to DC front desk (maybe a rotating responsibility within the department) that are trained to assess inquiries accurately and to clearly convey the process and/or direct the public to the appropriate person/office. 13.The City website is difficult to use. Improve the website making it easy for the public to use so that many issues may be resolved without involving staff.Add Accela Citizen Access to replace VelocityHall and look for improvements to match new project management system. Total Customer Interactions (by Type) J311-11 Feb-I I Mar-l 1 Apr-l 1 500 457 444 450 30 2 • 413 400 39j"o, • 350 ..... 304 300 289 _ 351 250 280 200 214 256 150 100 126 105 127 114 50 0 940 1161 1316 1111 ~Total New ~ Total Existing -.-Total Early Assistance -Total General Information - Daily Average Customer Interactions (by Di scipline) J.II·11 Ftb-ll ~,hr-ll Apr·ll 4!J 00 3972 40 00 r---~5 35.85 ~ )~ 00 _81111(11118 Techni cian ~Bulldll1g Plan Check 30,00 [-_Planning -PullllcWorks H .OO -Gret>11 Building 19.1 2 19.22 _Fire 2000 1821 • • .~4 15 00 JO 00 HZ 759 6.63 7 l ' . 500 -'.06 :!i:8l :---479 ~5:;-; 1M ~6 H' ". 000 ~ 2.26 0" 70.05 11.53 71.79 64,58 Attachment 5: Performance Measurement Program Overview To provide a useful tool for gauging staff and customer performance, several objectives of the measurement program include: 1.Measurement data should be collected for all stages of standard project processes in order to identify problem areas (early information quality, application submittal, staff review and problem solving, approval process, and construction inspection). While some stages work efficiently, other may not. It will be important to isolate service issues. 2.The customer’s perception & satisfaction with processing stages should be compared with actual internal metrics. Staff may be meeting internal metric targets however the customer is still not satisfied with the performance. How does the customer feel about services they are getting? An imbalance typically means that performance targets may be too lax or cultural issues exist. Ongoing measurement reporting trends and missed performance targets will help identify specific resources shortages and training or outreach needs. Compare Customer Satisfaction with Internal Metrics Comments Development Services Official 204,127$ Salary and benefits Permit Center Manager 172,159$ Salary and benefits Plans Examiner 139,884$ Salary and benefits Project Manager 115,493$ Salary and benefits Project Manager 115,493$ Salary and benefits Project Manager 115,493$ Salary and benefits New Salaries and Benefits Total 862,649$ Freed Up Funds Eliminate vacant Plans Check Engineer (139,884)$ Eliminate DC Manager temp-prorated (91,200)$ Eliminate Project Manager temp (17,025)$ Eliminate Project Manager temp (24,640)$ Eliminate Project Manager temp (35,000)$ Reduction totals (307,749)$ Non-Salary Additions Modular furniture and associated needs 137,006$ one-time cost: workstations, cable, 3 computers, 3 large screen monitors, 3 printers, recarpet Technology Enhancements To be determined $118K was collected in tech enhancement fee revenue FY2011 Total Non-salary changes 137,006$ Total Impact of Proposed Changes 691,906$ Projected Development Center revenues for FY2012 7,433,047$ Development Center actual revenues FY2011 7,129,885$ Anticipated increased revenue (difference: projected to actual)303,162$ Expense associated with this CMR 691,906$ Projected balance (388,744)$ Total Revenue to Total Costs FY2012 Development Center actual expenses FY2011 5,795,589$ Development Center budget changes in FY2012 595,122$ $442,333 one-time. Potential costs of proposed CMR 691,906$ Expected Development Center costs 7,082,617$ Development Center Enhancement CMR Resource Impacts New Staff Salary and Benefits estimate Attachment 6 Estimate Net projected revenue (projected revenue less expected expense)350,430$ .